In today’s briefing:
- Sheng Siong (SSG SP): Steady At Execution, Good Long-Term Play
- Taiwan Tech Weekly: TSMC Packaging Tech Ahead of Samsung; China Rare Earths Restrictions Plays; DRAM
- Recruit Holdings: Disappointing Job Data for May; More Downside Ahead
- [Alibaba (BABA US, BUY, TP US$116) Target Price Change]: CMR Improves on Expanded Merchant Base
- Heroz (4382) – Tailoring Business Growth Opportunities
- Moderna (MRNA US): Second Product Submission Is Not Big Enough Needle-Mover
- The Kraft Heinz Company: Winning the Market with Their Easy Meals and Taste Elevation! – Key Drivers
- Honda Motor Co.
- PDD Holdings Inc.: 3 Major Factors Responsible For Its Recovery – Key Drivers
- Jabil Inc.: Harnessing AI to Transform the Industry – Key Drivers
Sheng Siong (SSG SP): Steady At Execution, Good Long-Term Play
- It attracts investors when a company’s 15-year ROCE averages over 25% (and has never gone below 20%). Sheng Siong (SSG SP) is one of those companies.
- With 13% of the market capitalization in net cash (283 mn SGD) and a payout ratio averaging 70%, the stock trades at a yield of almost 4%.
- We believe the store expansion of 3-4 stores/year ( on a base of 67) in Singapore is possible, given the pipeline of HDB tenders.
Taiwan Tech Weekly: TSMC Packaging Tech Ahead of Samsung; China Rare Earths Restrictions Plays; DRAM
- TSMC winning with Nvidia’s business, beating Samsung due to TSMC’s advanced packaging technology; this highlights the rising importance and complexity of chip packaging.
- China export restrictions for rare earths used in semiconductors highlight opportunity for U.S. and Australian rare earths producers. We identify two potential plays.
- Nanya Technology Earnings: DRAM market has bottomed, sees industry improvement ahead. We see a trading Long opportunity.
Recruit Holdings: Disappointing Job Data for May; More Downside Ahead
- Recruit Holdings (6098 JP) ’s share price has been down over the last few days following release of job openings data for May 2023 by the US Department of Labour.
- The no. of job openings in the US in May 2023 decreased to 9.8m vs 11.3m in May 2022. It has also declined compared to 10.1m reported in April 2023.
- Moreover, web traffic on Recruit’s job platforms Indeed and Glassdoor have also decreased in June 2023 compared to May.
[Alibaba (BABA US, BUY, TP US$116) Target Price Change]: CMR Improves on Expanded Merchant Base
- We expect BABA to report C2Q23 (F1Q24) top-line and non-IFRS net income 2% and 21.5% vs. consensus. For C2Q23, we raised (1) Taobao/Tmall GMV/CMR estimates due to return of merchants,
- (2) International Commerce and Cainiao revenue estimates, and (3) EBITA margin estimates for all groups except cloud. We maintain our BUY rating and raise TP to US$ 116 TP,
- Due to 1) merchants return to Taobao/Tmall; 2) independent listing of groups; and 3) improved incentive structure after the organizational change.
Heroz (4382) – Tailoring Business Growth Opportunities
- HEROZ is an AI technology company that provides advanced AI development expertise to both B2C and B2B sectors.
- With a strategic focus on AI SaaS, it has embarked on a ‘buy-to-build’ strategy to develop profitable recurring revenue streams and accelerate earnings growth.
- In September 2022, it consolidated VarioSecure (4494), a subsidiary offering network security services, and in August 2022 acquired Strategit, a SaaS integration development support business.
Moderna (MRNA US): Second Product Submission Is Not Big Enough Needle-Mover
- Moderna Inc (MRNA US) has submitted marketing authorization applications for the investigational RSV vaccine, mRNA-1345, in Europe and Australia and initiated submission process in the U.S.
- Moderna anticipates to launch RSV vaccine in 2024 in US. Each year in US, approximately 60,000–120,000 older adults are hospitalized, and 6,000–10,000 of them die due to RSV infection.
- This year, FDA has already approved two RSV vaccines, Arexvy from GSK and Abrysvo from Pfizer, which are scheduled to be launched in the U.S. by this fall.
The Kraft Heinz Company: Winning the Market with Their Easy Meals and Taste Elevation! – Key Drivers
- Kraft Heinz delivered a positive result and managed an all-around beat in the last quarter.
- In the quarter, the company introduced It Has to be HEINZ, a new worldwide campaign that represents the brand’s first unification under a single creative approach.
- We give The Kraft Heinz Company a ‘Hold’ rating with a revised target price.
Honda Motor Co.
- Honda Motor’s results were a major disappointment as the company failed to meet the revenue expectations as well as the earnings expectations of Wall Street. but, their efforts in cost reduction and improved pricing strategies helped maintain an operating profit margin above 5%.
- Additionally, they aim to provide attractive dividends to shareholders, with a significant increase per share and a share buyback program.
PDD Holdings Inc.: 3 Major Factors Responsible For Its Recovery – Key Drivers
- PDD delivered an all-around beat in the previous quarter and the company saw clear recovery trends.
- Revenue increased in the quarter and contributed to a total of RMB37.6 billion.
- PDD has also launched its electronic shopping season and invested millions of RMB for promoting universal and high-quality access to reading.
Jabil Inc.: Harnessing AI to Transform the Industry – Key Drivers
- Jabil delivered a strong result and managed an all-around beat in the last quarter.
- The company’s growth was driven by improved profitability in electric vehicles, healthcare, renewable energy infrastructure, and cloud sectors.
- The healthcare sector also presents opportunities for Jabil, with increasing interest from OEMs seeking outsourcing manufacturing solutions.
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