In today’s briefing:
- Meituan (3690 HK): Delivery Workers on Strike
- Keisei (9009): Connecting Narita and Tokyo
- Nidec (6594) | Remain Cautious Despite Bullish Guidance
- Oriental Land: The 33.5x FY27 Consensus OP Bubble
- IHH Healthcare (IHH MK): Core Business Recovery; Fortis Open Offer to Come Soon
- TRACKING TRAFFIC/Container Shipping: Momentum Bottomed | Shares Stabilized | Focus on May News
- Taiwan Tech Weekly: This Is a Major Earnings Week; Are We Entering a 2-Track Semiconductor Recovery?
- APAC Insurers Series (#2): AIA or Prudential?
- Mercedes-Benz: Luxury Brand With Strong Pricing Power
- Rakuten Bank – In Japan With 65% Loan Growth
Meituan (3690 HK): Delivery Workers on Strike
- Meituan’s delivery workers started a strike in Shanwei City of Guangdong Province.
- Meituan called many of its delivery workers from other cities nearby as substitutes.
- We believe the hard job market pushes Meituan to the very font line of industrial relation.
Keisei (9009): Connecting Narita and Tokyo
- Japan’s tourism scene is back in action albeit still missing a contribution from China.
- On-The-Ground research in Japan has confirmed the above point and the crowded Narita airport.
- Keisei Electric Railway Co (9009 JP)operates Skyliner which connects Narita Airport to downtown Tokyo.
Nidec (6594) | Remain Cautious Despite Bullish Guidance
- NIdec’s full year FY3/23 operating profit declined 41% to Y100b, far short of analyst estimates
- However, FY3/24 corporate guidance for Y220b in operating profit is very bullish and assumes a V-shaped recovery in margins
- Given the macro outlook and lack of clarity on the restructuring charges, we prefer to remain cautious.
Oriental Land: The 33.5x FY27 Consensus OP Bubble
- Oriental Land (4661 JP)’s revenue in 4QFY23 could miss consensus by around 12%, but its profitability could exceed consensus expectations by around 20%.
- The shares did not react to beating consensus and revising up its guidance in the last quarter. This suggests limited upside risk for the company’s shares following 4QFY23 earnings.
- Despite consensus medium-term OP estimates, Oriental Land appears to be significantly overpriced, with shares trading at a consensus FY27 EV/OP multiple of 33.4x.
IHH Healthcare (IHH MK): Core Business Recovery; Fortis Open Offer to Come Soon
- IHH Healthcare (IHH MK) reported 11% YoY revenue growth in its core hospital and healthcare business in 4Q22, mainly driven by higher inpatient admissions in most of the hospitals.
- In November 2022, India’s stock exchange regulator SEBI has advised IHH to proceed with the open offer for Fortis Healthcare (FORH IN) to acquire 26.1% stake after obtaining court permission.
- IHH is cautiously optimistic of robust growth from its core business with the return of local and foreign patients to its hospitals.
TRACKING TRAFFIC/Container Shipping: Momentum Bottomed | Shares Stabilized | Focus on May News
- Our measures of momentum and profitability suggest industry bottomed in Q1 2023
- In addition, shares of container shipping stocks have stopped reacting to (plentiful) bad news
- Outcome of ongoing rate negotiations and Q1 earnings calls will drive near-term performance
Taiwan Tech Weekly: This Is a Major Earnings Week; Are We Entering a 2-Track Semiconductor Recovery?
- This week will have some major earnings data points released. In Taiwan, UMC, Delta, Mediatek, ASE will report among other local names in our coverage.
- Samsung & SK Hynix will report this week, providing major insight into the Memory chip space for companies such as Nanya Technology and Micron.
- TSMC & ASML results last week indicate that the cycle could be bottoming in 2Q23E for these leading firms… But are we entering a two-track industry recovery?
APAC Insurers Series (#2): AIA or Prudential?
- Given Pru’s demerger in 2021, it now offers investors a good alternative to AIA to tap into the development and the growth potential of the life insurance sector in Pan-Asia.
- AIA has a more balanced business across so many markets in APAC, while Pru skews toward Southeast Asia.
- Pru’s P/BV is currently at a 30% discount to AIA’s and is trading at the same level as the year-end when China just announced the re-opening of its borders.
Mercedes-Benz: Luxury Brand With Strong Pricing Power
- Mercedes is a luxury brand with strong pricing power, well positioned to capture growth in EV as it invests significantly to transition into an all-electric, software-driven world
- The launch of several models in the next few years will drive growth, as we believe the desirability remains very strong.
- We like the direct sales model and believe the operational focus and discipline of the Company are still to pay off. The valuation remains appealing at a P/E below 6x.
Rakuten Bank – In Japan With 65% Loan Growth
- There are few, if any banks, in Japan that compare with Rakuten’s 65% loan growth
- The newly listed interbank stands out with exceptional ROE, not from leverage
- Credit metrics remain strong, with NPL cover especially high vs peers
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