In today’s briefing:
- Nextage (3186): One Analyst, Two Valuations, Both Wrong
- Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap
- Brainbees (FIRSTCRY IN): First Results Fail to Cheer. Lock-In Expiry May Test Stock Resilience
- HK Exchanges: Position Cuts Deepen Among Asia Ex-Japan Funds
- Li Auto (LI US): 2Q24, Look at Monthly Deliveries, But Not Quarterly Revenue
- Intel’s Crisis Deepens: Is the Foundry Business Next on the Chopping Block?
- Shortlist of High Conviction Philippines Equity Ideas – September 2024
- [Akeso Inc. (9926 HK, BUY, TP HK$63) TP Change]: Too Many Positives to Count…Reiterate TOP BUY
- CrowdStrike’s Post-Outage Reality: Navigating the Challenges Ahead!
- Dongfang Electric (1072 HK): Finding a Bottom
Nextage (3186): One Analyst, Two Valuations, Both Wrong
- Simply Wall Street published an article on Aug 20, 2024, suggesting the fair value of Nextage was ¥1,772 or 16% below the previous day’s closing price.
- Yet, on the Simply Wall Street website’s stock page for Nextage, updated on August 26, they calculate the fair value at ¥5,726, or 189% above the close on Aug 19.
- Both cannot be right. Here’s an interesting window into how markets mis-price stocks.
Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): Chart Analysis Affirms Zhongsheng Is Too Cheap
- Historical valuation affirms that Zhongzheng is the cheapest it has been in the past 10 years
- Chart analysis is to compliment our recent report Zhongsheng Group Holdings (881 HK, BUY, TP:HKD12.5): A Contrarian Play published yesterday
- Our TP of HKD12.5 is based on FY25 PE of 5x. This implies an UPSIDE POTENTIAL of 33%. It also delivers a dividend yield of ~9% at current prices.
Brainbees (FIRSTCRY IN): First Results Fail to Cheer. Lock-In Expiry May Test Stock Resilience
- BrainBees Solutions (FIRSTCRY IN) reported marginal decline in 1QFY2025 revenues and GMV (India operations) versus previous quarter, though both were up 17% YoY; fell short of market expectations.
- Key operating metrics for India business too were soft with Average Order Value slipping both on a QoQ and YoY basis, impacting GMV growth and segment margins.
- With 0% promoter holding, nearly 30%-50% shares could possibly start trading post lock-in expiry and this could test the stock’s resilience. Softbank Group(9984 JP), the biggest stake holder, owns 19.99%.
HK Exchanges: Position Cuts Deepen Among Asia Ex-Japan Funds
- Asia Ex-Japan fund managers continue to reduce their positions in Hong Kong Exchanges & Clearing.
- Percentage of funds invested and the average weight of the stock in portfolios have been on a downward trend since the recent peak in early 2023
- Wave of position closures in 2024 by Allianz, T Rowe Price, and Baillie Gifford has resulted in over half of the historical investor base exiting the stock
Li Auto (LI US): 2Q24, Look at Monthly Deliveries, But Not Quarterly Revenue
- Monthly deliveries recovered to the 2023 level in the three months – June, July, and August 2024.
- Li Auto’s deliveries growth outperformed the China NEV market size in July.
- We set the price target at US$26.90, which is 38% above the market price.
Intel’s Crisis Deepens: Is the Foundry Business Next on the Chopping Block?
- Intel Corporation finds itself at a critical juncture as it heads into its mid-September 2024 board meeting, grappling with a series of severe challenges that threaten the company’s stability and future prospects.
- Once a titan of the semiconductor industry, Intel has been beset by financial difficulties, including continuous losses, declining market share, and an increasingly competitive landscape.
- The situation has been exacerbated by the recent departure of key executives, adding to the uncertainty surrounding the company’s strategic direction.
Shortlist of High Conviction Philippines Equity Ideas – September 2024
- We are slowly building out a high-conviction coverage of ideas for the mid and small-caps in the Philippines.
- We set criteria for high ROCE, reasonable growth (10-15% YoY), strong balance sheets, and reasonable capital allocation (dividend yields), all ingredients for being multi-baggers.
- We like Ginebra San Miguel (GSMI PM), The Keepers Holdings (KEEPR PM), and DigiPlus Interactive (PLUS PM). We are building our library and will cover more names in the future.
[Akeso Inc. (9926 HK, BUY, TP HK$63) TP Change]: Too Many Positives to Count…Reiterate TOP BUY
- Akeso reported C1H24 top line, non-IFRS operating loss and IFRS net loss 10% above, 13% narrower and 3.5% narrower than our estimates.
- The most positive takeaway from the result is the Phase III start of CD-47 mAb (AK117), which can potentially be a global first-in-class (FIC).
- We raised TP from HK$58 to HK$63 and reiterate our TOP BUY.
CrowdStrike’s Post-Outage Reality: Navigating the Challenges Ahead!
- CrowdStrike, a leader in cybersecurity known for its AI-driven Falcon platform, now finds itself grappling with significant challenges in the wake of a global IT outage that has shaken its foundations.
- While the company has long been recognized for its robust growth, technological innovation, and a solid client base, the recent incident has exposed vulnerabilities that could impact its future trajectory.
- The outage, which disrupted services across critical sectors, has raised questions about the resilience of CrowdStrike’s operations and the reliability of its platform.
Dongfang Electric (1072 HK): Finding a Bottom
- Dongfang Electric (1072 HK) is now closer to the bottom after underperformance due to a weaker-than-expected 1H24 result dragged by low-margin coal-fired products.
- New contract momentum, however, stayed resilient with a 14.8% YoY increase to Rmb56.1bn in 1H24. Forward backlog coverage is now at 1.8x FY24F revenue.
- There is a significant Rmb6.3bn positive operating cash flow swing in 1H24. This helps to raise net cash (excluding contract liabilities) to 76.4% of the share price.
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