Daily Brief Equity Bottom-Up: Perfect Medical 1830 HK: High Conviction (8% Div Yield and more

• Perfect Medical Health (1830 HK) reported a steady earnings growth of 3.5% YoY for FY23 despite the interruption of operations in China.
• Since its listing, the company has consistently maintained a ROCE of >25%, with FY23 being no exception. Net cash and investments at 738 mn HKD represent 18% of market capitalization. 
• The company declared a final dividend of 17 cents (Full year dividend FY23: 30 HKD cents Vs. FY22: 25 cents), representing an 8% yield with a 118% payout ratio. 

• In the past week, several leading Korean instant noodle makers including Nongshim, Samyang Foods, and Ottogi announced that they will be reducing instant noodle and snack prices starting July.
• This government pressure to lower instant noodle and snack prices are likely to negatively impact companies including Nongshim, Samyang Foods, and Ottogi Corp.
• We believe the share prices of the three major instant noodle makers including Nongshim, Samyang Foods, and Ottogi could face further underperformance relative to KOSPI in the next 3-6 months. 

For our next Corporate Webinar we are glad to welcome IREIT Global’s CEO, Louis d’Estienne d’Orves.

In the upcoming webinar, Louis will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Jesus Rodriguez Aguilar. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Thursday, 6 July 2023, 17:00 SGT.

About IREIT Global

IREIT Global, which was listed on 13 August 2014, is the first Singapore-listed real estate investment trust with the investment strategy of principally investing, directly or indirectly, in a portfolio of income-producing real estate in Europe which is used primarily for office, retail and industrial (including logistics) purposes, as well as real estate-related assets. IREIT Global’s current portfolio comprises five freehold office properties in Germany, five freehold office properties in Spain and 27 freehold retail properties in France.

IREIT Global is managed by IREIT Global Group Pte. Ltd., which is jointly owned by Tikehau Capital and City Developments Limited. Tikehau Capital is global alternative asset management group listed in France, while City Developments Limited is a leading global real estate company listed in Singapore.

• AKR Corporindo provided an unseasonally upbeat indication for 2Q2023 for its petroleum and chemical product distribution businesses, and for the strong demand pick up for its retail JV with BP.
• Indications suggest that the company is well on track to meet its FY2023 guidance for its distribution businesses, and is optimistic about the build-out of its retail filling stations. 
• Its JIIPE industrial estate secured 17 hectares in 2Q2023 but its pipeline is now 300-350 hectares, underlining the increasing importance to AKR Corporindo (AKRA IJ).

• Hon Hai shares have rallied to new 52-week highs; We update our model and sanity check the company’s 2025E gross margin target.
• Hon Hai can realize its target higher gross margin as its revenue mix changes between its legacy contract manufacturing and components/ higher value products revenue.
• We maintain our 12-month price target of NT$155 per share, 35% above current levels and higher than the entire Street.

• Micron released results and its shares are rising U.S. afterhours. The company said that its trough is past, implying the same for other memory chip producers such as Nanya Tech.
• Given Nanya Tech recently rallied ahead of Micron, then reverted back most of the gains, we see at least a10% short-term Long trade for Nanya shares here.
• Micron also made positive comments about the PC industry inventories. However, Taiwan PC names are already near 52-week highs. Elan Microelectronics could be a yet-to-rally play: See our full piece.

• Yageo has been relatively range-bound since early 2023E, missing completely the ‘AI Rally’ that caused many other Taiwan names to rise. Hence one can buy it without chasing hype.
• We spoke with management. The company has historically enjoyed durable margins and we believe could enjoy a cycle turn-around as its products are linked to high-tech power needs.
• While not directly linked to AI demand, its products have strong long-term demand dynamics and are necessary for AI servers, high-end computing, autos, defense, and communications. Structural Long, NT$690 target.

• Trigon was granted seven large silver and lead prospecting licenses encompassing 112km2 in the Addana Mountains of Southern Morocco.
• This morning, Trigon Metals Inc. (TM:TSXV), announced that it has been granted seven exclusive prospecting licenses encompassing 112km2 in the Addana Mountains of Southern Morocco, called the Addana Project (Figure 1).
• The Addana permit area is 14x the size of the Silver Hill target and currently, the historical workings appear far more pervasive despite the lack of modern data.

• What sets HDFC Bank apart from peers is stability, strength in profit, ROA, NPLs, NIM
• Peers see volatile, high NPL ratios, where HDFC Bank may see NPLs at less than 1% soon
• Amalgamation HDFC into HDFC Bank can see more interest, supported by fundamentals 

• Oracle’s upside in the near term might appear limited, but there is potential for higher dividend growth going forward.
• The debt level should be monitored closely by investors, but in my view does not present a major risk for Oracle’s dividend.
• The dividend yield remains low, but the debt level must be monitored by investors.