In today’s briefing:
- Recruit Holdings (6098) | 2024 High Conviction
- [Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future
- TSMC (2330.TT; TSM.US): 2024 High Conviction for Upside >15% YoY
- 2024 High Conviction: Full Truck Alliance | Strong Top Line, Margins in Q3 | Worth US$9.5 on 21x PER
- Income Statement Analysis of Global Luxury Brand Korea Operations and Luxury Brand Spending Slowdown
- Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)
- Taiwan Dual Listings Monitor: Spreads Generally Trading in the Middle of Their Ranges
- China Education Group (839 HK): Not so Encouraging in the near Term
- Monthly Chinese Express Tracker | Q3 Margins Battered By Price | More to Come in Q4 (November 2023)
- Sinocelltech Group (688520.CH) – Magical Leaps in Valuation Are Hard to Sustain
Recruit Holdings (6098) | 2024 High Conviction
- We are bullish on Recruit at the current share price and believe that the stock has around 40% upside potential to our fair value estimate of Y7,700.
- We believe that investors have been overly concerned with the cyclical slowdown in the job market as it normalizes from the post-Covid recovery
- Indeed.com remains a disruptor in the HR recruiting market and the potential monetization of this asset is significantly under-appreciated by the market.
[Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future
- Baidu reported revenue/non-GAAP operating profit/GAAP net income inline/7.72%/66.1% vs. our estimation.
- We believe short term cyclical and medium term AIGC-led upswing in advertising can bridge Baidu’s long-term business, which we do see them difficult to monetize.
- We maintain a BUY rating and adjusted TP to US$157, implying a 14.6x PE. It is currently trading at 11.4x PE in 2024.
TSMC (2330.TT; TSM.US): 2024 High Conviction for Upside >15% YoY
- TSMC is expected to experience growth of ~15% YoY in 2024F.
- TSMC’s N3 is expected to dominate the market in 2024F, with applications in CPU, GPU, smartphone SoC, and more.
- We also estimate that the N2 pilot run will begin in 4Q24.
2024 High Conviction: Full Truck Alliance | Strong Top Line, Margins in Q3 | Worth US$9.5 on 21x PER
- Full Truck Alliance reported strong growth in Q3, from the right sources
- Improved sales mix & progress on expense control lifted core margins
- With 22% upside to US$9.5 based on 21x PER, our high conviction pick
Income Statement Analysis of Global Luxury Brand Korea Operations and Luxury Brand Spending Slowdown
- In this insight, we provide the income statement comparisons of the eight largest global luxury brand Korea operations including Louis Vuitton Korea, Prada Korea, Ralph Lauren Korea, and Moncler Korea.
- In 2022, Korea spent $16.8 billion in luxury goods, representing per capita consumption of $325 per person, surpassing the United States ($280 per person) and China ($55 per person).
- Luxury brand spending in Korea is often a leading indicator of global luxury brand spending. Luxury brand spending in Korea has been weak this year and this continued in 3Q23.
Monthly Chinese Tourism Tracker | Recovery Still Sluggish | Trip.com as Value Name | (November 2023)
- In October, the sluggish recovery in outbound tourism demand continued
- Outbound capacity growth also timid; but domestic recovery is mostly complete
- As growth stock, Trip.com’s disappointed; maybe it can attract value investors?
Taiwan Dual Listings Monitor: Spreads Generally Trading in the Middle of Their Ranges
- TSMC: 8.2% Premium — Still Best to Wait for Better Levels
- ASE: 6.4% Premium — Wait for 5% as the Level to Go Long the Spread
- ChipMOS: -0.5% Discount — Stay Long the Spread if You Started at -2.0%
China Education Group (839 HK): Not so Encouraging in the near Term
- China Education Group (839 HK) appears to be facing the headwinds from higher USD interest rate and reduction in capitalised interest. The intangible write-off is another drag on FY23.
- Newly registered students increased 17.8% for FY24. With better average fees, this will help the topline. Our concerns are high finance and operating costs will erode revenue growth.
- Consensus is overly aggressive and there are risks of downgrade. Earnings may re-accelerate in the future, but weaker 1H FY24F keeps us on the sideline in the short term.
Monthly Chinese Express Tracker | Q3 Margins Battered By Price | More to Come in Q4 (November 2023)
- October’s industry numbers hide pricing turmoil seen at company level
- STO Express appears to be using price to gain share from Yunda, others
- We believe price competition continues to hurt ‘ground’ express margins
Sinocelltech Group (688520.CH) – Magical Leaps in Valuation Are Hard to Sustain
- The real value of Sinocelltech Group (688520 CH)’s pipeline will be greatly discounted because in the current context of fierce homogeneous competition, the commercialization performance of latecomers will be bleak.
- Through frequent capital operations, in two and a half years, valuation of Sinocelltech was successfully raised by nearly 300 times. However, the Company’s owner’s equity is negative, with delisting risk.
- The SSE STAR Market has been full of bubble if compared with HKEX. Sinocelltech has been severely overvalued. We think the reasonable market value of Sinocelltech is around RMB15-20 billion.
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