Daily Brief Equity Bottom-Up: China Consumption Weekly (9 Dec 2024): BYD and more

• BYD’s deliveries grew by 68% YoY in November 2024, which provides a positive signal for the whole NEV (New Energy Vehicle) industry.
• In November, Seres’ sales volume increased by 27% YoY with NEV up by 55% YoY.
• Arawana, the top cooking oil producer, finished acquiring 11% of Lihua’s stock.

• Pat Gelsinger took to X to invite us to join him in 24 hours of “praying and fasting” for Intel’s 100k employees to help them navigate “this difficult period”
• This is an unprecedented move never before seen in the semiconductor world, albeit we suspect that IBM may have dabbled in something similar to resurrect their 2nm process prowess
• This coming Thursday is the proposed date. Don’t expect miracles, this could take until the following Monday for the full impact to manifest itself in terms of share price appreciation

• Trent Ltd (TRENT IN) is best positioned to capitalize on the growing market for lab-grown diamonds (LGD) and alter its business growth trajectory.
• LGD disruptions seen in other markets are unlikely to be seen in India due to the positioning of Jewellery in Household asset allocation. 
• We also believe that Trent Ltd (TRENT IN)  LGD potential is underrated while the impact on Titan Co Ltd (TTAN IN)  is overrated.

• Sarimelati Kencana PT (PZZA IJ) has been hard hit over the last year by the impact of the boycott due to a perception of its Israel exposure. 
• The company has focused on reducing its cost base over the past year and continued to build its higher-end Ristorante format, with the boycott impact lessening since June 2024.
• PZZA management maintains that it can hit profitability in 4Q2024, with this momentum continuing into 2025, with a target to increase its new formats helping to drive recovery. 

• We are reiterating our Buy rating, $40 price target and projections for JAKKS Pacific after meeting with company management.
• We believe, with easy 1H2025 comparisons, the initial strength of the Moana 2 premiere, a continued focus on key emerging growth drivers (international, ABG collaboration) and basic blocking and tackling, JAKKS is well positioned to continue to drive upside.
• Further, with the company debt free and registering material free cash flow, there remains opportunities to return capital to investors.

• ASKA Pharmaceutical Holdings represents an attractive investment opportunity with substantial upside potential
• The company combines solid growth, strong profitability, and clear avenues for shareholder value enhancement.
• With Nippon Active Value’s increasing involvement and the stock trading at deeply discounted valuations, ASKA is well-positioned for a re-rating.

• LGES takes over GM battery plant in response to Trump’s win, expanding its presence in the US market.
• India establishes a sovereign AI ecosystem, driving ambitions forward for technological advancements in the country.
• Samsung’s One UI 7 Beta introduces AI enhancements and improved security features in anticipation of the Galaxy S25 release.

• In this edition: • ASM International / ASML Holding / BE Semiconductor Industries | brightened outlook for semiconductor equipment sales • Black Friday/Sinterklaas update | fewer debit card payments during Sinterklaas week

• We met with the management of Dream International (1126 HK) on our trip to Hong Kong and summarize our major takeaways. 
• The Plush Toy segment continues to experience growth driven by Disney revenues, but the Plastic Toys segment continues to be plagued by destocking. 
• Despite a 15% YoY earnings decline on our numbers, the stock trades at 5x FY24 PE with an 11.0% dividend yield and 40% of the market cap in net cash. 

Quadrise has made a significant step towards commercialisation, through which its innovative emulsion fuel technology will contribute to the decarbonisation of the marine sector. The company announced that it has signed a Collaboration and Operational Trial Agreement (the project agreement) with MSC Shipmanagement and Cargill, paving the way for the highly anticipated vessel trials on board the MSC Leandra. The market recognised the significance of this agreement, with Quadrise’s stock price rallying by approximately 50% on the day of the announcement.