Daily Brief Equity Bottom-Up: GlobalWafers (6488.TT): 1Q24F Outlook Could Be a Bit Downside and more

• The Globalwafers (6488 TT) outlook for 1Q24F is likely to show a slightly negative QoQ revenue trend. However, we anticipate a positive direction from 2Q24F onwards.  
• We have a relatively high conviction for 2024F compared to 2023, indicating upside potential for the Memory and Logic sectors.
• The supply of 12″ raw wafers remains constrained among the top market players, and overcoming this constraint won’t be easy.  

• The US Supreme Court has just blocked JetBlue’s planned acquisition of Spirit Airlines, ruling on the side of the US DOJ, which had sued to block the proposed deal.
• Reuters has reported that the European Commission should approve Korean Air/Asiana imminently following analysis of concessions provided. However, the US and Japan also need to approve the deal.
• In “Korean Air – Plan B should Asiana merger fail to gain approval” on 26 October 2023, we highlighted Korean Air is well positioned to continue as a standalone entity.

• Total impairment costs are soaring now at Citigroup up to USD3.5bn in 4Q23 compared with an average charge of USD1.8-1.9bn in the recent preceding quarters.
• Net interest income appears to be topping out now, as there is generally a lagged impact on funding in a rising rate environment.
• The implications of the Citi results, steeped in geopolitical risk, are not positive for large global banks, major US banks in particular and HSBC Holdings (5 HK) specifically.

• Chinese tourists are back, and the Thai government has launched a series of initiatives to woo them back.
• Discounts to airlines offered by Airports of Thailand (AOT TB) will not hurt earnings much, although if extended for >12 months,  AOT earnings could lag their peers.
• Valuation is still expensive, although it is expected to normalize once earnings are back. Collapse the RV trade against Malaysia Airports Holdings (MAHB MK) and buy for the short term.

• Consensus estimates for Shakey’s Pizza (PIZZA PM) for Q4 FY23 (expected April 15th) are too conservative, implying a degrowth in profitability. We believe there would be a comfortable beat there. 
• We expect incremental growth plans on Potato Corner to continue to be the aggressive one-store-per-day addition. 
• Despite the recent move, the stock trades at 14x/10x PE FY23e/24e, with management-guided future revenue growth at 20% CAGR for the next three years.

• The Shanghai Containerised Freight Index has popped by 25% in the first two weeks of 2024 due to the Red Sea crisis. Orient Overseas International (316 HK) is a beneficiary.
• There are already signs of bottoming out of realised freight rate and load factor in 4Q23. The spike in freight rate means that consensus forecasts are too bearish. 
• OOIL’s net cash of US$5.6bn equals 58% of its market capitalisation, making its 0.7x P/B and 8% yield attractive. There is also a possibility for a higher dividend payout. 

Key points (machine generated)

• Mohawk Industries has a stock price of $80 per share, and despite a decline in the global construction market, the company has a strong market position and is considered a medium+ quality business.
• The current valuation at 8 times EBIT is seen as an attractive entry point, with expectations for EBIT in 2024 already lowered but still indicating a promising earnings power of $10-14 net income per share in the medium term.
• Mohawk Industries is seen as a cheap investment opportunity with significant growth potential in the future, and previous VIC notes have highlighted its potential. Readers are recommended to review the analyses provided by dsteiner84, Value1929, and Glory_Warriors.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key points (machine generated)

• Tyson denies any involvement in illegal activities and believes the allegations made against it are baseless.
• The company is committed to defending itself and operating in compliance with all laws and regulations.
• The investigation into alleged collusion and price-fixing in the chicken industry is ongoing and the outcome is uncertain.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Investing into cannabis stocks has been a soul-crushing experience for investors over the past 10 years.
• Check out the performance of the Global Cannabis Stock Index below.
• It’s effectively a complete wipe-out.

• The factor of seasonality will be evolved in 1Q24F, but 2Q24F should be picking up most likely.
• The Semiconductor cycle shall be reaching the bottom and no more correction, to our expectation.  
• The recent changes of Silergy’s management didn’t affect the reality.