In today’s briefing:
- Pinduoduo (PDD): 2Q23, Revenue Significantly Higher Than Consensus, Buy
- Oriental Land: Google Searches For Tokyo Disneyland Dips Double Digits in July & August 2023
- Taiwan Shorts Analysis: AI Supply Chain Stocks With High Short Squeeze Risk
- Ultrajaya Milk (ULTJ IJ) – Back on Track with Dairy and Tea
- Wuliangye (000858 CH): Classic Value Trap
- Gogoro: Hunting for a Contrarian EV Buy; Valuing It as a Utility/Infra Business
- Genting Berhad: 2Q23 Results Show Early Positive Ramping in Early Post Covid Era
- ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher
- Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked
- Rent.com.au Ltd – FY23 Refocus Set to Benefit Future Revenue Generation
Pinduoduo (PDD): 2Q23, Revenue Significantly Higher Than Consensus, Buy
- PDD’s revenue increased by 66% YoY to RMB52 bn, significantly higher than the market consensus RMB43 bn.
- The operating margin declined to 24% in 2Q23 from 28% in 2Q22 due to aggressive expansion outside China.
- We believe the stock still has an upside of 47% for year end 2023. Buy.
Oriental Land: Google Searches For Tokyo Disneyland Dips Double Digits in July & August 2023
- During the initial months of 2QFY24, both Tokyo Disneyland and Tokyo DisneySea experienced a significant double-digit QoQ drop in Google search interest.
- Using Google Search trends data for the first two months of 2QFY24, we anticipate a QoQ decline of about 17% in Oriental Land’s Theme Parks revenue, dropping below ¥100bn.
- 2QFY24 consensus OP is 2.5x above the company’s guidance, and both short and medium term consensus revenue and OP targets for Oriental Land (4661 JP) appear blatantly unachievable.
Taiwan Shorts Analysis: AI Supply Chain Stocks With High Short Squeeze Risk
- We analyze the most shorted stocks in Taiwan and highlight notable AI supply chain stocks who have have some of the highest short interest vs. float in the market.
- Gigabyte Technology (2376 TT) , Global Unichip (3443 TT) , Gold Circuit Electronics (2368 TT) , Inventec Corp (2356 TT) , Mitac Holdings (3706 TT) – high short squeeze risk.
- Some Apple (AAPL US) supply chain stocks, Display-related, and Memory-related stocks are also heavily shorted.
Ultrajaya Milk (ULTJ IJ) – Back on Track with Dairy and Tea
- Ultrajaya Milk (ULTJ IJ) remains a core proxy for the under-penetration of dairy products in Indonesia, which stands at less than half of Thailand in terms of per capita consumption.
- Ultrajaya has seen a strong rebound in sales this year for its UHT milk sales but material pressure persisted in 1H2023 but will abate in 2H2023 improving margins.
- Its carton tea products are seeing a strong rebound and a new distribution warehouse in Cikarang will improve distribution. Ultrajaya‘s growth trajectory is resuming and valuations are attractive.
Wuliangye (000858 CH): Classic Value Trap
- Wuliangye Yibin Co Ltd A (000858 CH), the second largest Chinese liquor company in China, trades at one of the lowest PE multiples in the space.
- Kweichow Moutai (600519 CH), the largest Chinese liquor company trades at 26x 2024 expected earnings, and most other listed Chinese liquor names trade above 20x 2024 expected earnings.
- Upon closer look, Wuliangye is actually a classic case of value trap – slow growth with no change or slowly deteriorating PE multiples.
Gogoro: Hunting for a Contrarian EV Buy; Valuing It as a Utility/Infra Business
- We spoke to Gogoro (GGR US), a beaten-down and under-covered Taiwan EV play listed in the US — As part of a hunt for contrarian plays.
- The company has faced headwinds recently, with hardware sales relatively weak vs. its local market. The battery swapping business is compelling and steadily growing however.
- We find the company fairly valued unless it can show more growth — We value it as two parts, a EV 2-wheeler hardware business and an infrastructure-like battery swapping business.
Genting Berhad: 2Q23 Results Show Early Positive Ramping in Early Post Covid Era
- The company is the most geographically diverse operator in the global gaming space. It has been something of a post-covid laggard relative to sector peers.
- Return to modern profit largely comes from Malaysia Highlands flagship.
- Big unnoticed catalyst could be its key position in the bidding wars for three new licenses to be awarded in metro New York. Genting active there since 2011.
ZTO Express Q2 Results: Strong on Volume | Weak on Price | Margins Up in Q2, But H2 Much Tougher
- Solid Q2 results from ZTO, with deep unit cost reductions offseting weak pricing
- But ultimately, Q2/H1 results are merely in-line with guidance — not better, nor worse
- In this environment, it’s difficult to see what will move ZTO out of recent trading range
Shenzhen Intl (152 HK): Brighter Outlook in 2H23 Not to Be Overlooked
- Poor 1H23 result at Shenzhen International (152 HK) should have been anticipated, and we believe there is good room for sharp earnings improvement in 2H23.
- Completion of logistics projects, more asset value realisation (through REIT and private equity funds), contribution from Yicheng Qiwanli and lower finance costs should underpin outlook.
- SZI is an asset play with significant upside and this is reflected in the undemanding 0.42x P/B. Against its historical average of 0.67x, such a level is almost -2SD below.
Rent.com.au Ltd – FY23 Refocus Set to Benefit Future Revenue Generation
- Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
- The company has reported FY23 revenue of $2.77m, down 17.8% on the previous corresponding period (pcp) but in line with our expectations.
- The EBITDA loss for the year was $2.48m, an increase of 55.5% on the pcp and a little higher than our forecast for a $2.3m EBITDA loss.
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