In today’s briefing:
- Oriental Land: Fantasy Springs Is No Longer on Management’s Interest
- Delta Taiwan Vs. Thailand Monitor: SET50 Re-Inclusion Surge, Biggest Diversion in History
- GoTo: Going Gets Tough
- Ace Hardware Indonesia (ACES IJ) – Will Expansion Mode Be Enough?
- Komatsu (6301) | Plenty of Gas in the Tank
- MMP Industries: Forensic Analysis
- Bank Mandiri (BMRI IJ) – Brimming with Convenience and Returns
- Samsung Biologics (207940 KS): 2022 Revenue Surpassed KRW3T; Strong Growth Momentum to Continue
- Taiwan Tech Weekly: Samsung Results; Will Bleed Competitors; Japan & Holland Join China Chip Ban
- Hon Hai 4Q22 Results Preview: Brace for a Weak Print, But EV Structural Driver Intact
Oriental Land: Fantasy Springs Is No Longer on Management’s Interest
- Aided by the Japanese Government’s efforts to rebuild the COVID-ravaged leisure sector, Oriental Land (4661 JP)’s 3QFY23 OP surpassed consensus by more than 35%.
- We believe 3QFY23 could be a peak in terms of financial performance for Oriental Land, at least until the opening of the Fantasy Springs.
- In addition, the growth story that OLC offered through the expansion of DisneySea, seems to be no longer compelling as the management has simply stopped talking about its progress.
Delta Taiwan Vs. Thailand Monitor: SET50 Re-Inclusion Surge, Biggest Diversion in History
- Delta Thailand has surged post SET50 re-inclusion and the stock has dramatically outperformed both Delta Taiwan and Thailand’s SET Index.
- For both stocks, forward growth rates are expected to be similar for 2023E and 2024E.
- Delta Taiwan’s stake in Delta Thailand alone is now worth nearly 90% of its market cap.
GoTo: Going Gets Tough
- GoTo’s share price lost more than 75% last year following its weaker-than-expected performance and lock-up expiry despite the company entering into a coordinated secondary offering of shares with pre-IPO shareholders.
- The company’s share price has moved up 24% YTD partially driven by cost cutting measures that is expected to improve the company’s profitability.
- Nevertheless, we expect this share price rebound to be temporary with e-commerce and food delivery market in Indonesia slowing down.
Ace Hardware Indonesia (ACES IJ) – Will Expansion Mode Be Enough?
- Ace Hardware has been a distinct laggard amongst listed retailers in Indonesia, with its valuations drifting to multi-year lows, given a slow recovery from the pandemic and limited digital strategy.
- The company has continued to see lacklustre SSSG finish flat for last year but has recently opined a more optimistic outlook for 2023, planning to open 10-15 new stores.
- Ace Hardware Indonesia (ACES IJ) trades on 13.7x FY2023E PER and 12.7x FY2024E PER when it used to trade on twice that multiple with not dissimilar growth rates.
Komatsu (6301) | Plenty of Gas in the Tank
- Komatsu Q3 operating profit rose 54% YoY, beating analyst estimates by around 12%
- Construction and Mining Equipment sales rose 31% in the quarter, or ~10% on a constant currency basis versus industry volume of -6%
- Komatsu shares have sharply lagged the recovery at CAT. We still see significant upside with current P/B of 1.2x
MMP Industries: Forensic Analysis
- MMP Industries (MMP IN) is mainly engaged in the business of manufacturing, selling and distribution and trading of aluminum products such as powder, pyro and flake, paste, foils etc.
- The company has been on the main board of NSE since F20 but however, its financials are plagued with several forensic concerns.
- We highlight takeaways mainly related to negative cash flows and their misrepresentation in reporting standards. Additionally, the company is also engaged in various secretarial audit woes.
Bank Mandiri (BMRI IJ) – Brimming with Convenience and Returns
- Bank Mandiri (BMRI IJ) finished the year with a strong showing of loan growth across the board driven by corporate and commercial loans but micro was also a feature.
- Both the bank’s consumer app under Livin’ and its digital corporate platform under Kopra continue to help drive CASA growth and transactions plus the bank is opening “smart” branches.
- Bank Mandiri (BMRI IJ) is optimistic about the outlook for loan growth and NIMs in 2023, with its digital initiatives continuing to gain traction and drive growth. Valuations are attractive.
Samsung Biologics (207940 KS): 2022 Revenue Surpassed KRW3T; Strong Growth Momentum to Continue
- In 2022, Samsung Biologics (207940 KS) posted record-high consolidated revenue of KRW3 trillion and, driven by new orders, efficient plant utilization, and inclusion of Samsung Bioepis as a wholly-owned subsidiary.
- Plant 4 is on track to be completed in H12023, with active pre-sale activities are rapidly locking in capacity. Strong order momentum continued, with 2022 CMO contract amount of $9.5B.
- Samsung Bioepis reported revenue growth of 12% to KRW946B, driven by stable sales of existing products and new product launch. Humira biosimilar launch in the US is the biggest catalyst.
Taiwan Tech Weekly: Samsung Results; Will Bleed Competitors; Japan & Holland Join China Chip Ban
- Samsung reported 4Q22 detailed results – Semiconductor earnings evaporated and its memory subsegment likely lost money.
- Samsung re-iterated that it would NOT cut capex despite the market downturn – Samsung appears ready to endure losses which is negative for Nanya Tech, SK Hynix, and Micron.
- Japan and the Netherlands have joined the U.S. with chip technology restrictions for China – Hon Hai is a net winner.
Hon Hai 4Q22 Results Preview: Brace for a Weak Print, But EV Structural Driver Intact
- Hon Hai’s upcoming results date hasn’t yet been publicly announced, but last year it was 16 March.
- Gross margin could come in well below consensus, and net profit could be minimal for 4Q22E. Look for reiteration of its longer-term margin target from management.
- We remain structurally bullish on Hon Hai and see it as positioned favorably relative to U.S. China semiconductor restrictions. Our TP for Hon Hai is $155, over 50% above today.
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