In today’s briefing:
- Hisense (921 HK/000921 CH) Nonsense
- Fast Retailing – FY23 Guidance Could Knock Some Sense into Market
- BRI – Spectacular Margins and ALM
- Tencent Seeks Majority Stake in Overseas Game Companies as Game Revenue Slows Down Further
- Yaskawa (6506 JP) | Constant Currency Concerns
- South Korean Banks Screener; KB Financial Is Our Core Pick
- Wuxi Biologics (2269.HK) – Removed from UVL, but the Crisis Is Not Over
Hisense (921 HK/000921 CH) Nonsense
- Back on the 21 October 2016, Hisense Home Appliances Group Co., Ltd. H (921 HK) announced it would invest RMB1.7bn of “idle” funds into wealth management products, or ~HK$1.43/share.
- Between 16 September 2022 and 8 October, Hisense announced it has invested HK$1.13bn of idle funds in wealth management products.
- Hisense reckons the investment is “beneficial for enhancing efficiency of use of idle self-owned funds“. But if truly idle, they should be returned to shareholders.
Fast Retailing – FY23 Guidance Could Knock Some Sense into Market
- Although we are not expecting a major miss for Fast Retailing (9983 JP) in FQ4, we believe FY23 guidance could be disappointing to prompt a substantial correction in FY23 consensus.
- China is continuously failing to live up to the company’s expectations and the only factors holding Uniqlo’s share price from breaking-down are the North America growth and the Yen depreciation.
- Those too are now under threat, with a looming recession and Fed rate hikes failing to curb inflation.
BRI – Spectacular Margins and ALM
- BRI’s margins are highest of major Asean banks at nearly 9% and growing
- Asset-Liability management (ALM), core to banking, can see NIM remain strong
- Credit costs remain high relative to the past, there is scope for a ratcheting downward
Tencent Seeks Majority Stake in Overseas Game Companies as Game Revenue Slows Down Further
- Several news media outlets reported last week that Tencent has changed its M&A strategy to obtain majority stakes in overseas gaming companies as opposed to buying minority stakes previously.
- Tencent’s online game revenue declined YoY for two-consecutive quarters primarily due to decline in domestic game revenue that was impacted by absence of new game titles and minority protection rules.
- Our analysis on Tencent’s game downloads and ranks reveal that both domestic and international game revenues would decline further in 3Q2022E.
Yaskawa (6506 JP) | Constant Currency Concerns
- Yaskawa’s order momentum has peaked. On a constant currency basis, orders growth was -6% sequentially
- Margins for the key Motion Control segment were 160bps lower in the quarter compared to a year ago
- A minor revision down relies on aggressive FX assumptions for the 2H. We feel there is another downgrade to come. Stay Bearish
South Korean Banks Screener; KB Financial Is Our Core Pick
- Six of the seven South Korean banks screen favourably on valuation versus returns metrics to June 2022; we like KB Financial, whilst Woori Financial is a wait and see story
- KB has undemanding valuations, and one of the lowest PEG ratios; it delivers steady pre-provision returns, has sound core capital ratio of close to 13% and healthy credit quality ratios
- Woori Financial and potentially KakaoBank are two names to review post 3Q22 results, with Woori and KakaoBank having seen their 2Q22 cost of risk rise sharply; we seek positive catalysts
Wuxi Biologics (2269.HK) – Removed from UVL, but the Crisis Is Not Over
- Wuxi Biologics (2269 HK) has been removed from the “Unverified List”, but the crisis is not over. CXO’s valuation center could gradually volatile to the downside,during which there would be temporary rebounds.
- Biotechnology of US and China has entered a higher level of game. As domestic CXO is deeply embedded in global supply chain, we won’t take any chances on WuXi Biologics.
- We may face a long high-interest-rate environment after the Fed hikes,but the booming of US pharmaceutical IPOs is the underlying logic of CXO. We provided suggestions on CXO trading strategy.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
