In today’s briefing:
- Alibaba (9988 HK): Value Proposition Looks Clean
- TSMC (2330.TT; TSM.US): Foundry Market Forecast in 2030F; TSMC Had Developed The 2nm Nanosheet.
- Big Returns on Small Investment – A Unique Special Situation in Indiabulls Housing
- Li Auto (LI US): 4Q23, High Growth and Profit, A Winner of Market Concentration, Upgraded to Hold
- China Consumption Weekly (26 Feb 2024): Alibaba, Xpeng, HiPhi, Tuhu Car, Luckin
- Grab Holdings (GRAB US) – Surging Ahead of Expectations
- Appier (4180) | A Volatile Stock Despite Solid SaaS Metrics
- Booking.com (BKNG US): Buying Back Shares Until There Is None Left
- Bumrungrad Hospital (BH TB): Record High Performance in 2023; Middle-East Performance Recovers
- Chinese Education Giant Urged to Repay Bondholders Early as Default Fears Mount
Alibaba (9988 HK): Value Proposition Looks Clean
- It is well-known that Alibaba (ADR) (BABA US) is cheap (9x FY24 PE, fiscal year ending March; 8x FY23 free cash flow; net cash 25% of market cap).
- Taking into account all of the major moving parts, I believe Alibaba can now be categorized as a good value stock.
- Shareholder returns through buyback and dividend, minus stock-based compensation in 2023 calendar year equal to around 5% yield.
TSMC (2330.TT; TSM.US): Foundry Market Forecast in 2030F; TSMC Had Developed The 2nm Nanosheet.
- TSMC expects the foundry, semiconductor, electronics, industrial technology, and global GDP to be $0.25 trillion, $1 trillion, $3 trillion, $12 trillion, and $145 trillion, respectively, in 2030F
- Transistor technology is constantly evolving, and FinFET architecture will be followed by Nanosheet and others.
- In the transition, the automotive market belongs to IDM companies, but the utility of ADAS (Advanced Driver Assistance Systems) could fall under Foundry territory.
Big Returns on Small Investment – A Unique Special Situation in Indiabulls Housing
- Indiabulls Housing’s Right Issue offers a unique opportunity to earn higher returns on smaller investment.
- Indiabulls Housing is at the cusp of a turnaround: detaching its old identity maligned by various governance issues
- Turnaround + Special Situation Bet – A potential opportunity to make outsized returns owing to the lower initial investment requirement in a company undergoing significant turnaround
Li Auto (LI US): 4Q23, High Growth and Profit, A Winner of Market Concentration, Upgraded to Hold
- In 4Q23, revenue grew by 136% and operating profit was significantly higher than the market consensus.
- Li Auto grew the most rapidly among the top-ten Chinese NEV sellers.
- We believe Li Auto will be one of the winners after the market gets more concentrated. Upgrade to Hold.
China Consumption Weekly (26 Feb 2024): Alibaba, Xpeng, HiPhi, Tuhu Car, Luckin
- Alibaba plans to provide operational services to third-party sales broadcasters.
- Xpeng will hire 4,000 employees and raise research budget by 40%.
- Tuhu Car expected that its net profit will turn positive in 2023.
Grab Holdings (GRAB US) – Surging Ahead of Expectations
- Grab Holdings reported nothing short of an impressive set of results for 4Q2023, booking another positive adjusted EBITDA but also an actual net profit and positive adjusted cash flow.
- The company saw its mobility GMV come in above pre-COVID levels and deliveries GMV growth reaccelerated, while also reaching positive adjusted EBITDA for a second quarter.
- Grab aims to deepen its engagement with users through affordable and premium offerings and a laddered pricing approach, with additional focus on financial services and advertising to come in 2024.
Appier (4180) | A Volatile Stock Despite Solid SaaS Metrics
- Post FY23 results in mid-February, Appier’s stock exhibited significant volatility, despite robust financial performance.
- We believe that Appier is a beneficiary of continued growth in ecommerce and increasing ubiquity of AI solutions for marketing.
- Appier trades at a significant discount to global peers and domestic SaaS companies, suggesting significant upside
Booking.com (BKNG US): Buying Back Shares Until There Is None Left
- 4Q23 results beat expectations with record revenues and profits and announced a maiden cash dividend of USD8.75/share (0.35% yield)
- But, share price plunged by 10% on soft guidance of 4-6% YoY growth in room-night booked in 1Q24, due to the impact of high-interest rates and the ongoing wars
- Good opportunity to buy on dips, stock trading at ~20x FY24 PE, ~18% discount to LT mean. Plus, there is a balance USD7.5b (6.1% shares in issue) of share buybacks
Bumrungrad Hospital (BH TB): Record High Performance in 2023; Middle-East Performance Recovers
- In 2023, Bumrungrad Hospital Pub Co (BH TB) reported 23% YoY revenue growth to THB25.6B, driven by 32%, 17%, and 11% YoY growth in international, expat, and Thai patients, respectively.
- Driven by high margin international patients, increasing inpatient revenue, and continued cost management, gross profit, EBITDA, and net profit margin expanded in 2023.
- Unrest in Middle-East remained an overhang on BH’s shares. However, revenue from Middle-East patients increased at 23.3% in H2 2023 compared to H1 2023.
Chinese Education Giant Urged to Repay Bondholders Early as Default Fears Mount
- Some global investors are urging Chinese private education giant XJ International Holdings Co. Ltd. to redeem half of its $350 million in bonds before maturity, as the creditors fear the Hong Kong-listed firm may intentionally default on repayments.
- The bonds are due in 2026, but the creditors asked for the early redemption to be completed by March 2 in a letter sent to the Chinese company last month by their legal adviser, Chicago-headquartered global law firm Kirkland & Ellis LLP.
- The creditors are a group of large international investors who collectively hold no less than $154 million, or about 50%, of the bonds’ outstanding principal amount, according to the letter seen by Caixin.
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