In today’s briefing:
- Kuaishou (1024 HK): Why Did the Market React Mutedly to Its Strong Profit Alert?
- Astellas Pharma (4503 JP): Mixed Q1 Result; FY24 Profit Guidance Cut; New Drug Approval
- [Z Holdings (4689 JP, SELL, TP JPY 340) Target Price Change]: Continued Impact of Chinese E-Commerce
- Trucker Call for End to Free Shipping Will Help Relieve Pressure on Yamato
- [Li Auto (LI US, BUY, TP US$55) TP Change]: Witnessing Consolidation…Reiterate as Our Top Pick
- Hutchmed China Ltd (13.HK/HCM.US) 23H1 – This Company Is Becoming More Attractive
- [Miniso Group (MNSO US, BUY, TP US$26) TP Change]: Shifting from Value- To Interest-Based Retailer
- REIT Watch – Institutional investors net buyers of these 10 S-Reits in July
- Jardine C&C MD Ben Birks acquires more shares following H1 FY23 earnings report
- Maersk Q2: Raised FY23 Guidance | Beat on Earnings, Too | Takeaway: Conditions Not Disastrous
Kuaishou (1024 HK): Why Did the Market React Mutedly to Its Strong Profit Alert?
- We believe that Kuaishou’s outsized bottom-line beat for 1H23 was driven by stronger advertising and e-commerce business and cost reduction than the street expected.
- However, the market’s muted response suggests that investors are looking beyond 1H23 or even FY23 to price in a mature growth outlook.
- Kuaishou is trading at ~40x our FY23 estimate against 24% earnings CAGR from 2023 to 2025 which represents a hefty valuation premium over other China tech giants.
Astellas Pharma (4503 JP): Mixed Q1 Result; FY24 Profit Guidance Cut; New Drug Approval
- Astellas Pharma (4503 JP) reported Q1FY24 results, with revenue beating and operating and net profit missing consensus. Revenue declined 2%, while operating and net profit increased 17% and 13%, respectively.
- Astellas has reiterated FY24 revenue guidance of ¥1,520B, while reduced operating profit guidance by ¥29B to ¥259B (+95% YoY) and net profit guidance by ¥23B to ¥204B (+106% YoY).
- On August 4, Iveric Bio has received FDA approval for Izervay for the treatment of geographic atrophy secondary to age-related macular degeneration, which impacts approximately 1.5M people in the U.S.
[Z Holdings (4689 JP, SELL, TP JPY 340) Target Price Change]: Continued Impact of Chinese E-Commerce
- ZHD reported F1Q/C2Q23 top-line, non-GAAP operating profit and non-GAAP net profit in-line, in-line and (32%) vs. consensus, respectively. Earnings miss was driven by wider tax expense.
- ZHD’s B2C e-commerce platform GMV continued to decline, which we suspect is due to the continued impact of STAT, especially Shein.
- We maintain SELL and raise TP to JPY 340 due to improved ads-spending, but we expect the transient ad spend increase to be offset by loss of ecommerce customers.
Trucker Call for End to Free Shipping Will Help Relieve Pressure on Yamato
- Transport industry officials want to ban ‘free shipping’, forcing customers to pay for all deliveries and even redeliveries.
- The aim is to reduce demand in time for new rules on driver overtime due to come into force next year and should relieve pressure on Yamato and others.
- There is also more collaboration to reduce costs and labour: Yamato has scrapped its small packet business entirely, passing customers on to Japan Post.
[Li Auto (LI US, BUY, TP US$55) TP Change]: Witnessing Consolidation…Reiterate as Our Top Pick
- We expect Li Auto to report 2Q23 top line and GPM 2.3%/in line vs. cons. We think Li Auto’s share gain in Q1/Q2 reflects market consolidation.
- Our channel check found its weekly order intake remains robust at ~10k. We expect the capacity ramp-up to lead to Q3 delivery of ~100k, 12% vs. cons.
- We reiterate Li Auto as our top pick, due to 1) strong model cycle (L9/L8/L7) and channel expansion; 2) margin upside. Li’s MEGA BEV could be the next catalyst.
Hutchmed China Ltd (13.HK/HCM.US) 23H1 – This Company Is Becoming More Attractive
- HUTCHMED’s 23H1 results were in line with expectation. We updated our forecast for the three core products. Its 2023 total revenue would achieve a high double-digit growth. HUTCHMED is undervalued.
- Performance prospects for 2024 and beyond largely depend on whether fruquintinib can smoothly obtain FDA approval in 2023, which means significant progress in internationalization and possibility of breakeven in 2025.
- Based on the performance so far, we think the clarity of HUTCHMED’s performance is high and the guidance given by management is reliable. The Company deserves more attention from investors.
[Miniso Group (MNSO US, BUY, TP US$26) TP Change]: Shifting from Value- To Interest-Based Retailer
- We expect MNSO to report C2Q23 revenue 4.6% higher than cons and non-GAAP NI in-line with cons. The beat is due to strong sales from larger ticket size &store expansion.
- We think the brand upgrade strategy had effectively drove up Miniso stores’ blended ASP, combined with mild recovery of foot traffic, leading to 46% YoY growth in China revenue.
- Besides, we anticipate 37% YoY growth in oversea revenue and 43% YoY growth in total revenue in C2Q23. We maintain Buy rating and raise TP by US$0.5 to US$26.
REIT Watch – Institutional investors net buyers of these 10 S-Reits in July
- In terms of net fund flows over the month, retail investors net bought S$8.2 million of S-Reits while institutional investors net sold S$86.4 million in the sector.
- However, there were 10 S-Reits and property trusts which recorded net institutional inflows in the month of July.
- They were Keppel DC Reit, CapitaLand Integrated Commercial Trust (CICT), CapitaLand India Trust (Clint), ESR-Logos Reit, Far East Hospitality Trust, Digital Core Reit, Paragon Reit, Sasseur Reit, First Reit, and BHG Retail Reit.
Jardine C&C MD Ben Birks acquires more shares following H1 FY23 earnings report
- Share buybacks by primary listed companies 28 Jul – 3 Aug 2023 Stocks that booked the highest net institutional outflow over the five sessions included Singapore Airlines, Frasers Logistics & Commercial Trust, Genting Singapore, Jardine Matheson, CapitaLand Investment, Venture Corporation, Mapletree Pan Asia Commercial Trust, Suntec Reit and Sheng Siong Group.
- There were four primary-listed companies conducting share buybacks over the five trading sessions through to Aug 3 with a total consideration of S$11.4 million.
Maersk Q2: Raised FY23 Guidance | Beat on Earnings, Too | Takeaway: Conditions Not Disastrous
- On Friday container giant AP Moeller – Maersk A/S (MAERSKB DC) raised FY23 guidance, lifting the bottom of its EBITDA range & increasing target FCF from US$2bn+ to US$3bn+
- Despite beating Q2 expectations and raising FY guidance, management warned that the “normalization” of container shipping conditions is taking longer than anticipated
- Maersk’s shares traded down on the news, but the company’s statements confirm our thesis: market conditions in 2023 are not nearly as bad as expected (Maersk’s TTM ROIC 34%!)
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