Daily Brief Equity Bottom-Up: Alibaba (BABA US): Buy Ahead of March Quarter Results This Thursday and more

• We believe BABA’s upcoming 4QFY23 results will surprise the market to the upside by a wide margin in terms of recovery in bottomline, catalyzing trading opportunity for short-term investors.
• We also expect that the results will usher in a period of sustained re-rating for the stock due to China’s continued yet slow consumption recovery and Alibaba’s well-executed restructuring plan.
• Geo-Political risks will not go away, but have been very much reflected in current pricing in our view. Buy ahead of results on Thursday.

• AEM reported weak 1Q23 showing significant revenue and margin pressure across the board
• The company mentioned it was an indirect beneficiary of AI and ChatGPT hype going forward
• AEM could achieve 0.40 EPS in FY24 once the semiconductor industry rebounds. Fair Value of 6 SGD is unchanged.

• Edelweiss’ stock was down over -5% yesterday. The reason for downfall seems to be a media article which states that three large brokers are being investigated for money laundering activities.
• We think Edelweiss is not one of them as the article mentions that these brokers are being investigated since their involvement in the NSEL scam, where Edelweiss had no involvement.
• In fact, Edelweiss was among the few brokers that had come out unscathed in the NSEL scam, as it detected early on that there was some wrongdoing happening at NSEL.

• In this insight, we discuss 10 small cap cosmetic stocks in Korea, which are up on average 26.6% YTD, outperforming KOSPI which is up 10.9% YTD. 
• The drivers of their strong share price performances include reopening after the COVID-19 pandemic and ending of nearly all pandemic related restrictions (including wearing of face masks).
• Among the 10 companies, we would focus on the top five small cap cosmetics stocks with the highest growth in operating profit in 1Q 2023 including Cosmecca Korea and Clio.

• It has taken three years to build and set up but Aeon will finally open its first automated warehouse for online food sales in Chiba this summer. 
• The warehouse will run on technology from Ocado and act as the backend for a completely new online supermarket called Green Beans.
• A second warehouse is due to come online in 2026, expanding sales to all of Tokyo and into Kanagawa. This is the most advanced food e-commerce operation in Japan.

• TAV Airports is the #1 airport terminal operator in Turkey with a 31% passenger market share and 28% market share in commercial flights.
• TAV has one of the best growth profile among peer group with expected 3 yr revenue CAGR of 10%-14% and EBITDA CAGR of 12%-18%.
• Potential upside of over 50% in one year and over 200% in 4-5 years.

• IN Q4FY23, Cipla Ltd (CIPLA IN) reported highest ever US business revenue of $204M, up 27% YoY and 5% QoQ, driven by expansion in market share of key launches.
• Lead peptide asset Lanreotide injection, launched in Q4FY22, is consistently gaining market share. The product currently has market share of 17%, up from 14.1% in Q3FY23 and 9.6% in Q2FY23.
• Ex-COVID, India business revenue increased 16% YoY, driven by chronic branded prescription portfolio. FY23 marks the second consecutive year of market beating growth of Cipla’s chronic portfolio.

CentralNic’s Q123 results showed robust revenue and profit growth, as well as a further deleveraging of its balance sheet. Its product comparison business VGL’s entry into France provides a strong organic growth opportunity, with potential to expand into other regions. The group continues to showcase its commitment to shareholder returns with its latest share buyback programme.

• We expect Futu to report 1Q23 revenue in-line with consensus, while net income beat consensus by 4.2%, mainly due to less operating expenses.  
• The next catalysts in 2023 could be 1) gradual market share gain in HK region, 2) potential new markets in Japan and Southeast Asia. 
• We maintain BUY rating on FUTU and maintain TP at US$51.