In today’s briefing:
- Nintendo (7974) | Game Over for Switch
- Intel Q224 Meltdown. Don’t Say We Didn’t Warn You…
- Asian Dividend Gems: KT Corp
- Waste Connections Inc.: Expansion of Core Solid Waste Pricing & Other Major Drivers
- United Rentals Inc.: An Analysis Of Their Acquisition-Led Growth & Competitive Advantage! – Major Drivers
- Ford Motor Company: EV Segment Losses & Surging Warranty Costs Are A Major Concern! – Major Drivers
- South Korean Banks; Hana Financial (086790 KS) And Woori (316140 KS) Are Our Positive Picks
- O’Reilly Automotive Inc.: What Major Challenges Did They Face & How Is The Management Overcoming Them? – Major Drivers
- Fortive Corporation: How Is The Strategic De-risking in Advanced Market Engagements Working Out? – Major Drivers
- Newmont Corporation: What Is Their Portfolio Optimization Strategy? – Major Drivers
Nintendo (7974) | Game Over for Switch
- Nintendo missed Q1 with Operating income coming in at Y54.5b (-71% YoY) vs our estimate Y116b and the street at Y94b
- Switch 2 hardware and software units sold are now suffering from buyer fatigue as consumers await the next-gen console
- The stock will likely fall quite sharply over the next week. Looking for good buying opportunity in anticipation of the next console cycle
Intel Q224 Meltdown. Don’t Say We Didn’t Warn You…
- Q224 revenues of $12.8 billion, in line with their updated May outlook, ~flat QoQ and down 1% YoY.
- Gross margin (non-GAAP) was 38.7%, down 1.1 points YoY but down a whopping 4.8 points from the April outlook.
- Shares tanked >24% in after hours trading. What’s really going on at Intel?
Asian Dividend Gems: KT Corp
- We have a Positive view of KT Corp (030200 KS) due to three main reasons.
- First, KT has started to implement aggressive capital return policy (returning 50% of net income through dividends and share buybacks/cancellations). Two other reasons include Corporate Value Up and higher Smartscore.
- KT Corp has been the best performing stock among the three major Korean telcos in the past one year. KT Corp’s shares are up 27.9% in the past one year.
Waste Connections Inc.: Expansion of Core Solid Waste Pricing & Other Major Drivers
- Waste Connections demonstrated strong financial performance in the latest quarter, driven by solid waste pricing and effective cost management.
- The company’s revenue grew by over 11%, with core solid waste pricing contributing significantly to this growth.
- Despite a slight decline in volumes, the company’s strategic approach to pricing and contract renewals has maintained revenue quality, offsetting the negative impact of lower special waste volumes and other cyclical challenges.
United Rentals Inc.: An Analysis Of Their Acquisition-Led Growth & Competitive Advantage! – Major Drivers
- United Rentals recently discussed its financial performance and strategic direction, presenting a mixed but robust picture of its operational and financial health.
- The company reported a notable increase in total revenue, which rose by 6% year-over-year to $3.8 billion in the second quarter, with rental revenue climbing 8% to $3.2 billion.
- This growth was bolstered by fleet productivity, which also saw an improvement of 4.6%.
Ford Motor Company: EV Segment Losses & Surging Warranty Costs Are A Major Concern! – Major Drivers
- Ford Motor Company’s second quarter 2024 performance offers a comprehensive snapshot of a transitional phase in the company’s long-standing history.
- The quarter reflects their advancing Ford+ strategic plan which aims to refine operational efficiencies and bolster profit margins through structural adaptations and technological advancements.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.
South Korean Banks; Hana Financial (086790 KS) And Woori (316140 KS) Are Our Positive Picks
- Delinquency ratios continued to worsen into 2Q24, with a couple of the South Korean banks seeing accelerating growth in NPL ratios; despite this, there are buy opportunities
- Our bigger cap pick is Hana Financial for its very attractive valuations, PEG and equity risk premia, as well as its solid core capital ratio and strong credit quality credentials
- Among the smaller caps, Woori stands out in terms of valuation, PEG ratio, credit quality and it has registered improving post-provision returns
O’Reilly Automotive Inc.: What Major Challenges Did They Face & How Is The Management Overcoming Them? – Major Drivers
- O’Reilly Automotive, Inc. faced a challenging second quarter in 2024, with performance below expectations due to broader industry demand headwinds.
- Despite these challenges, the company reported a 2.3% increase in comparable store sales, continuing to outperform the industry.
- Adjustments in full-year outlook for operating profit and earnings per share were made following these results.
Fortive Corporation: How Is The Strategic De-risking in Advanced Market Engagements Working Out? – Major Drivers
- Fortive Corporation’s recent earnings report underscores its strategic focus and financial agility in today’s economic environment.
- The firm showcased a robust display of financial discipline and strategic execution, achieving earnings and free cash flow at the high end of expectations.
- Despite facing a low growth environment, Fortive demonstrated a remarkable 90 basis points of adjusted operating margin expansion and a 9% growth in adjusted earnings, which highlights its operational efficacy and resilience.
Newmont Corporation: What Is Their Portfolio Optimization Strategy? – Major Drivers
- Newmont Corporation reported strong second quarter results, keeping the company well-aligned with its 2024 guidance and reinforcing its position to improve financial performance as the year progresses.
- In the quarter under review, Newmont achieved a production of 1.6 million ounces of gold, alongside 477,000 gold equivalent ounces from other minerals including copper, leading to a solid cash flow generation of $1.4 billion from operations and $594 million in free cash flow.
- These figures underscore the company’s robust operational achievements despite the usual challenges faced in the mining sector.
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