In today’s briefing:
- GoTo (GOTO IJ) – Shifting the Needle?
- Tokyo Electron (8035 JP): Saved from Disaster by China
- Amorepacific Corp: Return of the Korean Cosmetics King With End of Ban on Chinese Group Tours
- Japan Post Bank – JPY234bn in Gains More than Offsets Cratering Net Interest Income
- Keepers Holdings: Q2 2023 Conference Call: Upbeat Good Momentum into H2 2023
- Hong Kong CEO & Director Dealings (15 August): The Chans Chip Away At Hang Lung
- GoTo: Cost Cutting Measures Pay Off but What About Growth?
- PayPal Holdings Inc.: Can Stablecoin Become The Future of Digital Payments? – Major Drivers
- Home Product Center (HMPRO TB): Return To Growth
- Kaken Pharmaceutical (4521 JP): Q1 Revenue Is Flat; Profit Falls; Bleak Outlook for FY24
GoTo (GOTO IJ) – Shifting the Needle?
- GoTo is laser-focused on shifting the needle towards a semblance of profitability and likely with renewed vigour with a new management team in place.
- 2Q2023 results will likely reflect a slower headline GMV but should show an improvement in take rates and contribution margin. More colour on recent initiatives would be welcomed by investors.
- GoTo has launched a standalone GoPay app which should help to boost its off-platform usage and has the potential to nurture more collaboration with Bank Jago.
Tokyo Electron (8035 JP): Saved from Disaster by China
- Thanks to strong demand from China, 1Q results at Tokyo Electron (TEL) were just bad, not horrible. Operating profit was down 30% YoY on a 17% decline in sales.
- 1H guidance implies that 2Q will also be weak. Full-year FY Mar-24 guidance implies an unlikely 50% sequential increase in net profit, putting the shares on 32x projected EPS.
- A return to peak EPS next fiscal year would drop the P/E ratio to 21x, which used to be the top of TEL’s P/E range. Sell.
Amorepacific Corp: Return of the Korean Cosmetics King With End of Ban on Chinese Group Tours
- Amorepacific Corp (090430 KS) is likely to be one of the biggest beneficiaries of the return of Chinese group tours in Korea.
- Now that the Chinese government is allowing group tours to South Korea, this will likely lead to a sharp improvement in the company’s sales and profits in 2023-2024.
- We expect the consensus to raise sales estimates of Amorepacific Corp by about 3-5%+ and operating profit estimates by 20-30%+ in 2023 and 2024.
Japan Post Bank – JPY234bn in Gains More than Offsets Cratering Net Interest Income
- Results show dramatically lower NIM, net interest income, but stock gains in spades
- The only way to analyze 7182 is to have a view on its stock, bonds, investment gains
- Unrealized gains more than doubled to JPY472bn: fire-power remains, but is it valuable?
Keepers Holdings: Q2 2023 Conference Call: Upbeat Good Momentum into H2 2023
- The Keepers Holdings (KEEPR PM) conference call was upbeat, with the guidance of improved results from Bodegas W&H and sequential seasonal improvement from H12023 to H2 2023.
- Unrealized gross profits of 203 mn pesos ( H1 gross profit 1.8 bn pesos) due to in-transit goods from Bodegas W&H should provide an upside to margins in H2 2023.
- Trading at 8.54x/7.1x PE FY23e/24e and net cash with a dividend yield of 4.6%/5.3% FY23e/24e, a monopoly position in imported spirit distribution (>70% Mkt share), a name worth exploring.
Hong Kong CEO & Director Dealings (15 August): The Chans Chip Away At Hang Lung
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stocks mentioned in this regular insight are Hang Lung (10 HK) and Hang Lung Properties (101 HK).
GoTo: Cost Cutting Measures Pay Off but What About Growth?
- GoTo Gojek Tokopedia Tbk PT (GOTO IJ) reported 2Q2023 results. Gross revenue increased 5.6% YoY to IDR5.83trn while adj. EBITDA losses further narrowed down to IDR1.21trn vs IDR4.3trn in 2Q2022.
- The company’s cost discipline measures have helped cut down on losses but growth rates have seen huge declines over the last few quarters.
- Demand for food delivery has declined in Indonesia while entry of TikToK Shop has posed significant threat on Tokopedia, Shopee and other e-commerce platforms in the country.
PayPal Holdings Inc.: Can Stablecoin Become The Future of Digital Payments? – Major Drivers
- PayPal managed to surpass the revenue and earnings expectations of Wall Street.
- The company’s strategic priorities, including branded checkout, merchant solutions, and digital wallets, drive innovation and growth, supported by AI and data utilization investments.
- In addition, PayPal introduced the development of a stablecoin pegged to the U.S. dollar called PayPal USD.
Home Product Center (HMPRO TB): Return To Growth
- Home Product Center (HMPRO TB) is a play on improving Thailand consumer sentiment driven by easing inflation, formation of new Thai government, and continued return of tourists.
- The company is expected to open 10 new stores in 2023, a major pick up in growth from only 1.7% sales CAGR in 2017-2023.
- Strong track record of management in execution and reputation. Valuation also reasonable.
Kaken Pharmaceutical (4521 JP): Q1 Revenue Is Flat; Profit Falls; Bleak Outlook for FY24
- Kaken Pharmaceutical (4521 JP) reported muted operating performance for Q1FY24. Revenue was flat compared to year-ago quarter, while operating profit declined 19% YoY. Net profit decreased 14% YoY.
- The company has reiterated FY24 guidance of flat revenue and 5% YoY decline in operating profit. However, net profit is expected to increase 23% YoY in FY24 on low base.
- Kaken is not expected to see any immediate respite as the contribution from the new products will not compensate for the revenue loss from its top selling products.