In today’s briefing:
- Taiwan Tech Weekly: Key Supply Chain Names to Watch for Nvidia’s Earnings Today
- Alibaba: Navigating in Reverse
- RPPL: Weak Q1FY24 Earnings, However, Long-Term Growth Trajectory Remains Intact
- 3P Learning (3PL): Steady Through the 3Rs, Eyes on FY24
- Anta Sports (2020 HK): Most Resilient In Industry Down-Cycles
- Kuaishou: Earnings Beat, Improved Profitability and Further Upside
- HCG: Hitting All The Right Notes To Scale Up
- Bangkok Dusit Medical Services (BDMS TB): International Patients Drove 2Q23 Performance
- [Baidu (BIDU US, BUY, TP US$162) Earnings Review]: Online Ads Growth Will Remain Robust
- RCI Hospitality Holdings, Inc. – Solid 3Q Results
Taiwan Tech Weekly: Key Supply Chain Names to Watch for Nvidia’s Earnings Today
- Nvidia will report its earnings today U.S.-time, we outline the key Taiwan AI supply chain names to watch around the earnings.
- TSMC has maintained its full-year revenue guidance despite media reports questioning whether a further downgrade was coming.
- Hon Hai produces over 50% of Nvidia’s AI hardware according to media reports.
Alibaba: Navigating in Reverse
- Alibaba (ADR) (BABA US)‘s New Retail strategy stumbled, prompting the company to revert to its e-commerce origins with a renewed emphasis on social commerce.
- Creating a social media platform could be relatively simple, yet turning it into a prosperous venture amid established social media giants could be challenging.
- Branching out from social media to e-commerce might be straightforward, but Alibaba Group Holding (9988 HK)‘s unprecedented reverse path could present unique challenges.
RPPL: Weak Q1FY24 Earnings, However, Long-Term Growth Trajectory Remains Intact
- RPPL reported a weak Q1FY24 due to correction in raw material prices that led to inventory losses and decline in EBITDA margin to 12% vs 14%+ QoQ and 16% YoY.
- Given that Q1 tends to be a high demand quarter, RPPL had kept high inventory, which further accentuated the inventory losses.
- The raw material prices have stabilized now. EBITDA per kg should stabilize back to around INR 34-35 and should help the EBITDA to grow in line with the volume growth.
3P Learning (3PL): Steady Through the 3Rs, Eyes on FY24
- Holistic Educational Suite: 3PL enriched its product portfolio, with the APAC debut of WritingLegends and BrightPath Assessement.
- Steady Financial Growth: Amidst challenges in the UK, 3PL’s 9% ARPU growth highlights its consistent performance and market strength.
- Setting the Pace: With attractive-priced offerings, an integrated product approach, and an innovative teacher training vision, 3PL is expected to continue growing its top line as more schools join.
Anta Sports (2020 HK): Most Resilient In Industry Down-Cycles
- Anta Sports Products (2020 HK) reported a set of resilient earnings in 1H23, with net profit up 32% yoy.
- Management reconfirmed 2023 guidance for Fila and Anta at double-digit retail sales growth, and increased 2023 guidance for other brands to 40% yoy compared to 30% before.
- Anta’s sales growth has been the most resilient in previous industry down-turns in China. China macro worries should not be overly read through to Anta’s future results.
Kuaishou: Earnings Beat, Improved Profitability and Further Upside
- Kuaishou Technology (1024 HK) reported 2Q2023 results yesterday which beat consensus estimates. The company reported an OPM of 4.7% with net profits for the first time.
- The company’s domestic business continues to see improvement in operating profits while losses of the overseas business have reduced significantly over the last few quarters.
- Though livestreaming growth has decelerated, the company’s online marketing and e-commerce businesses continue to expand driving Kuaishou’s earnings.
HCG: Hitting All The Right Notes To Scale Up
- HCG’s cancer segment reported decent revenue growth of 14% YoY in Q1FY24. EBITDA margin came in weaker than expected due to a few transient adverse factors.
- HCG is hitting all the right notes to drive growth. It is beefing up clinical talent to attract patients. It is also making strategic tuck-in acquisitions to expand its presence.
- As cancer treatment is becoming more advanced, the mix of immunotherapy and hi-tech treatment is growing, helping the realization and the profitability to improve.
Bangkok Dusit Medical Services (BDMS TB): International Patients Drove 2Q23 Performance
- Bangkok Dusit Medical Services (BDMS TB) recorded 10% YoY growth in revenue from hospital operations in 2Q23, driven by 22% YoY from international patients, which contributed 26% of revenue.
- Thai patient revenues increased 7% YoY, despite COVID-19 related revenue decreased sharply from year-ago quarter.
- EBITDA margin declined 70 basis points YoY to 22.6% due to lower occupancy rate and economies of scales from a decline in number of COVID-19 patients.
[Baidu (BIDU US, BUY, TP US$162) Earnings Review]: Online Ads Growth Will Remain Robust
- Baidu reported 2Q23 revenue/non-GAAP net income 2.3%/38.1% vs cons., Baidu core’s online marketing revenues and other revenues grew 7.1%/13.0% YoY, respectively.
- We expect that Baidu’s ads growth will continue into 2H23, supported by recovery of key advertisers.
- We slightly increase FY23 EPS estimates and maintain our TP of US$162, which implies 17.8X PE.
RCI Hospitality Holdings, Inc. – Solid 3Q Results
Summary thesis. RCI reported another solid quarter, slightly exceeding our expectations.
The company is well- positioned for accelerating earnings growth looking out to 2HFY24 and FY25 given the opening of new clubs, Bombshells, and its first casino properties in Central City, CO, as well as our expectation of improving same-store sales (SSS).
With RCI’s industry-leading growth metrics and margins (40%+ for nightclubs), RCI’s valuation remains below peers on both an EV/EBITDA and P/E basis (see page 3 for valuation analysis).
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