In today’s briefing:
- [JD.com (JD US, SELL, TP US$32) Preview]: Short-Term Demand Doesn’t Indicate a Long-Term Trend
- Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2023
- China Population Policies Impact on Healthcare Companies Series – Part 1
- Shakeys Pizza: What to Expect From Q2 2023
- Sun Hung Kai Properties (16 HK): A Proxy for Hong Kong and Diversified Play – a Value Trade
- Hisamitsu Pharmaceutical (4530 JP): Strong Result, New Drug Launch, & Share Buyback Brighten Outlook
- Shenzhen Intl (152 HK): Enhancing Its Values
- HSBC Holdings PLC: Initiation of Coverage – Increased Distribution & Transformation Strategy & Other Drivers
- UBS Group AG: Initiation of Coverage – The Credit Suisse Acquisition & Other Drivers
- Truist Financial Corporation: Initiation of Coverage – Business Strategy & Key Drivers
[JD.com (JD US, SELL, TP US$32) Preview]: Short-Term Demand Doesn’t Indicate a Long-Term Trend
- We expect JD to report C2Q23 revenue in-line vs. cons., and non-IFRS net income 6% vs. consensus.
- Although we raised our GMV estimate, our 5% YoY revenue growth estimate is unchanged as we expect 3P take rate decline to partially offset GMV growth.
- We maintain SELL and TP but cut FY23 non-GAAP net margin to 3% due to the greater share of lower margin 1P revenue vs. our prior estimate.
Gap Trades in Korean Prefs Vs Common Share Pairs in 3Q 2023
- In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2023.
- The excessive gaps in the preferred and common shares of Kumho Petrochem, LG Electronics, and Samsung Electronics could reverse in the next several months, in our view.
- We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung Electro-Mechanics which have especially high discounts for the preferred shares versus their counterpart common shares.
China Population Policies Impact on Healthcare Companies Series – Part 1
- China has started taking measures to optimize fertility policies. The inclusion of assisted reproduction technologies in medical insurance is a general trend, which would generate increasing demand in the future.
- From the current domestic assisted reproductive industry chain, there is significant import substitution space and growth potential in the fields of related drugs, prenatal/newborn genetic testing, and downstream medical services.
- Companies such as Livzon/BGI/Jinxin would be the direct beneficiaries of related policy. We analyzed the industry characteristics, investment rationale, key risks and comparison with peers of these companies.
Shakeys Pizza: What to Expect From Q2 2023
- We expect Shakey’s Pizza (PIZZA PM) to release its results for H1 2023 in the second week of August. The stock just went ex-dividend today (17th July 2023).
- We estimate Q1/H1 FY23 revenue to grow 36%/59% and profits to increase by 31%/71%, led by slight margin expansion for Q2 over Q1 as guided by the company.
- Trading at 14.5x/11.1x PE with a growth profile of >20% CAGR over the next 4-5 years, given the Potato Corner expansion, Shakey’s Pizza could be an attractive investment opportunity.
Sun Hung Kai Properties (16 HK): A Proxy for Hong Kong and Diversified Play – a Value Trade
- In this insight, we conducted fundamental analysis for SHKP, which is a proxy for Hong Kong given 70% of its GAV comes from Hong Kong
- SHKP has well diversified businesses in residential, retail and office in Hong Kong and China, and there are a lot of share price drivers
- We would recommend a BUY as long as the stock trades below HKD100, as the stock has a trading range of HKD100 to HKD 130
Hisamitsu Pharmaceutical (4530 JP): Strong Result, New Drug Launch, & Share Buyback Brighten Outlook
- Hisamitsu Pharmaceutical Co (4530 JP) announced strong Q1FY24 result, with double-digit top-line and triple-digit bottom-line growth, driven by its largest selling OTC product, Salonpas. The company has reiterated FY24 guidance.
- In Q1FY24, Hisamitsu has launched Apohide Lotion in Japan for the treatment of primary palmar hyperhidrosis and Xelstrym transdermal system in the U.S. for the treatment of Attention-Deficit/Hyperactivity Disorder (ADHD).
- Hisamitsu has announced buyback of up to 2M of its shares (representing 2.57% of issued shares) from July 2023 to February 2024 for ¥10B.
Shenzhen Intl (152 HK): Enhancing Its Values
- We expect Shenzhen International (152 HK) to sustain efforts in realising and releasing the value of its assets, and this will be positive in narrowing its discount to book.
- The plan to issue REIT by using Hangzhou and Guizhou logistics projects as underlying assets will add to earnings. We estimate they account for 14% of SZI’s total project area.
- Subscription to A-share issuance of Shenzhen Expressway Co (548 HK) will increase its book value by Rmb5bn. This will lower its P/B multiple to 0.46x, from 0.54x.
HSBC Holdings PLC: Initiation of Coverage – Increased Distribution & Transformation Strategy & Other Drivers
- This is our first report on HSBC Holdings PLC, one of the biggest banks and financial service providers in the world.
- Notably, Hong Kong, Mainland China, the Middle East, and the U.K. have shown strong economic resilience and recovery.
- We initiate coverage on the stock of HSBC Holdings PLC with a ‘Hold’ rating.
UBS Group AG: Initiation of Coverage – The Credit Suisse Acquisition & Other Drivers
- This is our first report on UBS Group AG, one of the largest banking service companies.
- The company delivered a decent result in the last quarter driven by strong flows across Global Wealth Management and Asset Management.
- The company will continue to prioritize a capital-light and client-focused Investment Bank model while managing activities outside its strategic focus.
Truist Financial Corporation: Initiation of Coverage – Business Strategy & Key Drivers
- This is our first report on Truist Financial Corporation, one of the largest regional banks in the United States.
- Truist opened 146,000 bank accounts online.
- We initiate coverage on the stock of Truist Financial Corporation with a ‘Hold’ rating.
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