In today’s briefing:
- Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2023
- Taiwan Tech Weekly: Micron Results Ahead; Taiwan AI Plays Slump But Still Beat Nvidia Last 3 Months
- Micron’s Results Likely to Call a Memory Market Trough and Highlight New HBM DRAM for AI
- Malaysia Airport (MAHB): Undervalued Tourism Play in SEA
- Lonking (3339 HK): Between a Rock and a Hard Place
- Huawei and Kirin 9000S, Memory Markets, Intel, Nordic, and Broadcom TPUs
- Monthly Chinese Express Tracker | August ASPs Plunge | Long SF / Short ‘Ground’? | (September 2023)
- Pointerra Ltd – FY24 Outlook Improving
- Lotus Pharmaceutical (1795 TT): Continued Stellar Growth in Q2; Pipeline Expansion to Drive Growth
Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety – September 2023
- We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
- Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and The Keepers Holdings (KEEPR PM).
- We add UMP Healthcare (722 HK) to our list of small/mid-cap names we track. The company has just recently declared its full-year results.
Taiwan Tech Weekly: Micron Results Ahead; Taiwan AI Plays Slump But Still Beat Nvidia Last 3 Months
- Micron results this week. The company is likely to call a trough for memory prices and highlight its development of the next most advanced type of HBM DRAM for AI.
- Taiwan’s market fell, with previous AI-rally beneficiaries continuing to be some of the top losers. Interestingly, Taiwan AI-names outperformed Nvidia over the last three months.
- Intel’s Innovation Conference wrapped up last week, with its new Meteor Lake PC CPUs launching Dec 14th, which is positive for the PC supply chain. Intel shares fell slightly however.
Micron’s Results Likely to Call a Memory Market Trough and Highlight New HBM DRAM for AI
- Micron’s earnings results will be released September 27th. We expect the company to describe a trough for memory pricing happening now and provide a positive outlook for rising prices.
- Micron and Nanya Tech have outperformed SK Hynix recently. Our ‘reversion catch up’ trade has worked. Going forward we believe Micron looks compelling on a relative basis.
- SK Hynix was ahead of peers developing HBM DRAM needed for AI. However, Micron could now convince the market it can catch up by focusing on the next advanced version.
Malaysia Airport (MAHB): Undervalued Tourism Play in SEA
- Besides Thailand and Singapore, Malaysia is one of the countries in South East Asia that are popular tourists destination.
- Malaysia Airports Holdings (MAHB MK) is the airport operator that benefits from the tourism recovery in Malaysia.
- Compared to Airports of Thailand (AOT TB) , Malaysia Airport is trading at a lower valuation, although it has recorded better operating numbers YTD.
Lonking (3339 HK): Between a Rock and a Hard Place
- While valuations for Lonking Holdings (3339 HK) do not appear expensive, there is a risk that the 2H23 earnings outlook is weaker than expected. This opens room for disappointment.
- There is no sign that domestic sales have picked up and Jul-Aug was still down significantly. Meanwhile, the strong export in 1H23 has not sustained in the last two months.
- The weaker A-share market so far in 2H23 also does not bode well for investment gains, which are important contributors to the impressive earnings rebound in 1H23.
Huawei and Kirin 9000S, Memory Markets, Intel, Nordic, and Broadcom TPUs
- First, let’s talk about Huawei. I want to highlight how lackadaisically the export restrictions have even been applied.
- BIS granted validated end-user status to SMIC in 2007, which meant that as late as 2020, multiple SMIC entities were still receiving tools from American companies.
- BIS got lobbied by tool makers to undo commerce control list regulations in 2018. Also, AMEC has outright stolen tools from US companies.
Monthly Chinese Express Tracker | August ASPs Plunge | Long SF / Short ‘Ground’? | (September 2023)
- Express industry pricing fell by -5% in August, but some companies’ ASPs fell by far more
- Reportedly, we could see movement on planned J&T Express and CaiNiao IPOs this week
- We think SF Holding should outperform its “plain vanilla” express peers in medium-term
Pointerra Ltd – FY24 Outlook Improving
- Pointerra Ltd (ASX:3DP) provides a powerful cloud-based solution (Pointerra3D) for managing, visualising, analysing, using and sharing massive 3D point clouds and datasets.
- Pointerra3D is a proprietary digital twin SaaS platform which delivers predictive digital insights and definitive answers to complex physical asset management questions.
- The company has reported FY23 revenue of $8.3m, a decline of 22% on the previous corresponding period (pcp) and an underlying EBITDA loss of $4.68m (which includes non-recurring project services costs of $2.19m), against an underlying EBITDA loss of $0.02m a year ago.
Lotus Pharmaceutical (1795 TT): Continued Stellar Growth in Q2; Pipeline Expansion to Drive Growth
- In 2Q23, Lotus Pharmaceutical (1795 TT) reported 53% YoY growth in revenue to NTD4.4B, mainly driven by strong uptake of Lenalidomide and Suboxone in America and branded products in Taiwan.
- Lotus reported an EPS of NTD4.85 for Q2 2023, 285% above EPS of NTD1.26 reported for the same quarter of 2022. This result beat the average analyst’s estimate by NTD0.64.
- Lotus has acquired exclusive global right to develop and commercialize suicidal bipolar therapy NRX-101 and obtained approval for new branded oncology drug Zepzelca in Taiwan.
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