In today’s briefing:
- Japan Alpha | Bullish KHI (And MHI)
- Intel CEO Shock Resignation. What’s Going On?
- China Consumption Weekly (2 Dec 2024): Starbucks, Chow Tai Fook, SAIC, Volkswagen, BYD
- HKBN (1310 HK): China Mobile’s “Fair” Tendering Offer
- Strategic Decision by MapMyIndia: Segregating B2C and B2B Businesses – A Detailed Analysis
- Indian Banks Screener: Stick with Buys on Select, Value Based Smaller Caps
- Tech Supply Chain Tracker (03-Dec-2024): Oct 2024: Notebook shipment update
- HK-Listed Apparel & Footwear Screener: Attractive Yield & Rapid Expansion Outside China – Dec 2024
- Playing With Fire
- Telix Pharmaceuticals (TLX AU): Pipeline Progress to Expand Portfolio; Favorable Payment Rule in US
Japan Alpha | Bullish KHI (And MHI)
- The recent pull-back in the share price of KHI provides a cheap entry point into the defense spending thematic
- KHI’s defense revenues are projected to soar by 40% to ¥406 billion in FY24, outpacing industry leader MHI’s 20% growth
- KHI and MJI to benefit from Japan’s defense spending doubling to 2% of GDP by 2027 and ¥43 trillion ($320 billion) earmarked over five years.
Intel CEO Shock Resignation. What’s Going On?
- No stated reason for Mr. Gelsinger’s shock resignation as Intel’s CEO.
- CFO and CCG leaders named as interim co-CEO’s with the latter also assuming a newly created role as CEO of Intel’s Products (CCG, DCAI & NEX)
- It’s the beginning of the end for Intel as we used to know it
China Consumption Weekly (2 Dec 2024): Starbucks, Chow Tai Fook, SAIC, Volkswagen, BYD
- Starbucks’ CEO of China denied the rumor that Starbucks will sell its Chinese businesses.
- Chow Tai Fook closed 239 stores from March to September.
- SAIC and Volkswagen will extend their joint venture to 2040.
HKBN (1310 HK): China Mobile’s “Fair” Tendering Offer
- China Mobile (941 HK) was a logical suitor for HKBN Ltd (1310 HK). A non-PRC (or government-affiliated) corporation taking over a media/broadband/telco in Hong Kong is probably a non-starter.
- China Mobile has a made a pre-conditional voluntary Offer at HK$5.23/share, a 40.97% premium to undisturbed. The price is final.
- Pre-Cons are the usual suspects (NDRC, Mofcom & SASAC). The Offer itself conditional on a 50% acceptance hurdle, with 24.96% in the bag. The intention is to maintain HKBN’s listing.
Strategic Decision by MapMyIndia: Segregating B2C and B2B Businesses – A Detailed Analysis
- MapmyIndia decided to hive off its B2C business to a promoter entity which will be funded and backed by the current listed entity.
- Hiving off loss-making business will lead to margin improvement for the listed entity but will increase the cash burn to fund loss-making business
- Departure of current CEO, taking funding from listed entity to fund this loss-making business where Promoter has the stake raises corporate governance issues.
Indian Banks Screener: Stick with Buys on Select, Value Based Smaller Caps
- Our positive focus remains on three smaller cap Indian banks, namely Bandhan, Baroda and Union Bank of India (UBI); we stay negative on richly valued ICICI Bank and Kotak Mahindra
- Bandhan has its NPL challenges, but its pre-provision returns have improved and it is a value stand-out; Baroda remains our favourite and UBI has delivered better profitability and credit quality
- Kotak Mahindra is the peer group’s highest return bank post credit costs, but returns continue to erode; ICICI is on premium valuations and we expect credit costs to go higher
Tech Supply Chain Tracker (03-Dec-2024): Oct 2024: Notebook shipment update
- Auto LED orders set to increase significantly for a year, with Edison predicting double growth by 2025.
- TSMC upgrades CoWoS technology to compete with 9x reticle sizes by 2027, showing continuous advancement in semiconductor manufacturing.
- MiTAC plans to double capital expenditures in 2025 to diversify production under the new administration of Trump 2.0.
HK-Listed Apparel & Footwear Screener: Attractive Yield & Rapid Expansion Outside China – Dec 2024
- The HK market is moving, and the share prices of high-yield companies are increasing. Despite the average YTD returns of 38%, stocks are trading at 5-15% dividend yields.
- We update investors with results from Nameson Holdings (1982 HK) H1 FY25: 16-17% Dividend Yield Intact and Pacific Textiles (1382 HK), which guided down earnings due to interruptions in Vietnam.
- We also flag Yue Yuen Industrial Holdings (551 HK) results, buybacks, and some updates from our conference call with Nameson Holdings (1982 HK) management.
Playing With Fire
- Hello, Welcome to the third edition of the Mikro Kap Wathclist, a series in which I go deeper into unique opportunities from my watchlist that, IMO, are worth monitoring closely.
- This way, you can act decisively when the moment comes, rather than spending weeks on initial research.
- These kinds of stocks would probably be a part of my portfolio if I were older, more diversified, or both.
Telix Pharmaceuticals (TLX AU): Pipeline Progress to Expand Portfolio; Favorable Payment Rule in US
- Telix Pharmaceuticals (TLX AU) initiated Phase 3 ZIRCON-CP trial of PET imaging candidate TLX250-CDx for clear cell renal cell carcinoma and dosed first patient in a cancer hospital in China.
- Telix is focused on expanding the near-term opportunity in precision medicine diagnostics with three new products planned for launch in 2025.
- CMS will unbundle and pay separately for specialized diagnostic radiopharmaceuticals for Medicare patients with per-day costs exceeding $630. The new payment decision is in favor of Telix.
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