In today’s briefing:
- BYD (1211 HK): Strong Revenue in 2023 and to Change Strategy in 2024
- Micron’s Earnings and Broadcom’s Accelerators
- Anta Sports (2020 HK): 2024 High Conviction Update – Earnings Beat In 2H23
- [Tencent (700 HK, BUY, TP HK$351) TP Change]: Improvement of Earning Quality Should Be Sustainable
- Bukalapak.com (BUKA IJ) – On the Cusp of Breakeven
- Delta Taiwan Vs. Thailand Monitor: Delta Taiwan Surges As New AI Play; But Shorts Amassing as Well
- BABA’s Babies: They Are All Grown Up! Ali Pictures: A Blockbuster Company
- Sinotrans (598. HK) Continues to Deliver
- Novo Nordisk: Is the FDA Approval of Wegovy Worth an Extra $460 Bn?
- [Meituan (3690 HK, SELL, TP HK$70) TP Change]: Margin Reflects Persistent Competitive Pressure
BYD (1211 HK): Strong Revenue in 2023 and to Change Strategy in 2024
- Total revenue increase by 42% and automobile revenue increased by 49% in 2023.
- The gross margin improved significantly in 2023, especially in 4Q23.
- We believe BYD will move its focus from ‘low price for sales volume’ to ‘development of new vehicle models’.
Micron’s Earnings and Broadcom’s Accelerators
- I wrote about this in my recent post about HBM, and it seems almost everything I talked about became true. HBM is going to bail out the memory markets meaningfully.
- Let’s talk about earnings, but I was hoping you could keep this post in mind while I discuss Micron.
These are the kinds of beats we start to see when the cycle turns. Now, the stocks have begun to anticipate this, but given the pricing dynamics of HBM, I feel very confident in Micron’s ability to hit a new cycle high in profitability.
Anta Sports (2020 HK): 2024 High Conviction Update – Earnings Beat In 2H23
- At noon time today, Anta Sports Products (2020 HK) released strong 2023 results which beat expectations.
- Anta currently trades at a forward PE of 18x based on estimated 2024 earnings (assuming a conservative 15% yoy growth in 2024 earnings).
- I expect the company’s net profit to grow 15-20% CAGR in 2024-2026. Anta’s historical forward PE is around 24x since 2017.
[Tencent (700 HK, BUY, TP HK$351) TP Change]: Improvement of Earning Quality Should Be Sustainable
- Tencent reported C4Q23 revenue, IFRS operating profit, and non-IFRS net income in-line with our estimates and in-line with consensus, with non-game revenues exceeding while game revenue missing expectations;
- We believe the shift from game to non-game should enhance Tencent multiples but the market might have concerns on the sustainability of this change.
- We believe this change is sustainable with game revenue reaccelerating and non-game revenue continues to gain weight. We cut TP by 3% to reflect slow game recovery in C1H24.
Bukalapak.com (BUKA IJ) – On the Cusp of Breakeven
- Bukalapak.com (BUKA IJ) booked a slightly weaker finish to the year than expected with a slowdown in revenue growth in 4Q2023 and a miss on adjusted EBITDA breakeven.
- The key reason was a thinning out of non-performing specialty businesses which impacted short-term revenues but will improve revenues and adjusted EBITDA. as the focus shifts to higher take-rate businesses.
- Bukalapak.com PT Tbk (BUKA IJ) is guiding for +15-20% revenue growth and positive adjusted EBITDA in 2024 with execution on this being paramount. Valuations remain attractive.
Delta Taiwan Vs. Thailand Monitor: Delta Taiwan Surges As New AI Play; But Shorts Amassing as Well
- Delta Taiwan Outperforms Delta Thailand After Showcasing Its AI Power Efficiency Solutions at NVIDIA Corp (NVDA US)’s GTC Conference
- Delta Taiwan vs. Thailand Valuation Mismatch Has Corrected Further; Delta Thailand Finally Worth Less Than Its Parent
- Short Interest Spiked for Delta Taiwan; Taiwan Rally Short-Term Overdone Due to AI Concept Stock Hype?
BABA’s Babies: They Are All Grown Up! Ali Pictures: A Blockbuster Company
- Alibaba Pictures (1060 HK) is expanding rapidly into complimentary areas such as online ticketing of cinema and live events with the recent acquisition of Damai.cn from parent Alibaba.
- Alibaba Group Holding (9988 HK) is considering injecting other media platform assets like Youku to realize synergies among its portfolio of companies.
- Ali Pictures (Alipics) legacy film production business continues to expand globally with its American film production company, Amblin which is a partnership with Steven Spielberg.
Sinotrans (598. HK) Continues to Deliver
- Cost and business optimisations lead to increased profits as revenues drop due to freight rate declines
- Successfully pivoting by geography as the global trading environment changes
- The company increases its dividend payout in a sign of confidence for the future
Novo Nordisk: Is the FDA Approval of Wegovy Worth an Extra $460 Bn?
- FDA approval of Wegovy is overvalued at approx. $460 billion. Market exaggerated the worth without proper assessment of weight loss results and risks associated with the drug.
- Clinical trials showed a 14.9% weight loss with diet and exercise; real-world results would be lower. Impact on BMI for obese individuals won’t be significant. Long-term use is questionable.
- Competition in the GLP-1 market is fierce. Novo Nordisk faces challenges in India and China, increased capex spending, and risks from compounding pharmacies and potential legal issues.
[Meituan (3690 HK, SELL, TP HK$70) TP Change]: Margin Reflects Persistent Competitive Pressure
- Meituan reported C4Q23 revenue beat our estimate/consensus by 0.7%/1.4%; operating profit beat our estimate/consensus by 37.3%/48.6%, mainly due to order volume surprise, which is unsustainable in our view.
- However, we think Meituan’s near term pressures did not change: (1) core biz OPM drop due to rising low-price orders and subsidies; (2) resuming competition from Eleme/Douyin/PDD
- We maintain the stock as SELL rating but raise TP by HK$13 to HK$70 to factor in the loss cutting commitment in the community group buying biz.
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