In today’s briefing:
- Pinduoduo (PDD US): More Thoughts on TEMU
- 2021 High Conviction Seven & I: Major Headwinds Deflected By The Yen Depreciation, Upside Is Limited
- Ibiden (4062 JP): Another Chance for Long-Term Investors
- Softbank Group – Vision Fund: Gains on Dollar Basis in Q3 but Stronger Yen Points to Quarterly Loss
- Peptidream (4587 JP): Rising Drug Discovery Collaborations To Drive Growth; New Revenue Stream Added
- Taiwan Tech Weekly: Signs TSMC Winning the 3-Nm Battle Vs. Samsung, Apple Bargaining Down Suppliers
- Super Hi International: Trading Dynamics Post Listing Amid High Volatility
- Leapmotor: Sell
- Jiangsu Hengrui Medicine (600276.CH) – About The Performance Recovery and the Concerns Behind
- IPAR: Catalysts for Further Growth
Pinduoduo (PDD US): More Thoughts on TEMU
- We believe it was a wise move for PDD to launch the overseas online marketplace TEMU first off the U.S., because of its massive, lucrative and integrated retail markets.
- Still, the adventure lacks some of the recipe for successes PDD made during its early days, and the failure of Wish suggests pricing not come at the expense of quality.
- We expect TEMU to lose US$2bn in 2024 (1/3 of PDD’s FY22 earnings) and won’t generate meaningful profit probably until 2026, reinforcing our view on PDD’s near-term earnings risk.
2021 High Conviction Seven & I: Major Headwinds Deflected By The Yen Depreciation, Upside Is Limited
- We would be closing our 2021 high-conviction long trade on Seven & I Holdings (3382 JP) before they release 3QFY23 results next week.
- Although we are not expecting the company to miss consensus estimates this time around, we are expecting significant downside risks to Seven & I’s US business throughout the year.
- Given that shares went nowhere after 12% revenue and 1% OP beats in the previous quarter is a good indication that the upside is limited.
Ibiden (4062 JP): Another Chance for Long-Term Investors
- Operating profit hit a 15-year high in the six months to September. That appears to have been the cyclical peak.
- Guidance for 2H of FY Mar-23 is probably conservative, but year-on-year profit comparisons will probably be negative for at least a year.
- After rising by 44% from mid-October to mid-November, Ibiden’s share price has given up more than half that gain. Long term investors may again look for an entry point.
Softbank Group – Vision Fund: Gains on Dollar Basis in Q3 but Stronger Yen Points to Quarterly Loss
- The Vision Fund public portfolio closed Q3 in the black as gains for Didi and AutoStore offset weakness for Asian investments Goto and Coupang. We have included updated tables inside
- On a yen basis, however, Softbank will likely post a Q3 segment loss for Vision Fund as a weaker dollar more than offsets the local currency gains.
- SBG shares have traded close to the 35% discount to NAV level since end-November but that could expand if sentiment on China weakens or tech valuations remain volatile
Peptidream (4587 JP): Rising Drug Discovery Collaborations To Drive Growth; New Revenue Stream Added
- Peptidream Inc (4587 JP) aspires to be a world leader in drug discovery and development to address unmet medical needs by leveraging on proprietary PDPS technology, a peptide discovery platform.
- Driven by expanding research collaboration programs and progressing pipelines, Peptidream guided for revenue of ¥13–15B from drug discovery and development business in 2022, up from ¥9.4B in 2021.
- Foray into Radiopharma adds a regular revenue stream. Peptidream expects the business to report revenue of ~¥11.5B and remain marginally profitable for 2022.
Taiwan Tech Weekly: Signs TSMC Winning the 3-Nm Battle Vs. Samsung, Apple Bargaining Down Suppliers
- TSMC’s revenue could drop in the near-term due to customers cutting orders, however full year 2023E growth still likely thanks to advanced chips.
- Samsung has guided staff internally for a major slump in its semiconductor unit’s operating profit.
- Apple is pushing for price cuts amongst its suppliers due to weak end demand for its products.
Super Hi International: Trading Dynamics Post Listing Amid High Volatility
- On 30 December, Super Hi International Holding (9658 HK) completed its separate listing in HK from Haidilao by the way of introduction. The trading has been highly volatile so far.
- Our base case valuation of Super Hi International is target price of HKD13.6 per share, which represents a 40% upside from current levels.
- The same store sales at Super Hi improved significantly in nearly all major regions in 1H 2022.
Leapmotor: Sell
- Sales has been weak since October, mainly due to price hike.
- Technology leadership may not be sustainable with limited R&D investments.
- EREV version may not be the right solution for the company’s long-term growth.
Jiangsu Hengrui Medicine (600276.CH) – About The Performance Recovery and the Concerns Behind
- There could be some catalyst for Hengrui, such as the NRDL negotiation in early January 2023, the slowing down of the negative impact of VBP and the increasing outpatient volume.
- Hengrui’s performance low point was in 2022, and it would gradually recover after that. If investors want to invest in Hengrui, 2023 is a good time to take action.
- However, Hengrui could be hard to return to its peak. Without the next PD-1 level blockbuster product, it would be difficult for Hengrui to achieve complete performance reversal.
IPAR: Catalysts for Further Growth
- IPAR has added Lacoste to its portfolio of fragrance licenses and should lead to incremental growth in 2024.
- Lacoste, like IPAR’s other major licenses, is a well-established brand that is likely to immediately contribute to sales and earnings growth when in 2024
- Heading into the holiday shopping season of 2022, fragrance was proving as a high demand category from consumers
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