In today’s briefing:
- Rohm (6963): Search for the Bottom
- BEA – Far Worse Deterioration in Hong Kong than Other Regions & Sharply Lower HFD Centa City Index
- [XPeng Inc. (XPEV US, SELL, TP US$2) Earnings Review]: Delivery Goal for MONA M03 Is Unrealistic
- Innovent Biologics (1801 HK) Adds to Its Oncology Portfolio
- Ola Electric’s Path to Profitability: Volumes, Cells and PLI
- Bumrungrad Hospital (BH TB): Cautiously Optimistic on Growth Prospect Amid Intensifying Competition
- Tech Supply Chain Tracker (23-Aug-2024): Silicon Shield 2.0: supply chain security & diplomacy.
- Back to Jafco- Continues to Be in the Right Place and at the Right Time
- Choice Hotels International Inc. – Major Drivers
- SITC International (1308 HK): Advancing Amid the Challenging Time
Rohm (6963): Search for the Bottom
- Rohm’s cyclical turning points in revenue typically lag the turn METI production %YoY less inventory % YoY for electronic devices and components by 12 months.
- Investors were disappointed with Q1 results, but the company cleanly outperformed most peers in the power semiconductor space, and recovery now looks inevitable.
- We believe the fair value of shares to be around ¥3,300, 2x the current price, but investors should ask, “When?” Not “How much.”
BEA – Far Worse Deterioration in Hong Kong than Other Regions & Sharply Lower HFD Centa City Index
- Data from Bank of East Asia (23 HK) is just out with poor 1H24 results YoY
- Notable in its release are its Hong Kong overdue exposure by over three months
- Hong Kong region income is the worst affected by credit costs, this does not seem to be over
[XPeng Inc. (XPEV US, SELL, TP US$2) Earnings Review]: Delivery Goal for MONA M03 Is Unrealistic
- XPeng (XPEV) reported C2Q24 top line, non-GAAP operating loss and GAAP net income in line, 5.4% worse and 7.5% better than our estimate.
- We raised our MONA forecast by 13% but still significantly below XPEV’s guidance. We believe management guidance is overly optimistic;
- We maintain a SELL rating on the stock and TP unchanged.
Innovent Biologics (1801 HK) Adds to Its Oncology Portfolio
- Dupert, a drug for the special treatment of non-small cell cancer has been approved by the NMPA.
- In 2022, China recorded the highest number of new cancer cases, and their exceptional high incidence of smoking is of particular concern.
- Innovent’s portfolio of nine oncology drugs is very attractive in the biggest cancer market.
Ola Electric’s Path to Profitability: Volumes, Cells and PLI
- Investors seem concerned about poor visibility on Ola Electric’s profitability given its aggressive pricing strategy.
- Expect increasing production volumes and the resulting benefits of operating leverage to lead to operating profits, likely by next quarter.
- Integrating in-house manufactured Lithium-ion cells into its two-wheeler EVs from FY2026 and higher Government incentive pay out in FY2025 to drive profit margins further.
Bumrungrad Hospital (BH TB): Cautiously Optimistic on Growth Prospect Amid Intensifying Competition
- Bumrungrad Hospital Pub Co (BH TB) has reported mixed performance in 2Q24, with revenue growing 3% YoY to THB6,331M. However, bottomline growth outpaced the revenue growth.
- We are cautiously optimistic about the future growth prospect of the company as well as valuation multiple expansion prospect due to intensifying competition in attracting international patients.
- In recent times, revenue contribution from international patients has not changed much and is hovering around a range of 53–55%, significantly lower than pre-COVID time’s range of 64–67%.
Tech Supply Chain Tracker (23-Aug-2024): Silicon Shield 2.0: supply chain security & diplomacy.
- Silicon Shield 2.0 involves managing risks and building partnerships to secure supply chains in today’s economic landscape.
- AMD collaborates with ZT System engineers to simplify rising AI system complexity, enhancing efficiency and productivity.
- Foxconn leverages AI server trading models to increase profits, while Taiwan’s president calls for regional de-risking and trade partnerships to adapt to supply chain shifts. #Taiwan #trade #partnerships #supplychain. Innodisk’s AI revenue surpasses 20%, foreseeing growth in revenue and profit in the second half of 2024. SK Hynix’s revenue doubles in the US and China, attributed to increased AI demand in the first half of 2024. TSMC’s new fab in Germany is expected to generate jobs and enhance wafer ecosystems in Europe.
Back to Jafco- Continues to Be in the Right Place and at the Right Time
- Its portfolio of Japanese investments should benefit from the change in investor focus to domestic names.
- Has shown strong outperformance since the sell-off presaging future relative strength
- The business itself progressing as planned for increased shareholder returns
Choice Hotels International Inc. – Major Drivers
- Choice Hotels International has portrayed a strong growth trajectory in its latest quarterly result, evidenced by a significant increase in adjusted EBITDA and EPS.
- The company raised its full-year adjusted EPS guidance, reflecting confidence in its financial outlook and operational strategy.
- Central to its growth strategy is the expansion of its portfolio of revenue-intense hotels.
SITC International (1308 HK): Advancing Amid the Challenging Time
- SITC International (1308 HK)‘s management guided for a promising outlook for 2H24, with strong load performance in Jul-Aug, and better long-term contract rates YoY.
- Gross margin expanded 4.5pp in 1H24 despite a 5.3% drop in average freight rate, thanks to good cost control with lower chartered-in costs and more self-owned vessels.
- Net cash increased 195% from end-FY23, and we are confident that its 70% payout ratio can be maintained. Its P/B is still below the 5-year average.
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