In today’s briefing:
- Bandhan Bank: Initiating Coverage – Heads Up, Strong Re-Rating Ahead.
- [Week 5] Namaste India 🙏 | BYD (1211 HK) | Playing Defence
- Topsports (6110 HK): Beneficiary Of An Improving Nike China
- Alpha Generation Through High Dividend Stocks in Korea
- Gap Trades in Korean Prefs Vs Common Share Pairs in 4Q 2023
- Hewlett Packard Enterprise: Soaring Sales and the Genius Behind Intelligent Edge! – Major Drivers
- Memory Monitor: Micron Outperformed Through Earnings; Nanya Earnings Key for DRAM Bottoming View
- HP Inc.: The Collaborative Moves Making The Company A Market Leader! – Major Drivers
- Water Oasis: FY23 Earnings a Preview, Trades at 11% Yield Post Correction
- Costco Wholesale Corp: Strategies for Consistent Membership Renewals! – Major Drivers
Bandhan Bank: Initiating Coverage – Heads Up, Strong Re-Rating Ahead.
- Bandhan Bank Ltd (BANDHAN IN) has been an underperformer among Indian banks since the start of the COVID-19 pandemic due to asset quality issues in its core Group Microfinance portfolio.
- Bandhan Bank’s leading position in the microfinance sector, strong operating margins, strategic de-risking, self-sustaining capital base, and cheap relative valuations make it a value bet with strong positive re-rating potential.
- We value Bandhan Bank at 2.1x FY25e P/B in the base case, implying a 44% upside. On the other hand, we also discuss the risks to the thesis in detail.
[Week 5] Namaste India 🙏 | BYD (1211 HK) | Playing Defence
- We believe the undertone in the market is bullish, Large Caps are “out of flavour” and hence an L/S (Long/Short) strategy with INDA/SMIN could be an interesting pair to track.
- We visited a BYD (1211 HK) showroom in Western India gathering hints of the defensive strategy in India.
- Other names discussed include Asian Paints (APNT IN), CE Info Systems (MapmyIndia) (1052633Z IN) and Ebix (EBIX US).
Topsports (6110 HK): Beneficiary Of An Improving Nike China
- Topsports International Holdin (6110 HK) is a pure-play on Nike and Adidas retail sales in China, as it is a leading retail partner of Nike and Adidas in China.
- Nike’s Greater China sales grew 12% yoy during the most recent quarter. During the earnings call, Nike management was bullish on the prospects of the China business.
- The company currently trades at 13x forward PE, with a forward dividend yielf of 7%.
Alpha Generation Through High Dividend Stocks in Korea
- In the first table, we provide a list of 56 stocks (2.2% of total) which have dividend yields of 7% or more.
- The second table is a list of stocks with dividend yields of 7% or more and they are ranked in terms of market cap.
- These 25 stocks have an average dividend yield of 9.1%. The second table has 12 financials related stocks, representing 48% of total.
Gap Trades in Korean Prefs Vs Common Share Pairs in 4Q 2023
- In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 4Q 2023. Typically, fourth quarter is when pref stocks are emphasized the most in Korea.
- The excessive gaps in the preferred and common shares of Samsung Electronics (005930 KS), Hotel Shilla (008770 KS), and Amorepacific Corp (090430 KS) could reverse in the next several months.
- We see some attractive longer-term opportunities for Amorepacific, Doosan Fuel Cell, LG Electronics, and Hyundai Motor which have especially high discounts for the preferred shares versus their counterpart common shares.
Hewlett Packard Enterprise: Soaring Sales and the Genius Behind Intelligent Edge! – Major Drivers
- Hewlett Packard Enterprise Company delivered a positive result and managed an all-around beat last quarter.
- HPE produced significant free cash flow while increasing its revenue, gross margin, as well as earnings per share year over year.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
Memory Monitor: Micron Outperformed Through Earnings; Nanya Earnings Key for DRAM Bottoming View
- Micron has Outperperformed Nanya Tech & Hynix since our pre-earnings trade. Micron’s valuation has reverted vs. Nanya’s.
- Nanya Tech has recently reported a 15% YoY drop in its latest monthly revenue. Micron just had a US$1.3bn subsidy approved by the Japanese government.
- We are now agnostic on the upcoming relative performance between the three Memory names Micron, Nanya Tech, and SK Hynix. Nanya will report its results on October 11th.
HP Inc.: The Collaborative Moves Making The Company A Market Leader! – Major Drivers
- Despite a challenging market environment, HP increased net revenue, non-GAAP EPS, non-GAAP operating profit, and free cash flow quarter over quarter.
- With $13.2 billion in net revenue, the company’s annualized revenue was down 10% or 7% in constant currency.
- Despite not being immune to the end market concerns, these businesses combined produced strong sequential growth in the quarter.
Water Oasis: FY23 Earnings a Preview, Trades at 11% Yield Post Correction
- After going ex-dividend in June, Water Oasis (1161 HK) corrected and has remained rangebound at the 1.35-1.45 HKD/levels due to negative sentiment on HK/China.
- We expect FY23 results to be reported in late November/early December. We expect an increase of 19%/85% in Revenue/PAT with a 16-cent dividend for FY23 (11.4% dividend yield).
- Stock trades at 7.6x/6.2x PE FY23e/24e, a dividend yield of 11.4%/14% FY23e/24e with 25% of the market capitalization in cash.
Costco Wholesale Corp: Strategies for Consistent Membership Renewals! – Major Drivers
- Costco delivered an all-around beat in the most recent quarterly result.
- The company reported net income for the 17-week fourth quarter came in at $2.16 billion or $4.86 per diluted share compared to $1.868 billion or $4.20 per diluted share in the 16-week fourth quarter last year.
- In terms of sales, net sales for the 17-week fourth quarter were $77.43 billion, an increase of 9.4% from $70.76 billion in the 16-week fourth quarter last year.
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