In today’s briefing:
- Shiseido (4911 JP): This Fallen Angel Is Fixable
- Taiwan Tech Weekly: TSMC Sales Ahead; Display Driver Growth Reversal; AI Names Keep Flying
- Water Oasis 1161 HK: Gone Ex-Dividend, Trading at 7.5x PE FY24 and an 11% Dividend Yield
- Intel’s UMC Partnership Is A Big Deal. For UMC.
- State Bank of India (SBIN) – 3Q24 Update: Short-Term Pressure Is an Opportunity to Accumulate
- Largest Display Driver Maker in the World’s Guidance Implies Growth Reversal Coming in Feb & March
- Novatek (3034.TT): It’s the Low Season in 1Q24F; AI Is Gradually Added to Different Applications.
- GOL – Ramifications of GOL’s Chapter 11 Filing
- Rent.com.au Ltd – Strong Across the Board Growth in Revenue in Q2
- Singapore’s Most Defensive High ROE & Low P/E Stocks Over Past Year
Shiseido (4911 JP): This Fallen Angel Is Fixable
- Shiseido Company (4911 JP) relies heavily on Japan and China, each making up over one quarter of sales.
- The long thesis is simple – I expect improvement in both regions in the near future, and the valuation is very attractive.
- Blackstone just announced a potential bid for L’Occitane (973 HK), which I have written extensively about. We could potentially see a pickup in interest in the sector.
Taiwan Tech Weekly: TSMC Sales Ahead; Display Driver Growth Reversal; AI Names Keep Flying
- Latest Performance: Taiwan AI Names Keep Flying; ASE & Mediatek Lose Steam After Reporting
- Largest Display Driver Maker in the World’s Guidance Implies Growth Reversal Coming in Feb & March
- TSMC and Samsung Will Keep Their Most Advanced Chipmaking at Home
Water Oasis 1161 HK: Gone Ex-Dividend, Trading at 7.5x PE FY24 and an 11% Dividend Yield
- Water Oasis (1161 HK) just went ex-dividend on 6th Feb and is now trading at a 7.5x PE FY24e and a 10.7% dividend yield on trailing FY23 earnings.
- The company has refurbished its flagship stores, and we believe it can perform 8-9% better year over year for FY24 than FY23.
- The company also has 230 mn HKD net cash (after netting dividends paid out), representing 26% of market capitalization.
Intel’s UMC Partnership Is A Big Deal. For UMC.
- UMC’s Q423 results in line with expectations. Q124 guidance, down 2-3% QoQ, demonstrates ongoing headwinds for foundry
- Intel, UMC foundry partnership helps the latter overcome their 14nm issues while giving them bargain basement access to US manufacturing capacity
- If Intel could have developed and deployed the proposed 12nm specialty process on their own, they would have….
State Bank of India (SBIN) – 3Q24 Update: Short-Term Pressure Is an Opportunity to Accumulate
- State Bank Of India (SBIN IN) has reported its 3Q24 (Dec-23) results with a one-off pension and wages revision charge which impacts the short-term earnings profile.
- Medium-Term ROE Forecast Intact (16% to 18%) with management confident of even touching 20% in next couple of years; loan growth forecast of 14% to 16% for FY25e-FY26e.
- We reiterate our view: P/BV is cheap at 1.3x FY25e. SBIN has the potential to re-rate to P/BV of ~1.6x FY25e in the near term (~40% upside). Opportunity to ADD.
Largest Display Driver Maker in the World’s Guidance Implies Growth Reversal Coming in Feb & March
- Novatek reported over 20% YoY growth for 4Q23 and slightly beat expectations but the latest guidance implies growth to reverse to a sales contraction in the latter part of 1Q24E.
- Gross and operating margins are guided to contract; nevertheless, inventory dropped to one of the lowest levels since COVID and is expected to remain healthy.
- Novatek’s latest results appear to signal that while inventory levels are healthy, the demand growth rebound for display drivers that started in June 2023E could lose steam in 1Q24E.
Novatek (3034.TT): It’s the Low Season in 1Q24F; AI Is Gradually Added to Different Applications.
- 4Q23 surpassed the guidance for revenue, GM, and OPM. 4Q23 EPS reached NT$8.76, compared to NT$10.46 in 3Q23 and NT$6.64 in 4Q22.
- 1Q24F is typically the traditional low season for consumer electronics, and there are fewer working days during the Lunar New Year.
- It is expected that the dividend payout ratio this year will be similar to previous years, which has been higher than 80% in the past few years.
GOL – Ramifications of GOL’s Chapter 11 Filing
- GOL recently filed for CH11 bankruptcy protection as it was due to run out of readily available cash in mid-February. We assess the ramifications.
- We highlight that GOL may need to reduce aircraft ownership/financing costs by a third to achieve PBT margins of 5%+; difficult in a strong aircraft leasing market.
- We see the risk GOL loses scale. However, long-term, an increasingly competitive GOL is good for its parent Abra Group, and sister company Avianca.
Rent.com.au Ltd – Strong Across the Board Growth in Revenue in Q2
- Rent.com.au Limited (ASX:RNT) is a purpose-led company seeking to empower home renters through its technology platform and a growing number of aligned transactional services.
- The company has reported a 33% year-on-year increase in Q2 FY24 revenue to $0.808m, in what is seasonally the weakest quarter for the group.
- Search portal revenue grew 11% on the previous corresponding period (pcp) but, not unexpectedly, dropped 7% on Q1 due to seasonal factors.
Singapore’s Most Defensive High ROE & Low P/E Stocks Over Past Year
- Just over 40 Singapore-listed stocks that posted price gains over the past year, maintain single-digit P/E ratios and double-digit ROEs.
- Aside from Singapore Airlines, the most traded stocks of the cohort over the past 5 weeks were Geo Energy Res, Golden Agri, Food Empire, TJ DaRenTang, Valuetronics, Marco Polo Marine, Ley Choon, Bumitama Agri and Stamford Land.
- Among these stocks, Golden Agri, Food Empire, TJ DaRenTang, Bumitama Agri are currently trading below their Consensus Estimate Target Prices.
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