In today’s briefing:
- Alibaba (BABA US): Stronger Results, Higher Conviction and Cheaper Valuation
- Paradise: Boost from End of Ban of Chinese Group Tours to Korea Vs Inspire Resort Opening in Incheon
- [Alibaba (BABA US, BUY, TP US$120) Target Price Change]: Return of Users and Merchants Will Continue
- Sapporo Clinical Laboratory Inc (TYO 9776)
- REIT Watch – Healthcare S-REITs remain committed to expansion strategies
Alibaba (BABA US): Stronger Results, Higher Conviction and Cheaper Valuation
- Alibaba delivered a strong June quarter that beat consensus by a wide margin and across the board, showcasing an acceleration of recovery.
- The strong results were however clouded by China’s weak macro signals and investors’ lingering concern about China consumption of which Alibaba is commonly seen as a proxy.
- Alibaba trades at 9x our revised-up FY24 earnings. The most certain thing about Alibaba amidst all the uncertainties is it is getting cheaper and it is not a value trap.
Paradise: Boost from End of Ban of Chinese Group Tours to Korea Vs Inspire Resort Opening in Incheon
- Paradise is one of the largest foreigners only casino operators in Korea which should benefit from the end of the ban of Chinese group tours to Korea.
- However, Paradise will face additional competition from the opening of the new Inspire Entertainment Resort in Incheon which is expected to open by the end of 2023.
- Paradise is likely to benefit from a combination of higher earnings and valuation multiples in the coming months.
[Alibaba (BABA US, BUY, TP US$120) Target Price Change]: Return of Users and Merchants Will Continue
- BABA reported CY2Q23 top-line and non-GAAP net profit 10% and in-line vs. our estimate, and 12% and 20% vs. consensus, respectively. Taobao/T-mall 3P, international retail, and DME beat our estimate.
- We suspect WeChat cooperation has been a main driver for increasing DAU of a cohort of previously untapped users. This also drove merchants to return to the platform.
- We maintain BUY and raise TP to US$ 120 to reflect (1) higher growth of Taobao/Tmall, and (2) improved profitability of most business groups.
Sapporo Clinical Laboratory Inc (TYO 9776)
- This is a quick profile of one of the many Japanese stocks that have caught my interest and are in my cheap Japanese basket.
- I’ll be doing more frequent short write ups on names in this basket over the coming months.
- Sapporo Clinical Laboratory is a $24m market cap operator of retail pharmacies and clinical testing facilities across Hokkaido, Japan.
REIT Watch – Healthcare S-REITs remain committed to expansion strategies
- THE first seven months of 2023 saw the iEdge S-Reit Index gain 3.9 per cent in total return terms, reversing its 11.9 per cent decline in 2022.
- This was followed by hospitality S-Reits with 5.8 per cent average total returns, after being the best performing sub-segment last year.
- PLife Reit declared a distribution per unit (DPU) of 7.29 Singapore cents for H1 2023, representing an increase of 3.3 per cent year on year.
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