In today’s briefing:
- HDFC Bank: Looking Beyond Reported Numbers
- Intel Cancels 20A. Now Why Would They Go & Do That?
- The Beat Ideas: How Ganesha Ecosphere Is Shaping the Future of Recycling?
- AMD Acquires ZT Systems for $4.9B, Challenging NVIDIA in the AI Infrastructure Market
- PDD Holdings Inc.: How Are They Managing Competition and Consumer Demand? – Major Drivers
- Indonesian Banks Screener; Bank Negara (BBNI IJ), the Value and Growth Pick
- ITMG IJ: Steady Coal Prices, Mine Life Upgrade, 43% of the Mkt Cap in Cash and 11% Dividend Yield
- Kangwon Land: Regulatory Improvements to Result in Higher Earnings and Valuation Multiples Expansion
- Didi Invests $94 Million in Smart Cockpit Developer
- Broadcom Surpasses Q3 Earnings Estimates but Guidance Worries Investors, Shares Drop 7%
HDFC Bank: Looking Beyond Reported Numbers
- Post merger, HDFC Bank (“HDFCB”) has been under pressure in regards to sustaining its loan growth, which very much hinges on rapid deposit growth.
- While the deposit growth has been weak, it has been an industry-wide issue. Furthermore, at times, the period-end numbers can be misleading.
- Focusing on average numbers paints a better picture of growth. Looking at the averages, deposit growth has been strong at 4.6% QoQ, despite liquidity issues in the banking system.
Intel Cancels 20A. Now Why Would They Go & Do That?
- Intel’s CFO says the company is going to “kind of skip over productizing 20A”
- This decision removes an important, looming milestone from Intel’s roadmap, i.e. the ramp of Arrow Lake later this year
- The decision to outsource all Arrow Lake tiles, apart from final packaging, strongly suggests that Intel 3 and Intel 18A are not capable of a cost-competitive volume ramp
The Beat Ideas: How Ganesha Ecosphere Is Shaping the Future of Recycling?
- Ganesha Ecosphere (GNPL IN) is expanding from textiles to FMCG packaging with rPET granules, aiming for a 10-12% market share in the recycled PET market by 2029.
- The shift to high-margin rPET products and expansion into FMCG packaging aligns with regulatory trends and growing demand for sustainable materials.
- GEL’s strategic focus on high-value, sustainable products and robust market position suggests significant growth potential and improved profitability.
AMD Acquires ZT Systems for $4.9B, Challenging NVIDIA in the AI Infrastructure Market
- The acquisition positions AMD to capitalize on the booming AI infrastructure market, which is expected to grow to $372.9 billion by 2029, leveraging ZT Systems’ hyperscale computing and integration capabilities.
- AMD will use ZT Systems’ experience in AI infrastructure deployment for cloud providers like AWS and Azure, helping it compete with NVIDIA’s 70% market share and Intel’s data center push.
- Analysts expect the acquisition to be financially accretive by 2025, with ZT Systems enabling AMD to provide comprehensive AI solutions, boosting its presence in the cloud, AI, and enterprise sectors.
PDD Holdings Inc.: How Are They Managing Competition and Consumer Demand? – Major Drivers
- PDD Holdings, Inc. has shared their financial results for the second quarter of 2024 along with an overview of strategic actions and challenges.
- The company saw substantial revenue growth, with total revenue reaching RMB 97 billion, marking an 86% year-on-year increase.
- This significant growth stems mainly from robust online marketing and transaction services.
Indonesian Banks Screener; Bank Negara (BBNI IJ), the Value and Growth Pick
- Negara value attributes, its growth potential captured by its low PEG ratio and its improving efficiency ratio all stand out; pre- and post-provision returns edged higher, with high NPL coverage
- We are also positive on Mandiri for its quality attributes, its premium returns, and its strong credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia
- Bank Mega has seen credit quality stabilise in 2Q24, but its returns are under pressure, with the efficiency ratio worsening steadily; cost of risk is likely to increase going forward
ITMG IJ: Steady Coal Prices, Mine Life Upgrade, 43% of the Mkt Cap in Cash and 11% Dividend Yield
- Indo Tambangraya Megah (ITMG IJ) recently announced an underwhelming 1228 Rph/share dividend for H1 FY24 (implying a 9% annualized yield).
- Core profits for H1 2024 were 157 mn USD ( excluding 21 mn USD forex and a six mn USD write-off). We are confident of sequential improvement in earnings.
- The company has deep value: 43% of its market cap is in cash, its PE is 5.7x, and its yield, based on a 65% payout ratio, is 11%.
Kangwon Land: Regulatory Improvements to Result in Higher Earnings and Valuation Multiples Expansion
- Kangwon Land has received approval to expand its total casino area from 14,512 square metres previously to 20,260 square metres (up 40%).
- The betting limits in the foreign players only zone will increase significantly from 300,000 won (about US$225) to 300 million won (about US$225,000). This represents a 1000x increase.
- We would argue that there is a high probability of Kangwon Land benefiting not just from higher sales and profits but also from higher valuation multiples.
Didi Invests $94 Million in Smart Cockpit Developer
- Didi Global Inc. is investing 670 million yuan ($94 million) in an affiliated firm of digital mapping company NavInfo Co. Ltd. (002405.SZ -3.09%) and has moved its team responsible for smart cockpit development to the venture, as the Chinese ride-hailing giant takes another step away from carmaking to streamline its business.
- Beijing-based Didi’s smart transportation arm will take a 16.46% stake in AutoAI (Nanjing) Technologies Co. Ltd., becoming its second-largest shareholder, NavInfo said in a Shenzhen Stock Exchange filing dated Wednesday.
- NavInfo, AutoAI’s largest shareholder, will also invest an additional 100 million yuan in AutoAI, diluting its stake from 30.29% to 27.01%, the filing said.
Broadcom Surpasses Q3 Earnings Estimates but Guidance Worries Investors, Shares Drop 7%
- Revenue’s surged 47% YoY, driven by a 200% increase in infrastructure software revenue. Despite strong revenue growth, the company posted a $1.88B net loss due to a $4.5B tax provision
- AI revenue is projected to grow by 10% sequentially in Q4, surpassing $3.5B, and is expected to total $12B for fiscal 2024. VMware annualized booking value increased 32% QoQ.
- Despite beating Q3 estimates, Broadcom’s Q4 revenue guidance of $14B fell short of the $14.04B expected by analysts. This led to a 7% drop in shares post-earnings.
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