In today’s briefing:
- Softbank Group – Accelerated Buyback in October Drove Share Price Surge
- NTT Q2 Results and a New Buyback
- Nintendo (7974) | No Christmas Present This Year
- NTT (Buy) – Q2 22 Results Reaction: Expanded Buyback Is Second Largest Ever
- Takeda: A Deep Dive into Takeda’s Dengue Vaccine
- A Pair Trade Between SK Telecom & LG Uplus
- Calbee – Price Hikes to Deliver Upside As Buybacks Provide Downside Protection
- 2023 High Conviction Idea: Cipla (CIPLA IN)- Complex Generics and India Business to Drive Growth
- First Solar Inc: Major Drivers
- DOHOME : Weak 3Q22 Earnings as Expected
Softbank Group – Accelerated Buyback in October Drove Share Price Surge
- Softbank Group (9984 JP) massively ramped up share buybacks in October driving a 31% increase in the share price
- Average Daily Volume (ADV) was 28% higher in October and 46% higher for the last half of the month. October buyback volumes were the second highest for a month ever
- Whether Softbank announces additional buyback plans likely depends on the timing of the ARM IPO and that partly depends on Q2 performance
NTT Q2 Results and a New Buyback
- NTT (Nippon Telegraph & Telephone) (9432 JP) announced Q2 results today during market hours. The stock had been trading up 1.1% on the day, but fell 1% in 5 minutes.
- It then spent the rest of the day grinding higher to end just higher than just before results.
- NTT announced another buyback – this one on-market. It is only a little bit of a surprise.
Nintendo (7974) | No Christmas Present This Year
- The share price is roughly flat since we turned Bearish on Nintendo citing concerns that the cycle had peaked
- Q2 results released today suggest that the hardware cycle has indeed peaked – Switch hardware guidance cut
- We see a lack of catalysts for the stock price over the next several months and remain bearish
NTT (Buy) – Q2 22 Results Reaction: Expanded Buyback Is Second Largest Ever
- Results were mostly positive with strong forex-boosted revenue growth and mobile outperformance
- An expansion of the buyback program helps sentiment as an additional Y150bn program takes FY22 buybacks to the highest single-year total since 2005
- Comments at the analyst meeting focused on underlying costs but management seems positive that it can manage with cost efficiencies
Takeda: A Deep Dive into Takeda’s Dengue Vaccine
- Takeda’s dengue vaccine TAK-003/QDENGA has been approved in Indonesia and is awaiting consent from the EU. The company is also seeking approval from the US, Latam and other Asian countries.
- The company plans to launch the vaccine in December or early next year which will become the industry’s first immunisation against dengue after the problems faced by Sanofi’s Dengvaxia.
- In this insight, we take a look at Takeda Pharmaceutical (4502 JP) ‘s decade long journey into its dengue vaccine and its potential.
A Pair Trade Between SK Telecom & LG Uplus
- At current prices, we like a pair trade between SK Telecom (go long) and LG Uplus (go short).
- We believe the share price gap has widened too much in the past month in favor of LG Uplus and this gap is likely to close in the coming weeks.
- While LG Uplus tries to expand its non-telecom businesses, this may involve greater spending on marketing and promotions (as % of sales), which could be a drag on its earnings.
Calbee – Price Hikes to Deliver Upside As Buybacks Provide Downside Protection
- Calbee Inc (2229 JP)’s share price fell 4% today from the top end of the trend channel as 2QFY23 OP fell short of consensus by ¥658m to ¥4.9bn.
- There was also a ¥3.5bn downgrade to full-year OP guidance on higher-than-expected energy and raw material costs. However, this seems too conservative, especially with 10-20% price hikes in September-November.
- In addition, share buy-backs are starting to become a regular part of shareholder returns with ¥12.0bn per-year in share buybacks in the previous fiscal year and the current fiscal year.
2023 High Conviction Idea: Cipla (CIPLA IN)- Complex Generics and India Business to Drive Growth
- Cipla Ltd (CIPLA IN) is a strong play in Indian generic pharmaceutical industry, due to its niche and differentiated respiratory and peptide injectable portfolio, which has less competition.
- The company has launched couple of complex respiratory products in the US market, which has accelerated its revenue growth. Multiple high-value launches are also lined up for this year.
- Cipla’s India business is on a strong footing, led by core portfolio tailwind in prescription and trade generics businesses. Q2FY23 marked the sixth consecutive quarter of market beating growth.
First Solar Inc: Major Drivers
- First Solar’s bull run was halted by a below par result in the last quarter as the company failed to meet Wall Street expectations with respect to revenues as well as earnings.
- The company’s manufacturing plants produced 2.4 gigawatts of modules in the third quarter and sold 2.8 gigawatts.
- Besides, their current fleet’s manufacturing performance metrics remain consistent, and plans for the third manufacturing plant in Ohio are still on track.
DOHOME : Weak 3Q22 Earnings as Expected
- Maintain HOLD recommendation for DOHOME with a target price of Bt14.10. DOHOME’s 3Q22 net profit came in at Bt50m (-85%YoY,-84%QoQ),in-line with our forecast but below BB consensus estimated by 34%
- 3Q22 earnings sink both YoY and QoQ Its net profit came out at Bt50m (-85%YoY, -84%QoQ),the lowest level since listed.The 9M22 result accounted for 88%of full-year net profit in 2022.
- The significant drop in 3Q22 earnings pressured by lower margin from steel products, clearance sales in decoration materials category, and rising all products cost as a result from rising inflation.
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