In today’s briefing:
- [Tencent (700 HK, BUY, TP HK$545) Target Price Change]: C4Q24 Review: Good Time to Pick up Shares
- MHI (7011 JP): U.S. Presses Japan to Spend More on Defense
- Samsung Electronics(005930): Shareholders’ Meeting Results
- Top Glove Corp (TOPG MK): Recovery Continues, ASP Improves, Demand Outlook Stays Strong
- Hong Kong Earnings in the Week Commencing March 24
- Robert Half Inc: The Expanding Demand for Protiviti’s Services Is Arguably Its Biggest Growth Catalyst!
- LICHF: Benign Credit Cost Led to Strong Q3FY25
- Mohawk Industries: Its Expansion in Higher-End Product Mix In An Attempt To Aid Margin Expansion May Just Work Out!
- Illinois Tool Works: Here’s How Its Focus On China’s Automotive & EV Markets Is Paying Off!
- Boston Scientific: How WATCHMAN and FARAPULSE Expansion Is Shaping This Med-Tech Giant’s Future!
[Tencent (700 HK, BUY, TP HK$545) Target Price Change]: C4Q24 Review: Good Time to Pick up Shares
- Tencent reported C4Q24 revenue, IFRS op. profit, and IFRS net income in-line, (5.3%), 6.0% vs. our est. and 2.1%, (12.6%), 5.3% vs. cons.
- We shifted our game TOP PICK from Tencent to NetEase on January 16 2025, due to pipeline gaps.
- We reiterate our BUY rating and raise TP to HK$545 on Tencent. We expect game pipeline to fill the gap with the launch of two blockbusters in C3Q25.
MHI (7011 JP): U.S. Presses Japan to Spend More on Defense
- Japan’s top defense and aerospace contractor is being rerated to account for the limits on relying on the U.S. for defense in an alarming national security environment.
- A reasonably optimistic scenario brings MHI’s P/E ratio down to 22X in FY Mar-28, by which time Japan’s defense spending is scheduled reach 2% of GDP.
- The Trump administration wants Japan to spend more, but getting the budget through the national Diet is difficult enough as it is.
Samsung Electronics(005930): Shareholders’ Meeting Results
- All proposals at Samsung Electronics’ March 19 shareholders’ meeting were approved, despite opposition recommendations from Sustinvest, a Korean proxy advisory firm.
- Sustinvest had recommended voting against outside director candidate Kim Jun-sung (Agenda 2-1-1) and inside director candidate Jeon Young-hyun (Agenda 2-2-1).
- The approval of all agenda items indicates strong shareholder support for Samsung’s current management direction despite some governance concerns raised by proxy advisors.
Top Glove Corp (TOPG MK): Recovery Continues, ASP Improves, Demand Outlook Stays Strong
- Top Glove Corp (TOPG MK) achieved 70% YoY revenue growth in 1HFY25, while net profit stood at RM 58M.
- Management remains bullish on the U.S. market with North America region (23% of revenue) witnessing 13% QoQ sales growth in 2QFY25.
- ASP were up 3–4% across product categories. Top Glove expects the ASP to further strengthen.
Hong Kong Earnings in the Week Commencing March 24
- The Hong Kong earnings season enters its final week with at least 17 Hang Seng Index companies reporting their 2024 results and announcing dividends.
- The proportion of companies reporting in the coming week and the week after is significant at an index level, with notable weightings in the HSI, HSCEI, and HS TECH indices.
- Opportunities to profit from price movement around earnings are manifold and include event-focused trading, statistical arbitrage, hedging, and capitalizing on changes in dividends and implied volatility.
Robert Half Inc: The Expanding Demand for Protiviti’s Services Is Arguably Its Biggest Growth Catalyst!
- Robert Half International’s fourth-quarter 2024 earnings results reveal a mixed performance, reflecting both challenges and opportunities.
- The company reported global enterprise revenues of $1.382 billion, marking a decline of 6% from the previous year on a reported basis.
- The net income per share for the quarter was $0.53, significantly down from $0.83 a year ago.
LICHF: Benign Credit Cost Led to Strong Q3FY25
- LICHF reported PAT growth of 23% YoY in Q3FY25 led by benign credit cost. Credit cost was negative (-44cr) in Q3FY25 vs INR 435cr (0.2%+ of AUM) in Q3FY24.
- Stage 1 assets improved to 93.25% of AUM vs 93.09% QoQ. NIM continues to be stable at around 2.7%, similar to last quarter, making the earnings predictable now.
- Led by low credit cost, LICHF is on track to achieve FY25 PAT as per our estimate of INR 5400cr+. This implies LICHF is currently trading at below 6x P/E.
Mohawk Industries: Its Expansion in Higher-End Product Mix In An Attempt To Aid Margin Expansion May Just Work Out!
- Mohawk Industries’ fourth-quarter results showed a mixed performance amid ongoing industry challenges.
- The company reported net sales of approximately $2.6 billion, consistent with the previous year, although this included the benefit from two additional shipping days.
- Positively impacting the results were sales initiatives, restructuring efforts, and productivity improvements.
Illinois Tool Works: Here’s How Its Focus On China’s Automotive & EV Markets Is Paying Off!
- Illinois Tool Works Inc. (ITW) completed 2024 on a strong financial footing, achieving record results in several key performance areas.
- For the fourth quarter, the company reported a modest decline in total revenues by 1.3%, but a robust operating margin increase to 26.2%, an improvement of 140 basis points, driven primarily by enterprise initiatives.
- The company’s ability to expand operating income by 4% in spite of lower revenue demonstrates effective cost management and strategic execution.
Boston Scientific: How WATCHMAN and FARAPULSE Expansion Is Shaping This Med-Tech Giant’s Future!
- The financial results for Boston Scientific’s fourth quarter and full-year 2024 highlight both strengths and challenges faced by the company.
- Achieving robust growth in several segments, the company reported operational sales growth of 23% for the quarter and 18.5% for the year, with organic growth hitting 20% and 16% respectively.
- These figures surpass their upper guidance limits, indicating strong market performance, driven primarily by the early U.S. adoption of the FARAPULSE system and other key products.
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