In today’s briefing:
- Kansai Electric | Growing Support for Nuclear Restarts; Bullish
- IQiyi: Improving Profitability but Headwinds Continue
- SK Bioscience (302440 KS): Murky Outlook On Weak Vaccine Demand And Flooding Supply
- ZTO Express (2057 HK/ZTO US): Quality Speaks for Itself
- Sirnaomics (2257.HK)-Unverified Technology and Uncertainties Can Lead to Big Swings in Share Price
- UI: Revenue Rebounds, Target to $375
Kansai Electric | Growing Support for Nuclear Restarts; Bullish
- We believe KEPCO is well-positioned within the utility sector to benefit from growing support for nuclear restarts among policy makers and the general public
- Given its substantial nuclear power generating capacity, KEPCO will likely see best-in-class balance sheet and cash flow-generation over the next several years.
- This puts KEPCO well ahead of peers in terms of both environmental credentials and attractive shareholder returns.
IQiyi: Improving Profitability but Headwinds Continue
- IQIYI Inc (IQ US) reported 2Q2022 earnings last week. Revenue decreased 12.5% YoY to RMB6.66bn (vs consensus RMB6.67bn) and reported an OP of RMB125.8m (vs consensus RMB30.4m).
- The company also announced a US$500m private placement of convertible notes with PAG (PAG HK) and the transaction is expected to close in 4Q2022.
- The company also has entered into a content licensing agreement with Douyin which will likely bring in high-margin business for content distribution segment.
SK Bioscience (302440 KS): Murky Outlook On Weak Vaccine Demand And Flooding Supply
- SK Bioscience (302440 KS) received approval for Korea’s first locally-developed COVID-19 vaccine, SKYCovione. The company is seeking European approval and plans to apply for emergency use listing to the WHO.
- The company is a late entrant in the overcrowded domestic vaccine market. Currently, six vaccines are approved for use in South Korea. Moreover, demand outlook is uncertain beyond 2022.
- Recently, the company has dropped a multinational phase 3 trial of P2-VP8, trivalent rotavirus vaccine. Among the non-COVID pipeline, P2-VP8 was in the most advanced stage of clinical trial.
ZTO Express (2057 HK/ZTO US): Quality Speaks for Itself
- The Aug China Express Development Index points to further industry recovery; and as the leader with 23% (+2pp YoY) market share, ZTO Express (2057 HK) should ride on the uptrend.
- Sustained volume outperformance, upside on pricing and excellent cost control capability are drivers in 2H22. We are also comfortable with its solid financial position.
- ZTO Express has above-average earnings quality and enjoys benefits from industry consolidation. Its on par valuation with the industry makes the stock appealing.
Sirnaomics (2257.HK)-Unverified Technology and Uncertainties Can Lead to Big Swings in Share Price
- The current two mainstream delivery platforms such as LNP delivery platform and GalNAc RNAi platform have been verified and recognized, with products using these platforms successfully launched on the market.
- Sirnaomics has developed its own differentiated delivery platforms, but the druggability has never been verified in trials, like a blind box. They will not be valuable until they are proven.
- Sirnaomics has cashflow pressure and is uncertain if it can survive “this winter”. It’s also difficult for Sirnaomics to find suitable valuation anchor in HKEX. Share price may fluctuate largely.
UI: Revenue Rebounds, Target to $375
- Ubiquiti showcased a rebound in its business in the June 2022 quarter with revenue rising by nearly 24 percent from the March 2022 quarter
- Ubiquiti reported fiscal fourth quarter revenue of $443.1 million compared to our estimate of $387.0 million
- The increase in revenue during the June quarter suggests demand remains healthy enough to put Ubiquiti back on pace for potentially exceeding $500 million in revenue in a single quarter
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