Daily Brief Equity Bottom-Up: L’Occitane (973 HK):  Underlying Fundamentals Intact and more

• L’Occitane (973 HK) announced after market close yesterday that the controlling shareholder has terminated the potential general offer. 
• Shares trade at a significant discount to global cosmetics peers and its own historical trading range, while brands’ growth momentum remain intact. 
• Take advantage of any potential significant sell-down caused by the drop of the privatization attempt. 

• Globalfoundries may be considering filing a complaint regarding TSMC’s recently announced European JV with three of their customers, Bosch, Infineon and NXP
• Yet they just inked their own deal for a JV with ST Micro in France. What gives?
• In conjunction with their recent CFO hiring fiasco, one wonders if all is well with the GF leadership team. 

• Positive retail flows, HNI & AIF inflows, along with global market trends, suggest that the uptrend for the NIFTY Index (NIFTY INDEX) may continue.
• Bullish stocks include Metro Brands (METROBRA IN) and Zydus Wellness (ZYWL IN), while the sentiment for Whirlpool of India (WHIRL IN) is Bearish.
• Highlighted global stocks include Ebix (EBIX US) , Smith (A.O.) (AOS US) and Apple (AAPL US) 

• Strong Q2 results out Tuesday morning beat consensus Revenue and core EPS estimates
• But concerns remain about expense control and longevity of ongoing demand recovery
• Great Q2 results, yes, but we think investors want more clarity about H2 demand

• We turned bullish on Komatsu a year ago and the stock has since returned over 50%.
• Komatsu is trading at 10x EV/EBIT versus an historical average of 11x, with a target price of ¥5,100/share.
• Komatsu represents a cheaper way to play the theme of onshoring and long-term mining demand from electrification.

• Tower Semi will pay Intel $300 million to acquire and own equipment and other fixed assets to be installed in the New Mexico facility
• Intel’s termination fee on the failure of the proposed Tower Semi acquisition was $353 million
• It’s quite the clever move and doesn’t require China’s approval…

• China Longyuan Power (916 HK) is now attractively priced at 5.9x and 5.2x PERs for FY23 and FY24, respectively. The 2Q23 result clearly showed that business is gathering momentum.
• Margins have demonstrated good improvement despite weaker tariffs and coal sale business. With a very low base in last year, its 2H23 earnings growth will be impressive.
• There is positive progress on new project sign-up which has secured its pipeline. Asset injection from parent will stay as a major theme in the next two years.

In its H123 results, Secure Trust Bank (STB) delivered an 11% y o y increase in operating income, overcoming margin pressure on rising interest rates. However, PBT was £16.5m, 4% lower than in H122 as the bank incurred a one-off impairment charge of £7.0m stemming from a long-standing debt case in Commercial Finance. Excluding this charge, PBT was £23.5m, which implies a 6% beat on our estimates on an annualised basis. Across the group, underlying impairments are resilient, especially in Vehicle Finance where impairments fell to 2.4% (H122: 8.0%) as lending shifted to prime borrowers. We have increased our FY23 and FY24 continuing PBT forecasts to £45m and £55m respectively, leaving the stock trading at P/E ratios of only 4.0x in FY23 and 3.1x in FY24.

• Medtronic Plc (MDT US) announced better-than-expected Q1FY24 result. Revenue of $7.7B increased 6% on organic basis, ahead of guidance of 4.5%. Each of four segments delivered 6% organic revenue growth.
• Adjusted EPS increased 6% YoY to $1.20, ahead of guidance of $1.10–1.12. Outperformance was driven by better-than-expected operational performance and lesser-than-expected unfavorable impact from foreign currency translation.
• The company increased FY24 organic revenue growth guidance to 4.5% versus the prior range of 4.0% to 4.5% and adjusted EPS guidance to $5.08–5.16, 7 cent increase at midpoint.

• Takamiya announced its 1Q results for FY24/3 on August 4, after the close of trading.
• Key figures on a consolidated basis were sales of ¥9,896 mn (+9.7% YoY), operating profit rose 125.5% YoY, to ¥409 mn, ordinary profit rose 41.0%YoY, to ¥615 mn, and quartery net profit rose 33.0%YoY, to ¥417 mn.
• An overview by business segment is as follows