Daily Brief Equity Bottom-Up: BUY/SELL/HOLD: Hong Kong Stock Updates (August 6) and more

• Low Volatility and High Dividend yield stocks in Hong Kong outperformed the region during recent global market sell off.
• MGM China Holdings (2282 HK) is outperforming its peers with revenue now exceeding pre-COVID levels.
• Weibo (9898 HK) maintains a high cash flow and dividend yield in China’s tech sector.  Zhuzhou CRRC Times Electric Co., Ltd. (3898 HK) benefits from China’s new large-scale maintenance cycle.

• Palantir Technologies continues to establish itself as a leading force in the world of data analytics and artificial intelligence.
• The company’s recent financial results reveal a mixed but overall positive picture, showcasing strong revenue growth and solidifying its position as a key player in both the government and commercial sectors.
• Palantir’s focus on leveraging AI to solve complex problems at scale is clearly paying off, with impressive strides in revenue and customer acquisition.

• The acquisition of Filo (FIL CN) by Lundin Mining (LUN CN) and BHP Group Ltd (BHP LN) could be the start of a much larger M&A wave.
• Many juniors trade at 0.1x to 0.2x NAV while transactions typically happen at 0.8x-1x NAV. Filo was acquired at 0.81x NAV so right within this range.
• We continue to like a basket of junior copper mines to get exposure to M&A copper dynamics

• The sharp Japanese market correction has hit the banks hard, and heightened market volatility is likely to remain a feature, at least in the very near term
• Nonetheless, the big five’s results in the first quarter to June-end paint a reassuring picture, and we see that BoJ is pausing on rate rises in these unsettled markets
• Among the big five Japanese bank shares, we highlight Resona and Mizuho in particular for their strong gearing to higher interest rates; we are also positive on SMFG and Concordia

• Yum China Holdings (9987 HK) reported a marginal 1% year-on-year increase in 2Q2024 revenue, driven by new store additions despite a decline in same-store sales.
• Despite a challenging business environment, it achieved 8% year-on-year profit growth in Q2 and stabilised margins through sharp cost management and operational efficiency initiatives.
• Without a clear visibility in improvement in consumer sentiment and spending, expect the tough operating environment to limit Yum China’s revenue and profit growth potential.

• Given market concerns that AI is overhyped and not yet delivering sufficient value, we analyze Microsoft’s Copilot disclosures and examine signs of AI services traction among corporate clients.
• Signs indicate that Copilot is gaining substantial traction with corporate clients, adding value to software development, business operations, and healthcare documentation functions.
• The number of organizations paying for MSFT’s AI services is expanding rapidly. We view this as a promising indicator of increased AI adoption and substantial value creation.

• Apple achieved a record $85.78B in Q3 revenue, up 5% YoY, and earnings per share rose 11% to $1.40, exceeding expectations and reflecting strong financial health. 
• IPhone revenue was $39.3B, surpassing the $38.81B estimate. Despite a 1% YoY decline, iPhone sales showed growth on a constant currency basis, contributing significantly to overall revenue.
• Services revenue reached a record $24.2B, growing 14% YoY. The gross margin was 46.3%, slightly above estimates, despite challenges from foreign exchange and product mix changes.

• Airtel Africa is undervalued and has potential for upside growth
• Company has shown strong performance in revenue and EBITDA growth despite challenges
• Potential IPO of mobile money business could unlock more value for shareholders

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• IGT announced split with slot machine operator merging with EVRI
• Lottery business retains ownership, manages lotteries for 92 customers worldwide
• EVRI to borrow $3.7bn for debt refinance, distribute $2.2Bn to Lottery business; estimated tax leakage of $100m for taxable accounts

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• GMV increased 21.4% YoY to JPY85.7bn, while revenue decreased 7.7% YoY to JPY20.4bn, and operating profit fell 46.6% YoY to JPY1.4bn.
• In Q3 FY09/24, GMV grew 21.4% YoY, with Global Commerce revenue up 21.3% YoY and Entertainment revenue up 6.8% YoY.
• The company recorded an extraordinary gain of JPY1.0bn from the Value Cycle segment share transfer, impacting FY09/24 results.