In today’s briefing:
- Potential Big Changes at the Korean Chaebols – The Age Factor of Chairman/Honorary Chairman
- China Resources Beverage (华润饮料) Pre-IPO: A Visit to Convenience Stores
- Will Margin Contraction, Decline in Deliveries, and Trump’s EV Policy Reversals Stall Tesla?
- BUY/SELL/HOLD: Hong Kong Stock Updates (July 29)
- Nazara Technologies- Face off with Heavy Liability
- Tesla’s Q2 Revenue Up 2% to $25.5B but Misses Earnings Expectations; Stock Drops 8%
- Fanuc (6954) | Improved Orders and Margins Amid Long-Term Challenges
- M3: No Tangible Recovery in Earnings Yet
- Dr. Reddy’s Laboratories (DRRD IN): US and India Drive Q1FY25 Result; Announces 1:5 Stock Split
- PT Nippon Indosari Corpindo (ROTI IJ) – New Products Gaining Traction
Potential Big Changes at the Korean Chaebols – The Age Factor of Chairman/Honorary Chairman
- One of the important factors of big changes at the Korean chaebols is the age factor of the chairman/honorary chairman of each of these conglomerates.
- In this insight, we provide the shareholding ownerships and ages of the top 10 Korean conglomerates where age could become a major factor in impacting big changes that could occur.
- Among the 10 conglomerates listed below, Hyundai Motor Group, Celltrion Group, and SK Group have shown greater willingness to improve their shareholder return policies.
China Resources Beverage (华润饮料) Pre-IPO: A Visit to Convenience Stores
- We visited convenience stores to look for China Resources Beverage products.
- The company is in a price war with Nongfu Spring, for both drinkable water and beverages.
- Some CRB products, such as plum syrup, do not have any competitors in physical stores.
Will Margin Contraction, Decline in Deliveries, and Trump’s EV Policy Reversals Stall Tesla?
- Tesla’s stock dropped 12% post Q2 earnings, due to a 7% decrease in auto revenue, reflecting broader financial struggles despite a 15% rise in quarterly EV deliveries.
- Trump’s potential repeal of EV subsidies could reduce EV sales by 27% by 2030, but Tesla’s lower reliance on imports may mitigate the effect of increased tariffs.
- Elon Musk’s $5 billion investment in his AI startup xAI raises concerns about potential distractions from Tesla, even as he leverages political shifts to benefit Tesla.
BUY/SELL/HOLD: Hong Kong Stock Updates (July 29)
- Low volatility investing has taken the mantle from Dividend yield as the top strategy during July
- BYD Electronics (285 HK) and Alibaba Group Holding (9988 HK) are rated BUYs as their businesses show improvement.
- Kingdee International Software (268 HK) is seeing a softening in its SME business, however there is potential to gain market share from foreign ERP companies given the pledged government’s policies.
Nazara Technologies- Face off with Heavy Liability
- Shares of Nazara Technologies (NAZARA IN) were rattled last week after the company had received show cause notice from the GST Department on 16th July.
- The GST liability pertained to two of its subsidiaries and summed up to INR 11.2 bn, which represents under 50% of consolidated net-worth.
- However because the GST for the industry is a delicate and debatable matter, the actual impact on the financials cannot be ascertained now, but company faces a high legal risk.
Tesla’s Q2 Revenue Up 2% to $25.5B but Misses Earnings Expectations; Stock Drops 8%
- Earnings Miss: Tesla’s Q2 revenue increased by 2% to $25.5 billion, but earnings per share were 52 cents, missing the forecast of 62 cents.
- Record Revenue in Energy: Tesla achieved record revenues and profits in its energy sector, with 130% QoQ growth in energy storage deployments and regulatory credit revenues.
- Stock Reaction & Competition: Tesla’s stock dropped over 8% after-hours, influenced by increased competition, production challenges, and a notable decline in auto revenue by 7% to $19.9 billion.
Fanuc (6954) | Improved Orders and Margins Amid Long-Term Challenges
- Fanuc reported slightly better-than-expected Q1 sales and OP forecasts, mainly due to a recovery in sales of FA equipment
- Fanuc’s results are consistent with a bottoming out of Japan’s machine tool orders in the first half of the year
- We turn bullish on the stock given the cyclical bottoming out of orders and margins. However, the stock is still not “cheap” and the company faces a number of challenges
M3: No Tangible Recovery in Earnings Yet
- M3 Inc (2413 JP) reported 1QFY03/2025 results on Friday. Both revenue and OP for the quarter beat consensus estimates by 3.5% and 11.0% respectively despite earnings continue to decline.
- Medical Platform segment’s earnings have continued to decline as a result of pharma marketing whose revenues are impacted due to spending cuts by pharmaceutical companies.
- M3’s share price has declined by more than 35% YTD and we don’t see any tangible recovery in the company’s earnings as overseas and other businesses face challenges.
Dr. Reddy’s Laboratories (DRRD IN): US and India Drive Q1FY25 Result; Announces 1:5 Stock Split
- Dr. Reddy’s Laboratories (DRRD IN) had a good start to FY25, with a record high quarterly revenue of INR77B in Q1FY25, beating estimates.
- Increase in base business volume in the U.S. and revenue from Sanofi’s vaccine portfolio in India drove the revenue growth. Higher opex and effective tax rate impacted bottom line.
- The company will split its shares in the ratio of 1:5. This will be first time in last 20 years the company will be splitting its stocks.
PT Nippon Indosari Corpindo (ROTI IJ) – New Products Gaining Traction
- PT Nippon Indosari Corpindo (ROTI IJ) booked a strong set of numbers for 1H2024 as it benefitted from a pick up outside Java plus a good showing from modern trade.
- ROTI launched several new products in IH2024 both at the premium as well as at the more affordable level. It is also targeting a younger demographic with revamped packaging.
- Management points towards a more positive 2H2024 with stronger growth outside Java and a lower return rate as new products gain traction with lower costs. Valuations are attractive versus history.
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