In today’s briefing:
- China E-Commerce: Stabilizing Property Market Matters a Lot
- UPDATE: China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis
- Onewo (2602 HK): Major Share Repurchase Mandate Announced (Up To HKD5.8bn, 20% Of Current MKT CAP)
- Tech Supply Chain Tracker (06-Jun-2024): Foxconn Hyderabad factory to make Airpods from August.
- Vanguard (5347.TT): Setup 12″ Fab in Singapore With 60% Stake, with NXP Investing Remaining 40%.
- Intel’s Latest SCIP With Apollo. Yikes!
- Raydium Semiconductor – Acceleration of Revenue in 1Q24 Has Positive Implications
- Marvell Earnings
- Lasertec (6920): Some of the Accusations Are Disgraceful, Some Not
- CP Axtra (CPAXT TB) – Symbiotic Alliance
China E-Commerce: Stabilizing Property Market Matters a Lot
- A stabilizing property market matters more than other factors such as industry rivalry and shareholder return policies for the performance of leading China e-commerce players in our view.
- China’s worst property market downturn is probably behind us. This will gradually help restore consumer confidence and lift consumer propensity to spend, improving growth outlook for China e-commerce sector.
- We believe China e-commerce players will in general benefit from a stabilizing housing market. Alibaba remains the most attractive play in the space.
UPDATE: China Medical System (CMS, 867 HK) – A Cheap Play on China’s Pending Health Care Crisis
- A high disease burden, high demand for chronic treatment, and an ageing population makes China an excellent opportunity for an established pharma company.
- With 1/3 of the market cap in cash, a healthy payout ratio, and a FPE of under 8, CMS is one of the bargain beneficiaries in the Chinese healthcare space.
- The founder/CEO recently purchased 8m shares. He last bought shares in 2020-2021. The share price almost tripled afterwards.
Onewo (2602 HK): Major Share Repurchase Mandate Announced (Up To HKD5.8bn, 20% Of Current MKT CAP)
- Onewo (2602 HK), a leading China property management company with the controlling shareholder being China Vanke (H) (2202 HK), announced a major share repurchase mandate last night.
- The company intends to repurchase its shares in the open market up to HKD5.8bn, which is around 20% of the current market cap.
- The company is trading at 13x 2024E PE on around 15% net profit growth in 2024E, and at 5% forward dividend yield.
Tech Supply Chain Tracker (06-Jun-2024): Foxconn Hyderabad factory to make Airpods from August.
- Foxconn’s Hyderabad factory to begin producing Airpods in August, as confirmed by Telangana official.
- Qualcomm CEO backs Arm’s forecast of 50% Windows PC market share in 5 years.
- UnaBiz achieves record-breaking 90% accuracy with AI-enabled Wi-Fi geolocation; Nvidia and Foxconn unveil advanced computing center in Taiwan. EU establishes AI office to enforce AI Act. Tower Semi awaits wafer fab approval in India post-elections. Win Semiconductors propelled by mobile phone surge into 2024.
Vanguard (5347.TT): Setup 12″ Fab in Singapore With 60% Stake, with NXP Investing Remaining 40%.
- Vanguard announce the establishment of a 12” Fab in Singapore with 60% stake, with Nxp Semiconductors Nv (NXPI US) will invest remaining 40%.
- The nodes produced will span from 40nm to 130nm, encompassing mixed-signal, PMIC, and analog ICs to support automotive, industrial, consumer, and mobile applications.
- Vanguard will uphold a healthy cash balance, along with large debt and a follow-up cash offering.
Intel’s Latest SCIP With Apollo. Yikes!
- Apollo-Managed funds and affiliates will lead an investment of $11 billion to acquire from Intel a 49% equity interest in a joint venture entity related to Intel’s Fab 34
- This deal follows a similar mid-2022 deal with Brookfield to co-invest in two new leading edge fabs in Arizona at a cost of up to $30 billion
- Why make the deal with Fab 34 in Ireland instead of the Ohio fab under construction?
Raydium Semiconductor – Acceleration of Revenue in 1Q24 Has Positive Implications
- Surge in revenue during 1Q24 may have implications for a return to strong profit growth
- There is no evidence of structurally weaker core costs, like COGS and SGA and even R&D
- ROE is now above 20% and this after it large capital raising in FY22
Marvell Earnings
Marvell had a pretty solid result and guided to sequentially better revenue.
The market didn’t like this, but I thought, looking through the result, I liked this result quite a bit. Shares did not.
- Marvell Technology reports Q1 EPS $0.24 ex-items vs FactSet $0.24.
Lasertec (6920): Some of the Accusations Are Disgraceful, Some Not
- Lasertec shares dropped nearly 8% following a scathing 53-page report by Scorpion Capital, accusing management of “colossal fraud.”
- The SC report is shrill, in our view, and therefore, we think we add value by contributing a second opinion.
- In our view, Lasertec is due for a correction even if SC’s report is inundated by hyperbole.
CP Axtra (CPAXT TB) – Symbiotic Alliance
- CP Axtra (CPAXT TB) is a merger upon a merger combining the Makro wholesale business and the Lotus hypermarket and supermarket businesses, along with a hybrid mall operation.
- The combined entity continues to realise operational synergies in sourcing and logistics, with a strong B2B element. Omnichannel makes up more than 16% of sales and is growing rapidly.
- CP Axtra (CPAXT TB) provides an alternative retail exposure to its parent CP ALL (CPALL TB) with ongoing restructuring benefits still to be realised. Valuations look attractive relative to growth.
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