In today’s briefing:
- Nintendo (7974) | Negative Surprise….Not Really
- Taiwan Tech Weekly: Hon Hai New All-Time Highs; Asustek Soars; Leading Chip Testing Firm Exits China
- [Meituan (3690 HK,BUY,TP HK$150) Rating Change]: A Turning Point Might Have Arrived on Two Catalysts
- Silicon Motion: Leader in Powerful Niche for Edge AI Memory; Plus Key Wins for Data Center Solution
- Quint Digital: The New Era of Raghav Bahal
- Singamas (716 HK): Net Cash 1.6x of Market Cap, Why Not Privatise?
- Delta Corp’s Links to Mahadev App Scam Reveal Cash Exchange
- RERE: Trimming 2024 EPS Estimate Ahead of 1Q24 Earnings
- GlobalWafers (6488.TT): Demand Was Weaker in 1H24F, and We Hope It Will Be Better in 2H24F.
- China Postal Savings Bank – Lower NIM, But Steady Lending & Credit Costs Suggests All Is Fine?
Nintendo (7974) | Negative Surprise….Not Really
- Operating profit: FY3/24 OP was 529 billion yen (+4.9% YoY) vs analyst estimates of 537 billion (1.5% miss)
- FY3/25 Operating guidance is 400 billion yen, significantly below analyst expectations of 480 billions (-16% miss).
- The initial market reaction may be negative, we would use that as an opportunity to buy into the stock for the cyclical upturn in FY3/26.
Taiwan Tech Weekly: Hon Hai New All-Time Highs; Asustek Soars; Leading Chip Testing Firm Exits China
- Taiwan Tech Rallies Along With Rebound In Global Tech; Hon Hai, Asustek Top Gainers; KYEC a Top Loser After Announcing China Market Divestment
- PC Monitor: The Next Version of MSFT CoPilot Will Be the Killer App for a Global AI PC Upgrade Cycle
- ASMedia GDR Early Look – Momentum Has Been Strong, and Raising Would Grow Its Cash Base Almost 6x
[Meituan (3690 HK,BUY,TP HK$150) Rating Change]: A Turning Point Might Have Arrived on Two Catalysts
- We upgrade Meituan because we believe its success in Hong Kong might be replicable on a global scale.
- The upcoming autonomous driving (ADS) revolution has deep and fundamental implications in permanently cutting Meituan’s logistic cost;
- We upgrade the stock from SELL to BUY and raise TP to HK$150/share
Silicon Motion: Leader in Powerful Niche for Edge AI Memory; Plus Key Wins for Data Center Solution
- Silicon Motion’s lQ24 results confirmed the company’s end-demand strength as implied by previous Samsung and SK Hynix management commentary re: solid state memory.
- Management has increased 2024E guidance, citing rising ASPs and strong demand due to its memory controller products’ usage in edge AI applications such as AI PCs and AI smartphones.
- The street upgraded target prices across the board after the results; however we note the stock remains below its past acquistion offer price by Maxlinear and we see further upside.
Quint Digital: The New Era of Raghav Bahal
- Quint Digital (QUINT IN) announces alterations to its MoA, changing its name and expanding its digital ventures, including joint ventures and acquisitions.
- Quintype Technologies India Limited’s impressive growth and the acquisition of Lee Enterprises (LEE US) highlight Quint Digital’s ambitions and potential.
- Despite debt concerns, Quint Digital’s strategic investments in digital media and technology position it for substantial growth, potentially reshaping the digital publishing landscape.
Singamas (716 HK): Net Cash 1.6x of Market Cap, Why Not Privatise?
- Singamas Container Holdings (716 HK) is interesting in that it has a net cash of US$300m (HK$2.35bn), but its market capitalisation is only HK$1.5bn.
- This is a possible privatisation candidate given the steep discount to cash. The thin trading volume made it difficult to function as a financing platform.
- Business-Wise, it should have passed the trough as global container box plant utilisation is expected to improve in the next two years, driving profitability recovery.
Delta Corp’s Links to Mahadev App Scam Reveal Cash Exchange
- Delta Corp Ltd (DELTA IN) sells its Nepal casino business to Ability Games amidst allegations of connections to illegal betting and money laundering.
- The ED’s investigations into Mahadev Online Book reveal a Rs 3,916 crore scam, freezing of Rs 580.78 crore assets, and involvement of companies like Ability Games.
- CEO of Delta Corp Ltd (DELTA IN)mentioned in ED statement that they have agreed for 10Crs over and above the transaction value.
RERE: Trimming 2024 EPS Estimate Ahead of 1Q24 Earnings
- Despite a slightly flatter revenue/margin trajectory outlook, we remain optimistic that ATRenew’s differentiated pre-owned consumer electronics transactions and services platform in China will continue to drive outsized growth in transaction volumes, sales, fees, and profits over the long run.
- While RERE has meaningfully outperformed recently, we believe current levels for the stock still provide investors with an attractive entry point, as awareness and appreciation of the company’s business model, growth prospects, competitive positioning, and valuation disconnect increasingly take hold.
- Despite what we believe to be conservative inputs/assumptions, our DCF model suggests a wide disconnect between ATRenew’s fundamentals and the stock’s current price.
GlobalWafers (6488.TT): Demand Was Weaker in 1H24F, and We Hope It Will Be Better in 2H24F.
- 1Q24 revenue and GM are in line, but operating income at 24.3% was 1% below consensus.
- GlobalWafers anticipates revenue in 2024 will likely be similar to 2023, which means 1H24 revenue could account for 45% of the 2024 yearly revenue.
- The planned dividend payout for 2024 is NT$19.0, with NT$8.0 from 1H23 and NT$11 from 2H23.
China Postal Savings Bank – Lower NIM, But Steady Lending & Credit Costs Suggests All Is Fine?
- NIM is continuing to decline, from ~2.5% at its recent peak to ~1.8% in the most recent quarter. This may be from higher rescheduled loans.
- Loan growth ascent is strangely steady, and not indicative at all, of any business cycle. This alone is a concern, for true visibility of figures.
- Impairment costs do not suggest concern on underlying credit metrics, but with far higher loan balances in the past few years, this is an even greater worry.
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