In today’s briefing:
- Shiseido: Drunk Elephant Seems an $845m Write-Off
- NEC (6701) | Even Higher Conviction
- Netdragon Websoft – Ms Tang Yu Becomes World’s First Virtual Humanoid Robot CEO
- Taiwan Dual-Listings – TSMC Premium Almost Wiped Out, UMC & ChipMOS ADRs Trading at Discounts
- Intel Vs. TSMC/UMC Long/Short Monitor: Upcoming Intel Conference Catalyst
- Tencent: Excluded Again from New Game Approvals as NetEase Makes into the Approved List
- Genscript Biotech (1548.HK) 22H1 – The Outlook and the Risks Behind
- Citigroup: Cautious Buy Rating Assigned
- Manolete Partners: When A Profit Warning Is A Good Thing
Shiseido: Drunk Elephant Seems an $845m Write-Off
- Shiseido’s acquisition of Drunk Elephant for a valuation of $845m was perceived positively, hoping that Shiseido could use Drunk Elephant’s digital marketing expertise to restructure its North America business.
- Rather than emulating Drunk Elephant like digital marketing to the company’s other brands, Shiseido has been trying to accommodate all its brands including Drunk Elephant into a hybrid marketing strategy.
- This seems to have killed Drunk Elephant’s appeal to its customers. Thus, Shiseido Company (4911 JP) could be facing a massive $845m write-off over the next few years.
NEC (6701) | Even Higher Conviction
- NEC’s buyback announcement sends a clear message that the MTP is on track and management feel the stock is undervalued
- The recent IR DAY increased our conviction in the financial model. We were impressed with the improving pipeline of Open RAN customers
- The stock is significantly undervalued, trading below book value, with improving ROE
Netdragon Websoft – Ms Tang Yu Becomes World’s First Virtual Humanoid Robot CEO
- NetDragon Websoft announced that it has appointed Ms. Tang Wu (a virtual humanoid robot powered by AI) as its new CEO which would be the first ever in the world.
- The company’s education revenue increased by 71.2% YoY to reach 2.4 billion RMB in 1H 2022. Profitability of the edtech business is also improving.
- Despite the company’s lower valuation multiples than its peers combined with catalysts including improving edtech business, we are cautious on its shares mainly due to the overall market related risks.
Taiwan Dual-Listings – TSMC Premium Almost Wiped Out, UMC & ChipMOS ADRs Trading at Discounts
- Taiwan ADR premiums vs. their local shares have generally decreased across the board.
- Is TSMC’s high ADR premium a thing of the past?
- UMC and ChipMOS ADRs are both trading at historically rare discounts to their Taiwan shares.
Intel Vs. TSMC/UMC Long/Short Monitor: Upcoming Intel Conference Catalyst
- Intel Corp (INTC US)’s upcoming Innovation conference is a potential catalyst for the stock, given we believe there is likelihood of positive product announcements.
- Taiwan Semiconductor (TSMC) (2330 TT) and United Microelectronics Corp (2303 TT) have already released their August sales figures at the start of September, with next release not until early October.
- Newsflow thus could be in Intel’s favor through the end of the month. The stock is trading at an all-time low PBV.
Tencent: Excluded Again from New Game Approvals as NetEase Makes into the Approved List
- China’s gaming regulator granted publishing licenses to 73 online games on Tuesday, including one for NetEase Inc (NTES US) . However, Tencent (700 HK) was excluded for the fifth time.
- Though the 9-month long new game approval freeze was lifted in April, it has been more than a year since Tencent received approval for a new title.
- Tencent’s online game revenue declined YoY for two consecutive quarters and we expect online game revenue to decline further in 3Q2022E.
Genscript Biotech (1548.HK) 22H1 – The Outlook and the Risks Behind
- Genscript’s four business segments are the horizontal and vertical extension based on gene synthesis technology. There is also synergy between Genscript and its subsidiaries, which can promote each other’s development.
- If only from the business level, GenScript is a worthy target for investment. It has the exponential growth potential in valuation and could reach a new high in the future.
- However, our biggest worry lies in the “black swans events” . We don’t know what “new surprises” GenScript will bring us in the future.
Citigroup: Cautious Buy Rating Assigned
- Citi’s Basel III framework is safe as houses, we urge investors to remain coy as systemic risk remains high due to volatile economic and geopolitical features.
- The firm’s operating cash flow is robust and covers an attractive 4.03% dividend yield soundly, we urged investors to stay coy.
Manolete Partners: When A Profit Warning Is A Good Thing
- Manolete Partners issued a profit warning on Friday 9th September 2022.
- Share price dipped over 15% after a market over-reaction that resulted in the share price dipping over 15%.
- This is a wonderful buying opportunity, according to the article.
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