Daily Brief Equity Bottom-Up: Intel. Mr. Tan’s Greatest Challenge Is Not Process Or Foundry Leadership. It’s Something Far Bigger and more

• Whether Intel can achieve Process or Foundry leadership in a credible timeframe is something Mr. Tan has relatively little control over in the short term.
• His most pressing challenge will be to address the corporate culture of entitlement that’s rife throughout the company, starting with the BoD
• Measure his success by the number of high profile resignations we see in the coming months. Those who created Intel’s problems cannot be the ones to fix them. 

• Huang throws cold water on a potential TSMC led deal for INTC fab business, saying he ‘wasn’t invited’ to any discussions. 
• Micron guidance beats consensus which should be a positive for related names such as Micronics. 
• CoWoS and advanced packing maker Shibaura Mechtronics raised guidance on Wednesday ahead of street, yet stock still trading around recent lows points to further upside.

• Ambuja Cements (ACEM IN), established in 1983 by traders Narotam Sekhsaria and Suresh Neotia, leveraged strategic foresight to become a premier Indian cement giant within the diversified Adani Group.
• In 2022, Adani acquired Ambuja Cement at INR 385/share, valuing it at INR 49,620 crore ($6.4 billion), at EBITDA/ton levels (INR900-INR1,000) similar to the company’s current performance.
• Ambuja Cement is strategically positioned to achieve a substantial 44% increase in its cement production capacity by FY28, reaching a total of 140 MTPA from the current 97 MTPA.

• Watsco is North America’s largest distributor of HVAC equipment, serving as a crucial link between manufacturers and contractors.
• They offer a wide range of equipment and parts, technical expertise, and value-added services to their contractor customers.
• Watsco’s transformation from manufacturer to distributor in 1989 led to significant growth, with consistent annualized shareholder returns over the years.

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• Bajaj Finance Ltd (“BAF”) reported a strong Q3FY25 led by good volume growth and AUM growth. It saw highest ever new loans at 12.06mm. AUM growth was INR 24119cr. 
• Despite elevated credit costs for peers, BAF has been relatively insulated and reported steady asset quality. ROA and Opex were also steady at around 4.5% and 33%, respectively.
• In line with BAF’s long-range strategy, BAF is increasingly adopting AI to improve productivity. As part of this, BAF unveiled a BFL 3.0 FINAI company.

• Micron’s strong HBM and Data Center growth has nearly offset low revenues in the remainder of the company’s business.
• This HBM growth depends heavily upon continued strength in hyperscale data center AI CapEx
• Micron outlined means to maintain stability in its industry, but China semiconductor goals are in conflict with these measures

• The largest REIT in Asia, with enough liquidity for most funds. Has a great set of neighborhood malls across Hong Kong enjoying recurring income from food & beverage, restaurants, etc
• Suffered during the COVID-19 pandemic but DPU has started growing again. Rights issue a misstep but the leverage is now acceptable. New Blackrock CIO bodes well for M&A. 
• REIT trades at 7% yield vs 4% historically. Essentially an interest rate bet. Will probably be included in the Stock Connect program soon, expect an announcement on 19 April. 

• Taiwan server revenue and shipment forecast for 2025 is expected to increase, reflecting growth in the IT industry.
• Japanese government plans to invest $1 billion in Space Strategy Fund projects, highlighting a push for innovation and exploration in the aerospace sector.
• SoftBank’s $6.5B Ampere acquisition is a strategic move in the AI chip market with Arm, positioning the company for future technological advancements.

• PDD’s total revenue grew by 24% YoY in 4Q24, with advertising up by 17% YoY and commission up by 33% YoY.
• The gross margin declined YoY, but we still believe PDD has advantage in the low price market.
• We conclude an upside of 71% and a price target of US$215 for the next twelve months.

• Total revenue increased by 34% and total sales volume increased by 32%.
• The operating margin improved to 4% in 2024, compared to 2% in 2023.
• We conclude an upside of 51% and a price target of HK$28.00. Buy.