In today’s briefing:
- Shopee Faces Decision on Brazil Amid Tax Changes
- BFI Finance Indonesia (BFIN IJ) – Enter the Era of High Returns
- Douzone Bizon: Deeply Oversold, Ready for a Turnaround
- History Could Repeat For Apple With A Hardware High
- ADEA: Undiscovered AI
- Hogy Medical (3593 JP): Mixed FY23 Result; Soaring Cost to Negatively Impact Profit in FY24
- AViC (9554 JP) – 2Q Follow Up
- Alibaba Health Information Technology (241.HK) FY2023 – A Slowdown in Future Growth Seems Inevitable
- Elevance Health: A Critical Update (Rating Downgrade)
- McKesson Corporation: A Streamlined Portfolio After Recent Divestitures – Key Drivers
Shopee Faces Decision on Brazil Amid Tax Changes
- Most Brazilian e-commerce platforms evade taxes by treating orders as individual transactions instead of business operations, despite the 60% tax on international e-commerce shipments by companies.
- The Brazillian government plans to address this tax loophole by strengthening oversight and implementing administrative measures.
- If Sea (SE US) cannot find a viable solution to navigate this tax, there is a strong possibility that Shopee will exit the Brazilian market.
BFI Finance Indonesia (BFIN IJ) – Enter the Era of High Returns
- BFI Finance Indonesia management recently confirmed its expectations for receivables growth of +20% YoY this year, which looks conservative after a strong start to the year, with +53.9% new-financing growth.
- The company booked a strong set of 1Q2023 numbers with strong new bookings growth, improving net interest spreads, low NPLs, and an ROE of over 22%
- BFI Finance Indonesia has the lowest cost of funds of the multi-finance companies in Indonesia, with a long track record of strong risk management, and remains a top pick.
Douzone Bizon: Deeply Oversold, Ready for a Turnaround
- We believe shares of Douzone Bizon are deeply oversold and ready for a turnaround.
- The company is increasingly buying back shares. Treasury shares as a percentage of total outstanding shares increased from 0% at end of 2021 to 9.3% at end of 1Q 2023.
- Korean government’s plans to boost the domestic software industry by spending more than 560 billion won in the software industry is also likely to positively benefit the company this year.
History Could Repeat For Apple With A Hardware High
- Apple’s stock reached an all-time high ahead of the 2023 Worldwide Developer Conference.
- The company unveiled its mixed-reality headset, Apple Vision Pro, which could revolutionize communications and be a game-changer for the metaverse.
- McKinsey predicts that the headset could be a $5 trillion opportunity by 2030.
ADEA: Undiscovered AI
- ADEA could be the most under the radar artificial intelligence (“AI”) beneficiary through its patent portfolio related to hybrid bonding
- Hybrid bonding is expected to help usher the next generation of semiconductors to handle the growing need for speed and bandwidth with lower power consumption
- ADEA’s stock has been mainly valued on the free cash flow it is able to generate from its media patent portfolio with little value given to ADEA’s semiconductor patent portfolio
Hogy Medical (3593 JP): Mixed FY23 Result; Soaring Cost to Negatively Impact Profit in FY24
- Hogy Medical (3593 JP) reported mixed FY23 result. Revenue and operating profit were ahead of guidance while net profit missed guidance mainly due to a one-off loss of ¥464M.
- For FY24, Hogy guided for 5% revenue growth. However, operating, and net profits are expected to decline 23% and 19%, respectively, due to rising costs and exchange rate fluctuations.
- While Hogy will continue cost cutting and improving productivity, the company is not expected to fully offset the cost pressure. Hence near-term outlook for the company remains bleak.
AViC (9554 JP) – 2Q Follow Up
- AViC announced its 2HFY9/23 earnings on May 15.
- For 1H,Oct.–Mar., AViC posted net sales of ¥730 mn, +30.1% YoY, and operating profit of ¥140 mn, a slight year-on-year decline of 5.1%.
- On account of a deterioration in the funding environment for start-up companies, AViC lost some of its start-up clients, which account for a percentage of clients that is not insignificant, and saw others cut their budget.
Alibaba Health Information Technology (241.HK) FY2023 – A Slowdown in Future Growth Seems Inevitable
- Against a backdrop of slowing revenue/active users growth, a return to profit in FY2023, while welcome, is shaky.We think Alibaba Health’s growth would continue to slow down in the future.
- The low gross profit and strong regulatory characteristics of drug sales indicate that Alibaba Health Information Technology (241 HK) is difficult to replicate the scale effect brought by traditional internet platforms.
- The current business model and revenue structure have already made Alibaba Health lack imagination space.From a comprehensive perspective, its valuation should be lower than JD Health but higher than PAGD.
Elevance Health: A Critical Update (Rating Downgrade)
- Elevance Health, Inc. has been active in the M&A market with the divestiture of its life disability business and a “new markets” acquisition.
- However, evidence suggests that success is not guaranteed, according to the company.
- The company’s stock has been downgraded to a moderate buy.
McKesson Corporation: A Streamlined Portfolio After Recent Divestitures – Key Drivers
- McKesson managed an all-around beat in the last quarter, closing out a solid fiscal 2023 with full-year revenues of $277 billion and adjusted earnings per diluted share of $25.94.
- The core Pharmaceutical Distribution business supported growth in the U.S.
- Pharmaceutical segment, and they divested their European operations to streamline their portfolio.
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