In today’s briefing:
- Alibaba’s Eddie Wu, Strategic Leader or Ma’s Partner?
- Plover Bay (1523 HK): Interesting Net Cash /8% Dividend Yield Play/ With ROEs Above 50%
- Sumber Alfaria Trijaya (AMRT IJ) – Rationalising the Lawson Buildout
- Intel’s AI Everywhere In New York
- Edelweiss: Hitting All the Right Notes to Scale Up Businesses and Unlock Value
- COSCO Shipping Energy (1138 HK): Time for Another Look
- AOT Vs MAHB: Part Deux
- 2Q Follow-Up – Japan System Techniques (4323 JP)
- Carnival Corp’s Per Passenger Revenue
- MillerKnoll, Inc. – 2QFY24 Results Deliver Strong Margins; Orders Challenged
Alibaba’s Eddie Wu, Strategic Leader or Ma’s Partner?
- In the latest wave of management changes, Eddie Wu, Jack Ma’s trusted associate has staged a comeback, securing pivotal roles.
- We believe this is not a mere coincidence. Jack Ma seems to be orchestrating moves from behind the scenes, with Eddie Wu strategically positioned to represent his influence.
- The Chinese government’s reaction to Jack Ma’s increased involvement may impact Alibaba Group Holding (9988 HK)‘s price performance in the short term.
Plover Bay (1523 HK): Interesting Net Cash /8% Dividend Yield Play/ With ROEs Above 50%
- Plover Bay Technologies (1523 HK) is another exciting play from the stable of net cash (12% of market cap) and high dividend yield (8% FY22) companies.
- The company develops networking technologies that enable supercharged connectivity. Users can build always-on networks anywhere by combining fixed, mobile, and satellite connectivity. Its major brands are Peplink and Pepwave.
- Plover Bay is a high net margin (25%) and high ROE (>50%) business that has 9-10% CAGR revenue growth (trading at 11x PE) with catalysts up ahead.
Sumber Alfaria Trijaya (AMRT IJ) – Rationalising the Lawson Buildout
- Sumber Alfaria Trijaya has decided to pare back the velocity of the expansion of Lawson convenience stores as it consolidates its leading position and maximises efficiencies.
- 4Q2023 saw slower growth in November but December should be stronger, whilst its store expansion for 2023 reached 1,700 new stores, with plans for around 1,300 new stores in 2024.
- Sumber Alfaria Trijaya remains the best way to play the minimarket space in Indonesia. 4Q 2023 numbers should provide a positive catalyst given it is the seasonally high quarter.
Intel’s AI Everywhere In New York
- Intel’s “AI Everywhere” event turned out to be little more than last minute launches client and server products promised for 2023
- While these products have little new in the way of ground-breaking AI hardware, the entire event was infused with AI marketing to the highest degree
- Ostensibly Intel’s great hope in AI hardware acceleration, Gaudi, featured solely as a last minute gimmick announcing that Gaudi3 was “out of the fab and into the lab”. Yawn!
Edelweiss: Hitting All the Right Notes to Scale Up Businesses and Unlock Value
- Edelweiss reported a decent Q2FY24 with ex-Insurance PAT of INR 153cr vs INR 133cr YoY. All the businesses – ARC, Asset Management and Credit – performed well.
- Edelweiss is making decent progress in the Credit business aided by the co-lending business model. 80% of disbursals in NBFC and 30% in Housing Finance in Q2FY24 were through co-lending.
- Edelweiss is in process of selling a minority stake in its Alternative Asset Management business for value unlocking. It plans to sell 10-20% equity stake for INR 1500-2000cr.
COSCO Shipping Energy (1138 HK): Time for Another Look
- The 20% retreat in the share price of Cosco Shipping Energy Transportation (1138 HK) from the peak has well reflected the plunge in 3Q23 VLCC rates and 10% earnings downgrade.
- 4Q23 VLCC rates have rebounded 78.4% QoQ. Re-routing due to recent Houthi attacks on commercial ships at the Red Sea has reduced effective supply and is positive to rates.
- Heightened energy security needs will drive demand. The medium-term supply pressure is mild as the VLCC orderbook equals just 2% of the existing fleet, fueling ROE for FY23-25F.
AOT Vs MAHB: Part Deux
- Airports of Thailand (AOT TB) 6m24 revenue growth rates are healthy, supported by the growth in departure passenger service charges and the coming back of concession revenues.
- AOT labor expenses have expanded at an unprecedented level, even higher than pre-COVID levels, while Malaysia Airports Holdings (MAHB MK) kept them under control.
- Book profit on half of the exposure and wait for the next quarter to see if AOT labor expenses will stay high.
2Q Follow-Up – Japan System Techniques (4323 JP)
- Fully independent DX provider: Japan System Techniques (JAST) is an independent system integrator that develops and sells software and systems, which celebrated its 50th anniversary.
- The company develops systems for customers in a variety of industries and sectors, including finance, manufacturing, distribution, services, public services, telecommunications, transportation, and science and technology.
- Furthermore, as a developer, the company has three main JAST-branded software offerings for its customers, namely GAKUEN for the education industry, BankNeo for the financial industry, and JMICS (JAST Medical Insurance Checking System) for the medical industry and the profitability of these own-brand businesses is very high.
Carnival Corp’s Per Passenger Revenue
- Lots of financial analysts and other Calcbench users might be wishing they could sail away on a tropical cruise as we enter the holiday slow season, so perhaps it’s a good time to visit Carnival Corp. ($CCL) and the company’s latest financial performance.
- Carnival filed its latest quarterly (and fiscal year-end) earnings release on Thursday, and top-line numbers looked pretty good for a company still recovering from the pandemic’s apocalyptic effects four years ago.
- Quarterly revenue jumped 40.6 percent from the year-ago period, to $5.4 billion; annual revenue soared 77.5 percent to $21.6 billion.
MillerKnoll, Inc. – 2QFY24 Results Deliver Strong Margins; Orders Challenged
- After market close on December 20, MillerKnoll reported 2QFY24 adjusted EPS of $0.59, ahead of our estimate of $0.55 and the consensus mean of $0.54.
- Margins were better than expected, while revenue of $949.5 million came in at the low end of guidance.
- Sales in the Americas segment disappointed relative to our expectations.
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