Daily Brief Equity Bottom-Up: Kobe Bussan (3038): The Final Cliff and more

• Kobe Bussan continues to hit new lows relative to the median Japanese retailer, as cheaper alternatives continue to rebound.
• Kobe was one of the greatest beneficiaries in Japan of the Pandemic, but it is stuck at 10% growth which is no longer unusual. 
• Kobe’s wholesale model makes it difficult to benefit from food price inflation like other food retailers. Kobe Bussan could drop another 50% before reaching fair value.

• Currently, the share of natural gas in energy basket is just 6.7%, Which India is aiming for 15% by 2030.
• Capex in Place- expanding the Dahej Plant, Petchem facility(20000Cr) will be operational in 4-5 years, Kochi utilization will improve
• 20% Volume Growth expected by Management, with a rising LNG portion in overall Gas Consumption in India.

• TSMC’s June 2024 revenue increased by 32.9% YoY, exceeding expectations with $6.42 billion. 
• It dominates with >62% of the global foundry market share, propelled by AI demand. 
• Expansion into the automotive market and new fabs in the U.S. and Japan highlight TSMC’s growth strategy. 

• Delfi Ltd (DELFI SP) is Asia’s largest confectioner, with circa 50% market share of chocolate in its largest market Indonesia, despite competition from global confectionary players over many years. 
• The company produces products that are engrained in local tastes but it also produces products in different categories that compete directly with foreign competitors with a local twist. 
• The negative headwinds from higher cocoa prices have started to stabilise and Delfi has deployed various strategies to offset the impact on packaging and ingredients. 

• The company’ share bucked China catering sector’s down trend and rallied 30% in last few weeks.
• Its 2Q operating data suggest that its store opening is well on track with healthy SSSG, underpinning strong margin expansion.
• We believe that market still underestimates its growth and earnings potential which could beat consensus by wide margin. Interim results to be announced in August will be key catalyst.

• ASICS is revising up its full year forecasts, now expecting sales to reach a record ¥660 billion , up 15.7% year-over-year. There is a strong currency tail wind. 
• Still “you gotta be in it to win it..”  ASICS is currently crushing it, while Nike flounders
• A large secondary offering will likely hit the share price in the short term; there are two key risks…but it could be a good opportunity to buy. 

• Chinese innovative drugmaker Sichuan Biokin Pharmaceutical Co. Ltd. has filed with the Hong Kong Stock Exchange for an initial public offering (IPO) in an effort to tap fresh funding to support new drug development and overseas expansion.
• Biokin, already listed in Shanghai, did not disclose the target size of its Hong Kong offering. According to its preliminary prospectus, Goldman Sachs Group Inc., JPMorgan Chase & Co., and Citic Securities Co. Ltd. are joint sponsors for the share sale.
• Founded in 1996, Biokin began as a producer of chemical generic drugs and proprietary Chinese medicines. The company has since 2011 moved on to novel biological drugs, focusing on antibody-drug conjugates (ADCs) for cancer treatment.

• Since Elliott Management emerged as a shareholder in SoftBank group last month, the share price has rallied sharply, largely driven by the further appreciation of the Arm Holding share price
• SoftBank management is currently focused on growing its Gen AI investment portfolio and appears to have shelved share buybacks for now, which is likely to disappoint minority shareholders
• Despite the above challenges and the risk of de-rating at Arm, we remain positive on Softbank shares as they trade at a historically high 54%+ discount to the estimated NAV

• Gold currently trades at a historic 50% discount to its long-term value
• Gold miners are trading at a 30-60% discount to gold, presenting an investment opportunity
• Investing in GDXJ and a basket of gold miners can potentially yield high returns due to the supply dynamics of gold

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Hesai Group shares significantly underperformed in 2024 with shares down ~47% over the year versus a ~23% gain on the Nasdaq Composite.
• Moreover, a San Francisco-based Ouster, one of the key competitors among LiDAR makers, outperformed Hesai Group and the NASDAQ on a year-to-date basis.
• I believe Hesai Group should initiate a share buyback program as RoboSense has recently announced on-market share repurchase plan to create value for its shareholders.