Daily Brief Equity Bottom-Up: Shiseido (4911 JP):  Japan On Track While China Was Weak and more

• Shiseido Company (4911 JP) reported 4Q23 results last week.  Overall, operating profit of Y40bn in FY23 was Y5bn higher than previous company guidance of Y35bn.
• However, Shiseido’s China business weakened materially in 4Q23, and 2024/25 guidance seems a bit light. 
• I believe FY24 should not be used as a base for valuation because the nuclear wastewater impact is likely to linger a while longer during FY24. 

• Citic Ltd (267 HK) is a well-managed conglomerate trading at a big discount to its constituent parts
• Earnings should move up from here and pays a decent dividend while you wait.
• A member of both the the Hang Seng Index (HSI INDEX)  and the HSCCI and will attract inflows once institutional money returns

• Since Imbruvica’s sales continued to decline and Calquence hadn’t shown much growth in US since 23Q2, either Zanubrutinib gained more market share or the entire BTK inhibitors market is shrinking. 
• BeiGene’s recent sluggish share price could be related to geopolitical conflicts/weak market sentiment.However, innovative drugs don’t involve supply chain security issues. There’s no need for US to sanction China’s biotech.
• We are relatively optimistic about BeiGene’s 23Q4 sales growth. In our view, BeiGene’s reasonable market value is at least about US$18 billion. BeiGene (6160 HK) is undervalued.   

• Overseas traveling revenue recovered strongly in China during the Chinese New Year.
• Great Wall Motor’s vehicle deliveries increased by 69% in January 2024.
• JD.com plans to raise the salaries for customer service employees by 30% in 2024.

• The sales of Jan 2024F were the lowest during 2022-2024F, indicating a likely downtrend for 1Q24F.
• Demand is expected to remain sluggish in 2Q24F, potentially resulting in decreased raw wafer demand for Logic and Memory in 2Q24F.
• The market for 12″ raw wafers is expected to have a more stable demand-supply balance, while raw wafers of 8” and smaller sizes could experience reduced demand in 1H24F.

• Keystone Law Group (KEYS) is a UK-based law firm utilizing a freelance-lawyer platform model.

• Its “pay-when-paid” policy and “work-from-anywhere” culture result in minimal invested capital, yielding high returns on capital and a structural competitive advantage over traditional equity-based law firms.

• With a 2023E free cash flow yield of approximately 6.8%, the shares are deemed fairly to slightly overvalued.

Key points

• MFA Financial’s Series C preferred stock offers a 25% IRR and 40% total return over 18 months
• Favorable entry point for investors due to current interest rate environment and preferred instruments being out of favor
• MFA’s position in the face of LIBOR transition challenges sets it apart, making it a strong choice for short-duration fixed income investing

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• THE net institutional fund flows for the first six weeks of 2024 showed a similar trend as the same period in 2023, with net withdrawals of S$463 million.
• The net institutional fund flows indicate the direction and level of institutional investor activity across all stocks in the Singapore market.
• As many as 18 of the 20 stocks that booked the highest net retail inflow relative to market capitalisation also booked declines in total return, while Pacific Radiance and Asia Enterprises Holding were the exceptions, booking respective total returns of 7.2 per cent and 9.1 per cent over the six weeks.

Key points

• Arthur J Gallagher is a strong player in the U.S. SME broking market trading at fair value with potential upside
• Estimated 5-year returns are 10% IRR / 1.5x MOIC, with possibility of higher returns with EBITDA growth and multiple expansion
• Insurance brokers benefiting from firm P&C pricing cycle and market conditions, providing downside protection and potential for sustained organic growth, investor focus on growth trend maintenance

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Bell Financial Group Ltd (ASX:BFG) is a diversified provider of financial products and software solutions within, and increasingly outside, its traditional full-service stockbroking business.
• BFG reported FY23 NPAT of $24.3m, 5% below FY22 and 10% below RaaS estimates.
• A H2 FY23 miss in Technology & Platforms (down 8% against a H1 result +100%) was the major difference to RaaS estimates, with all other divisions trading in-line with generally challenging but improving trading conditions.