In today’s briefing:
- Central Retail Corp Ltd (CRC TB) – Realising a Fashionable Recovery
- Bank of India – Off The Charts
- Luxshare Precision Industry: More Market Share Gains from Hon Hai Precision Likely in 2023
- Fanuc (6954) | Forget FA, Robots Are the Future
- Intel 4Q22: How Many Kitchen Sinks?
- Bank Central Asia (BBCA IJ) – Embracing Its Digital Reach
- Thai Banks 4Q22 Screener; Krung Thai Back on Top
- Hogy Medical (3593 JP): Strong Nine-Month Result as COVID Had Minimal Impact on Surgery Volume
- Gen Digital (formerly Norton Lifelock): Financial Forecasts
- December Brazil Bank Data in Charts – Household and SME NPL Metrics Are the Focus Points
Central Retail Corp Ltd (CRC TB) – Realising a Fashionable Recovery
- Central Retail Corp remains a core holding to play the retail recovery in Thailand and Vietnam, with the tailwind from the recovery in tourism providing an additional boost.
- The company has seen a dramatic recovery in its fashion business along with higher margins plus it is expanding new stores and launching new formats such as Tops CLUB.
- Vietnam provides an additional growth driver through BigC and GO Stores, where it is the omnichannel market leader, with Italy under Rinascente already ahead of pre-COVID sales levels.
Bank of India – Off The Charts
- Delta in core net interest income growth is accelerating like no other peer
- Net interest margin’s are now up 50% YoY at a reasonable level of 3.02%
- Credit costs have yet to decline despite NPL ratio down sharply
Luxshare Precision Industry: More Market Share Gains from Hon Hai Precision Likely in 2023
- We have a positive view of Luxshare Precision Industry (002475 CH) and we believe its shares are well poised to outperform the market this year.
- The recent production halts and protests at Foxconn’s Zhengzhou facility due to the overly stringent COVID measures has benefited Luxshare since Apple has given more orders to the company.
- We believe Luxshare will continue to grab more market share for producing iPhones and other products of Apple in 2023.
Fanuc (6954) | Forget FA, Robots Are the Future
- Fanuc’s Q3 sales and earnings beat analyst expectations. Sales rose 17% YoY and profit increased by 14%.
- The bears will be able to point to the collapse in FA orders in Q3, but this just confirms what the Japan Machine Tool numbers have been signalling.
- Robot orders remain strong as Fanuc continues to benefit from de-globalization and the need to modernize global supply chains.
Intel 4Q22: How Many Kitchen Sinks?
- How many kitchens does Intel have? Intel guided 1Q2023 revenues to $11B, down 40% YoY / 22% QoQ and 21% (!!) below consensus $14B.
- 1Q23 gross margins ex-accounting change guided to 36%, the lowest since 1986!
- Intel’s worsening FCF means dividend cuts are on the table.
Bank Central Asia (BBCA IJ) – Embracing Its Digital Reach
- Bank Central Asia came through with a strong finish to the year as it took the brakes off lending, with the advantage of the highest CASA amongst Indonesian banks.
- Loan growth was focused on corporate borrowers, commercial & SMEs, and consumers, with mortgages and autos seeing strong growth in 4Q2022, whilst loans-at-risk continues to decline, boosting profitability.
- Bank Central Asia is highly capitalised but continues to invest in growth without sacrificing underwriting standards and continues to embrace its digital reach with growing numbers of customers.
Thai Banks 4Q22 Screener; Krung Thai Back on Top
- Krung Thai is our pick; it ranks top in terms of post-provision profitability, as well as screening well on NPL coverage and valuations, including its low PEG ratio
- We also like Ayudhya, with its strong pre and post-provision profitability in 4Q22, strong credit quality metrics and attractive valuations
- Kasikorn has had a difficult 4Q22 due to its high cost of risk and its need to bolster provision coverage; Kasikorn may be a 2023 opportunity, but not yet
Hogy Medical (3593 JP): Strong Nine-Month Result as COVID Had Minimal Impact on Surgery Volume
- Hogy Medical (3593 JP) reported 6.2% growth in revenue to ¥29.5B during 9MFY23, driven by healthy sales of Premium Kit and other non-woven products. Sales of Premium Kit climbed 12%.
- Rising cost pressure has negatively impacted margins. Gross profit margin contracted 180bps YoY to 40.6% in 9MFY23. Operating profit margin declined 20bps YoY to 17.1%.
- Hogy continued to expect revenue to rise 5.3% YoY to ¥38.7B, operating profit to grow 6.1% YoY to ¥6.5B, and net profit to increase 4.6% YoY to ¥4.57B in FY23.
Gen Digital (formerly Norton Lifelock): Financial Forecasts
- After combining the Norton LifeLock and Avast businesses, the company has been renamed as Gen Digital – a corporation with the goal to develop technological solutions that will allow users to profit fully from the online environment while maintaining their privacy and confidence.
- Today, the company’s brand portfolio includes well-known brands, including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender, and CCleaner.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
December Brazil Bank Data in Charts – Household and SME NPL Metrics Are the Focus Points
- In December many NPL ratio categories improved MoM, but there are still some areas of concerns namely household and SME credit
- System loan growth for full year 2022 decelerated further (from an annualized 14.7% in November) but still grew by +14%, due primarily to slower consumer loan growth
- New credit spreads declined MoM, along with lending rates implying that this was not due solely to funding costs; we favour Banco do Brasil, and are cautious on Santander Brasil
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