In today’s briefing:
- Bukalapak (BUKA IJ) – A Virtuous Circle to Profitability
- Adi Sarana Armada (ASSA IJ) – A Circular Route to Success
- China Healthcare Weekly (Aug11)-Anti-Corruption Update, Increase A-Share Shareholder Return, CanSino
- Ford: Staying The Course
- PC Monitor: Asustek Preparing for AI PC Upgrade Wave, Volume Sales in 3Q24
- Rainbow Children’s Hospital (RAINBOW IN): Started FY24 On Strong Note; Capacity Expansions Underway
- Roku Inc.: What Strategies Are Making It the Top-selling TV OS? – Financial Forecasts
- Eastman Chemical Company: Cost Optimization Success & Other Major Drivers
- Himax: Sees Rebound in China Automotive Display Demand, Expects Dominant Market Share to Continue
- HNI Corporation – Integrating KII and Updating Estimates
Bukalapak (BUKA IJ) – A Virtuous Circle to Profitability
- Bukalapak continues to demonstrate the effectiveness of circular nature of its business model in 2Q2023, with demand from its O2O business fueling growth in its marketplace, creating a flywheel effect.
- Although TPV growth slowed slightly in 2Q2023, revenues saw much stronger growth, especially its marketplace business, which booked much higher take-rates driven by its specialty verticals, including gaming and gadgets.
- Bukalapak will continue to benefit from expanding take rates as specialty, such as AlloFresh feed in more SKUs and new verticals gain traction. Valuations remain attractive on 0.85x FY2023E EV/Sales.
Adi Sarana Armada (ASSA IJ) – A Circular Route to Success
- Adi Sarana Armada remains an interesting way to play the used car theme in Indonesia with its leading car leasing business fuelling used car sales.
- The company continues developing its logistics capabilities, thrusting towards B2B and value-added cold chain logistics. Anteraja has slowed along with e-commerce but is more focused on profitability.
- Adi Sarana Armada continues to benefit from synergies across its vehicle ecosystem through leasing, auction and used cars. Valuations are attractive with the company trading on 11x forward PER.
China Healthcare Weekly (Aug11)-Anti-Corruption Update, Increase A-Share Shareholder Return, CanSino
- Recent share-price declines in healthcare is mainly related to anti-corruption campaigns. Here’re some updates.We recommend investors not to rush to buy the dip, but wait for the bottom.
- We recommend A-share healthcare companies to buy back shares/increase dividends, in which case, despite slowing growth, A-shares are still the RMB-asset with the greatest potential for increases in expected returns.
- CanSino Biologics (6185 HK) has entered a Framework Agreement with AstraZeneca, but investors should not be overly optimistic about the short-term or even medium-term performance contribution brought by this cooperation.
Ford: Staying The Course
- Ford Motor Company’s recent selloff likely provides a lucrative entry point.
- Ford’s robust second quarter earnings paired with a positive output gap in the U.S. speaks volumes.
- Ford possesses high-quality characteristics, lending it the latitude to blossom as credit spreads recede.
PC Monitor: Asustek Preparing for AI PC Upgrade Wave, Volume Sales in 3Q24
- Asustek and Acer recently reported 2Q23 results with both companies showing a rebound in margins and normalized inventory levels. The cycle trough is clearly past.
- Asustek expects to grow its server product revenue by 500% by 2027 and is also developing AI PCs that could generate a significant sales volume by 3Q24.
- The latest results and comments not just make a coming PC up-cycle clear, but also imply that it could be stronger than previous cycles thanks to AI PCs.
Rainbow Children’s Hospital (RAINBOW IN): Started FY24 On Strong Note; Capacity Expansions Underway
- Rainbow Children’s Hospital (RAINBOW IN) recorded 21% YoY revenue growth in Q1FY24 to INR2.9B, driven by increase in pediatric surgical cases and deliveries, and addition of new bed capacities.
- Lower occupancies in new hospitals and higher expenses impacted profitability. In Q1FY24, EBITDA margin declined 407 bps YoY to 30.5%, while net profit margin contracted 190 bps YoY to 14.4%.
- The company will add 270 beds in the current financial year. By FY27, RCML aims to increase its bed capacity by 56% to 2,585 from current bed capacity of 1,655.
Roku Inc.: What Strategies Are Making It the Top-selling TV OS? – Financial Forecasts
- Roku Inc. managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
- The company demonstrated growth in scale, engagement, and platform revenue.
- Roku’s TV streaming platform and its innovation and scale continue to attract users, advertisers, streaming services, and content owners.
Eastman Chemical Company: Cost Optimization Success & Other Major Drivers
- Eastman Chemical Company delivered a mixed result in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus in terms of earnings.
- Despite signs of improvement and expectations for lessening destocking in the upcoming quarters, these challenges reduced the company’s earnings outlook for the rest of the year.
- We give Eastman Chemical Company a ‘Hold’ rating with a revised target price.
Himax: Sees Rebound in China Automotive Display Demand, Expects Dominant Market Share to Continue
- Himax reported 2Q23 results — Showing a previously-guided margin drop due to the one-off impact of the exit from long-term capacity commitments.
- Positive developments — Inventory levels improved further, China’s automotive industry demand is rebounding from lows, and the company should maintain its already-dominant market share in automotive display drivers.
- Long Himax — Himax continues to represent structural exposure to dramatically increasing display content in vehicles. The stock’s previous all-time high is double the current level.
HNI Corporation – Integrating KII and Updating Estimates
With this note, we are updating our estimates for FY23 and FY24 to reflect the surprisingly strong margin performance in legacy HNI Workplace Furnishings, the integration of Kimball International (KII), and promised margin improvement in Residential Building Products (Hearth).
One note on how we have modeled the next four quarters.
Through 2QFY24, we are modeling KII revenues and operating income independent of the legacy WF.
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