In today’s briefing:
- Taiwan Tech Weekly: Nvidia in Taiwan – Everyone Will Need ‘AI Factories’; Identifying Short Squeezes
- Pinduoduo (PDD): 1Q23, Up by 58% YoY, 40% Upside
- Zomato (ZOMATO IN) | The Big Picture
- Taiwan Shorts Monitor: Top Shorted Names Have Been Squeezed; U.S. Semis Outperforming Taiwan
- Indocement (INTP IJ) – A Bulky Take Off
- Jeisys Medical (287410 KS): Solid Q1 Result; New Product Launch and China Expansion to Drive Growth
- Japan Pachinko Sector Meets Secular Decline with Pivots in Strategy
- Pinduoduo: Margin Downtrend and Temu’s De Minimis Risk
- QANTM Intellectual Property Ltd – Investor Briefing: Reiterates EBITDA Margin Target
- CR Land 1109 HK: Another SOE Play on China Prop – Dual Growth Engine from DP and IP Mall Business
Taiwan Tech Weekly: Nvidia in Taiwan – Everyone Will Need ‘AI Factories’; Identifying Short Squeezes
- Nvidia’s CEO is in Taiwan this week for Computex and the company continues to dominate the headlines announcing Mediatek, Softbank, and WPP key partnerships.
- Semiconductor shorts have been squeezed after the global rally sparked by Nvidia’s monster results; We released our latest Taiwan Shorts Monitor to identify short squeezes.
- Earnings: Light this week for Taiwan, however PC industry leaders Hewlett Packard Co (HPQ US) and Dell Technologies Inc (DELL US) will report.
Pinduoduo (PDD): 1Q23, Up by 58% YoY, 40% Upside
- In 1Q23, total revenue grew by 58% YoY and the operating margin improved to 18% versus 9% in the same period last year.
- We believe the company benefited from its low-price products and the low comparison base last year.
- We conclude the stock has an upside of 40% and a price target of US$100.
Zomato (ZOMATO IN) | The Big Picture
- The street is excited about Zomato (ZOMATO IN) ‘s profitability, we are not.
- Zomato’s execution is strong, driving improved profitability despite the margin-dilutive Gold offering.
- Caution warranted due to market dynamics: slow growth, margin pressure, and increased competition.
Taiwan Shorts Monitor: Top Shorted Names Have Been Squeezed; U.S. Semis Outperforming Taiwan
- Investors in the U.S. market seem to be having a more bullish outlook towards U.S.-listed semiconductor names than investors are having for Taiwan’s semi names so far.
- Stocks with highest short interest as % of float — Some of the top names squeezed… Is HTC next? Also can consider Long Wiwynn vs. Short Wistron.
- Highest short ratios — Asus, UMC, Transcend shorts squeezed… Could WPG be next? Also can consider continuing Long Asus vs. Short Acer.
Indocement (INTP IJ) – A Bulky Take Off
- Indocement overperformed the overall Indonesian cement market in 1Q2023 in terms of growth, especially in the bulk market, where it also benefited from the contribution from its Maros plant.
- The company kept costs under control with 100% use of DMO coal during 1Q2023 despite the lower use of alternative fuels due to heavy rains and margins consequently improved.
- There is still some lingering cost pressure from gypsum and kraft paper but these are expected to subside by 2H2023, with Indocement’s volumes expected to increase +15-20% as demand recovers.
Jeisys Medical (287410 KS): Solid Q1 Result; New Product Launch and China Expansion to Drive Growth
- Jeisys Medical (287410 KS) recorded 15% YoY revenue growth in 1Q23, mainly driven by a 25% YoY growth in consumables due to the increasing number of aesthetic procedures globally.
- As of 1Q23, cumulative sales of two major devices of Jeisys, LinearFirm/LinearZ and Potenza reached 3,411 and 2,431 units, respectively. Expanding installed base should further drive consumables revenue growth.
- Jeisys has launched a new device in domestic market and Japan in current quarter. The company aims to accelerate growth momentum through entry in to new market, including China.
Japan Pachinko Sector Meets Secular Decline with Pivots in Strategy
- Universal Entertainment and Dynam Japan bave moved off total dependence on pure historic pachinko revenue flows as total market continues to slide.
- Universal’s move to the casino sector as a core profit center and Dynam’s strong hall closure strategy are keys to future of the sector.
- Dynam has been fighting off inflationary headwinds in opperating costs of their halls and sharp depreciation of equipment responsible for profit decline.
Pinduoduo: Margin Downtrend and Temu’s De Minimis Risk
- PDD Holdings Inc (PDD US) shares rose 19% on last Friday following 1Q23 revenue of RMB 37.6bn (consensus: RMB 31.9bn) and OP of RMB 6.9bn (consensus: RMB 5.0bn).
- The declining margin trend is a significant concern as Pinduoduo won’t appear cheap if margins fall short of expectations.
- Meanwhile, the existence of Temu could be at risk if the US government takes measures to address the De minimis loophole.
QANTM Intellectual Property Ltd – Investor Briefing: Reiterates EBITDA Margin Target
- Unchanged outlook commentary versus February 23 results commentary: QIP expects continued organic growth and underlying EBITDA margin improvement.
- Increased sense of urgency around transformation programme execution with IP management platform upgrades and redundant data centre commissioning scheduled in coming months.
- Reiteration of EBITDA margin target of low 30s medium term versus c. 27% currently.
CR Land 1109 HK: Another SOE Play on China Prop – Dual Growth Engine from DP and IP Mall Business
- Besides COLI, we also like CRL, being another SOE play (no bankruptcy risk), with dual growth engine from residential development business and shopping mall business
- Major share price drivers includes its contract sales trend, retail sales, rental performance as well as property policy from government
- CRL is trading HKD30, there is no placement risk until it trades at HKD HKD39 (P/B =1x). We recommend buying if stock trades <HKD35 as a technical indicator
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