In today’s briefing:
- APAC Luxury Industry Series: Luxury Travel Shines Amid Challenges for Traditional Luxury Goods
- Times Neighborhood (9928 HK): China Property Play With High Margin of Safety
- Samsung Electronics: Return of the King
- MTR (66): Should Start to Move
- Home First Finance (HOMEFIRS IN) | Irrelevant Mission, Fading Moat
- PT Medikaloka Hermina (HEAL IJ) – Women & Children with Increasing Intensity
- Keisei Electric (9009): Ridership and Price Hike
- Micron. Clutching At AI Straws
- Komatsu (6301) | The Back Test Worked. Now What?
- EM & Japan Neobanks – Stick with Rakuten Bank (5838 JP), but Time to Take Profits on Nubank (NU US)
APAC Luxury Industry Series: Luxury Travel Shines Amid Challenges for Traditional Luxury Goods
- While traditional luxury brands may encounter challenges as affluent Chinese consumers shift to local high-end brands, there are still opportunities within small niches in the luxury sector.
- Luxury travel, driven by trends like micro trips and the increasing number of High-Net-Worth Individuals, represents a potential area of growth in the luxury sector.
- The thriving luxury travel market opens up investment potential in sectors such as luxury hotels and premium cosmetics.
Times Neighborhood (9928 HK): China Property Play With High Margin of Safety
- Times Neighborhood (9928 HK) is a China property management company headquartered in the Big Bay Area, trading at 3x 2023 P/E and below net cash.
- China property management as a sector has lost most of its value given close relationship with China property. However, there are still some investable property management companies.
- Upcoming catalysts include interim results in August, potential favorable policies in China property sector, and potential shareholder actions.
Samsung Electronics: Return of the King
- Asia Ex-Japan investors move from underweight to a record overweight in Samsung Electronics
- Samsung has been a key beneficiary of manager rotation over the last 6-months alongside BYD, Trip Com and Meituan.
- Majority of funds positioned overweight with a record 81.4% of funds holding a position. Samsung becomes one of the highest conviction holdings in the Asia Ex-Japan region.
MTR (66): Should Start to Move
- The share price of MTR Corp (66 HK) has not moved and lagged behind other transport operators in Asia.
- High-Frequency numbers from the company has shown improvement and signs that the Chinese tourists are gradually returning.
- The reopening of the checking in facility in downtown Hong Kong is another sign that more tourists are expected to come.
Home First Finance (HOMEFIRS IN) | Irrelevant Mission, Fading Moat
- Home First Finance (HOMEFIRS IN) is a technology-driven affordable housing finance company (HFC) focused on first-time homebuyers in low and middle-income groups.
- We believe access to finance is more relevant rather than quick TAT and hence question the relevance of wanting to be the fastest provider.
- Considering the fading competitive advantage, borrower profile and segment dynamics, HOMEFIRS may be the fastest but not necessarily the safest.
PT Medikaloka Hermina (HEAL IJ) – Women & Children with Increasing Intensity
- Medikaloka Hermina (HEAL IJ) saw a strong recovery in patient volumes in 1Q2023, with margins starting to normalise from COVID highs and occupancy rates picking up.
- The company is back on an expansion track and recently secured the first hospital in the new capital next year with two new hospitals planned to open this year.
- Medikaloka Hermina continues to focus on women & children and JKN patients but is also expanding into more intensive specialist treatments to drive profits. Valuations remain attractive versus peers.
Keisei Electric (9009): Ridership and Price Hike
- YTD performance of 61% has been stellar and index beating but the concern remains whether there will be more left.
- Keisei Electric Railway Co (9009 JP) April 23 ridership and revenue growth provide momentum despite the still non-existence arrival of Chinese tourists.
- Chinese tourists’ arrival in 2H 23 may be slow but chances are that they will arrive in Japan and will boost both ridership and revenue.
Micron. Clutching At AI Straws
- Micron reported FQ3’23 revenues of $3.8 billion, up 2% sequentially and down 57% year-over-year.
- Despite upbeat AI notes among others, Micron quietly delivered more bad news than good with their overall outlook worsening in many key respects.
- In the company’s own words, “Profitability and cash flow will remain extremely challenged for some time”. For “some time”, you could insert “at least 12 months”
Komatsu (6301) | The Back Test Worked. Now What?
- We remain bullish on Komatsu despite returning a positive 37% return over the past year.
- Q1 results are likely to exceed expectations and guidance is likely to be cautious, due to forex, pricing and cost factors.
- Komatsu is still attractively valued compared to its peers and historical averages, and has 20% upside potential.
EM & Japan Neobanks – Stick with Rakuten Bank (5838 JP), but Time to Take Profits on Nubank (NU US)
- We remain positive on Rakuten Bank, with its group ecosphere as a source of customer growth, its low cost base, and extremely low NPL ratio
- Rakuten Bank trades on the lowest PE multiple of the neobank peer group , with the low ROE to PBV ratio close to the best of its neobank peers
- Nubank shares have done well since we upgraded to a buy in January; we recommend investors to take profits given Nubank’s limited potential for positive surprises and its stretched valuations
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