Daily Brief Equity Bottom-Up: Taiwan Dual-Listings Monitor: TSMC Premium Rangebound; UMC Hits Upper End of Range and more

• TSMC: +16.7% Premium, Has Remained Rangebound; Watching for Over 20% or Under 15%
• UMC: +2% Premium, Upper End of Trading Range, Can Consider Shorting
• ASE: +9.9% Premium; Spread Could Have Further Room to Bounce Higher

• Investors should be aware of the increasing prices of TCM raw materials, which could lead to fluctuations in profit margins of TCM companies. Investors should prepare for these potential impacts.
• After years of “fast-follow”, we’ve finally seen products from Chinese pharmaceutical companies stand at the center of the stage for the first time in the new generation of ADC.
• China Resources Medical’s profitability outlook is not promising due to issues within the Chinese healthcare system. The bottom line is P/B above 1 and P/E above 10x.

• Selamat Sempurna is one of the most interesting industrial companies in Indonesia, with a leading market share in filters for auto and heavy equipment markets in Indonesia and overseas.
• 1Q2024 was impacted by a seasonal slowdow ahead of Lebaran and a decline in sales to Russia, offset by strong US sales. Management remains confident in the outlook for FY2024.
• Selamat Sempurna will continue to benefit from growth in the filter replacement market for both auto and heavy equipment markets and already has exposure to EVs. Valuations are attractive. 

• While the street is getting excited about Bandhan Bank (assuming a change in management, end of a bad asset cycle, and lower valuations), we are not.
• We believe the next set of problems for the bank are yet to be unleashed, and a change in management will only intensify the challenges ahead.
• We believe the worst is yet to come for the bank. 

• Nuvama Wealth Management (“Nuvama”)  continues to report strong growth with Q4FY24 revenue at INR 596cr, a growth of 35% YoY. Q4FY24 PAT grew 57% YoY to reach INR 181cr. 
• Overall, FY24 revenue and PAT ended strong at INR 2063cr (YoY growth of 31%) and INR 597cr (YoY growth of 62%), respectively.
• FY24 growth was led by the capital markets (revenue grew 64% YoY) segment, aided by favorable cycle and market-share gains. Wealth and asset management segments are also scaling up well.

• PC & Server solutions names have fallen moderately from highs in June, however enterprise server company HPE soared 20% on AI strength.
• Despite the market pullback from highs, we note that 2025E forward growth expectations have generally increased for the universe over the last month.
• Latest Taiwan PC company revenues indicate healthy growth and HPE’s management guided for Enterprise AI orders to accelerate.

• Douyin’ GMV increased by 300% YoY in the “June 18” sales season.
• The revenue of a pre-IPO restaurant chain, Green Tea, increased by 55% in 2023.
• Alibaba’s supermarket chain, Freshippo, opened 12 new stores in June.

• Perfect Medical Health (1830 HK) reported flat revenue/profit growth for FY24 due to a weak Q4 that plagued the entire HK consumer space. H2FY24  revenue/profit growth was -6.3%/-12.5%
• The company paid a generous dividend of 31.5 cents for FY24 (vs. 30.0 cents), resulting in a 12.5% dividend yield.
• We will follow up with more details after the earnings call and presentation. 

Key points

• Delfi, the leading chocolate company in Indonesia, is experiencing challenges due to rising cocoa prices
• Despite a decrease in share price, analysts remain optimistic about Delfi’s future prospects
• The company’s management team is implementing strategic measures to protect profit margins and improve financial performance, with initiatives planned for 2024 expected to mitigate the impact of cocoa price increases

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Moody’s Ratings downgraded Grifols’ corporate family rating to B3 from B2, with a stable outlook, due to high leverage, and complex, opaque corporate governance involving related-party transactions.
• Moody’s considers Grifols’s liquidity to still be “fragile,” noting that “while adequate for the next 12 months, beyond that, maintaining adequate liquidity will depend on returning to positive FCF generation.
• For risk-tolerant investors, the current low share price could present a long-term buying opportunity if Grifols successfully executes its strategic initiatives.