In today’s briefing:
- Cathay Pacific (293 HK, BUY, TP HK$9.90): Inputs from Analyst Briefing
- 2024 High Conviction: Orion Corp
- 2024 High Conviction – Doosan Robotics – Levitating
- [Meituan (3690 HK, BUY, TP HK$128) Target Price Change]: Douyin’s Near-Term Impact Is Overrated… BUY
- Sumber Alfaria Trijaya (AMRT IJ) – Ongoing Momentum Sustained
- JD.com: Test of Investor Resolve as Selling Continues
- 2024 High Conviction – New Horizon Health – Overhangs Are Over, Upgraded ’23 Guidance
- [Kuaishou (1024 HK, BUY, TP HK$78) TP Change]: Refined Operation Supports Sustainable Growth
- Daiichi Kigenso Kagaku-Kogyo (4082) – Navigating Business Expansion Challenges
- EM Neobanks – Positive on Banco PAN, Cautious on Nubank & KakaoBank Is One to Watch
Cathay Pacific (293 HK, BUY, TP HK$9.90): Inputs from Analyst Briefing
- All positives from management: strong demand, loads and yields strong, cargo improving, costs are high but can cope, big profits coming but have to redeem preference shares
- The near-term future is a golden runaway for Cathay Pacific. All the parameters are in the right place and we think this will persist until 1H-2024 at the very least
- Cathay Pacific is a value BUY, our target price of HK$9.90 (+21% UPSIDE) implies 10x FY2024 PE, parity multiple against its arch-rival Singapore Airlines (SIA SP).
2024 High Conviction: Orion Corp
- We are positive on Orion Corp. Regardless of the overall market movement next year (up or down), we believe Orion Corp could outperform KOSPI in the next 6-12 months.
- The company has millions of loyal customers in major overseas countries including China, Russia, and Vietnam. Despite difficult operating conditions, Orion continues to generate stable growth in sales and profits.
- Orion Corp’s valuations are attractive. Orion Corp is currently trading at 2024E EV/EBITDA of 4.4x (42% lower than average valuation multiple from 2019 to 2023).
2024 High Conviction – Doosan Robotics – Levitating
- In Oct 23, Doosan Robotics (454910 KS) raised around US$318m through its Korean IPO, after pricing the IPO at the top end of the range at KRW26,000/share.
- Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module.
- In this note, we will talk about the company’s past performance and future prospects.
[Meituan (3690 HK, BUY, TP HK$128) Target Price Change]: Douyin’s Near-Term Impact Is Overrated… BUY
- We expect Meituan to report C3Q23 top line, non-GAAP operating profit and GAAP net income 2%, 4% and 20% vs. consensus. Our C4Q23 estimates are 6%, 19%, and 30% …
- Douyin’s in-store GMV growth decelerated in September/October, per local media. We believe there are two main causes, (1) local life’s share of Douyin video views is around 10%~, which…
- Douyin’s next threat to Meituan is food delivery, but GMV is less than 1% of Meituan food delivery in 3Q, we estimate. At the current trajectory, we expect Douyin…
Sumber Alfaria Trijaya (AMRT IJ) – Ongoing Momentum Sustained
- A company visit with Sumber Alfaria Trijaya revealed confidence in the outlook with its more aggressive store expansion on track, as it nearly draws level with Indomaret.
- The company remains focused on expanding its Lawson convenience store outlets plus larger size Midi outlets. Its membership scheme is growing fast with 10m shopping once a week.
- Sumber Alfaria Trijaya (AMRT IJ) remains a core retail holding, with its premium valuation justified by its strong growth prospects, with estimated 2-year Forward EPS growth of +25% and +17%.
JD.com: Test of Investor Resolve as Selling Continues
- EM Fund ownership in JD.com continues to fall. Average weights slip to 4-year low as managers close out in large numbers.
- Between February 2023 and October 2023, there were 56 closures versus 6 openings in JD.com, led by managers at the growth end of the spectrum.
- Despite this, JD.com is still the 16th most widely held stock globally, with combined AUM among the funds in this analysis of $1.27bn.
2024 High Conviction – New Horizon Health – Overhangs Are Over, Upgraded ’23 Guidance
- New Horizon reported a strong 1H2023 results. Company has upgraded its ’23 sales guidance.
- The company will continue to deliver strong sales growth despite recent anti-corruption movement in China.
- We believe that the evidence presented by the recent short-selling report is not sound. We believe the impact is over.
[Kuaishou (1024 HK, BUY, TP HK$78) TP Change]: Refined Operation Supports Sustainable Growth
- Kuaishou reported revenue/non-GAAP operating profit/GAAP net income 1.13%/35.0%/52.2% vs. our estimation.
- The bottom-line beats were primarily due to reduced S&M costs related to effective user retention strategies and the operation of the newly constructed data centre in Ulanqab…
- We maintain our BUY rating and raised TP to HK$78 for a positive outlook in the e-commerce business and viral playlets, stimulating advertising growth…
Daiichi Kigenso Kagaku-Kogyo (4082) – Navigating Business Expansion Challenges
- Q1-2 FY3/2024 results were in line with revised company guidance, highlighting progress in growing prioritized businesses in the Strategic Areas segment such as Healthcare.
- However, the company is experiencing headwinds due to weakness in demand from the electronics sector and market divergence for EV battery cathode materials.
- Volumes have also fallen more than anticipated YoY in the legacy Automotive Catalyst Areas.
EM Neobanks – Positive on Banco PAN, Cautious on Nubank & KakaoBank Is One to Watch
- We turn positive on Banco PAN, for its consistently improving operational metrics to 3Q23, attractive valuations and sound capital adequacy
- Nubank is operationally strong but we remain cautious on Nubank shares as we see this neobank to be challenged by capital constraints, as well as being on stretched valuations
- Inter has been improving operationally, and is sound on capital but is in the shadow of PAN in terms of valuations; KakaoBank is sound operationally and one to watch
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