In today’s briefing:
- DPC Dash (1405 HK): Recipe for Multibagger
- Nintendo (7974) | Stock Performance Ahead ‘Switch 2’ Speculation
- Ace Hardware Indonesia (ACES IJ) – Renaissance in Motion
- OCBC – 10 Nov Results | Credit Costs +150% Then +250% | ~4% Loans Greater China CRE | Insurance Risk
- Novatek (3034.TT): It’s Likely Quarterly Sales Will Return to Normal Seasonality in 2024F.
- [Week 10] Namaste India 🙏 | Earnings Edition – Final Part
- Sumber Alfaria Trijaya (AMRT IJ) – Running Ahead of the Pack
- Vanguard (5347.TT): The Smartphone and Computing/NB/TV Sectors Have Turned to Normal.
- Remegen (9995.HK/688331.CH) – The Survival Problem Is Becoming Imminent
- Rent.com.au Ltd – Portal Back on Track, Capital Raise to Support RentPay
DPC Dash (1405 HK): Recipe for Multibagger
- We believe the company is well positioned in China’s rapidly growing pizza market thanks to its strong brand and superior store economics.
- Despite stock rally post 1H23 results, market still underestimates its earnings for both near and long term. We expect RMB250 million net profit for 2024 versus break-even by consensus.
- History suggests DPC Dash has recipe for attractive stock return driven by its highly visible growth that can shield it from macro situations, which is desperately needed by China investors.
Nintendo (7974) | Stock Performance Ahead ‘Switch 2’ Speculation
- Nintendo’s Q2 results show solid performance but still fall short of expectations, with a conservative full-year profit outlook
- The impending release of “Switch 2” in 2H24 raises questions about the company’s ability to replicate the original Switch’s success
- We see the current 11x EV/EBIT as fair for the stock and do not anticipate a valuation breakout until the market can assess the credentials of “Switch 2”
Ace Hardware Indonesia (ACES IJ) – Renaissance in Motion
- Ace Hardware Indonesia (ACES IJ) booked an impressive set of 3Q2023 results after registering a strong improvement in SSSG over the last few months as well as increasing store count.
- The company has booked particularly strong performance outside Java, where spending power has proved to be strong, with the company’s digital promotions boosting sales significantly and complementing offline sales.
- Ace Hardware Indonesia (ACES IJ) has regained its lustre with a more coherent set of initiatives to drive future growth from promotions to new store formats. Valuations remain reasonable.
OCBC – 10 Nov Results | Credit Costs +150% Then +250% | ~4% Loans Greater China CRE | Insurance Risk
- In past 2 quarters OCBC (OCBC SP) saw its credit costs rise 150% YoY and then 250% YoY. For almost all of the preceding 8 quarters YoY growth was negative.
- It holds 3.8% of total loans in Greater China CRE, a sector that has seen visible deterioration in some banks, like Standard Chartered (STAN LN) and HSBC Holdings (HSBA LN).
- Great Eastern Holdings (GE SP) is seeing weakness in main revenue lines, with worsening policy claims. Its profit delta this year is distorted from the base effect.
Novatek (3034.TT): It’s Likely Quarterly Sales Will Return to Normal Seasonality in 2024F.
- It’s likely that quarterly sales will return to normal seasonality in 2024F, and the Smartphone demand has shown some signs of recovery.
- Revenue/ GM/ OPM are declined 8.6%/ 2.7%/ 2.7% in 4Q23F, but we consider the end market might be recovery.
- The OLED penetration rate in smartphones is 42.5% in 2023F , and it’s anticipated that Novatek Microelectronics Corp (3034 TT) will exceed the market in terms of OLED sales.
[Week 10] Namaste India 🙏 | Earnings Edition – Final Part
- While the earnings season continues, this will be the final dedicated earnings edition.
- For reference, the previous earnings editions are [Week 8] Namaste India 🙏 | Earnings Edition – Part I & [Week 9] Namaste India 🙏 | Earnings Edition – Part II
- At the bottom, we provide a consolidated view of all earnings (~ 50) tracked so far and we would be happy to engage in discussions on any of them.
Sumber Alfaria Trijaya (AMRT IJ) – Running Ahead of the Pack
- Sumber Alfaria Trijaya (AMRT IJ) came through a slower 3Q2023 with much stronger growth than peers, with SSSG and rapid store expansion driving growth, and margins improving concurrently.
- The company added more than 1,300 new stores for 9M2023 and looks set to add a record 1,800 by year-end, with new Alfamidi and Lawson stores driving growth.
- AMRT will see an even stronger seasonally higher 4Q2023, with SSSG likely to pick up boosted by supplier rebates and news store contributions. FY2024 looks set to be equally strong.
Vanguard (5347.TT): The Smartphone and Computing/NB/TV Sectors Have Turned to Normal.
- It remains cautiously optimistic for the 2024 outlook despite limited order visibility.
- The Vanguard wafer shipment has decreased by 8-10% QoQ, with the ASP declining by 0-2% QoQ. The GM for 4Q23F is projected to be 22-24%.
- The smartphone and computing/NB/TV sectors have returned to normal levels.
Remegen (9995.HK/688331.CH) – The Survival Problem Is Becoming Imminent
- Although RemeGen’s 23Q1-Q3 sales was better-than-expected, the Company is difficult to achieve management’s performance guidance for 2023. Since RemeGen’s commercialization logic has “undeniable flaws”, net loss would be further widened.
- Cash balance of RemeGen was just RMB600 million by 23Q3, which is not enough to cover its high R&D/SG&A expenses. If RemeGen cannot secure sufficient financing timely, risks are significant.
- The current valuation and investors’ expectations for RemeGen largely rely on the potential license-out deal of RC18. However, we remain caution until RC18 has sufficient evidence to win head-to-head trial.
Rent.com.au Ltd – Portal Back on Track, Capital Raise to Support RentPay
- Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
- The company has reported Q1 FY24 revenue of $0.786m, with the search engine, Rent.com.au, returning to positive EBITDA of ~$0.05m.
- Separately the company has launched a fully-underwritten entitlement offer to raise $1.95m at $0.017/share to support the commercialisation of its fintech platform RentPay.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
