In today’s briefing:
- Taiwan Tech Weekly: Apple Suppliers Slump on IPhone; PC Volumes Back to Growth; TSMC & ASML Results
- GHCL Textile: The Undervalued & Turnaround Play
- Nidec (6594) | Liquid Cooling Overheats Stock
- European Airlines – Assessing Fuel Price Risk to Earnings
- Cancelling CaiNiao’s IPO: What It Means for China’s Express Sector (+Comment on Implied Valuation)
- Contemporary Amperex Technology (300750 CH) 1Q24 Better than Expected
- Shakey’s Pizza FY23 Concall Highlights: Challenging Q1 FY24, Smoother Road Ahead in H2
- Novatek (3034.TT): 2Q24F Keeps Growing, and 3Q24F Shall Grow Significantly.
- [#22] Namaste India 🙏 | Voltas Ltd (VOLT IN) | Margin Pressure to Continue
- Nitori: One of the Best Bets in Japan Consumer Markets
Taiwan Tech Weekly: Apple Suppliers Slump on IPhone; PC Volumes Back to Growth; TSMC & ASML Results
- Apple supply chain names are falling due concerns about weak iPhone shipments. Global PC shipments returned to growth as per IDC data.
- TSMC and ASML results this week and will be cruical for the market. Can TSMC rally again to achieve new highs or will it continue trading lower?
- Nanya Technology sees DRAM Industry pricing rising through 2024E; but is underperforming financially.
GHCL Textile: The Undervalued & Turnaround Play
- Company recently demerged from Ghcl Ltd (GHCL IN) and guiding for 30% revenue growth and double margins from here onwards with cotton prices being stable.
- A Debt Free Textile company available at 0.56x Price to Book with growth plan in progress and adding Value added products in its portfolio.
- Due to Forced selling from DII, FII company remained undervalued, now with changing margin profile, the Company will be available at a cheap valuation compared to peers.
Nidec (6594) | Liquid Cooling Overheats Stock
- Nidec’s share price rose by 7% on the largest volume day of the year and on a day where the Nikkei declined by 2%.
- The move followed an announcement that Nidec will enhance its CDUs production line in Thailand by 10x by June 2024. CDUs are used to cool AI servers in data centres
- The market impact of 250 billion yen implies a sales impact of 69 billion yen, which is far too high for 24,000 units per year
European Airlines – Assessing Fuel Price Risk to Earnings
- Given events in the Middle East and associated risks for oil prices, we publish a quick guide to the 2024 earnings sensitivity to fuel price increases for the European airlines.
- Rising fuel prices pose starkest risk to Lufthansa earnings, and it has just profit warned due to strike costs, which leave it needing a record 2H to meet guidance.
- Ryanair is comfortably most insulated given margin and balance sheet strength.
Cancelling CaiNiao’s IPO: What It Means for China’s Express Sector (+Comment on Implied Valuation)
- A few weeks ago, Alibaba announced it would not seek IPO for CaiNiao
- The change of plans could force BABA/CaiNiao to re-focus on profitability
- BABA will reportedly buy rest of CaiNiao at US$10.2 bn valuation — cheap!
Contemporary Amperex Technology (300750 CH) 1Q24 Better than Expected
- CATL announced its 1Q24 net profit of CNY9.2B (+19% YoY), which straight out blew past market expectations
- The fear of ever-declining battery prices is overstated, as CATL has clearly shown it can take lower margins and boost ROEs via higher inventory turnover and high utilisation rates
- Our fair value of CNY253 (+27% UPSIDE) is derived by 23x 2024 PE ratio, which is 1SD below its historical mean. CATL is currently trading at exceptionally low valuations
Shakey’s Pizza FY23 Concall Highlights: Challenging Q1 FY24, Smoother Road Ahead in H2
- Shakey’s Pizza (PIZZA PM) had a disappointing end to FY23 despite the 32% YoY systemwide sales and 23% YoY profit growth. 4Q FY23 sales/profits were +15% YoY/-21% YoY.
- Network expansion was a solid 369 outlets (base of 1772 outlets), primarily led by Potato Corner (359 outlets). Expansion in FY24 was guided at over 400+ outlets (1+ bn Pesos).
- Stock trades at 15.6x FY23 earnings and 13x FY24e with mid-teens growth on the top/bottom line guided by the company for FY24
Novatek (3034.TT): 2Q24F Keeps Growing, and 3Q24F Shall Grow Significantly.
- Novatek Microelectronics Corp (3034 TT)‘s sales in 1Q24 showed a 6.2% YoY growth, implying a positive growth outlook for 2024F compared to 2023.
- Looking ahead to 2Q24F forecasts, the anticipated orders from United Microelectronics Corp (2303 TT) could have a positive impact on Novatek’s 1Q24 sales.
- A significant growth is expected after 2Q24, particularly following Novatek’s qualification for the Apple (AAPL US) iPhone 16.
[#22] Namaste India 🙏 | Voltas Ltd (VOLT IN) | Margin Pressure to Continue
- Our flash checks across a couple of dealers indicate pressure on margins across the industry. Voltas Ltd (VOLT IN) is trying hard to gain market share.
- Other names discussed include PNB Housing Finance Ltd (PNBHOUSI IN), Vedant Fashions (MANYAVAR IN) and Bandhan Bank Ltd (BANDHAN IN).
- Varun Beverages (VBL IN) and Schaeffler India (SCHFL IN) show up as interesting ARs to read.
Nitori: One of the Best Bets in Japan Consumer Markets
- Leading furniture retailer Nitori recently announced it would work with French platform developer Mirakl to build an online marketplace. The site will be available late 2024 or early 2025.
- Nitori wants the mall to contribute 20% of revenues by 2032 within a sales target of ¥3 trillion, when overseas store numbers are expected to be double those in Japan.
- But, founder Akio Nitori says he wants to see overseas sales much higher than official targets and may well get there through close targeting of the rising Asian middle class.
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