In today’s briefing:
- [Alibaba (BABA US, BUY, TP US$100) TP Change]: On Track for the Great Turnaround…Reiterate BUY
- Wasion (3393): Profit Alert and OBOR Beneficiary
- Taiwan Dual-Listings Monitor: History Implies TSMC Spread to Trade Down; ASE Still Broken Down
- Long 6920 Lasertec Corp | Short 6525 Kokusai Electric
- China Healthcare Weekly (Aug.18)- COVID Is Here, BIOSECURE Act Update, Livzon Deserves More Patience
- HK & China Gas (3 HK): A Yield Play Back in Favour
- Himax Sees China Automotive Market Softening; AI Sensing and AI/HPC Optics Opportunities Expanding
- Trex Company: How Are They Executing Market Expansion and Penetration? – Major Drivers
- Consumer Tales Aug Wk#3: Ola’s Dream Ride, Shopee’s SE Asia Lead, Jollibee’s Joyful 2Q
- Shopify Inc.: Will The Acquisition of Checkout Blocks Further Push Their Growth? – Major Drivers
[Alibaba (BABA US, BUY, TP US$100) TP Change]: On Track for the Great Turnaround…Reiterate BUY
- BABA reported C1Q24 top line, adjusted EBITA and non-GAAP net profit (2.7%), 5.5% and in-line vs. consensus.
- E-Commerce GMV recovery is the most positive of all. TTG ad-revenues (CMR) trailed GMV growth but we see the two closing the gap in C2H24
- Besides stabilizing e-commerce, BABA is on track of transforming itself from China’s eBay to China’s Microsoft. AI-related cloud revenue grew 100% YoY.
Wasion (3393): Profit Alert and OBOR Beneficiary
- 1H 24 net profit is expected to grow by 54%, a similar amount to FY 23 with a consistent message that revenue growth helps and cost control is in place.
- Wasion Group Holdings (3393 HK) benefits from the One Belt One Road policy as many of the EM countries do not have smart power meters yet.
- Wasion’s holding on Willfar Information Technology (688100 CH) is worth around USD 970 million, double the current market capitalization of Wasion.
Taiwan Dual-Listings Monitor: History Implies TSMC Spread to Trade Down; ASE Still Broken Down
- TSMC: +16.3% Premium; Can Continue to Consider Shorting the Spread Here
- UMC: +0.7% Premium; Wait for Higher Levels Again Before a Fresh Short
- ASE: +4.6% Premium; Breakdown of Spread Could Persist Since History Indicates It’s Now a Normal Level
Long 6920 Lasertec Corp | Short 6525 Kokusai Electric
- Long Lastertec after a solid set of numbers and the easing of concerns raised by the recent Scorpion Capital short sellers report.
- Short 6525 Kokusai Electric over continuing concerns over the US upcoming trade restriction announcement in September.
- This was previously seen as a dangerous short due to its high outstanding short interest, although it has now unwound to almost zero.
China Healthcare Weekly (Aug.18)- COVID Is Here, BIOSECURE Act Update, Livzon Deserves More Patience
- With rising COVID-19 cases, a pandemic outbreak in late 2024 is likely. Investors should focus on related sectors and stocks again.
- Due to BIOSECURE Act, US companies are leaving Chinese partners.If Trump is elected, his sanctions on China’s supply chain may intensify. So, there should be “valuation discount” for China CXOs.
- Livzon may have negative YoY revenue growth in 24H1, but full-year revenue may have positive low single-digit YoY growth. Due to good dividend/repurchase policy, Livzon deserves more patience from investors.
HK & China Gas (3 HK): A Yield Play Back in Favour
- At 5.4% for FY24-26F, Hong Kong & China Gas (3 HK) has the second-highest dividend yield among its HK utility peers. A lower US rate makes it attractive.
- An unchanged interim DPS of HK$0.12 despite a decline in reported net profit suggests the resilience of its dividend stream. Core operating profit has increased 2%.
- While gearing has gone up, HKCG still has excellent cash-generating ability (FY23: HK$10.9bn). It has also cut back in capex with a 33% YoY drop for 1H24.
Himax Sees China Automotive Market Softening; AI Sensing and AI/HPC Optics Opportunities Expanding
- Himax 2Q24 Results Showed Continued Margin Strength But Management Provided Cautious Outlook for 3Q24E Amidst Chinese Market Weakness
- Himax’s AI Sensing and AI/HPC Optical Data Transfer Growth Opportunity for 2025E — Investments into Obsidian Sensors & FOCI
- Himax — Maintain as a Structural Long; Market Sell-Off Opens Accumulation Opportunity
Trex Company: How Are They Executing Market Expansion and Penetration? – Major Drivers
- Trex Company Inc., a leading manufacturer of wood-alternative decking and railing, reported mixed results for its second quarter of 2024.
- The financial performance showcased both strengths and challenges primarily influenced by changing consumer behavior and varying demand across product lines.
- On the positive side, Trex experienced robust demand for its high-end products, with double-digit growth in the sell-through of premium offerings like Trex Transcend Lineage decking and Trex Signature lines.
Consumer Tales Aug Wk#3: Ola’s Dream Ride, Shopee’s SE Asia Lead, Jollibee’s Joyful 2Q
- Welcome to Consumer Tales & Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.
- Ola Electric (OLAELEC IN) has surged 75% from its IPO issue price. For investors wondering about potential upside, we present our base-to-bullish case valuation range for Ola Electric’s stock price.
- Sea (SE US) revised Shopee’s 2024 GMV growth outlook to the mid-20% range. Jollibee Foods(JFC PM)‘s impressive June quarter results stand out against broader trend of weaker sales in QSR sector.
Shopify Inc.: Will The Acquisition of Checkout Blocks Further Push Their Growth? – Major Drivers
- Shopify’s Second Quarter 2024 Conference Call offers a detailed insight into the company’s performance and future directions, signifying another strong quarter underpinned by significant growth and strategic advancements.
- Shopify has shown robust growth in its Q2 2024 results, driven by a 25% increase in revenue (excluding logistics) and a notable improvement in gross profit which has surpassed revenue growth.
- The company reported important structural changes, particularly the unification of its platforms, emphasizing ease and efficiency for merchants expanding internationally or offline.
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