In today’s briefing:
- Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power
- Chiba Bank – Less Yield Curve Control Issue With Near Zero JGBs
- ASP Isotopes – Initiation of Coverage Report – Isotope Market Overview
- Paramount Bed (7817 JP): All-Time Revenue and Profit in FY23; Further Upside Potential Remains
- PT Metrodata Electronics (MTDL IJ) – Enabling Digitalization Across Sectors
- Takuma (6031) | AVI to Turn Waste into Wealth
- Taiwan Tech: Insights from 1Q23 Earnings Season Into Where We Are in the Cycle
- China CRSC (3969 HK): Uniquely Positioned with Strong Financials
- SPY: Moderate Gains In Store?
- Vietnamese Banks Screener; Adding MBBank to Our Core Pick Techcombank
Japan Consumer Staples Update: Inflation Looks a Blessing in Disguise for Those with Pricing Power
- Japan’s inflation hit a 41-year high at 4.3% in January, but gradually slowed down in the following months, reaching 3.3%, 3.2%, and 3.5% in February, March, and April 2023, respectively.
- Although Fuel, Electricity, and Water prices declined, other items excluding fresh vegetables, maintained inflation at a similar pace, suggesting that cost-push inflation continues to impact the overall economic environment.
- This insight examines the recent quarterly performance of Yakult, Nissin, and Seven & I, our top picks in the Japan Consumer Staples Sector Smartkarma Original.
Chiba Bank – Less Yield Curve Control Issue With Near Zero JGBs
- If there is no relief on yield curve control (YCC) anytime soon, seek banks with low JGBs
- Chiba Bank is one of few banks in Japan where JGBs are nearly a rounding error vs assets
- A pure play on an improving Japan, focused next door to Tokyo, with falling NPLs
ASP Isotopes – Initiation of Coverage Report – Isotope Market Overview
- This is our first report on ASP Isotopes and we look to provide a detailed account of the various assets owned by the company and the drivers that will be responsible for the company’s growth in the coming years.
- ASP Isotopes’ proprietary isotope enrichment technology should enable the company to produce many of these isotopes, as shown in the diagram below.
- When combined with the company’s second manufacturing plant, scheduled to start production during 2H 2023, ASP Isotopes should generate substantial free cash flow during 2024.
Paramount Bed (7817 JP): All-Time Revenue and Profit in FY23; Further Upside Potential Remains
- Paramount Bed Holdings Co Lt (7817 JP) reported all-time high revenue and profit in FY23, driven by increased demand and price revision effect. The company has announced dividend of ¥59/share.
- For FY24, Paramount expects revenue growth of 6% to ¥105B, driven by expanding recurring revenue. Operating and net profits are expected to increase 4% and 6%, YoY, respectively, in FY24.
- Through business expansion and new product launches, the company is on track to achieve mid-term target of revenue of ¥120B and operating income of ¥17B in FY27.
PT Metrodata Electronics (MTDL IJ) – Enabling Digitalization Across Sectors
- Metrodata Electronics released a mixed set of 1Q2023 results, as its ICT distribution slowed as consumers held back from new purchases but this was offset by stronger Solutions&Consulting revenues.
- Solutions&Consulting saw strong growth from financial services, with the ongoing boost from BIFAST plus there was strong growth from telcos and the government segment, as it focuses on digitalisation.
- Metrodata Electronics management remains optimistic for 2023, with an expected recovery in distribution revenues in 2H2023 with the guidance of 8% growth for both revenue and net profits for FY2023.
Takuma (6031) | AVI to Turn Waste into Wealth
- Takuma presents an undervalued investment opportunity with strong financials, and a robust balance sheet. The focus on environmental solutions position it to capitalize on the demand for carbon neutrality.
- The recent involvement of AVI Japan as activist investors adds an exciting catalyst to Takuma’s investment case. We expect AVI to work with management to unlock further value.
- Takuma’s management is targeting enhanced profitability by transitioning from a more volatile EPC model to a recurring revenue-driven approach centred on O&M. Attractive valuations underpin our bullish view.
Taiwan Tech: Insights from 1Q23 Earnings Season Into Where We Are in the Cycle
- Our aggregate analysis of the 1Q23 earnings season showed a more balanced beat/miss ratio than 4Q22 likely due to already-downgraded forecasts presenting a lower expectations hurdle.
- Semiconductor’s inventory situation overall appeared to get worse in 1Q23… Excess inventory digestion is still a few quarters away for many semiconductor companies. Margins fell to the last cycle lows.
- Hardware showed small signs of overall inventory improvement. Margins fell further but remained pretty high relative to the previous cycle.
China CRSC (3969 HK): Uniquely Positioned with Strong Financials
- China Railway Signal & Communication (3969 HK) (CRSC) has achieved good share price performance YTD, but we think there is more room to go for the rest of the year.
- We like its steady domestic growth, exposure to overseas recovery, strong order backlog, and net cash position. 1Q23 new contracts reached Rmb13.7bn, an impressive 35.8% YoY growth.
- Unlike the highly-geared infrastructure construction peers, CRSC’s net cash equals 52% of the share price. On such basis, its P/B of 0.7x relative to ROE of 9-10% is inexpensive.
SPY: Moderate Gains In Store?
- The SPDR® S&P 500 ETF Trust is primed to receive support from lower implied risk premiums amid an interest rate slowdown from the Federal Reserve.
- However, a broad-based analysis suggests that the S&R 500 and the SPDR S &P 500ETF Trust are potentially undervalued.
- The S&P 500’s (SP500) year-to-date surge might have surprised many, as the talk of the town at the turn of the year was geared toward a sustained market drawdown until an interest rate pivot occurred.
Vietnamese Banks Screener; Adding MBBank to Our Core Pick Techcombank
- We maintain Techcombank as our top pick in the Vietnamese banks, given its attractive valuations, solid pre and post provision returns and its fortress balance sheet
- We add MBBank to the buy list with its attractive valuations, premium ROE and sound balance sheet metrics; we are neutral on Vietcombank
- VP Bank remains one to watch; its NPL ratio has worsened further to March 2023 and it is the negative outlier of the peer group on credit quality
💡 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
