In today’s briefing:
- Revisiting China Merchants Ports (144 HK)
- Yamaha (7951): Making Waves Again
- Iron Ore Comes Roaring Back! BHP-Anglo, VALE, FMG: What’s Hot In the Space
- High Conviction 2024 – CyberAgent: Strong Recovery in Gaming While Media Biz Reports Profits
- SK Hynix: AI Is Still the Main Driver
- Why RBI’s Favourite Enemy Kotak Bank Is Barred from Digital Banking Business?
- ASEH (3711.TT; ASX.US): 1Q24F Results Were Better, and the Outlook for 2024F Was Very Positive.
- Meta 1Q’24 Update
- Daiichi Sankyo (4568 JP): FY24 Ends on Strong Note; Initiates FY25 Guidance; ¥200B Buyback Announced
- Intel Is Shifting Focus to Products, Away from Manufacturing/Foundry; Worth to Follow?
Revisiting China Merchants Ports (144 HK)
- Four years ago, almost to the day, Bloomberg ran an article, “China Merchants Group Ltd. is exploring taking China Merchants Port Holdings private“. China Merchants Ports (144 HK) popped 23%.
- CMP gave back (most) of that gain a month later. Shares are up just ~10% since.
- CMP’s implied stub is bouncing around a multi-year low; and the simple ratio (CMP/ Shanghai International Port Group (600018 CH)) is around an all-time low.
Yamaha (7951): Making Waves Again
- Yamaha releases new guidance on May 8 for its fiscal year ending March 2025. The previous Mid-term plan for OP was ¥68bn, while the consensus is looking for just ¥40.9bn.
- We expect ¥50bn, and think the shares are as much as 30% undervalued.
- Analysts have responded to multiple downward revisions to current year guidance, driven by collapsing Piano sales to China, but haven’t responded to cost cutting or growth in other product lines.
Iron Ore Comes Roaring Back! BHP-Anglo, VALE, FMG: What’s Hot In the Space
- We initiated on the iron ore space recently with a short-term bullish call (see: Iron Ore Primer: Understanding The Drivers Of the Market, Ways To Play The Sector).
- Check out our initiation on Mount Gibson (MGX AU): Iron Ore Pure Play, 77% of the Mkt Cap in Cash, 0.5x EV-EBITDA With Catalysts ).
- Iron ore has a more short-term upside as it bounces off the cost curve in its three-year band (95-130 USD/ton), while China has demonstrated an abundant appetite for restocking.
High Conviction 2024 – CyberAgent: Strong Recovery in Gaming While Media Biz Reports Profits
- CyberAgent Inc (4751 JP) reported 2QFY09/2024 results yesterday which shows further improvement across all three segments. Both 2Q revenue and OP beat consensus estimates, with OP by a huge margin.
- Newly released game titles have helped further recovery in Gaming business while Media segment reported its first-ever OP since the company began investing on AbemaTV.
- As we continue to reiterate, the worst is over for CyberAgent (CA) and we remain positive over the company’s growth prospects.
SK Hynix: AI Is Still the Main Driver
- SK hynix earnings were announced, with a 10% Q/Q revenue increase driving a 734% increase in operating profit
- Although the company cited AI demand as the basis for this, its DRAM revenues, which are very AI dependent, increase very little
- NAND SSD demand increased significantly, with a 30% increase in revenues, largely attributable to price increases
Why RBI’s Favourite Enemy Kotak Bank Is Barred from Digital Banking Business?
- RBI has barred Kotak Bank from expanding its digital business and credit card issuance
- Rather than earnings damage (max -10%) there is more reputational damage to the bank taking away premium valuations it used to command
- The way ahead lies for the bank is the path of moderate growth
ASEH (3711.TT; ASX.US): 1Q24F Results Were Better, and the Outlook for 2024F Was Very Positive.
- Almost every sectors are recovery since 1Q24, and auto and industrial applications sectors still need more time to digest inventory. .
- The capex for 2024F has been increased by 10% for further investments in the testing business, targeting turnkey or testing customers.
- All product lines expected to grow in 2H24F, with APT outperforming corporate average. UTR growth expected in 2H24F, reaching above 70%.
Meta 1Q’24 Update
- If you have been following Meta for some time, you probably are accustomed with after-hours (AH) volatility by now.
- While Meta was -20% at one point AH today, it does seem a bit overdone.
- Of all the post-earnings drop that I have experienced following Meta since 2018, this one probably made me nervous the least.
Daiichi Sankyo (4568 JP): FY24 Ends on Strong Note; Initiates FY25 Guidance; ¥200B Buyback Announced
- Daiichi Sankyo (4568 JP) announced better-than-expected Q4FY24 result, with all key parameters exceeding guidance. Q4 revenue increased 30% YoY to ¥429B, driven by 76% YoY growth in Enhertu product sales.
- For FY25, Daiichi Sankyo guided 9% increase in revenue to ¥1,750B. Core operating profit is expected to increase 8% to ¥210B, while net profit to decline 5% to ¥190B.
- In addition to the dividend of ¥60 per share for FY25, Daiichi Sankyo has announced buyback plan of 55M shares (2.87% of issued shares) for ¥200B.
Intel Is Shifting Focus to Products, Away from Manufacturing/Foundry; Worth to Follow?
- Intel misses 1H24 market consensus again, post market correction of over 7%. Can shifting focus away from foundry/manufacturing help?
- Is the breakdown change for future spin off/IPO of foundry/manufacturing, and non focus businesses like Altera and Mobileye positive?
- We disagree Intel foundry to breakeven in two years; we see AI product lagging behind competitors and non AI server CPU being squeezed by AI server GPU and GPU/CPU integration.
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