In today’s briefing:
- Tencent/Netease: Zeroed for Two Rounds of Game Approval
- SMIC’s Semi Shocker
- Baidu: Back in the Mix
- Shenzhou Intl (2313 HK): Nike’s Inventories Declined By 10% Yoy in 1Q24
- Matahari Department Store (LPPF IJ) – Transforming and Trendy
- RPSG Ventures: Strong Profitability from IPL
- kopi-C with Thakral’s CEO: “We’ve re-invented ourselves from VCRs to Drones”
- 4Paradigm: Fears About The Entity List Are Exaggerated, Bullish On AI and SageGPT, PT: HK$86
- China’s Sinopec Dives Deeper Into Geothermal Energy
- TPL: The Unhedged
Tencent/Netease: Zeroed for Two Rounds of Game Approval
- China just announced game approval for September batch. The number of games approved is in-line with the pace of approval in recent month.
- Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
- Neither Tencent or Netease received approval for any game. Same thing happened for July batch.
SMIC’s Semi Shocker
- The latest Mate 60 Kirin SOC is a major accomplishment for the Huawei, SMIC combo
- SMIC will likely continue to refine their N+2 node and develop a 5nm-like process within 2-3 years, even without the use of EUV
- SMIC’s accomplishment is not reflected in its share price which lies midways between 52 week highs & lows
Baidu: Back in the Mix
- After a heavy decline in ownership between 2016 and 2020, active Asia Ex-Japan managers are re-engaging with Baidu Inc.
- Ownership levels are at 4-year highs, with Baidu one of the key beneficiaries of manager rotation this year.
- Baidu is the 3rd largest holding in the Communication Services sector, but there a plenty of funds with a history of ownership who remain on the sidelines for now.
Shenzhou Intl (2313 HK): Nike’s Inventories Declined By 10% Yoy in 1Q24
- Nike (NKE US) reported better than expected 1Q24 results this morning, with the stock up 8% in after market trading.
- Nike’s inventories declined by 10% yoy during the quarter, which bodes well for Shenzhou Intl Group Holdings (2313 HK), as sales to Nike made up 30% of Shenzhou’s sales.
- Shenzhou is trading at 15x 2024E PE, compared to an average of 21x forward PE over the last decade.
Matahari Department Store (LPPF IJ) – Transforming and Trendy
- Matahari Department Store (LPPF IJ) is the key player in the department store space in Indonesia with a significant transformation well underway to drive future growth and profitability.
- The company had a slightly disappointing Lebaran performance given some seasonal disparities but continues to make significant progress in revamping its merchandise mix, with a strong omnichannel yielding results.
- Matahari Department Store (LPPF IJ) looks exceptionally cheap on 4.0x FY2024E PER, and with a dividend yield of 20.0% and with earnings expected to rebound in 2024E.
RPSG Ventures: Strong Profitability from IPL
- Helped by the share in the incremental IPL media rights value, RPSG Venture’s (RPSGV) revenue from the sports business revenue jumped to INR 590cr+ in Q1FY24 vs INR 300cr+ YoY.
- Losses in the FMCG business narrowed to INR 63cr vs INR 90cr YoY and INR 70cr QoQ. FMCG revenues continue to be at around INR 400cr+ annualized run-rate.
- RPSGV’s BPO business, Firstsource Solutions (FSOL IN) saw stabilization in de-growth and margins. Margins expanded by 375bp during Q1FY24.
kopi-C with Thakral’s CEO: “We’ve re-invented ourselves from VCRs to Drones”
- kopi-C with Thakral’s CEO: “We’ve re-invented ourselves from VCRs to Drones” With the faster pace of development in sectors nowadays, adaptability and willingness to learn from others are crucial in business, says Thakral’s CEO Inderbethal Singh Thakral Building on the momentum, Thakral has invested in Skylark Drones, a start-up specialising in integrating drones in workflows in different industries.
4Paradigm: Fears About The Entity List Are Exaggerated, Bullish On AI and SageGPT, PT: HK$86
- 4Paradigm, a self-developed AI platform and scenario-specific AI applications provider, has completed an IPO and raised net proceeds of ~HK$836M, excluding the over-allotment option.
- Founder-Led AI unicorn priced its IPO at the bottom end of the range at HK$55.60 per share. Cornerstone investors agreed to purchase ~13.6M H shares at the IPO price.
- I like the company’s leadership position in China’s fastest-growing decision-making AI market, large TAM for their enterprise-grade generative AI offering SageGPT and top-tier VC investors.
China’s Sinopec Dives Deeper Into Geothermal Energy
- China Petroleum & Chemical Corp., the state-owned energy giant known as Sinopec, is making a bigger push into a renewable energy generated by heat within the earth as the country looks to diversify its sources of green energy.
- Sinopec’s push could serve as a catalyst for fast-tracking the exploration and use of geothermal energy, and spur the development of related technologies in the country, experts said.
- The company said on social media on Sept. 14 that it was expecting a “major development” in its geothermal heating segment and that it was on track to expand its service to more than 60 cities in over 10 regions in China by the end of the year.
TPL: The Unhedged
- The return of higher crude oil prices could result in Texas Pacific Land (TPL) reporting higher than expected revenue in the third and fourth quarters of 2023
- TPL does not hedge its exposure to energy prices, which would have an outsize benefit when prices move higher like they have in the third quarter
- Crude oil production has been rising even though total rig count has also declined from levels reached earlier in the year
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