In today’s briefing:
- Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums
- Xiabuxiabu (520 HK): Strong CNY Bodes Well for the Year of 2023
- Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E
- STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View
- 2023 High Conviction Update: Cipla (CIPLA IN)- Strong Traction Continued in Q3; Record High US Sales
- Dr. Reddy’s Laboratories (DRRD IN): Q3FY23 Results- Sequential Improvement Supported by US
- AI Takes the Write Way
- Thungela: The Canary Has Stopped Singing
Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums
- TSMC’s ADR premium is in the double digits, representing a major breakout.
- ASE Technology’s premium is also in the double digits and the company will be reporting results next week.
- Chunghwa’s premium is high for its tight range, and results will be coming out for the company this week.
Xiabuxiabu (520 HK): Strong CNY Bodes Well for the Year of 2023
- China catering players have seen strong recovery during the Chinese New Year starting from Jan 22th, amidst a broad-based revival of the service sector as a whole.
- For Xiabuxiabu, latest data points suggest significant progress in turnaround and higher visibility into 2023 performance.
- We see upside to our financial projection for 2023 and are more confident that Xiabuxiabu is the most attractively-priced to play re-opening in China catering sector. Expect 50% upside.
Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E
- Intel reported weak results at the end of last week, with its PC segment hit worst.
- PC total addressable market to fall by 7.5% based on Intel’s guidance.
- Asus and Acer inventory levels show the problem impacting Intel, and for the industry as a whole right now.
STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View
- ST reported solid Q4 results, 4% above consensus expectations at the EBIT level. Q1 2023 guidance is much better than consensus expectations on sales (11% beat)
- ST confirmed its view that 2023 will be another growth year, with sales indicated at US$17.3bn, which is +7.5% year over year and well above consensus
- Stock is up 21% since our initial note. We still see over 30% upside from here
2023 High Conviction Update: Cipla (CIPLA IN)- Strong Traction Continued in Q3; Record High US Sales
- Cipla Ltd (CIPLA IN) reported revenue growth of 6% in Q3FY23. Ex-COVID revenue growth was 11%. Despite price erosion and surging R&D investment, EBITDA margin expanded 153bps YoY to 24.2%.
- Ex-COVID India business recorded 11% revenue growth, driven by double-digit traction in core portfolio across therapies and business segments. Branded prescription business reported seventh consecutive quarter of market beating growth.
- US business recorded record high revenue, representing 30% growth in USD terms. Strong traction in respiratory products was further propelled by new launches including peptides. In December, Cipla launched leuprolide.
Dr. Reddy’s Laboratories (DRRD IN): Q3FY23 Results- Sequential Improvement Supported by US
- Dr. Reddy’s Laboratories (DRRD IN) recorded record high revenue, EBITDA, and net profit in Q3FY23, driven by US business. The company generated healthy cash flow of INR20B during the quarter.
- Revenue from North America surged 64% INR30.6B, driven by new products launches, increase in volumes, and a favorable forex movement. gRevlimid contributed ~34% of North America revenue.
- The company plans to launch ~30 products in the U.S. market in FY24. With the pipeline shifting toward complex products, Dr. Reddy is well-positioned to maintain double-digit revenue growth.
AI Takes the Write Way
- Digital Publisher BuzzFeed’s stock has seen an epic rally in the past week, with most of the gains driven by the company’s decision to use Artificial Intelligence tools like OpenAI’s ChatGPT to build quizzes and write content.
- Essentially, investors have been cheering about the potential for improved profitability and content that can be written at scale by using these various tools.
- This is a welcome change for the media outlet, which has seen its advertising revenues plummet, its site traffic decline across the board, and its balance sheet crumble.
Thungela: The Canary Has Stopped Singing
- Thungela’s Goedehoop mine continues to deliver robust results, but most of its assets are underperforming.
- The stock’s more than 35% ex-post dividend yield had many investors excited.
- Nevertheless, cyclicality could play its hand soon, according to the canary.
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