Daily Brief Equity Bottom-Up: Episode 86: Intel’s Inflection Point? Analyzing the Intel Plan. and more

• Intel is spinning off their foundry division into its own entity within the company, with financial independence and guardrails in place.
• The company is not selling off assets as a whole but is making strategic deals, such as a partnership with Amazon.
• A letter from Intel’s CEO to the team hints at potential activist investor issues and the company’s legal obligations in response to potential acquisition offers.

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• This is a short follow-up on HK-Listed Apparel & Footwear Screener: Right Stocks Listed in the Wrong Market – Attractive Yield & Rapid Expansion Outside China – Sep 2024 
• To make the list more comprehensive, we added JNBY Design Ltd (3306 HK), which trades at 8x PE, has a 9% dividend yield, and is net cash.
• We also have updates from Crystal International’s (2232 HK) interim report, which has a very positive future outlook. 

• China’s securities industry is under a wave of consolidation. China International Capital Corporation (3908 HK) is interesting given its leadership in the investment banking business.
• A combination with China Galaxy Securities (H) (6881 HK) may bring synergy, given their different focuses. This will create the 3rd largest securities house in China. 
• Even without a merger, CICC also looks attractive with the US interest rate trending down. It is best set to gain upon the revival of the Hong Kong IPO market. 

• Lippo Karawaci’s results made for interesting reading with underlying profitability improving in its real estate and lifestyle segments as it reduced its Siloam stake and reduced its debt.
• Real estate marketing sales in 1H2024 made up 58% of FY2024 guidance, with affordable landed housing driving growth across multiple projects targeting first-time buyers utilising readily available mortgages.
• LPKR further reduced its holding in Siloam International Hospitals in September through the tender offer and will further reduce its debt with proceeds. LPKR is back on the investor radar.

• iPhone 16 sales disappoint, LGD faces market obstacles, while Huawei enhances AI quality control in smart medicine.
• Reduce defense emissions to combat climate change, safeguarding national security amid declining EV demand and weakening investments in European battery makers.
• Thailand to establish first SiC facility by 2027, Taiwan introduces closed-loop lithium battery recycling system, boosts semiconductor innovation with US$9.3 billion initiative to stay competitive in the industry. US bans Chinese automotive tech.

• JGB 10Y bond yields have slipped from their July high, but are well above historic lows; the outlook, in our view, is still for BoJ monetary tightening before year-end 2024
• We see a constructive outlook with recovering domestic loan growth, available funding as well as sector evidence of higher lending rates; also, largely well controlled unrealized losses on bond portfolios
• We keep Resona and Mizuho as our top picks for their strong gearing to higher interest rates and attractive valuations in this Japanese bank group, along with Chiba and Concordia

• RPSGV reported a decent Q1FY25 with FMCG business sustaining an annualized revenue run-rate of INR 500cr+. The Sports business also reported healthy Q1FY25 revenue (INR 500cr+) led by IPL contribution.
• To add to growth aggression, RPSGV announced a new CEO for the FMCG business in August. Mr. Sudhir Langer, an accomplished FMCG professional, took the baton from Mr. Rajeev Khandelwal.
• At the current valuation, RPSGV is available at a holding company discount of 75%+. As the scalability potential of the FMCG and Sports businesses become evident, significant re-rating could happen.

• Volkswagen, an iconic symbol of German industry, is facing unprecedented challenges with potential factory closures
• The Volkswagen brand, which produces half of the cars for the entire Volkswagen Group, is struggling with high costs and low profit margins
• The potential layoffs and factory closures could have significant impacts on both Germany’s economy and its national identity as an industrial giant

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• Q3 is coming to an end and ADEA has yet to announce new licensing deals its management has been asserting would happen this year. 
• ADEA has maintained a revenue forecast of $380 million to $420 million on the expectation there would be at least two major new licenses announced this year.   
• Our earning model currently calls for ADEA to generate $400 million in revenue with the third quarter being a smaller step up in revenue compared to the fourth quarter.

• Global communication indices have outpaced broader global benchmarks this year, while Singtel, AIS TH SDR, NetLink, Starhub and APTT have averaged 20% total returns.
• Singtel has led these five counters this year, with a 37% total return, while also seeing its 2024 ADT soar 90% from 2023 levels.
• Singtel has led the net insti inflow into all local stocks this year with S$938 million of net buying.