In today’s briefing:
- BayCurrent (6532) | Riding the Wave of Digitization
- Federal Bank – Power of LDR
- China Internet Weekly (17Oct2022): Alibaba, JD, Tencent, 37, S.F., YTO
- SD Biosensor (137310 KS): Aggressively Investing Windfall Gain From COVID; Adding New Growth Engines
- Bloomage Biotechnology (688363.CH) – Positioning and Strategic Layout Imply Strong Upside Potential
- Xinhua Winshare (811 HK): Revisiting a Solid Yield Play Fully Backed by Net Cash
- Bearish Sentiment
BayCurrent (6532) | Riding the Wave of Digitization
- BayCurrent remains the key beneficiary of the trend towards digital transformation (DX) and Japan’s efforts to catch-up with global competitors
- Q2 sales growth of 33% highlights continued structural opportunity that should remain in place for at least a decade
- We believe that the share price can double over the next few years as the stock prices in the secular growth story
Federal Bank – Power of LDR
- Net interest income growth is exceptional, driven by major LDR expansion
- One must not only focus on NIM, although with this bank, there is also expansion
- Credit cost reductions are not a feature here, rather non-interest income supported ROA
China Internet Weekly (17Oct2022): Alibaba, JD, Tencent, 37, S.F., YTO
- Two logistics companies expected that their net profits to rise significantly in 3Q22.
- Alibaba’s Freshippo closed its community group purchase business after many small companies did.
- Tencent gave up on acquiring Black Shark, a mobile game handset producer.
SD Biosensor (137310 KS): Aggressively Investing Windfall Gain From COVID; Adding New Growth Engines
- In July 2022, SD Biosensor (137310 KS) in partnership with SJL Partners signed a definitive merger agreement to acquire Meridian Bioscience (VIVO US) for approximately KRW800 billion (~$1.5 billion).
- The acquisition will strengthen SD Biosensos’s IVD platform to navigate the decline in COVID-19 testing demand and accelerate its U.S. market entry.
- In September 2021, SD Biosensor acquired ~22% stake in UXN, which aims to launch mini continuous blood glucose meter in domestic market in 2024.
Bloomage Biotechnology (688363.CH) – Positioning and Strategic Layout Imply Strong Upside Potential
- Many interpretations of Bloomage are just looking at the surface of the Company. It is actually a biotechnology and biomaterial company, with business layout covering the whole industrial chain.
- The biggest advantage is the innovation of raw materials.Based on synthetic biology, Bloomage is more comfortable in the richness of raw materials (hyaluronic acid/collagen etc.) and flexibility of product matrix expansion.
- The synergy/complementarity of multiple businesses improve the resilience to market/policy changes. If investors cannot have a deep understanding of Bloomage’s positioning/real strategic intentions, they won’t seize the alpha in the future.
Xinhua Winshare (811 HK): Revisiting a Solid Yield Play Fully Backed by Net Cash
- Including dividends, Xinhua Winshare (811 HK) has returned 26.8% since end-2019, significantly outperformed the market. We expect it to maintain a secured 7% dividend yield in next two years.
- Without any outstanding borrowings, it has net cash of HK$5.23 at end-1H22. This equals to 103.5% of share price. Such a strong financial position means dividend stream can be sustained.
- Its businesses of textbook and supplementary materials publication and distribution are well insulated from economic slowdown. It does not face the same regulatory risks given its ownership by local SASAC.
Bearish Sentiment
- The Retail Investing Landscape has changed significantly over the last few years. Pandemic-era stimulus, lockdown restrictions, and the gamification of trading spurred many to enter the markets.
- This, coupled with the growing distrust in institutional investment advisors, has led many to switch away from traditional research reports from Wall Street to independent research and newsletter-focused content, especially for new investment ideas.
- Marketwise, which primarily targets individual investors through its research and analytical tools, has seen a meteoric rise over the last few years due to this phenomenon.
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