In today’s briefing:
- Sun Hung Kai (16 HK): The Kwoks Step In To Stem The Tide
- Yahoo Troubles Continue for Z Holdings
- SMFG (8316) – 75% Less JGBs than MUFG | Affiliates Show Worsening Profit | Credit Costs ~2x Vs Past
- Mediatek Downgrade: After Rally, Beware Emerging News of Huawei/SMIC Chip Capability
- Shougang Fushan: Efficiency Gains Help H1 2023, Cash ~60% of Mkt Cap, FY23 Yield 13%
- Otsuka Holdings (4578 JP): Strong 1H23 Result Prompts 2023 Guidance Raise; Pipeline Is Advancing
- Haier Smart Home (6690 HK): Healthy Growth Despite Challenges
- Taiwan Tech Weekly: Apple Accelerating to India; ARM IPO; Huawei Mediatek Market Risk; Intel AI PCs
- Spectur Limited – Supplying Surveillance Solutions for People/Assets
- Longboat Energy PLC – Expansion in South East Asia. Simplifying Malaysia.
Sun Hung Kai (16 HK): The Kwoks Step In To Stem The Tide
- After Sun Hung Kai Properties (16 HK) released its interim results, shares declined 12.7% intra-day this past Monday, touching a 14-year low, before closing down 9.5%.
- The same day, the Kwok family increased their stake in the company, purchasing ~2.2mn shares for ~HK$175mn.
- SHKP is currently trading a trailing P/B of 0.36x versus its five-year average of 0.54x, and the five-year average preceding Covid of 0.68x.
Yahoo Troubles Continue for Z Holdings
- GTVs for Yahoo’s shopping division fell by 8% in 1Q2023.
- Although this was expected and gross profits did improve, the downturn reflects deeper concerns.
- Even the group’s Zozo fashion platform are much more slowly.
SMFG (8316) – 75% Less JGBs than MUFG | Affiliates Show Worsening Profit | Credit Costs ~2x Vs Past
- SMFG can benefit like peer banks from BOJ policy change, but less so than MUFG, while at the same time, there does not appear to be a strong alpha story
- ROE and ROA for SMFG show now expansion over the years, and this is stark contrast to MUFG, part of this appears to be due many weak subsidiaries
- Credit costs are now averaging 23bps over the past four quarters vs 13bps during 1Q18 to 4Q19, not improving credit metrics like many others, with high write-offs.
Mediatek Downgrade: After Rally, Beware Emerging News of Huawei/SMIC Chip Capability
- Mediatek shares rallied recently on high volume and are approaching their 52-week highs. We however warn investors to beware emerging news of Huawei/SMIC’s chip capabilities.
- Mediatek announced last week its flagship mobile phone chip was preparing for high volume manufacturing with TSMC’s most advanced 3-nanometer process node.
- However, we believe Huawei’s recent Mate 60 chip development could pose a threat to Mediatek’s market share outlook. We downgrade our rating from Structural Long to Neutral, target price NT$815.
Shougang Fushan: Efficiency Gains Help H1 2023, Cash ~60% of Mkt Cap, FY23 Yield 13%
- Shougang Fushan Resources (639 HK) experienced a decline of 23% YoY in NPAT for H1 2023 despite coal prices falling 22% YoY due to improved coking coal recovery rates.
- Gross cash and Investments totaled 9.4 bn HKD. Netting the dividend/tax payable and buyback of 1.4/0.4/0.3 bn HKD, net cash is 7.3 bn (60% of mktcap) and growing.
- We estimate a dividend payment of 32 cents (13% yield) for FY23e; H1 FY23 dividend payment was 10 cents ( H1 FY22: 15 cents FY22: 43 cents).
Otsuka Holdings (4578 JP): Strong 1H23 Result Prompts 2023 Guidance Raise; Pipeline Is Advancing
- In 1H23, Otsuka Holdings (4578 JP) reported revenue growth of 16% YoY to ¥947.5B, ahead of the guidance of ¥867B, as all operating segments recorded increased revenue.
- In 1H23, revenue from pharmaceutical segment grew 21% YoY to ¥637.9B, mainly driven by the growth of the four global products, which contributed 49% of segment revenue.
- Encouraged by a better-than-expected 1H23 result, Otsuka has raised 2023 guidance. The company has increased revenue, operating profit, and net profit guidance by 6%, 17%, and 19%, respectively.
Haier Smart Home (6690 HK): Healthy Growth Despite Challenges
- The weak share price of Haier Smart Home (6690 HK) looks unjustified given its healthy 1H23 result and solid financial position with net cash equals 11% of share price.
- We anticipate product advancement and innovation will allow HSH to gain more market share. Its high-end brand Casarte will sustain as an important driver for earnings performance.
- Gross margin looks to have room to expand due to better cost dynamics with digitalisation and AI initiatives. Continued growth in developing overseas market is also positive.
Taiwan Tech Weekly: Apple Accelerating to India; ARM IPO; Huawei Mediatek Market Risk; Intel AI PCs
- India Supply Chain Rising — Hon Hai is helping Apple launch with India-made iPhone 15’s on Day 1. These days, Apple likely wants to diversify away from China even faster.
- ARM IPO prices at high end of range, is backed by TSMC, Apple, Nvidia, Samsung, Intel.
- We downgrade Mediatek: After rally, beware of Huawei/SMIC chip capabilities causing market to realize Mediatek could lose market share.
Spectur Limited – Supplying Surveillance Solutions for People/Assets
- Spectur Limited (ASX:SP3) is a surveillance technology company providing security, safety, environmental monitoring and visual AI solutions to watch and act on assets managed by its platform.
- The company develops, manufactures and sells solar- and battery-powered, remotely-connected hardware, which is driven by SP3’s firmware, software, cloud and web-apps, providing data and solutions to its customers.
- The company has more than 2,900 devices deployed to greater than 600 customers, with a plurality in Western Australia, where it is headquartered.
Longboat Energy PLC – Expansion in South East Asia. Simplifying Malaysia.
- Longboat is acquiring Topaz Number One, its partner in Malaysia for an initial consideration of US$0.1 mm in shares in Longboat.
- The transaction will boost Longboat’s WI in the Production Sharing Contract over Block 2A offshore Sarawak from 36.75% to 52.5%.
- The 15.75% WI in the block is the only asset of Topaz Number One.
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