Daily Brief Equity Bottom-Up: Perfect Medical Management FY23 Concall: Highlights Bright Outlook for FY24 and more

• We spoke with the management of Perfect Medical Health (1830 HK). The key highlight is a steady recovery for FY24e and an overall expansion of 60% in three years. 
• Expansion plans in HK (75% of revenue) have commenced, with ten centers opening over the year, adding to the existing 22 HK centers (one already opened in June 2023).
• They also highlighted an aggressive long-term goal of making one bn HKD of profit by FY26 (Mkt cap: 4.8 bn HKD) and short-term guidance of 30-40% profit growth for FY24e. 

• Rakuten Group (4755 JP), having experienced an 80% decline in value over the last 8 years, now emerges as an enticing prospect for value investors.
• The combined fair value of Rakuten’s Cards, Bank, and Mobile businesses now surpasses 100% of the company’s market capitalization.
• Rakuten Ichiba, valued at ¥600bn, appears significantly undervalued when compared to ZOZO Inc (3092 JP) and MonotaRO Co Ltd (3064 JP), which hold approximately 2.0x Rakuten Ichiba’s valuation.

• Kao has the lonest period of consecutive earnings growth in the Nikkei’s new “Consecutive Dividend Growth Stock Index”
• With a 2.8% yield and a long history of raising its dividend, Kao should definitely be on the income investor’s radar screen
• Despite the recent underperformance of the stock (-4% ytd), Kao does not represent compelling valuations

• EV adoption in the ASEAN is very low compared to developed markets including the US, the Europe and China due to higher ASPs and lack of logistics, maintenance and repair.
• However, there has been a rapid growth in EV related investment in the region recently, focusing on developing domestic EV markets to make them more affordable while conserving the environment.
• The governments have put forward several incentives such as government funding, tax incentives to buy EVs, while introducing measures to discourage the use of ICE vehicles.

• Q1FY24 AUM growth came in stellar at 9%+ QoQ, led by highest-ever quarterly AUM addition of INR 22700cr vs INR 16537cr QoQ. 
• BAF recorded its highest-ever quarterly increase in customer franchise at 3.84mm, taking the total to 72.98mm vs 69.14mm QoQ. New loans booked were also strong at 9.94mm vs 7.56mm QoQ.
• Deposits book grew strong to INR 49,900cr vs INR 44,666cr, a growth of 11.7%+ QoQ. Liquidity surplus is at INR 12,700cr vs INR 11,852cr QoQ.

• Key customers & their retail partners battling excess inventory, waning consumer demand, and market share losses in certain geographies
• Plans for capacity expansion amid demand uncertainties and alt data and macro picture may prove aggressive and along with risks of reshoring/nearshoring & friend-shoring may prove margin dilutive
• Consensus expectations for 2H23 and 2024 appear overly optimistic and valuation is not cheap given the growth profile

• Fenbi Ltd (2469 HK) is a newly listed China edtech company that focuses on tutoring for China civil servant exams.  
• The company’s share price was caught by a perfect storm in June, dropping by as much as 70% during the month.
• Very interesting opportunity to have exposure to a quality company in a sector that is very different from K12 tutoring.  

• Celltrion Inc (068270 KS) has launched Humira biosimilar Yuflyma in the U.S. market, with a list price of $6,576.50 per month, 5% cheaper than Humira.
• Yuflyma is a citrate-free formulation that is highly concentrated. More than 80% of patients treated with Humira in the U.S. rely on a high-concentration and citrate-free formulation.
• Celltrion has submitted marketing application to the FDA for Eylea biosimilar candidate, CT-P42. The company plans to file for approval for the same in Europe and other countries later.

• One of main criteria for ACCC to allow ANZ’s takeover of Suncorp centers around competition, will it worsen as a result
• There are 8 banks in Australia with over 100 branches, if the takeover is allowed, this puts the 127 Suncorp branches into the 668 branch stable of ANZ
• There is plenty of expert and public testimony that such a merger would see less competition especially in SME and agribusiness loans, and possibly limit physical access to banking

For FY23 Picton Property Income (PCTN) published resilient underlying (EPRA) earnings, which together with strong rent collection supported a 4% increase in DPS paid. The impact of market-wide property yield widening on NAV was mitigated by portfolio outperformance and low gearing. Continuing occupier demand, rent growth and mostly long-term, fixed-rate borrowings are positive indicators for further progress.