Daily Brief Equity Bottom-Up: An Update on Oriental Watch (398 HK) and more

• A Review on Final Results Oriental Watch recently announced its earnings for the fiscal year, and the results were quite impressive.
• On June 20, 2023, the company reported a revenue of HKD3.7 billion and a net profit of HKD295 million.
• These figures surpassed our initial estimates of HKD3.

• Bangkok Dusit Medical Services (BDMS TB) recorded 4% YoY growth in hospital revenue in 1Q23, driven by higher patient intensity at Center of Excellence (COE) and returning of international patients.
• However, Thai patient revenues decreased 6% YoY due to a decrease of COVID-19 related revenues, in line with improving COVID-19 situation in Thailand.
• BDMS targets to increase its bed capacity to ~9,000 beds in 2027 from 8,400 beds in 2022. BDMS targets revenue CAGR of 6–8% during 2023–2025.

• Takeda Pharmaceutical (4502 JP) announced yesterday that the company has voluntarily withdrawn the US Biologic License Application for dengue vaccine candidate (QDENGA) citing issues over data collection.
• As per Fierce Pharma, the decision to withdraw was due to additional data requested by the FDA which were not captured by Takeda’s Phase 3 TIDES trial.
• Takeda’s share price dropped more than 2.0% during today’s trade, however, we would not be too concerned as efficacy and safety profiles of the trial has already been established.

• In my previous insight Dickson Concepts 113 HK: Straight From The Ben Graham Stable, >40% Discount to NCAV, I highlighted why one must explore the stock as a viable investment.
• NCAV (Net current asset value) in FY23 was 7.5 HKD/share ( Vs. current share price of 4.25 HKD/share), with net cash + ST/LT financial investments now at 9.7 HKD/share. 
• Absolute DPS ( dividend per share) was 35 cents representing a yield of 8.2% ( payout ratio of 55%). The trailing PE is 6.6x FY23. 

• On 3 July 2023, the Ministry of Commerce of China announced that it will restrict exports of gallium and germanium starting next month.
• YMC is one of the key beneficiaries in Korea of China’s restriction of gallium exports. YMC makes silicon carbide which can be a substitute material for gallium.
• YMC’s valuation is relatively cheap. Given that YMC currently has a market cap of 150 billion won, this would represent P/E of 7.3x (using 2022 net profit). 

• Marsh & McLennan managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
• The company had significant growth in most of its businesses, market sectors, and geographical areas, with Marsh, Guy Carpenter, and Mercer all experiencing faster underlying growth than in the previous quarter.
• Guy Carpenter’s revenue was $1.1 billion, driven by solid growth in all areas and worldwide specializations, reflecting tighter reinsurance market conditions.

Martin Currie Global Portfolio Trust’s (MNP’s) relative performance is back on track following a tough 2022, when investors favoured value and cyclical companies rather than growth businesses. Manager Zehrid Osmani has remained disciplined, seeking high-quality, long-term growth companies, and has retained his five- to 10-year investment horizon. Over the last decade, the trust has generated robust double-digit absolute annual NAV and share price total returns of 10.3% and 10.6% respectively. Within the AIC Global sector, MNP’s NAV total returns are above average over the last one and five years.

• Colgate-Palmolive’s share price performance over the past few years is not as grim as it might look on the surface.
• Improving gross margin remains the only game in town for future shareholder returns, according to the company.
• Colgate-Palmolive Company (NYSE:CL) is rarely seen as an attractive investment opportunity as the company significantly underperformed the S&P 500 and the consumer staples sector in particular over the past 5-year period.

• Yerbaé announced a strategic partnership with Farrell Distribution, a renowned distributor of premium beverages in Vermont.
• YERB.U extended its partnership with CrossFit champion Annie Thorisdottir and launched new flavours in Sprouts Farmers Markets.
• However, Yerbaé (3.7x 2024E sales) continues to trade at a sizeable discount to Celsius at 7.7x 2024E sales and Monster Beverage at 7.0x 2024E sales.