In today’s briefing:
- [Sea (SE US, SELL, TP US$51) TP Change]: Competitive Landscape Intensifying… Cut TP to $51
- [XPeng(XPEV US, BUY, TP US$24.3)TP Change]: Potential of Tech Licensing and EV Sales Lifts Valuation
- Google, Microsoft, Facebook and Nvidia: AI Spending Implications at the Hyperscalers
- Multi Bintang Q2 2023: Steady Recovery 6.5-7% Yield and 85% ROCEs on Track
- LGES: Slowing Sales in Europe & A Turning Point in Momentum for Korean Rechargeable Battery Sector?
- Mizuho – Tax Rate Normalization, Yield Curve Control Relief, Can Mean Profit Surge
- AKR Corporindo (AKRA IJ) – A Steely Operator
- Samsung Biologics (207940 KS): Strong Momentum in 2Q23- Revenue Up 33%; Net Profit Jumps 22%
- The Shanghai Commercial & Savings Bank – Far Stronger Credit Metrics, 31% Net Interest Income Growth
- Takeda: Earnings Beat Driven by Key Drugs and Dengue Vaccine Seeing Positive Momentum
[Sea (SE US, SELL, TP US$51) TP Change]: Competitive Landscape Intensifying… Cut TP to $51
- We expect Shopee’s competitive landscape deteriorated in 2Q23, due to increased pressure from TikTok/Lazada in ASEAN, Coupang in Taiwan, and Shein in Brazil. Temu is a large swing factor.
- Shopee has been pushing live streaming and its full-management (or consignment) mode. In our view, these will drag down its profit margins and may not be effective in gaining share.
- We estimate 2Q23 revenue and non-GAAP net income are 2.5% and (24%) vs cons. We have revised down Shopee’s growth expectations for the next 3 years.
[XPeng(XPEV US, BUY, TP US$24.3)TP Change]: Potential of Tech Licensing and EV Sales Lifts Valuation
- VW’s long-term software dilemma caused delays of new EV model launch. Thus, leveraging established software capability of Xpeng could help VW catch up and shorten its R&D cycle.
- We see two benefits for Xpeng: 1) a new revenue stream from tech licensing and potential reduction of supply chain costs; 2) VW’s endorsement could help Xpeng’s overseas expansion.
- We think the potential of Xpeng’s high-margin tech licensing being opened to more VW models and other OEMs. Our TP implies 2.5x 2024PS
Google, Microsoft, Facebook and Nvidia: AI Spending Implications at the Hyperscalers
- Google, Microsoft, and Facebook reported earnings.
- Let’s discuss their capex plans and what that means for our new data center champion, Nvidia.
- I think it’s pretty straightforward that Nvidia has revenue beats for the foreseeable future.
Multi Bintang Q2 2023: Steady Recovery 6.5-7% Yield and 85% ROCEs on Track
- Multi Bintang Indonesia (MLBI IJ) delivered a steady Q2 2023 with revenues up 16.6% YoY and profits up 32% YoY, aided by revenue growth on alcoholic beverages of 20% YoY.
- EBITDA margins expanded to 50% in Q2 2023 from 45% in Q1 2023 but remained flat YoY. We expect margins to continue expanding in subsequent quarters as revenues grow seasonally.
- Trading at 15.8x/13x FY23e/24e PE, with a 6.3%/7.7% dividend yield, we believe this is an excellent play on tourism recovery in Indonesia.
LGES: Slowing Sales in Europe & A Turning Point in Momentum for Korean Rechargeable Battery Sector?
- LGES provided a lower sales guidance in 3Q 2023 due to slower sales in Europe. LGES expects its sales in 3Q 2023 to decline in a QoQ basis.
- The share prices of the top 12 rechargeable battery names in Korea are down on average 13.9% in the past two trading days.
- We believe that the overall sentiment on the rechargeable battery sector in Korea has started to turn sour which could have a further negative impact on companies such as LGES.
Mizuho – Tax Rate Normalization, Yield Curve Control Relief, Can Mean Profit Surge
- Mizuho’s current tax expenses can see normalization that restores profitability by June quarter
- Yield curve control relief coming at a time of tax normalization, can be significant to profit
- Credit costs have moved higher, but the magnitude may wane, given NPL distribution
AKR Corporindo (AKRA IJ) – A Steely Operator
- AKR Corporindo (AKRA IJ) booked solid set of numbers despite a less favourable pricing environment with the additional boost from a ramp up of sakes at JIIPE.
- JIIPE will become a more important contributor for AKR Corporindo, as it builds a critical mass of EV-battery-related tenants plus it benefits from increasing demand from smelters for chemicals
- AKR Corporindo remains a core industrial holding in Indonesia, through both its petroleum and chemicals business plus its industrial estate, which is a multi-year growth story. Valuations remain attractive.
Samsung Biologics (207940 KS): Strong Momentum in 2Q23- Revenue Up 33%; Net Profit Jumps 22%
- Samsung Biologics (207940 KS) reported record-high revenue and operating profit of KRW866 billion and KRW253 billion, up 33% and 49%, YoY, respectively in 2Q23, aided by contract signing spree.
- With continued orders from the leading global pharmas, the company’s total cumulative CMO contracts reached to $11.3B in July, up 19% from $9.5B at the end of 2022.
- Outlook for H2 is more positive with revenue from Plant 4 will be reflected from Q3. Two new biosimilars launch in the U.S. and EU will also add to revenue.
The Shanghai Commercial & Savings Bank – Far Stronger Credit Metrics, 31% Net Interest Income Growth
- Wildly improving credit metrics, with NPL coverage now at 1,144% in 1Q23
- Core net interest income is strong for past 3 quarters, now at +31% YoY
- Key line item deltas can continue, suggesting ROA to surpass 1.0% soon
Takeda: Earnings Beat Driven by Key Drugs and Dengue Vaccine Seeing Positive Momentum
- Takeda Pharmaceutical (4502 JP) reported 1QFY03/2024 results today. Revenue increased 8.9% YoY to ¥1,058.6bn (vs consensus ¥989.8bn) while OP increased 12.0% YoY to ¥168.6bn (vs consensus ¥123.5bn).
- The topline growth was driven by growth & launch products which accounted for 40% of total revenues, and increased 16.2% YoY during the quarter at constant exchange rates.
- Takeda is expecting 7-8 key regulatory decisions during the current fiscal year and we expect dengue vaccine and other new launches to help offset revenue loss from upcoming patent expiry.
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