Daily Brief Equity Bottom-Up: Bilibili 4Q: Gaming to Drop Further with In-House Developed Strategy and more

• Bilibili reported 4Q2022 results. Net revenue increased 6.2% YoY to RMB6,142m (vs consensus RMB6,154m) while operating losses expanded to RMB2,327M (vs consensus RMB1,905.9m).
• Mobile Games revenues declined 11.5% YoY in 4Q2022 due to the restructuring of the games biz to focus on self-developed gaming titles.
• We expect Bilibili’s earnings to remain under pressure with aggressive cost controls to impact growth and Mobile games to slow-down in 2023E with lack of new titles for launch.

• Indo Tambangraya Megah (ITMG IJ) dividend yield at an assumed 150 USD/ton price in FY23e ( FY22 px: 192 USD/ton) is over 20% (FY22 yield 25-28%).  
• Investors staying over FY22/FY23e will get 45-48% of the share price returned in dividends assuming a 70% payout ratio, and the company’s cash pile will be >1.5 bn USD.
• Coal prices have been softer recently, but the recent mining incident threatens a slower rebound in coal production from China. The company looks cheap at 3-3.5x PE FY23e.

• Of the six Malaysian banks screened, we keep RHB Bank and CIMB on the buy list; PB Bank and Maybank are quality but seem fully valued by comparison
• RHB Bank has, in the December quarter, maintained its improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio understates its ROE, and it is attractive on PE multiples
• CIMB once again improved its positive post-provision returns which should support CIMB’s share price given its modest valuations and attractive PEG versus peers; its high NPL ratio is fully provisioned

• Occidental Petroleum had a weak financial performance in the last quarter and failed to meet Wall Street expectations with respect to revenues as well as earnings.
• Storm effects in the Permian and Rockies were largely countered by superior performance in the Gulf of Mexico and the Al Hosn.
• While Midstream and marketing earnings were within projections, OxyChem’s performance exceeded expectations due to stronger-than-anticipated market dynamics.

• NetEase delivered a mediocre set of results for the last quarter as it failed to meet market expectations with respect to net revenues.
• The company’s legacy titles, including the Westward Journey Online series and Fantasy Westward Journey Online did perform well and helped deliver an earnings beat.
• The company’s new game, the Egg Party, hit the Chinese market by storm this quarter.

• Celltrion Inc (068270 KS) reported Q4 results, with revenue, operating profit, and net profit declined YoY and QoQ. Absence of COVID-related products dragged revenue, while non-recurring expenses impacted margins.
• Pricing pressure in biosimilar products and elevated R&D expenses are negatively impacting bottom line. With pipeline progress and upcoming product launches, R&D expenses are expected to remain elevated.
• Celltrion expects to launch Humira biosimilar in the US in July 2023. This year, 8 players are expected to launch Humira biosimilar.

• Viatris delivered a mixed set of results as it failed to meet the revenue expectations of Wall Street but managed an earnings beat.
• They dealt with intense competition for important products like Wixela and the loss of exclusivity for Miacalcin and Perforomist.
• In addition, they acquired Oyster Point Pharma and Famy Life Sciences in January to create their new Viatris Eye Care division.

On 21 February 2023, Wheaton Precious Metals (WPM) announced that it had produced and sold 286,985oz and 293,234oz gold, respectively, and 23,979koz and 21,570koz silver, respectively in FY22. Subject to any historical restatements in its FY22 financial results next week (possible but unlikely and very unlikely to be material), this implies that it produced and sold 66,025oz and 68,996oz gold and 5,353koz and 4,935koz silver, respectively, in Q4. In the case of gold, in particular, this was below our prior forecast (see Exhibit 1), but is consistent with the 14.7% quarter-on-quarter decline in copper production at Salobo announced by Vale on 31 January on account of ‘major maintenance’. This note updates our forecasts for Q422 and FY22 in the light of WPM’s actual production and sales numbers and for FY23 in the light of maiden, detailed guidance.

• ASRT could significantly benefit from a new guideline set by American Society for Gastrointestinal Endoscopy (“ASEG”) this week related to the use of indomethacin (Indocin) post ERCP surgery.
• Indocin is ASRT’s largest source of revenue and nearly all the revenue from off-line use related to post ERCP surgery.
• We updated our earnings model when ASRT issued preliminary fourth quarter results. We believe the ASEG guidance could lead to accelerated market expansion in coming months

According to BB Biotech’s (BION’s) investment team, the biotech industry remains in a very good position. Following a sell-off in the last two years, valuations are still close to the levels seen three years ago, reflecting ongoing challenges and despite the fundamental industry strength. In the sector, BION is differentiated from the Nasdaq Biotechnology Index by its concentrated portfolio (c 30 stocks). The investment team anticipates that 2023 will include multiple catalysts for the sector and for BION portfolio companies, including product launches, important clinical trial results, licensing deals and renewed M&A activity. During 2022 the investment manager, Bellevue Asset Management, strengthened the investment team with three new members (two data scientists and one neurologist).