In today’s briefing:
- NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
- Tech Supply Chain Tracker (31-Aug-2024): Samsung’s growth depends on AI, HPC, autos.
- Premier Energies Promoter Sold Shares Just Before IPO Raises Governance Concern
- [Li Auto (LI US, BUY, TP US$22) TP Change]: Expanding Outside of SUV Is Still the US$mn Question
- Sanyo Industries (TYO 5958) – $60m Net-Net With 5 P/E, 3.8% Dividend, That’s Buying Back Shares
- ELGi Equipments- Forensic Analysis
- Bank Mandiri (BMRI IJ) – Escalating Returns and Lower Credit Costs
- Lululemon 2Q’24 Update
- LiAuto (LI US, BUY, TP:USD25.0): Good 2Q-2024 Results, on Track to Match Consensus
- BQE: New Water Treatment Plant Contract
NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag
- NVIDIA delivered another blockbuster quarter with record revenues of $30 billion, blowing well past the guided $28 billion, up 15% QoQ and up 122% YoY.
- $5.6 billion in revenues were attributed to Singapore, making up more than 18% of overall revenues and up >5 times YoY
- What the heck is the city state doing with all of those GPUs?
Tech Supply Chain Tracker (31-Aug-2024): Samsung’s growth depends on AI, HPC, autos.
- Samsung’s foundry service growth is driven by AI, HPC, and automotive sectors, showcasing a diverse and promising market strategy.
- Meta is set to launch glasses-like MR device in 2027, aiming to revolutionize the way we interact with technology and the digital world.
- Global OSAT industry is projected to experience significant growth by 2024, fueled by increasing demand for testing and packaging services in the semiconductor market.
Premier Energies Promoter Sold Shares Just Before IPO Raises Governance Concern
- Premier Energies made SALE before Offer For Sale – A mini OFS just before IPO to close investors who helped company in its journey till IPO.
- The stake sale amounting to INR 800+ crores raises the concern over governance and disclosure norms
- Such a unique case where the promoter used the loophole might face actions from SEBI.
[Li Auto (LI US, BUY, TP US$22) TP Change]: Expanding Outside of SUV Is Still the US$mn Question
- LI Auto (LI) reported C2Q24 top line, non-GAAP operating profit and GAAP net income 5.0%, (5.2%) and (20%) vs. our estimates, and in-line, 53% and 6.8% vs. consensus.
- We believe the market has oversold the company.But in our view,the key question is LI’s next product entry under the backdrop of Xiaomi consolidating its position in the EV sector.
- We believe LI should continue to explore its “family car” brand niche in entering the sedan market. If so, volume and margin can co-exist.
Sanyo Industries (TYO 5958) – $60m Net-Net With 5 P/E, 3.8% Dividend, That’s Buying Back Shares
- Sanyo Industries Product Categories Sanyo Industries (TYO 5958) is a manufacturer of construction materials that’s been in business since 1948.
- Their main products are sheet metal works used for flooring, roofing, aluminium building materials, and rooftop ventilators.
- They also manufactur earthquake and other disaster resilient components.
ELGi Equipments- Forensic Analysis
- Elgi Equipments (ELEQ IN) headquartered in Tamil Nadu, India manufactures a range of air compressors and automotive equipments and sells across domestic and international geographies.
- Overall, balance sheet looks strong with consistent FCF generation, upward sloping ROCEs and low risk of solvency
- But one needs to be cautious about the performance of subsidiaries, especially the Belgium and US arms, and goodwill assessment, whistle blower trends, etc.
Bank Mandiri (BMRI IJ) – Escalating Returns and Lower Credit Costs
- Bank Mandiri’s recent results reflect the success of the bank’s strategy to grow higher-yielding loans and its strength in corporate, commercial, and consumer loans, with micro showing slower growth.
- The bank funding base remains solid with strong CASA growth, helping it to maintain NIMs. Mandiri’s mobile banking under Livin’ continues to drive its transactional banking, loan and deposit growth.
- Bank Mandiri‘s upgrade to its loan growth projects speaks volumes about its confidence. With credit costs at less than 1% and ample liquidity, the bank is well-positioned for growth.
Lululemon 2Q’24 Update
- It is far from common for a stock to be up 4% after missing the revenue guide for the quarter and slashing the full-year revenue guide for the year.
- That’s exactly what happened with Lululemon today which should tell you the kind of sentiment going into the earnings!
- The crux of the bear thesis on Lulu usually circles around their US business.
LiAuto (LI US, BUY, TP:USD25.0): Good 2Q-2024 Results, on Track to Match Consensus
- 2Q-2024 results is within ours and consensus expectations. Competition is tough, but LiAuto managed to remain profitable
- Management is boosting R&D expenditure and boost spending on expanding number of charging stations, all for the benefit of its customers.
- Our fair value of USD25 implies 16x FY25 PE – average for auto growth stock. A bargain with 3-year CAGR of 38%, net cash, and churns high free cash flow.
BQE: New Water Treatment Plant Contract
- BQE announced that it has been contracted for a new water treatment plant for the closure of the legacy Valley Tailings Facility in the Yukon.
- This continues the rapid growth that BQE has posted in its recurring operations segment which grew 79% YoY and 43% QoQ in Q2.
- The plant is expected to be completed in Q2/25 and operate for six years.
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