Daily Brief Equity Bottom-Up: [Baidu (BIDU US) Target Price Change]: Better Recovery with Leading Position in AIGC and more

• We estimate that Baidu’s 1Q23/2023 bottom line would beat cons. by 13.2%/6.5%, mostly driven by better-than-expected recovery of ads business and cost-saving measures. 
• We remain optimistic about Baidu’s AIGC leading position, because Baidu still gains the edge for its first-mover advantage and continuous investment. 
• Maintain BUY rating and raise TP to US$175, implying 17.9X PE in 2023

• After losing nearly a third of its value, Amazon looks more attractive than a year ago.
• Investors should be mindful of recency bias when evaluating Amazon’s share price attractiveness.
• The unique business model also poses some risks that should be considered regardless of one’s investment horizon.

• Q1 better-than-expected sales led by Fashion & Leather Goods; positive surprise in the Selective Retailing division
• Beat on the back of China’s economic recovery and the resilience of the rest of the world, particularly Europe
• EPS estimates lifted by 4% and 5%. Momentum is strong.

• Open House (3288-JP) is a niche homebuilder in Japan that has a special expertise in building/selling cheap detached homes in urban cities.
• It participates in many segments of the residential property market, though earns the lions share (~60-65%) of its profits from the single-family homes business.
• Despite its relatively modest profile in the investment community, the company has a ~US$4bn capitalization. It trades at ~1.3x 2023e P/B and ~6.8x P/E.

• GTX has entered into an agreement with its two largest shareholders to force the conversion of its Series A Preferred stock into common stock
• The agreement with Centerbridge Partners and Oaktree Capital Management calls for GTX to repurchase shares $570 million of Series A Preferred stock and pay dividends owed
• GTX had already claimed it would have reached the adjusted EBITDA requirement for the forced conversion. The transaction is accretive to GTX’s earnings.

• Hisamitsu Pharmaceutical Co (4530 JP) reported better-than-expected FY23 results, as OTC business revenue from the overseas market, specially Salonpas increased more than expected. OTC business contributed 54% of total revenue.
• The company guided for FY24 revenue of ¥132B (+3% YoY), operating profit of ¥11.8B (+2% YoY), and net profit of ¥10.6B (-10% YoY). Dividend for FY24 is expected at ¥85/share.
• With the resumption of outdoor events globally, Hisamitsu’s OTC business will be the main growth engine, going ahead. The company is on track to achieve 7th mid-term management plan target.  

• IBM has delivered a positive return of nearly 20% over the past two years, but that has little to do with actual business performance.
• In addition to sluggish growth, IBM’s declining profitability remains a problem.Issues related to the company’s high debt load, low dividend coverage and an addiction to acquisitions have not gone away.

• Being an IBM (NYSE:IBM) shareholder hasn’t been easy over the years as the market continues to make new highs, while IBM still trades at levels from 2010.

• We expect JDL to report C1Q23 net revenue in-line with cons., and non-IFRS net margin lower than cons. by (0.5ppts). 
• Our FY23 revenue and net-profit forecasts are (5%) and (6%) below consensus, respectively. JDL’s key customers JD and Douyin are pushing new services that favor shipment via logistics competitors; 
• JDL’s key customers JD and Douyin are pushing new services that favor shipment via logistics competitors; We maintain JDL’s SELL rating and cut its TP to HK$ 9.2.

Norcros’s FY23 trading update highlighted a solid performance, particularly in the UK in H2, as well as the closure of the loss-making Norcros Adhesives division. We believe that Norcros’s proven strategy remains on track, which should allow it to unlock significant market share gain and M&A opportunities given its robust balance sheet. We also believe that its key strengths are undervalued and that most, if not all, of the legacy issues, particularly relating to the pension, have been resolved. We maintain our estimates and our 252p/share valuation implying c 40% upside.

• Charles Schwab is due to release its first-quarter 2023 earnings report on Monday.
• The firm’s sell-side trading activities remain in decline.
• The company’s elevated price-to-book multiple is a severe concern as slowing growth, a goodwill build-up, and recent impairment losses provide structural problems.