In today’s briefing:
- China Semi Foundry: Fierce Competition & Sluggish Rebound In Year Of The Dragon
- Asics (7936) | Slow Out of the Blocks
- Bajaj Finance (BAF): A Sustained Growth Powerhouse
- Johnson Controls International: Initiation Of Coverage – A Strategic Overhaul That Could Be A Game Changer! – Major Drivers
- Tesla Sold A Whopping One Car in January in South Korea
- Royal Caribbean Cruises Ltd.: How They’re Sailing Towards Improved Profitability With These Strategies! – Major Drivers
- Terumo Corp (4543 JP): 3Q Result Beat Estimate; Currency Depreciation Led Full-Year Guidance Raise
- Microchip Technology: How Their Latest Innovations Are Set to Dominate the Market! – Major Drivers
- Parker-Hannifin Corporation: Increased Global Frontline Performance & Improved Margins Saving The Day? – Major Drivers
- [KE Holdings (BEKE US, BUY, TP US$24) Target Price Change]: Benefiting from Structural Change
China Semi Foundry: Fierce Competition & Sluggish Rebound In Year Of The Dragon
- Both SMIC & Hua Hong reported Q423 earnings in line with expectations and both guided Q124 flat to slightly down. SMIC expects FY24 mid single digit growth YoY.
- The downturn has exposed inherent weakness in China’s Semi Foundry segment relative to peers as exemplified by the significant GM disparity
- China’s two leading semi foundries have ~80% domestic dependence. Right now, that’s a headwind
Asics (7936) | Slow Out of the Blocks
- Asics absolutely smashed the last MTP; this year they have a more measured approach
- Full-Year OP guidance for FY24 is a little shy of street expectations, but this should not impact the share price
- Asics has a decent runway for growth ahead and will benefit from channel mix improvements. The stock remains undervalued relative to peers
Bajaj Finance (BAF): A Sustained Growth Powerhouse
- Q3FY24 performance was slightly below expectation led by NIM margin compression and marginally elevated credit costs. Certain regulatory restrictions also dampened growth and profitability.
- However, from a medium-term perspective, BAF is setting up well to be a sustained growth powerhouse. It has widened its product catalogue and is deepening the product availability per branch.
- Led by growth tailwinds and market share gains, BAF has potential to grow at 25%+ for a prolonged period. The current headwinds seem temporary and provide a buying opportunity.
Johnson Controls International: Initiation Of Coverage – A Strategic Overhaul That Could Be A Game Changer! – Major Drivers
- This is our first report on diversified technology and multi industrial player, Johnson Controls.
- The company reported its Q1 2024 earnings recently.
- The company is facing some momentum after overcoming a considerable cyber disruption early in the quarter.
Tesla Sold A Whopping One Car in January in South Korea
- Tesla Motors (TSLA US) sold one car in January 2024 in South Korea. In comparison, Tesla sold 1,022 vehicles in December 2023 and 13,885 units in 2023.
- The key reason for the sharp plunge in vehicle sales in January has been due to the government’s slashing EV subsidies for vehicles with Chinese LFP based batteries.
- Furthermore, many consumers avoided buying Tesla vehicles in January as they waited for the government’s announcements of new EV subsidies.
Royal Caribbean Cruises Ltd.: How They’re Sailing Towards Improved Profitability With These Strategies! – Major Drivers
- The latest earnings of the Royal Caribbean Group exhibited an optimistic financial position for the Q4 and full-year 2023 and the company flourished particularly with the debut of the revolutionary product, Icon of the Seas.
- By delivering the best vacation experiences, 2023 marked an exceptional year with net yields up by 13.5% compared to 2019 levels, thereby boosting net income by approximately $1 billion.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
Terumo Corp (4543 JP): 3Q Result Beat Estimate; Currency Depreciation Led Full-Year Guidance Raise
- Terumo Corp (4543 JP) posted highest ever quarterly and YTD revenue and operating profit in Q3FY24. Double-digit growth in C&V and TBCT businesses are the main revenue growth driver.
- During 9MFY24, gross profit margin expanded 50bps YoY to 52%, while operating profit margin improved 40bps to 15.5%. Profitability improvement through price increases and cost reduction is on track.
- Terumo has revised both FY24 revenue and profit upward to reflect continuing positive impacts from yen depreciation. The company is aiming for record high revenue and profit in FY24.
Microchip Technology: How Their Latest Innovations Are Set to Dominate the Market! – Major Drivers
- Microchip Technology, a leading provider of microcontroller and analogue semiconductors, reported its third quarter 2024 financial results which were below expectations as net sales dropped 21.7% sequentially and 18.6% year-over-year due to increased business uncertainty, slowing economic activity, and higher inventory levels among customers.
- Despite a challenging environment, the company’s non-GAAP gross and operating margins showed some resilience at 63.8% and 41.2% respectively.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
Parker-Hannifin Corporation: Increased Global Frontline Performance & Improved Margins Saving The Day? – Major Drivers
- With respect to Parker-Hannifin’s latest earnings, a few distinctive factors paint a broad picture of the company’s current status and future prospects.
- With record sales of $4.8 billion in Q2, a 3% progression from the previous year, the company has expressed confidence in sustaining incrementals of over 100% and expanding upon the adjusted segment operating margin which stood at a record 24.5%, marking a 3% increase on a year-to-year basis.
- This strong performance has primarily been driven by their Aerospace Systems, while both Industrial Silos also made valuable contributions.
[KE Holdings (BEKE US, BUY, TP US$24) Target Price Change]: Benefiting from Structural Change
- We expect KE Holdings (Beike) C4Q23 revenue to be in-line with consensus, with non-GAAP NI 15.6% higher than consensus, mainly due to better existing home sales.
- Although overall home living demand remains lukewarm in 2023, the structural substitution from purchasing new home to existing home has accelerated, benefiting Beike, in our view.
- We maintain the stock as BUY rating and trim down TP by US$0.5 to US$24.0/ADS to factor in the weak new home sales.
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