In today’s briefing:
- Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent
- Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise
- Los Andes Copper: Insider Buying Continues and PFS in Next 60 Days
- Vitasoy (345): Time to Bounce
- Kino Indonesia (KINO IJ) – Staples with a Discretionary Edge
- Foxconn / Hon Hai: Quick-Take On The Zhengzhou Outbreak; Accumulate on Weakness
- Mitra Keluarga Karyasehat Tbk (MIKA IJ) – Higher Volumes Lower Intensity
- Takeda: Thrilling Journey Ahead with a Dengue Vaccine Launch and New Approvals
- Asahi Intecc (7747 JP): Stellar Performance in FY22 Likely to Accelerate in FY23
- Ping An Healthcare and Technology (1833.HK) – The New Acquisition Is Hard to Turn Things Around
Oriental Land: Modest Price Reaction to Revised Guidance Indicates a Breakdown Is Imminent
- Oriental Land (4661 JP) raised its FY23 revenue and OP guidance by 8.4% and 59.4% respectively last week sighting a recovery in demand for leisure during the second-half of the year.
- The modest price reaction to upgraded guidance could be an indication that a breakdown is imminent.
- Cost overruns of ¥70bn and a delay to the scheduled opening of Fantasy Springs from FY23 to FY24, could force investors to second guess consensus medium-term expectations.
Mercari – Q1 23 Results Reaction: Strong Domestic Drives OP Beat but Spending to Rise
- Domestic results were better than we expected driving operating income to its highest level in six quarters. Management will launch credit card services to boost fintech exposure
- The US business remains a drag on results with platform sales down 5% YoY and expanding operating losses. A downgrade to expectations is likely in the quarters ahead
- Q1 results were better than we expected but a weak US business and higher spending ahead may disappoint markets that bid shares 28% higher over the last month
Los Andes Copper: Insider Buying Continues and PFS in Next 60 Days
- Los Andes Copper, our preferred copper junior exploration company, will have an updated PFS out in the coming 60 days.
- Meanwhile, regular insider buying continues by Chief Executive Michael Jones.
- Los Andes Copper remains key M&A target for larger diversified miners.
Vitasoy (345): Time to Bounce
- Vitasoy Intl Holdings (345 HK) was shunned by investors last year as its products were taken off the shelves in China, causing its revenue from China to plummet.
- Recently announced a substantial increase in net profit vs last year.
- Despite the recent uptick, Vitasoy’s share price is still trading at 50% PBR vs 5 years ago.
Kino Indonesia (KINO IJ) – Staples with a Discretionary Edge
- Kino Indonesia (KINO IJ) is one of Indonesia’s most interesting staples players with a strong share in a number of segments within beverages and personal care which dominate its sales.
- The company has seen a decent rebound in its beverages business as mobility has improved but continues to face some headwinds from higher input costs and packaging for personal care.
- Kino Indonesia (KINO IJ) has been selectively increasing prices to offset higher costs and is seeing an improvement in sales of some of its more discretionary products.
Foxconn / Hon Hai: Quick-Take On The Zhengzhou Outbreak; Accumulate on Weakness
- Some workers have been fleeing Hon Hai’s largest iPhone production facility in Zhengzhou, China over the weekend, due to COVID-19 outbreak lock-downs.
- Even a significant hit to 4Q22E earnings is unlikely to change the 2023E and 2024E financial outlook or valuation multiples for the company, in our view.
- Even after considering that Q4 is a high production period, if we assume November is about 1/10th of annual production, then only an estimated 2% annual reduction is at risk.
Mitra Keluarga Karyasehat Tbk (MIKA IJ) – Higher Volumes Lower Intensity
- Mitra Keluarga‘s 3Q2022 results reflected the changing environment with patient volumes higher and back above COVID levels but treatment intensity came down YoY in 3Q2022 given last year’s Delta base.
- MIKA continues to expand its hospital numbers through greenfield and brownfield expansions with three new hospitals due to open in the next 12 months plus it is open to M&A.
- Mitra Keluarga’s treatment intensity should start to improve over the next few quarters given management’s focus on this plus easier YoY comparisons. Valuations remain attractive versus historical levels.
Takeda: Thrilling Journey Ahead with a Dengue Vaccine Launch and New Approvals
- Takeda Pharmaceutical (4502 JP) reported 2QFY03/2023 results last week. Reported revenue increased 18.6% YoY to JPY1.0trn (vs consensus JPY962bn) while OP increased 7.2% YoY to JPY104.4bn (vs consensus JPY119bn).
- Growth in sales was driven by Takeda’s blockbuster drug Entyvio (+36.6% YoY), Takhzyro (+75.8%) and immunoglobulin products (HYQVIA in particular).
- The company also has raised its peak sales estimate for Entyvio to US$7.5-9.0bn (from US$5.5-6.5bn) driven by further market growth and market share expansion.
Asahi Intecc (7747 JP): Stellar Performance in FY22 Likely to Accelerate in FY23
- Asahi Intecc (7747 JP) reported better-than-expected FY22 results, driven by overseas sales primarily in Europe and China mainly due to market recovery and a weaker yen versus other major currencies.
- Asahi has raised FY23 revenue guidance to ¥89.3 billion (+15% y/y) from ¥83.5 billion earlier. However, with weakening yen, another beat is on card.
- Although Asahi shares have strong upside potential, continued hospital staff shortages in the U.S. and COVID-related restrictions in China are the main downside risks.
Ping An Healthcare and Technology (1833.HK) – The New Acquisition Is Hard to Turn Things Around
- In 2022H1, Ping An Health’s losses narrowed and gross profit margin increased, with various financial indicators showing an improving trend. The Company also announced a new acquisition recently.
- In the process of turning from 2C business to 2B business, Ping An Health hopes to expand B-end users who can contribute higher margin, but this transformation would encounter difficulties.
- If the payment method in China is not changed (still dominated by national medical insurance payment, with small portion of commercial insurance), it’s difficult to improve the profitability qualitatively.
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