In today’s briefing:
- China Consumption Weekly (19Aug2024): China Literature, BEKE, Alibaba, JD, JD Health, Tencent Music
- Grab Holdings (GRAB US) – Product-Led Sequential Growth Ahead
- NAB – Profit Slightly Down in 3Q, Credit Costs Collapsed, but Bad Loans Are Rising Significantly
- Pan Pacific International Holdings (7532 JP): Full-year FY06/24 flash update
- Wharf REIC: Beta Play W Multiple Catalysts, Lower Rates, Weaker Currency and Returning of Shoppers
- JD Logistics (2618 HK): There Are More Rooms
- Tech Supply Chain Tracker (20-Aug-2024): Regional production helps Foxconn.
- China Resources Beer Holdings – Interim Results Show Progress but Macro Headwinds Remain
- Wheaton Precious Metals Corp.: Is The Risk of Over-dependence on Key Projects That Significant? – Major Drivers
- Duolingo Inc.: Expansion of Motion Design Capabilities by Acquiring Hobbes & Other Major Drivers
China Consumption Weekly (19Aug2024): China Literature, BEKE, Alibaba, JD, JD Health, Tencent Music
- China Literature’s revenue increased by 28% YoY in 1H24, because four novel copyrights for movies brought box office hits.
- KE revenue increased by 20% YoY in 2Q24 compared with a 19% YoY decrease in 1Q24, as government policies supported existing home transaction.
- Alibaba announced that it will recruit 1,000 fresh graduates for tech positions in 2025.
Grab Holdings (GRAB US) – Product-Led Sequential Growth Ahead
- Grab Holdings booked record GMV, revenue, FCF, MTUs, and EBITDA in 2Q2024 and flagged an optimistic outlook for 2H2024, with positive adjusted FCF expected to remain positive for FY2024.
- The company continues to focus on its product-led and technology-driven initiatives to drive growth and profitability through mass-market and high-value products such as Grab Unlimited, advance bookings, and group bookings.
- Concerns over competition from TikTok look overblown, with Grab already active on social media. Management expects positive sequential growth for the next 2Qs and a stronger growth outlook in FY2025,
NAB – Profit Slightly Down in 3Q, Credit Costs Collapsed, but Bad Loans Are Rising Significantly
- NAB reported its 3Q24 results with slightly lower profit, but major divergence inside the figures
- The bank shows a staggering decline in credit costs in 3Q24, which means the results were flattered
- This is despite a very sharp rise in bad loans in major segments, corporate and residential mortgages, up around 50% YoY annualized in 3Q24
Pan Pacific International Holdings (7532 JP): Full-year FY06/24 flash update
- FY06/24 results: Sales JPY2,095.1bn (+8.2% YoY), operating profit JPY140.2bn (+33.2% YoY), net income JPY88.7bn (+34.1% YoY).
- FY06/25 forecast: Sales JPY2,220.0bn (+6.0% YoY), operating profit JPY150.0bn (+7.0% YoY), net income JPY86.5bn (-2.5% YoY).
- Store count end-June 2024: 742 total, 632 domestic, 110 overseas; 24 new stores in Japan, 12 overseas.
Wharf REIC: Beta Play W Multiple Catalysts, Lower Rates, Weaker Currency and Returning of Shoppers
- Wharf REIC reported 2% yoy core earnings growth, the first earnings increase since 2019. The results also show Hong Kong retail business is more resilient than expected
- The upcoming catalysts include 1) lower interest rates, 2) weakening currency environment and 3) bottoming out of HK retail market
- Market is forward-looking and we think the worst is behind us. Valuation is very compelling. The stock is a beta play. BUY
JD Logistics (2618 HK): There Are More Rooms
- Even after the 28% surge in share price since the 1H24 result, JD Logistics (2618 HK) still deserves a look as fundamentals have improved, especially with better cost control.
- JDL is riding on scale economies with higher asset utilisation. Quarterly margins have sustained an uptrend, reaching the highest levels since 1Q21 and it will continue.
- We like its lower reliance on JD.com (9618 HK) and net cash of HK$2.83/share (28% of the share price). There is a massive upside in consensus forecasts too.
Tech Supply Chain Tracker (20-Aug-2024): Regional production helps Foxconn.
- Foxconn benefits from regionalized production with improved efficiency, reduced shipping costs, and better supply chain integration.
- AMEC is confident in their lawsuit against the US Department of Defense, showing strong belief in the merit of their legal case.
- Japan’s economy faces uncertainty with financial resources at risk after Kishida’s resignation, raising concerns amidst the country’s economic landscape and supply chain players cautiously optimistic about AI server boom.
China Resources Beer Holdings – Interim Results Show Progress but Macro Headwinds Remain
- The company’s strategy of premiumisation continues to be executed to plan
- Despite the derating, investors will wait until seeing concrete signs of a turn in the Chinese consumer
- Continues to be a liquid proxy for Chinese consumption with no technology regulation risk
Wheaton Precious Metals Corp.: Is The Risk of Over-dependence on Key Projects That Significant? – Major Drivers
- Wheaton Precious Metals has reported its second quarter results for 2024, demonstrating a robust financial and operational performance, reflecting the company’s successful business model and strategic asset management.
- The company generated $234 million in operating cash flows and reached a record of over $450 million for the first half of the year.
- Wheaton Precious Metals produced over 305,000 gold equivalent ounces year-to-date, keeping on track with the 2024 production guidance of 550,000 to 620,000 gold equivalent ounces.
Duolingo Inc.: Expansion of Motion Design Capabilities by Acquiring Hobbes & Other Major Drivers
- Duolingo Inc., a leader in language learning platforms, demonstrated robust performance in its second quarter of 2024 financial results, showcasing a balanced mix of high growth, increased user engagement, and strategic milestones that solidifies its market position while highlighting areas for prudence looking ahead.
- The company reported a significant year-over-year growth in daily active users (DAUs) at 59% and revenues surged by 41%.
- This robust top-line growth is supported by key product expansions and user engagement strategies.
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