Daily Brief Equity Bottom-Up: Playmates Toys: More Details of Upcoming TMNT Toys And… Another Dividend and more

• Playmates Toys (869 HK) just published its FY22 results showing a decrease in revenues of 19% but a consistent dividend of 2c HKD
• More importantly, it shared more details about the TMNT upcoming movie launch
• Reiterate thesis that upon TMNT relaunch Playmates toys could be a major beneficiary

• In C4Q22, JD reported in-line total revenue and beat in profit. We trimmed down our forecast on C1Q23 total revenue by 4% due to slower-than-expected rebound in retail spending. 
• JD is shifting its strategy to be more focused on low price and user, and we suggest that the repositioning period could be painful for the company.
• We cut our revenue forecast by 5%. Our estimates on top and bottom lines in 2023 are (6%) and (28%) below cons. Maintain SELL rating and cut TP to US$27.

• The current slowdown in volume can be attributed to both the broader macroeconomic slowdown & the pausing of the inventory system during the COVID, which has resulted in some mismanagement.
• However, the slowdown is not due to a loss of market share, product quality, or adverse distributor policies, indicating a cyclical issue rather than a structural one.
• In case of a gradual recovery of the macroeconomic situation and appropriate measures taken by Page Industries (PAG IN) , volume growth may pick up in the future.

• Through operating luxury shopping malls in China, Hang Lung Properties is the only HK-listed stock that provides exposure to the China luxury consumption story.  It is trading at attractive valuation.
• Major concerns are 1) leakage of retail sales after re-opening and 2) impact on luxury consumption from negative wealth effect.  Most of the risks are priced in at current valuation.
• Short-Term, China consumption will recover post-COVID as consumer sentiment rebounds.  Long-term, the structural story of China consumption remains intact, supported by growing middle class and increasing disposable income and savings.

• In C4Q22, JDL reported in line results for both revenue and profit. In C1Q23, we expect JDL’s topline growth continue to decelerate due to decline of parcels. 
• JD has adopted the low-price strategy, which hinders the growth of JDL. The price competition in eCommerce negatively affects JDL but benefits ZTO.
• We cut our 2023 revenue forecast by 6%, which is (5%) below cons. Downgrade JDL to SELL with TP of HK$10.

Immix Biopharma has expanded both its clinical and technology portfolio with the in-licensing of its first CAR-T cell therapy, NXC-201. The treatment is being investigated in a Phase Ib/II open-label study for multiple myeloma (MM) and light chain amyloidosis (ALA). The trial intends to recruit up to 100 patients and management believes positive results may potentially support early regulatory approval. In our view, NXC-201 may provide Immix with the scope to expand into new indications within oncology, particularly among hematological malignancies. NXC-201’s clinical development is being independently financed under a subsidiary of Immix (Nexcella, of which Immix owns 98%). Our valuation of Immix is US$61.5m or US$4.4 per share (previously US$55.4m or US$4.0 per share). We await further NXC-201 clinical data and communication on its development plan before including it in our valuation.

JDC Group (JDC) reported preliminary FY22 results that were on the lower side of the guided range for revenues and on the higher end for EBITDA. FY22 revenue increased by 6.3%, compared to 18% in 2021, reflecting low German consumer confidence especially in December. This led to weaker demand especially for life insurance products. JDC expects FY23 revenue growth to accelerate, to 17% at the midpoint of guidance (€175–190m) based on cooperation agreements that are already signed. The EBITDA margin is also expected to increase based on a guided EBITDA range of €11.5–13.0m. We will review our valuation after the final results, which will be published on 31 March.

• 2022 results were solid, exceeding guidance. 2024: Guidance in-line with consensus
• Defense industry on fire. Refer to initial note for further info regarding increased defense budgets
• Given the very strong performance YTD, we recommend taking some profit here for shorter-term investors. For long-term investors TP remains €12.80. We like the sector

• LKQ Corporation delivered a significantly below part result in the year’s final quarter.
• Revenue declined in the quarter as compared to the last year, driven by the divestiture of PGW and FX translation.
• Organic revenue of parts and services increased but the overall top-line was below analyst expectations.

paragon has announced the result of the Eurobond tender offer at 60% of nominal, securing just under €1.7m nominal out of a potential €5m. The offer forms part of the ongoing debt reduction programme that will see the majority of the outstanding bond liabilities (both Swiss franc and euro) redeemed over the next few months (see our previous note). While the shares and bonds have been responding well to the management initiatives, these appear to pose a considerable potential opportunity for investors, assuming the operational growth strategy is successfully implemented.