In today’s briefing:
- Lonking (3339 HK): Back to Attractive Zone
- Memory Monitor: Nanya Technology Hopeful of 2H23E DRAM Recovery
- Baycurrent Consulting: Strong Earnings Beat with an Overly Conservative Guidance
- Riding the Re-SPAC Wave
Lonking (3339 HK): Back to Attractive Zone
- After a poor FY22, 1H23 will stay challenging for Lonking Holdings (3339 HK). However, we expect pick-up in business momentum going forward, and export is a major growth driver.
- Gross margin rebounded HoH and YoY in 2H22, and Lonking maintained good operating cost control. Recovery of equity market suggests potential big positive swing in investment income.
- Including investment portfolio, 92% of the current market capitalisation is net cash, providing solid downside buffer. Its 6.5x PER, 9.2% yield and 0.52x P/B are very attractive valuations.
Memory Monitor: Nanya Technology Hopeful of 2H23E DRAM Recovery
- Nanya Technology’s recent results showed a margin and ASP decline that appears to have performed better than the industry average.
- However, Nanya Technology may have traded off better pricing and margins for a continuation of high inventory levels. Nanya shares have underperformed Micron since our Mar 30th piece.
- Nanya said it expects a marginal recovery for the DRAM market in the second half of 2023E. SK Hynix will be a next major data point, to report April 26th.
Baycurrent Consulting: Strong Earnings Beat with an Overly Conservative Guidance
- Baycurrent reported fourth quarter and full-year FY02/2023 results on Friday. 4Q revenues increased 32.1% YoY to ¥21.2bn (vs consensus ¥20.7bn) and OP increased 60.8% to ¥9.6bn (vs consensus ¥8.3bn).
- Full-Year revenue and OP increased 32% and 39% YoY respectively to ¥76.1bn and ¥29.9bn, beating own guidance by 7% and 15% respectively.
- The company’s FY02/2023E guidance is too conservative as there has been no signs of an earnings slowdown as DX consulting and high-value add projects would drive next phase of growth.
Riding the Re-SPAC Wave
- In the ever-changing landscape of SPACs, a new trend has emerged that has got investors talking: Re-SPACs.
- Last week, electric vehicle startup Arrival announced its intention to Re-SPAC with Kensington Capital Acquisition Corp. V, signifying a growing interest among De-SPAC companies in exploring alternative capital-raising strategies.
- Traditionally, SPACs have been a popular vehicle for ushering businesses into the public markets.
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