In today’s briefing:
- Astra International (ASII IJ) – Driving into Indonesia’s Growth Areas
- Kunlun Energy (135 HK): Kunlun Gas 3Q22 Masked by Non-Operating Factors
- Akeso Biopharma (9926.HK) – The Recent Business Progress, the Valuation and the Challenges
- China Internet Weekly (7Nov2022): Tencent, Alibaba, Kuaishou, JD.com, Autohome, China Unicom
- Deep Dive: Komatsu (6301, KMTUY)
- REIT Watch – CapitaLand Reits see operational growth in Q3
- Grounding Myself in this Market Cycle
- King No More
Astra International (ASII IJ) – Driving into Indonesia’s Growth Areas
- Astra International (ASII IJ)‘s recent 9M2022 numbers confirmed its position as a well-rounded way to play Indonesia’s economic recovery through autos and commodities through its controlling stake in United Tractors.
- The company has continued to deploy its war chest of funds from the Bank Permata sale, investing in commercial vehicle leasing, hydro-power, and digital banking in 3Q2022 alone.
- Astra International (ASII IJ trades on 9.0x FY2023 PER and 8.5x FY2024E PER versus its 5-year average forward PER of 14x, making it attractive at current levels.
Kunlun Energy (135 HK): Kunlun Gas 3Q22 Masked by Non-Operating Factors
- 3Q22 result of Kunlun Gas is weaker than expected, but this is due to lower other income and surge in non-operating expenses. Without them, profit growth is actually more encouraging.
- While there is gross margin squeeze on higher input costs, Kunlun managed to reduce operating costs by 14.1%, successfully mitigated the negative impact.
- Kunlun Gas contributed 62.5% of 1H22 net profit of Kunlun Energy (135 HK). Its solid 36.2% 9M22 earnings growth still points to healthy underlying momentum for its parent.
Akeso Biopharma (9926.HK) – The Recent Business Progress, the Valuation and the Challenges
- Akeso has made some business progress. We analyzed the commercialization outlook/concerns on its late stage products. Akeso still stays at the level of biotech, a long way from becoming biopharma.
- The core challenge is whether bispecific antibody can bring better marginal clinical benefits than the combination of two mab, and why patients are willing to pay higher price for them?
- The sales forecast of Akeso’s late stage products could be RMB2 billion to RMB3 billion. The market value by the end of Nov 4 was just reasonable but not undervalued.
China Internet Weekly (7Nov2022): Tencent, Alibaba, Kuaishou, JD.com, Autohome, China Unicom
- Tencent and Alibaba are rumored to be acquired by state-owned companies.
- Tencent charges for originally free function and JD.com re-organized to cut cost.
- Autohome’s revenue stopped declining in 3Q22 and it is time to accumulate.
Deep Dive: Komatsu (6301, KMTUY)
- Industrials have been quite resilient this year. Their stocks prices have run up as sector earnings fared better-than-expected, and as investors have looked for safety under the cover of ‘real economy’ stocks during a year in which tech is down big.
- You may think that the train has left the station already with blue chip industrials like Caterpillar and Deere.
- They’re certainly trading near all time highs! But hold on. There is one train which hasn’t left yet, and that is Komatsu.
REIT Watch – CapitaLand Reits see operational growth in Q3
- REIT Watch – CapitaLand Reits see operational growth in Q3 CLI’s funds business comprises five real estate investment trusts (Reits) and business trusts listed on the Singapore Exchange (SGX).
- Ascendas Reit is now known as CapitaLand Ascendas Reit; Ascott Residence Trust is now known as CapitaLand Ascott Trust; while Ascendas India Trust is changed to CapitaLand India Trust.
Grounding Myself in this Market Cycle
- At the moment of writing this, it’s 2:30 pm on a Sunday and I am in a ground blind. Every year at about this time of the year I take a few days off of work to unplug, have a few drinks with other family members and run off to the middle of the woods.
- I get some of my best thinking done out here while I wait for a White Tail Buck to come by. It’s blissful.
- Regardless of where I am or what I am doing, I am and always have been committed to maintaining my transparency, my thoughts and my investing story/process to all of you.
King No More
- Fantasy Sportbook Operator DraftKings saw its shares drop by 28% at the close on Friday, recording the worst in its trading history even as its management and CEO remained upbeat about the company’s future.
- What was surprising about the steep decline was the fact that the company beat analyst expectations both on the revenue and EPS front in its most recent quarter while also raising its full-year guidance.
- The market remains skeptical about the company’s business model and its decision to prioritize growth over profitability, a stark comparison to its peers who have cut costs in recent months.
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