Daily Brief Equity Bottom-Up: China Consumption Weekly (3 Jun 2024): Alibaba and more

• Alibaba Pictures’ revenue increased by 44% YoY and EBTIDA increased by 61% in the March quarter.
• Cainiao, Alibaba’s logistics network, plans to purchase fresh food from the places of origin.
• Li Auto finished a round of layoff, in which headcount was reduced to 22,000 from 30,000.

• Indiabulls Housing Finance (IHFL IN) Raised INR 3,693 crores through rights issue, issued $350 million bond.
• Strong balance sheet, low NPAs, poised for growth in the retail housing via its asset light model.
• Rebranding to Samman Capital signals new phase of the company with multi-year growth guidance.

• On 3 June, the shares of Korea Gas jumped limit up 30% to 38,700 won on huge volume (13.4 million), which was 37x higher than the previous day volume traded. 
• This was driven by the announcement of the South Korean President Yoon giving the approval to conduct exploratory drilling for potentially vast oil and gas prospects near Pohang. 
• The Korean government announced that there is a “very high” possibility the area contains as much as 14 billion barrels of oil and gas.

• SK Hynix leads in next-gen HBM innovation, setting pace with Indian startup FermionIC aiming for market domination.
• AMD releases new processors for data centers and PCs promising improved performance and efficiency with Instinct, Ryzen, and EPYC.
• India partners with Taiwan for semiconductor ecosystem development, while Russia plans to produce 350nm chips with self-developed EUV machines in 2024.

• Q124 showed solid top-line growth, impressive improvement in core margins
• We are not too concerned about moderating domestic hotel, air pricing
• After consensus EPS raised, TCOM a BUY below US$50 per ADS, in our view

• Numerical targets for FY24/12 initial guidance are shown in the exhibit below.
• Despite initial guidance for consolidated OP of ¥800mn, an increase of ¥420mn (+110.3% YoY), the Company cites conservatively forecasting non-operating and extraordinary items such as interest expenses, restructuring costs, and exchange rate fluctuations for initial guidance for ordinary profit break-even and a net loss of (¥600mn) for profit attributable to owners of parent (see P2).
• Key initiatives and expectations for 2024 include: 1) in Japan, aim to provide more data-oriented and efficient services (online golf equipment sales GPM improving after 4Q inventory adjustment), 2) GOLFTEC golf lesson cash sales set to improve on coach issue addressed and marketing campaigns such as “7 shots better,” and 3) expand SkyTrak sales distribution channels. 

• A near-term key NVX goal is to secure additional customers and lock in demand.
• NVX recently formed an agreement with PowerCo SE, part of the Volkswagen Group, to develop, test and analyze synthetic graphite anode materials customized for PowerCo’s requirements.
• If successful, this could lead to a new supply agreement.

• Institutions were net buyers of Singapore stocks over the five trading sessions through to May 30, with S$108.4 million of net institutional inflow, as 20 primary-listed companies conducted buybacks by way of market acquisition with a total consideration of S$37.9 million.
• Meanwhile Mapletree Pan Asia Commercial Trust, Singapore Airlines, Mapletree Logistics Trust, Jardine Cycle & Carriage, CapitaLand Ascendas Reit, Sembcorp Industries, UOL Group, Jardine Matheson Holdings, Mapletree Industrial Trust, and Keppel Reit led the net institutional outflow over the five sessions.
• In addition to the 9.3 per cent interest that the Tang group owns in ARA H-Trust, the proposed acquisition increases the Tangs’ holding in ARA H-Trust to 28.3 per cent.

• SLCA has seen a decrease in shares and reduction in debt, making its enterprise value cheaper
• Core thesis remains unchanged, with focus on potential split of company’s two businesses for separate valuations
• Recent acquisition in frack sand business by Atlas Energy provides comparable valuation exercise for SLCA, suggesting potential value of company’s assets and opportunity for increased valuation in the future

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• 1Q24 production (excluding NGL) in the Williston was 1,151 boe/d.
• This is 140 boe/d above our expectations and ~100 boe/d above 4Q23 production.
• Production in March (excluding NGL) had increased to 1,212 boe/d.