In today’s briefing:
- Nidec (6594)| Q2 In-Line; Long-Term Outlook Intact
- Texas Instrument: Small Beat in 3Q24, Uninspiring 4Q Guidance, the Stock Is Very Expensive.
- Tech Supply Chain Tracker (24-Oct-2024): 2025+ global smartphone forecast.
- Emerging Market Exchanges – Attractive Valuations with Defensive Qualities
- Multi Bintang (MLBI IJ): Massive Inflection in Q3 FY24 with Double Digit Growth !!
- SITC International (1308 HK): Unbeatable
- Goldwin: 50% Growth in 5 Years? Possible but Some Challenges
- Samsung Biologics (207940 KS): 3Q Result Beat Expectation; Guidance Raise Amid Increasing Order Book
- JAKK: 3Q Preview: More than Holiday Movie Winners; Reiterate Buy, $30 PT
- EDG: Gaps Begin to be Filled & Drilling Accelerates with 2nd Rig
Nidec (6594)| Q2 In-Line; Long-Term Outlook Intact
- Nidec’s Q2 operating income beat my estimates, driven by strong small motors and appliance segments, though automotive profits underperformed
- The automotive division is shifting focus from e-axles to broader auto parts, while improving operational efficiency through partnerships and streamlined logistics
- Despite macro risks, Nidec remains well-positioned for long-term growth in digitalization, decarbonization, and automation, with a price target of ¥4,350
Texas Instrument: Small Beat in 3Q24, Uninspiring 4Q Guidance, the Stock Is Very Expensive.
- TXN reported 3Q24 last night: EPS 7% above Consensus, small beat. However, 4Q guidance shows a delayed / tepid recovery: revenue to decline -6% YoY, EPS to decline -21% YoY.
- Industrial demand is still declining steeply -23% YoY, “hovering at the bottom”. Auto revenue -2% YoY with growth in China but rest of world is declining.
- The stock is trading at 31x 2025 and 25x 2026 Consensus EPS, way above its valuations range.
Tech Supply Chain Tracker (24-Oct-2024): 2025+ global smartphone forecast.
- Global smartphone shipments expected to increase beyond 2025, with OLED technology gaining popularity in tablets and notebooks while Mini LED becomes less preferred.
- Uncertainty over whether Trump will end TSMC’s subsidies for Arizona factory, impacting material suppliers benefiting from TSMC’s growth in 3Q24.
- PSMC chairman shifts from cautious approach towards India to optimism with new partnership with Tata, while Horizon Robotics’ Hong Kong IPO supported by Alibaba, Baidu, and TSMC for manufacturing.
Emerging Market Exchanges – Attractive Valuations with Defensive Qualities
- Our core pick is Brazilian exchange B3; this is a contrarian call, given its poor share price performance year to date, but it is attractively priced versus its peers
- B3’s share of post-trade revenue is understated, and it is a well-diversified exchange in terms of the product offering, which includes cash equities, equity derivatives, FX, interest rates and commodities
- We also like Hong Kong Exchange, with its high share of post-trade revenues; HKEx should benefit from improving investor sentiment towards China, boosted by the Chinese government’s recent economic stimulus
Multi Bintang (MLBI IJ): Massive Inflection in Q3 FY24 with Double Digit Growth !!
- Multi Bintang Indonesia (MLBI IJ) experienced a massive inflection in its revenue with 21.9%/35% revenue/net profit growth as we approach the Q4 high season.
- Earlier, parent Heineken NV (HEIA NA) had flagged in its H1 2024 report that Indonesia was experiencing double-digit growth following excise duties implemented in January 2024.
- Trading at 11.5x FY24/net cash with >8% dividend yield and historical ROCEs averaging over 80%, we see a turning point in the share price now.
SITC International (1308 HK): Unbeatable
- Together with the just-announced HK$0.40 special DPS, SITC International (1308 HK) has already handed back HK$1.12/share to shareholders YTD, realising a dividend yield of 6.5%.
- Its 3Q24 performance is impressive, with revenue surging 56.6% YoY. Both volume (+13.4%) and average freight rates (+44.1%) have exhibited solid momentum.
- While the consensus forecasts have been upgraded by 7-11% since the 1H24 result, there appears more room to go. FY24 ROE is now expected to be 32.2%.
Goldwin: 50% Growth in 5 Years? Possible but Some Challenges
- Goldwin has big plans for both The North Face in the Japanese and Korean markets and for its own brand globally.
- But there are worries about saturation for the former in Japan, slowing brand development, and lack of expertise in overseas markets to build its own brand.
- Goldwin has had an amazing run but can it build a global brand? If it can, it will feed into high levels of demand for Japan-tech sports brands.
Samsung Biologics (207940 KS): 3Q Result Beat Expectation; Guidance Raise Amid Increasing Order Book
- In 3Q24, Samsung Biologics (207940 KS) reported 15% YoY revenue growth to KRW1,187B, driven by the contribution of Plant 4, the full utilization of Plants 1–3, and biosimilar products.
- The company has raised 2024 annual revenue growth guidance to 15–20% YoY from 10–15% earlier, driven by successful ramp-up of Plant 4 and favorable Fx movement.
- The company has signed record-breaking CMO contract with an Asian pharmaceutical company, thereby bringing the company’s total new contract value for the year to more than $3.3B.
JAKK: 3Q Preview: More than Holiday Movie Winners; Reiterate Buy, $30 PT
- We are reiterating our Buy rating, $30 price target and projections for JAKKS Pacific with the company announcing 3Q24 (September) results after the close on Wednesday.
- We remain confident in our inline projections for the quarter, and believe the company, with a strong, somewhat lower-risk Holiday movie lineup in 2024, the beginning of the ramp of the Authentic Brands and The Simpsons license expansions, and the potential upside for Dog Man and the company’s own Wild Manes line launch, is well positioned to drive top and bottom line upside into 2025.
- As such, we reiterate our Buy rating and $30 price target for JAKK.
EDG: Gaps Begin to be Filled & Drilling Accelerates with 2nd Rig
- What you need to know: • EDG announced assay results for four drill holes as part of its 10,000m 2024 drill program; it has completed 22 holes (6,100m) to date.
- • Today’s results confirmed strong mineralization in large untested gaps between Eagle & Imperial, also confirming mineralization at depth.
- • A 2nd drill rig has been added to accelerate the drill program – this rig will test the near-surface portion of the Eagle Zone.
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