In today’s briefing:
- Alibaba (9988 HK): “Department One” in Reorganization
- TSMC: Crowded Trade?
- Whitehaven Coal: Production Guide Down, Solid Support From Buybacks, 80% Annualized OCF Yield in Q3!
- Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2023
- [PDD Holdings Inc. (PDD US, BUY, TP US$95) Earnings Preview]: BUY on Expected Margin Beat
- Anta Sports (2020 HK): Our View After Placement
- British American Tobacco: New Category Growth
- 10 in 10 with H2G Green – The Pivot to Green Hydrogen
- First Solar Inc: A Strong Start To 2023 – Key Drivers
- Rio Tinto: Expansion Plans
Alibaba (9988 HK): “Department One” in Reorganization
- Alibaba broke down Taobao Tmall Center, the most important department, into three departments.
- Industry Development Department One is actually “other businesses” after the reorganization.
- Following Department One will help investors to understand Alibaba’s financials.
TSMC: Crowded Trade?
- Taiwan Semiconductor (TSMC) is by far the most dominant stock holding among active EM investors.
- TSMC is owned by 87.5% of EM funds with an average weight of 6.1%, it is also the largest portfolio holding for 64.5% of managers.
- Despite high levels of positioning, there are no obvious signs that managers are scaling back positions. The risk of not holding TSMC may be greater than playing the contrarian.
Whitehaven Coal: Production Guide Down, Solid Support From Buybacks, 80% Annualized OCF Yield in Q3!
- Whitehaven Coal (WHC AU) guided down production in an update released yesterday by 5-10% from a range of 19-20 mnt to 18-19 mnt for FY23.
- Net cash increased 300 mn AUD QoQ from 2.5 bn to 2.7 bn AUD representing 44% of market capitalization with 1.2 bn AUD of operating cash flow alone in Q3!
- We agree an OCF yield of 80% (1.2 bn*4 qtrs on a six bn mkt cap) is unsustainable; the capital allocation possible on this name is mind-boggling.
Korean Holdcos Vs Opcos Gap Trading Opportunities in 2Q 2023
- In this insight, we highlight the pricing gap divergences of the major Korean holdcos and opcos in 2Q 2023.
- Of the 38 pair trades, 21 of them involved holdcos outperforming opcos YTD and 17 of them involved opcos outperforming holdcos in the same period.
- We highlight 38 pair trades that involve Korean holdcos and opcos.
[PDD Holdings Inc. (PDD US, BUY, TP US$95) Earnings Preview]: BUY on Expected Margin Beat
- We expect PDD to report 1Q23’s revenue and non-GAAP net income 6.1% and 23.8% ahead of consensus, respectively.
- PDD entered an adjustment period, reflected in lower S&M expenditure both overseas and domestically, which has led to declining PDD DAU and moderating growth of Temu’s GMV and losses.
- We raise our PDD’s 2023’s EPS estimate by 14%~ to reflect better-than-expected cost control. We maintain PDD’s BUY rating and US$ 95 TP, implying 21x 2023 P/E.
Anta Sports (2020 HK): Our View After Placement
- The new share placement of Anta Sports Products (2020 HK) has caught the market by surprise, but we think long-term story for the company should not be affected.
- With proceeds to be used for repayment of outstanding debts, expansion in China and pursuing SE Asia markets, we should not overlook the benefits to be generated.
- An IPO of Amer Sports is clearly brewing and this represents an important catalyst. Anta’s 26.4x and 20.9x FY23 and FY24 PERs do not look stretched relative to earnings growth.
British American Tobacco: New Category Growth
- British American Tobacco delivered decent financial results and successfully navigated a progressively challenging macro environment.
- In New Categories, the company delivered strong revenue growth driven by Geo expansion, innovation, and share growth.
- British American Tobacco launched the first connected Vapour device of the Group, Vuse ePod2 plus, that drives increased pod consumption.
10 in 10 with H2G Green – The Pivot to Green Hydrogen
10 in 10 with H2G Green – The Pivot to Green Hydrogen
First Solar Inc: A Strong Start To 2023 – Key Drivers
- First Solar entered 2023 with an improved financial, operational, and commercial position with increased R&D, new international and domestic capacity coming online as well as a new Series 7 product.
- The company commenced initial production at its next-generation Series 7 factory in Ohio will continue to ramp this year.
- Furthering its manufacturing program, First Solar recently announced an innovative 3.5-gigawatt Series 7 factory in Alabama and also a 0.9-gigawatt rise to nameplate capacity at its Ohio factories.
Rio Tinto: Expansion Plans
- Rio Tinto’s business remained resilient in the last quarter and the company successfully entered the year with quite a good operational momentum, particularly in Pilbara iron ore.
- However, accelerating cost inflation and lower prices throughout the year led to margin compression.
- At Simandou, Rio Tinto incorporated the infrastructure joint venture with its various partners and the government of Guinea.
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