Daily Brief Equity Bottom-Up: Nvidia’s China Dominance in AI Accelerator Has Serious Deficiencies and more

• Nvidia’s H20 and upcoming B20 were launched to comply with China export controls, and have remained successful due to deficiencies and supply issues for Huawei’s Ascend AI accelerators.
• However, Nvidia’s China success will be short-lived due to increasing LLM compute requirements and no method for it to offer a more performance dense offering due to export controls.
• Not only will Huawei’s upcoming Ascend AI accelerator mitigate this issue, but it will likely also aim to address some of the other deficiencies of the Ascend platform too.

• The Bank of Japan has raised its short-term interest rate to 0.25% from 0.1% ahead of the core of consensus expectations, and BoJ plans to pare back purchases of JGBs
• We focus on those big-cap Japanese banks that are well geared into higher domestic rates through loan books and BoJ deposits, that also have lesser exposure to rising JGB yields
• We stay broadly positive on Japanese bank shares, despite their performance; we add Chiba to the buy list of Resona, Mizuho, SMFG and Concordia, whilst keeping Kyoto as a sell

• Samsonite is a global luggage leader with three major brands: Samsonite, Tumi, and American Tourister
• Despite challenges during COVID, Samsonite has successfully executed a turnaround by closing stores and improving sales and margins
• The stock is undervalued in Hong Kong, with plans for a secondary US or European listing in the near future, potentially offering a 100% upside opportunity.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Q224 revenues of $5.8 billion, +5.5% QoQ, +9% YoY and $100 million above the guided midpoint
• AMD forecasted current quarter revenues of $6.7 billion at the midpoint, up 15% QoQ and about the same YoY.
• AMD shares are up 9% in premarket trading, hardly the response one expected from a good but not amazing report. But why?

• One of the biggest stories in the Korean e-commerce sector this week has been TMON and WeMakePrice filing for court receivership due to liquidity crisis. 
• Singapore’s Qoo10 is the controlling shareholder of TMON and WeMakePrice. Young-Bae Ku is the largest shareholder of Qoo10 with a 42.77% stake, followed by KKR with a 25.65% stake. 
• Competitors such as E-Mart and Coupang are most to benefit. PG companies such as KG Inicis and NHP KCP are negatively impacted. 

• Welcome back to the portfolio updates series!
• This month, I am a few days early with the update. The reason is that my wife and I are celebrating our wedding next weekend, followed by an extended vacation, during which I will be disconnected for a couple of weeks.
• As a result, the next stock deep dive will not be released until the last week of August.

• Mediatek 2Q24 Earnings Beat Expectations; Strong Mid-Term Revenue Guidance Maintained
• 2Q24 Global Smartphone Market Witnessed Best Growth in Three Years
• Repeats Strong Mid-Term Guidance; Continues to Signal Revenue Strength for 2025E & 2026E. Maintain Structural Long Rating.

• Shell forecasts a decline in upstream production, gas price realisations, and refining margins. Its QoQ Revenue & EPS are expected to drop 4.3% and 21.7%, respectively.
• Shell anticipates Q2 post-tax impairments of USD 1.5 to USD 2 billion due to halting a biofuels plant in Rotterdam and divesting its Singapore refinery.
• On a brighter note, Shell anticipates higher chemical margins, increased marketing sales volume, and improved refinery utilisation rates in Q2.

• Bank Central Asia (BBCA IJ) booked another set of impressive results in 2Q2024, with continuing momentum behind loan growth driven by corporate and consumer loans, with credit quality under control.
• The bank continued to grow its deposits with CASA growth outpacing overall deposits, which helped underpin an increase in net interest margin to 5.8%, with credit costs at 0.2%
• BCA remains a top pick amongst Indonesian banks, with a long-term track record of producing sector returns, with a strong risk management but dynamic management culture. 

• China Communications Construction (1800 HK)‘s overseas contracts surged sharply in 2Q24 as market share gained. Slow domestic contracts are transient as bond issues will accelerate.
• Its backlog continued to grow to 4.7x 12-month forward revenue, which is higher than the 5-year average of 4.1x. Improving margin trend in 1Q24 will sustain into 2H24.
• With a projected ROE of 8.4% for the next two years, its 0.2x P/B is inexpensive. It is also attractive based on dividend yields of 7.7% and 8.4%, respectively.