In today’s briefing:
- Taiwan Dual-Listings Monitor: TSMC Premium Holding Up; ASE & CHT See Sharp Drops
- Mongolia Mining 975 HK: Q3 FY24 Operational Update, Gold Project Progressing Well
- Top Glove Corp (TOPG MK): Volumes Rise as Demand Revival Cycle On; US to Be the Key Market
- How Seven Eleven and Other Conbinis Are Sitting on a Retail Media Goldmine
- Smartphone Growth Is Slowing Down to +4% YoY in 3Q. Mediatek Had a Good Rally, Time to Take a Break
- Namaste India 🙏 | Catching up with Fashion
- Money Forward (3994) | Q3 Priced In; Look for Pull-Back
- China Everbright Env (257 HK): An Underappreciated Beneficiary
- Tech Supply Chain Tracker (16-Oct-2024): Taiwan seeks US defense contracts with efficiency.
- LSB Industries, Inc. – WTR Small-Cap Spotlight Recap
Taiwan Dual-Listings Monitor: TSMC Premium Holding Up; ASE & CHT See Sharp Drops
- TSMC: +15.6% Premium; Relatively Aggressive Trade is to Long Premium
- ASE: -3.0% Discount; Good Level to Go Long the Premium
- CHT: -2.8% Discount; Good Level to Go Long the Premium
Mongolia Mining 975 HK: Q3 FY24 Operational Update, Gold Project Progressing Well
- Mongolian Mining (975 HK) released its quarterly production update. While production remained flat QoQ, destocking led to 16.3% YoY sales growth in coal.
- The resources at the gold mine (476,000 oz) did not change, but construction of the plant was 55% complete compared to 30% a quarter ago in June.
- Trading at 5.6 PE, with opportunities for growth and future dividend payments due to repayment of the perpetual, this is an exciting idea to explore.
Top Glove Corp (TOPG MK): Volumes Rise as Demand Revival Cycle On; US to Be the Key Market
- Top Glove Corp (TOPG MK) achieved 75% YoY and 31% QoQ revenue growth in 4QFY24, driven by higher volume and relatively stable selling price, with net loss narrowing down further.
- Considering the current demand and supply condition, Top Glove expects the ASP to further increase. The company aims to recover its EBITDA margin to pre-pandemic levels of 15% by FY26.
- Import alert and expected tariff increase on Chinese manufacturers, may help shift the focus from China to Malaysia, as the preferred sourcing destination, thereby helping Top Glove.
How Seven Eleven and Other Conbinis Are Sitting on a Retail Media Goldmine
- Just as they did before, Japanese convenience stores are taking a US idea and making it Japanese, in this case retail media, which looks set to be huge in Japan.
- Seven & I believes it will be a ¥3 trillion business and Familymart, which is leading in this new profit machine, expects ¥5 billion in media income in 3 years.
- The options for highly personalised targeting and behavioural analysis will transform brand advertising and marketing – but even more the bottom line of convenience stores.
Smartphone Growth Is Slowing Down to +4% YoY in 3Q. Mediatek Had a Good Rally, Time to Take a Break
- Smartphones units sold in 3Q24 increased by +4% YoY. That’s a slowdown from +7% YoY in 1H24.
- Growth comes from low-price Emerging Markets demand. But the Premium segment sees increasing ASP with AI-enabled phones.
- Hence for Mediatek and Qualcomm, the investment thesis rests on increasing ASP as AI is propagating – not volume growth. MTK had a nice rally, time to take a breather.
Namaste India 🙏 | Catching up with Fashion
- In this Insight, we highlight industry and company-specific developments based on the annual reports of various companies related to the apparel industry.
- The industry has encountered challenges, primarily due to a slowdown in demand and rising inflation. Most companies are now hoping for a turnaround.
- Companies in Focus Aditya Birla Fashion and Retail Ltd (ABFRL IN), Arvind Fashions (ARVINDFA IN), Vedant Fashions (MANYAVAR IN), Go Fashion India (GOCOLORS IN) and Credo Brands Marketing (CREDO IN).
Money Forward (3994) | Q3 Priced In; Look for Pull-Back
- In Q3, Money Forward demonstrated continued strong performance, with consolidated net sales posting 31% growth year-on-year to ¥9.81 billion
- EBITDA for the cumulative nine months stands at ¥1.48 billion, comfortably within the company’s full year guidance range of ¥1-3 billion.
- We now see a very modest 2% upside to our target price of ¥6,440, based on an 8x forward revenue multiple.
China Everbright Env (257 HK): An Underappreciated Beneficiary
- China Everbright Environment (257 HK) will benefit immensely from the lower debt burden of local governments as the central government rolls out more fiscal support measures.
- We anticipate an acceleration in receivable collection to improve its cash flow while the new projects pipeline may speed up. Its FCF has positively turned around in 1H24.
- Despite recent outperformance, it remains a laggard since 2022. Still, it trades on an undemanding 5.5x PER and an appealing 6.3% yield on a higher dividend payout.
Tech Supply Chain Tracker (16-Oct-2024): Taiwan seeks US defense contracts with efficiency.
- Taiwan’s defense sector offers competitive advantage with better, faster, and cheaper solutions for securing US contracts.
- Growing tech sector demands secure, local storage solutions due to high energy usage.
- Google boosts investments in Asia-Pacific countries to expand its presence and tap into growing markets in the region.
LSB Industries, Inc. – WTR Small-Cap Spotlight Recap
- LSB currently operates three downstream integrated ammonia production facilities.
- Behrman said key competitive advantages include a cost structure underpinned by access to low-cost US natural gas feedstock, strategic proximity with plants located in three states (OK, AK, and AL), and good logistics with access to waterways, truck, and rail.
- About half of LSB’s output is geared toward agricultural applications (fertilizers), while the remaining is geared toward various industrial applications.
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