In today’s briefing:
- Asics (7936) | Running the Numbers
- China Consumption Weekly (13Nov2023): Li Auto, NIO, Alibaba, Best, Meituan, KE
- BeiGene (6160.HK/BGNE.US) 23Q3 – Beautiful Story Is About to Happen
- NCsoft: Launch of Highly Anticipated Throne and Liberty MMORPG Game
- Japan Post Insurance: Embedded Value Unlikely to Benefit from a Rate Increase
- Screen Holdings (7735 JP): FY Guidance Up, 2H Guidance Down
- Sheng Siong (SSG SP) – Great Execution So Far, Maintaining >20% ROCE
- Wolters Kluwer: Management Confident About 2024
- SK Biopharmaceuticals (326030 KS): Xcopri Sales Hit All-Time High in 3Q23; Operating Loss Narrowed
- Technical Analysis on DEERE & CO | October 27, 2023
Asics (7936) | Running the Numbers
- ASICS reports solid Q3 results, featuring a 14.5% rise in net sales, 31% rise in operating profit, improved gross margin, and digital growth.
- ASICS revises FY23 outlook with increased sales and operating profit. New OP guidance of Y52b is inline with consensus
- Market to focus on new Mid-Term Plan (end-Nov). Valuation at 16x forecast EBIT still a discount to average 18x multiple.
China Consumption Weekly (13Nov2023): Li Auto, NIO, Alibaba, Best, Meituan, KE
- Li Auto’s revenue increased by 271% YoY and vehicle deliveries increased by 296% YoY in 3Q23.
- NIO will dismiss 10% of its employees and even 20% in some departments.
- We do not believe Alibaba will take over the whole Best Inc.
BeiGene (6160.HK/BGNE.US) 23Q3 – Beautiful Story Is About to Happen
- BeiGene performed well in 23Q3. Product sales maintained strong growth momentum. Together with effective cost control measures, net loss significantly narrowed (close to breakeven), which exceeds expectation.
- BeiGene plans to rely primarily on BRUKINSA/tislelizumab to achieve breakeven, which means BRUKINSA needs to contribute about US$2 billion revenue. Given prescriptions volume, however, Astrazeneca’s Calquence is the biggest holdup.
- Whether BeiGene’s overall revenue can reach US$4 billion is the key point of marginal change in logic. How to further reduce SG&A/R&D expenses has become important topic at this stage.
NCsoft: Launch of Highly Anticipated Throne and Liberty MMORPG Game
- NCsoft plans to launch the highly anticipated new MMORPG game called Throne and Liberty in Korea on 7 December 2023.
- NCsoft reported operating profit of 16.5 billion won (down 89% YoY) and revenue of 423.1 billion won (down 30% YoY) in 3Q 2023.
- Throne and Liberty has a solid chance to become successful globally through Amazon Game platform, which is likely to drive a strong turnaround of NCsoft’s sales and profits.
Japan Post Insurance: Embedded Value Unlikely to Benefit from a Rate Increase
- Japan Post Insurance might seem undervalued based on a regression analysis, but its relatively strong RoE was due to extraordinary gains.
- The company has a much larger portion of its investment securities being carried at cost on the balance sheet vs. its peer, Dai-ichi Life.
- Against the backdrop of Japan’s “higher for longer” theme, its embedded value growth could be under more pressure due to ANW’s m-t-m adjustments and very weak new business value.
Screen Holdings (7735 JP): FY Guidance Up, 2H Guidance Down
- The share price has risen by more than 20% in the past month as 1H results beat guidance, FY guidance was raised and the yen weakened.
- The 2-for-1 stock split may also have attracted retail investors. But the new FY guidance implies lower 2H guidance.
- The outlook is for higher but volatile sales and profits. Valuations are reasonable but not compelling. Wait for a pullback.
Sheng Siong (SSG SP) – Great Execution So Far, Maintaining >20% ROCE
- Sheng Siong (SSG SP) continues to maintain steady, low, single-digit growth in revenue and flat profitability despite a challenging environment.
- Inflation trends reversing due to lower power costs in 2024, and an improvement in its product mix could lead to increased low double-digit profitability (10-11% YoY).
- Trading at 18.5x/17.6x FY23e/24e PE and 3.9% dividend yield, the stock remains on our watchlist if a correction leads to a favorable entry point.
Wolters Kluwer: Management Confident About 2024
- Wolters Kluwer is executing on the second year of its strategic plan, with bold steps taken during the past few months
- The business model is solid, with recurring revenues totaling 80% of the group’s total revenues.
- Management is positive about the pipeline, the retention rates, and the promising net promoter scores seen in H2; the key element for determining revenue growth in 2024
SK Biopharmaceuticals (326030 KS): Xcopri Sales Hit All-Time High in 3Q23; Operating Loss Narrowed
- In 3Q23, SK Biopharmaceuticals (326030 KS) reported Xcopri U.S. revenue of KRW75.7 billion, up 60% YoY and 19% QoQ, driven by accelerating new patients being treated with the drug.
- In 3Q23, operating loss narrowed sequentially to KRW10.7 billion. However, operating loss widened compared to year-ago period, mainly due to higher operating costs of the company’s U.S. subsidiary.
- The company is on track to report a profitable Q4. With continued momentum, Xcopri is expected to hit blockbuster status by generating revenue of $1B in the U.S. in 2029.
Technical Analysis on DEERE & CO | October 27, 2023
- Deere & Company manufactures and distributes various equipment worldwide. The company operates through four segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services.
- The Production and Precision Agriculture segment provides mid-size tractors, combines, cotton pickers and strippers, sugarcane harvesters, harvesting front-end equipment, sugarcane loaders, pull-behind scrapers, and tillage and seeding equipment, as well as application equipment, including sprayers and nutrient management, and soil preparation machinery for grain growers.
- The Small Agriculture and Turf segment offers utility tractors, and related loaders and attachments; turf and utility equipment, including riding lawn equipment, commercial mowing equipment, golf course equipment, and utility vehicles, as well as implements for mowing, tilling, snow and debris handling, aerating, residential, commercial, golf, and sports turf care applications; other outdoor power products; and hay and forage equipment.
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