In today’s briefing:
- NTT (9432 JP) – Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?
- China E-Commerce: Is Still a Dead Cat
- Apollo Hospitals Enterprise (APHS IN): Hospitals Business Drove Q4 Result; Positive Outlook For FY24
- Polaris Holdings (3010): Experiencing a Growth Renaissance
- GMR Airports Infrastructure- Still a Work In Progress
- Electronic Arts Inc.: New Game Launches & Other Drivers
- Airbnb Inc.: Possible Revenue Growth From The Affordable Rooms Offering – Key Drivers
- Occidental Petroleum Corporation: Notable Progress On The Carbon Capture Front & Other Developments
- PDD/Shein/Tiktok: Temu Continues to Experience Rapid Growth, a Summary of Our Recent Channel Checks
- Palantir Technologies Inc.: New AI Platform Could Become The Secret Sauce For Continued Hyper Growth – Key Drivers
NTT (9432 JP) – Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?
- The Kishida administration is looking for funding sources for its two big objectives – 1) raising the birthrate, 2) raising defense spending by 60% in 5yrs to 2% of GDP.
- The second is not new. It was in an “order” PM Kishida gave to FinMin Suzuki and MinDef Hamada last November. They need ¥48trln by end 2027.
- Yesterday, in an LDP meeting, the idea of changing the NTT Law so the government could sell more NTT shares was mooted. It’s worth thinking about.
China E-Commerce: Is Still a Dead Cat
- Positive surprises in profitability during Q1 2023 failed to reverse the long-term decline of Chinese e-commerce, possibly due to market recognition of the temporary impact of cost-cutting and monetization efforts.
- In our opinion, robust growth in GMV is fundamentally essential to reverse the long-term downward trend of the Chinese e-commerce sector.
- Chinese e-commerce sector no longer discloses GMV, but Express delivery volume indicates a 20% decline in parcel volumes compared to 2021, potentially reflecting a decrease in GMV.
Apollo Hospitals Enterprise (APHS IN): Hospitals Business Drove Q4 Result; Positive Outlook For FY24
- Apollo Hospitals Enterprise (APHS IN) reported a 21% YoY growth in revenue in Q4FY23, mainly driven by 31% and 18% revenue growth in Apollo HealthCo and hospital business, respectively.
- For FY24, Apollo expects HCS segment revenue growth at 15% YoY, mainly driven by higher occupancy. The company aims to improve hospital occupancy to 70% by the end of FY24.
- Apollo 24/7 business is on track to achieve breakeven at an entity level in Q4FY24. GMV of Apollo 24/7 is expected to be double in FY24 compared to FY23 level.
Polaris Holdings (3010): Experiencing a Growth Renaissance
- The waiting is over – Q4 FY3/2023 results highlighted 1) continued recovery in the hotel industry spurred by domestic and overseas traveler demand, 2) improvement in profit structure through business model transformation and increased accommodation demand has led to an increase in revenue, and 3) the completion of the acquisition of Red Planet’s business in the Philippines highlights the company’s expansion into overseas operations.
- However, as the tourism industry in Japan is in a full-fledged recovery phase, the company believes it can achieve sustained growth.
- Sound financial foundations – the company’s recapitalization strategy has been a success, and we maintain our view that there will be positive free cash flow generation in FY3/2024.
GMR Airports Infrastructure- Still a Work In Progress
- GMR Airports Infrastructure (GMRI IN) saw pressure on its scrip after its results, that witnessed losses widening to INR-8.4 bn in F23 from INR -7.5 bn in F22 (continuing operations).
- The losses have further dented the balance sheet, that already looked fragile over a number of years.
- The company also faces cash generation problems on the back of debt burden, apart from severe contingent liabilities, that could further hamper the net-worth. Investors should remain cautious.
Electronic Arts Inc.: New Game Launches & Other Drivers
- Electronic Arts managed to surpass the revenue expectations as well as the earnings expectations of Wall Street in its recent quarterly result.
- The fiscal year 2023 saw EA SPORTS FIFA thrive, with double-digit growth in net bookings and FIFA 23 becoming the best-selling title in franchise history.
- We give Electronic Arts Inc. a ‘Hold’ rating with a revised target price.
Airbnb Inc.: Possible Revenue Growth From The Affordable Rooms Offering – Key Drivers
- Airbnb delivered a mixed result in the recent quarter, with revenues above market expectations, but it failed to surpass the analyst consensus in terms of earnings.
- The company experienced significantly high bookings, with over 120 million Nights and Experiences Booked in Q1.
- Revenue grew significantly year-over-year, and the quarter was the most profitable GAAP-based.
Occidental Petroleum Corporation: Notable Progress On The Carbon Capture Front & Other Developments
- Occidental Petroleum Corporation delivered a disappointing set of results as the company was unable to meet the revenue expectations as well as the earnings expectations of Wall Street.
- However, their disciplined approach to capital spending and operational excellence has led to some progress in their shareholder return framework.
- We give Occidental Petroleum Corporation a ‘Hold’ rating with a revised target price.
PDD/Shein/Tiktok: Temu Continues to Experience Rapid Growth, a Summary of Our Recent Channel Checks
- We recently interviewed some Temu merchants, and the main conclusion is that Temu continues to experience rapid growth despite the chaos.
- Temu’s GMV reached a new high in May; Temu faces upcoming challenges from Shein and TikTok, as they are also about to launch their fully managed models.
- Moreover, Temu’s unit economics (UE) has not seen further improvement for several months, and the supply of goods has been a problem;
Palantir Technologies Inc.: New AI Platform Could Become The Secret Sauce For Continued Hyper Growth – Key Drivers
- Palantir Technologies delivered an all-around beat in the most recent quarterly result with solid revenue growth driven by the U.S. commercial business and disciplined spending management.
- Their commercial segment saw significant revenue growth, while the government showed strength.
- Their expanding adjusted operating margins and strong cash flow generation highlight their ability to manage costs while driving revenue growth effectively.
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