In today’s briefing:
- Fast Retailing (9983) | Q3 Masterclass
- TSMC’s June Revenue Declined 9.5% MoM. Should We Be Worried?
- TSMC (2330.TT; TSM.US): The 25% YoY Growth Rate Will Be Expected in 2024.
- The Beat Ideas: ADF Foods- A Spicy Investment Opportunity with Growth Potential
- Taste Gourmet (8371 HK): GEM to Mainboard Listing Catalyst in Play
- China Communications Services Corp. (552.HK)-Riding the AI Wave…
- The Heat Is On: News Flow and Sentiment China/Hong Kong (July 12)
- Actinver Research – Health & Personal Care: Healthy revaluation expected (Coverage Initiation)
- Alteogen (196170 KS): Transitioning Toward Becoming Commercial Stage Biotech Company
- Duratec: Leveraging Technologies For Infrastructure Maintenance Leading to Strong Financials
Fast Retailing (9983) | Q3 Masterclass
- Fast Retailing delivered an impressive Q3 report. Sales +10% YoY were +3% above our expectations.
- Big jump in profitability. OP +31% YoY to Y145b driven by +57% jump in Uniqlo Japan earnings. Record consolidated OPM ~19%
- Uniqlo’s performance is leaving global peers in its wake. Profitability now rivalling Inditex. However, valuations remain at a premium
TSMC’s June Revenue Declined 9.5% MoM. Should We Be Worried?
- June 2024 revenues of NT$207.87 billion, a decrease of 9.5% MoM but an increase of 32.9% YoY
- Q224 revenue of US$20.9 billion, $457 million above the high end, up 10.5% QoQ and up 33.7% YoY. It was also TSMC’s highest revenue quarter ever
- At NT$1,266,154 (around US$39 billion), TSMC’s YTD revenues are up 28% YoY, well in line with the company’s forecast for a >20% YoY increase in 2024.
TSMC (2330.TT; TSM.US): The 25% YoY Growth Rate Will Be Expected in 2024.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) could reach a growth rate of 25% YoY this year, with a very promising outlook for 2025.
- Artificial Intelligence (AI) remains the primary focus, with plans to continue expanding capacity in 2H24 and 2025.
- The demand from Apple (AAPL US) is expected to drive higher growth in 2H24.
The Beat Ideas: ADF Foods- A Spicy Investment Opportunity with Growth Potential
- ADF Foods (ADFL IN) is undergoing significant expansions, including brownfield projects in Nadiad and Nasik, and a greenfield project in Surat.
- These projects are expected to boost revenue significantly, enhance operational efficiency, and support the company’s growth plans.
- Company will almost double its revenue in 3 years and similarly PAT will also grow, which makes it attractive on valuation side as well.
Taste Gourmet (8371 HK): GEM to Mainboard Listing Catalyst in Play
- On 5th July 2024, Taste Gourmet (8371 HK) submitted an application to Hkex to transfer the listing of all its issued Shares from GEM to the Main Board.
- The company’s case is strong as it meets all the criteria proposed by the exchange, but there is no assurance that it will obtain relevant approval from the exchange.
- Trading at 6.4x/5.2x PE FY24/25e with 25% of the market cap in net cash and a trailing yield of 8.5%, we believe a mainboard listing would provide incremental visibility.
China Communications Services Corp. (552.HK)-Riding the AI Wave…
- Stable, Steady, State-owned Enterprise with upside from policy push on AI
- Lowly rated company with a new cyclical growth story in a strategic sector
- Good balance sheet with the opportunity to raise payouts and yields.
The Heat Is On: News Flow and Sentiment China/Hong Kong (July 12)
- Onshore Equity ETF flows in China continued to be positive for 8th week. Southbound Connect flows in July are lower than June.
- Baidu, Bilibili and GDS have had positive share price moves on the back of news flow.
- The container shipping segment has had a sharp pullback on positive Middle East news and cement maker CNBM flags a loss in the first half.
Actinver Research – Health & Personal Care: Healthy revaluation expected (Coverage Initiation)
- Within Consumer, we see Health & Personal Care as mostly defensive.
- While perfect conditions are hard to align, or remain, these days, we see mostly favorable conditions ahead for this segment, at least where it matters the most.
- Throughout the last years, consumers have faced a wide array of HPC options, some of them later phased out as companies started to focus on their core products amid rising costs.
Alteogen (196170 KS): Transitioning Toward Becoming Commercial Stage Biotech Company
- Alteogen Inc (196170 KS) received approval for first product, Tergase, a recombinant human hyaluronidase liquid product, in Korea. Tergase increases penetration during intramuscular or subcutaneous injection and local anesthesia.
- With excellent safety profile compared to existing animal-derived hyaluronidase products, Tergase stands to emerge as a promising alternative in the global hyaluronidase market estimated to be $1B in near future.
- Alteogen’s subsidiary, Altos Biologics submitted marketing authorization approval to the European Medicines Agency for Eylea biosimilar. Approval is expected by next year.
Duratec: Leveraging Technologies For Infrastructure Maintenance Leading to Strong Financials
- Duratec Ltd (DUR AU) with strong financials, a robust order pipeline and ability to leverage technologies makes it a solid small-cap infrastructure maintenance and asset protection play
- Shares are at least 30% below fair value given profitability, growth and order book profile. Historical numbers suggest solid execution of a diverse service contract portfolio.
- Duratec is a play on growing need for more efficient, accurate and innovative approach for proactive infrastructure inspections and maintenance.
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