Daily Brief Equity Bottom-Up: HDFC Bank – Rebalancing & MUFG Acquisition Benefit and more

• There is renewed interest in HDFC Bank given potential for stock index re-balancing as well as an acquisition for one of its subsidiaries
• The story with HDFC Bank is strong regardless of these new ancillary positives, where growth is incredibly stable, and credit metrics shine
• We remind that the amalgamation of HDFC Finance remains new, and gains are still not fully reflected, but a look at costs/assets shows progress

• On 4 July, NPS disclosed the details of the ownership changes for 112 listed companies in Korea, of which 87 were listed in KOSPI and 25 in KOSDAQ. 
• In 2Q 2024, the NPS reduced its investments in defense and military stocks and increased investments in cosmetics, shipbuilding, and food companies in Korea.
• NPS reduced its capital allocation to the military & defense sector. NPS reduced its stake in LIG Nex1 (-2.32%), Poongsan Corp (-2.24%), and Hanwha Aerospace (-1.02%). 

• Dollar has 15% market share in the Indian hosiery space with 2,000 products
• Strategically expanding the Distribution network by targeting specific areas with Lakshya   
• Integrated value chain from Spinning to stitching to marketing and distribution

• Digital Arts (2326 JP) , based in Japan offers internet security software and appliances  globally. The company also provides consulting services related to information security.
• The company’s share price has moved up by more than 30% over the last 30-days driven by DA’s decision to deconsolidate its DAC business.
• Given the high-cost nature, we welcome Digital Arts’ move to deconsolidate the DAC business as it should help improve the company’s profitability.

• South Korea is prioritizing enhancing its EDA competitiveness to stay ahead in the technological race.
• China is focusing on consolidating promising chip firms while doubling the terminations of IPOs to control the market.
• Commodity DRAM and NAND chip prices are stalling due to slow demand recovery, affecting Taiwanese companies and PanelSemi’s development of mini LEDs. Vietnam PM strengthens South Korea relations and secures investments in display production and clean energy. Taiwan is aiming to lead in floating wind technology with a projected global investment of EUR250 billion by 2035.

• Alpha Metallurgical Resources recently disclosed its financial results for the first quarter of 2024, presenting mixed outcomes amidst challenging market conditions.
• The company announced an adjusted EBITDA of $190 million, a decline from the $266 million recorded in the previous quarter, citing the softening metallurgical coal market which deteriorated further after the quarter ended, setting a challenging environment for the upcoming quarter.
• Despite these complex market dynamics, Alpha Metallurgical Resources remains committed to maintaining operational excellence and cost-efficient practices.

• IHH Healthcare (IHH MK) reported highest ever quarterly revenue in 1Q24, with double-digit growth across key metrics. 1Q24 revenue increased 16%, while EBITDA grew at a faster pace of 19%.
• Favorable patient mix, which was inclined to more acute and complex patients and price adjustments to counter inflation drove the growth. 1Q24 EBITDA margin (22.9%) improved from year-ago quarter (22.3%).
• The company expects favorable tailwinds from secular trends in its core markets, which will underpin longer-term growth. IHH is on track to add ~4,000 beds (+33% capacity) by 2028.

• Strong candidate for shorting in the short-run, potential to miss revenue consensus by 4-5ppt in Q1 2024
• Recommendation to short LULU US when share price is above USD410, price target of USD300 before next earnings date in May 2024
• Lululemon is a leading brand in women’s indoor training and yoga, overvalued and likely to see a decline in share price

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Arcos Dorados Holdings Inc. recently discussed its financial performance for the first quarter of 2024, highlighting both favorable outcomes and challenges that depict a mixed fiscal environment.
• The company, a major player in the fast-food industry in Latin America and the Caribbean, operates primarily under the McDonald’s brand, holding exclusive rights to own, operate, and grant franchises in 20 countries.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Inspired Medical Systems First Quarter 2024 performance showcases a robust growth trajectory alongside strategic market advancements and impending innovations.
• The company reported a notable increase in revenue, which reached $164 million, marking a 28% year-over-year growth.
• This uplift was primarily driven by enhanced penetration in existing markets and expansion into new territories, both domestically and internationally.