In today’s briefing:
- The Beat Ideas- Authum 2.0: A New Era in Financial Services!
- Tencent (700 HK): 2Q24, Gross Margins of All Business Lines Improved Significantly
- Appier (4180) | The Hidden Gem in AI Marketing
- HD Hyundai: Updated NAV Analysis
- Floor & Decor Holdings Inc.: A Bear’s Perspective! – Major Drivers
- Tencent 2Q: Recent Launch of DnF Mobile Helps Domestic Gaming Return to Growth
- TSMC (2330-TT): Revisiting Previous Bullish Themes Following Outperformance
- Shift Up: 2Q 2024 Results Analysis
- [Earnings Review] Occidental Beats Q2 Estimates with Boosted Output and Stronger Realisations
- Fu Shou Yuan (1448.HK) – Negative Growth in 24H1 Seems Inevitable
The Beat Ideas- Authum 2.0: A New Era in Financial Services!
- Transformation of the company from Equity investment driven to Equity and stress business.
- Complete restructuring of Reliance Capital and Reliance Home Finance into Authum and Focus on ARC and stressed assets.
- Recoveries in completely provided portfolios of Reliance Capital, Planned debt fundraise for further growth.
Tencent (700 HK): 2Q24, Gross Margins of All Business Lines Improved Significantly
- Total revenue increased by 8% YoY in 2Q24, lightly higher than 1Q24 and 4Q23.
- The gross margins of all business lines Improved significantly YoY.
- We set the upside at 35% and the price target at HK$506 for the end of 2025. Buy.
Appier (4180) | The Hidden Gem in AI Marketing
- Appier achieved 32% YoY sales growth in Q2, driven by strong US market performance and balanced revenue from both new and existing customers.
- The company’s EBITDA margin improved to 13%, reflecting strong operating leverage despite ongoing investments in growth initiatives.
- Trading at a 2.9x EV/FY25 revenue multiple, Appier is undervalued relative to peers, with significant upside potential from sustained growth and strategic initiatives.
HD Hyundai: Updated NAV Analysis
- According to our NAV analysis, it suggests a base case valuation of 122,473 won per share for HD Hyundai, representing a 50% upside from current levels.
- The combined value of HD Korea Shipbuilding & Offshore Engineering, HD Hyundai Electric & Energy, and HD Hyundai Marine Solution is 11.4 trillion won.
- We estimate HD Hyundai’s 73.85% stake in Hyundai Oilbank to be 7.0 trillion won. We also applied a 5x OP of its core business and a 50% holdco discount.
Floor & Decor Holdings Inc.: A Bear’s Perspective! – Major Drivers
- Floor & Decor Holdings, Inc. navigated the fiscal second quarter of 2024 with outcomes that reflected the broader economic challenges impacting the retail and real estate sectors.
- In the quarter under review, the company reported a dip in both total sales and comparable store sales which fell slightly short of expectations.
- This mirrored the continuing pressures from taut monetary policies adversely affecting housing market activities and discretionary spending on major projects.
Tencent 2Q: Recent Launch of DnF Mobile Helps Domestic Gaming Return to Growth
- Tencent (700 HK) reported 2Q2024 results today which beat consensus. Domestic gaming resumed growth driven by the successful launch of DnF Mobile which continues to dominate charts in China.
- All three business segments saw improvement in margins driven by Tencent’s high-margin businesses incl. mini-programs, video accounts, short-videos, etc.
- We expect continued recovery in Tencent’s earnings, however, remain cautious given slowdown in consumption spending and macroeconomic uncertainties.
TSMC (2330-TT): Revisiting Previous Bullish Themes Following Outperformance
- Taiwan Semiconductor (TSMC) (2330 TT) has significantly outperformed this year, driven by a global AI-driven tailwind resulting in substantial revenue growth acceleration and a significant earnings upgrade cycle.
- Record levels of FCF generation have supported dividend increases, and whilst future DPS expectations seem conservative, the current dividend yield suggests future increases have been priced in.
- TSMC trades just above its 5-year historic average trading levels and at a premium to its key competitors, other smaller listed foundries, its main customers, and large suppliers.
Shift Up: 2Q 2024 Results Analysis
- On 14 August, Shift Up (462870 KS) reported its 2Q 2024 results, which was the first earnings report post its IPO.
- Shift Up reported sales of 65.2 billion won (up 65.4% YoY and 19.5% below consensus) and OP of 45.1 billion won (up 49% YoY and 21.4% below consensus) in 2Q24.
- The company is preparing for a PC release of Stellar Blade in the near future to continue its strong popularity and it expects better results on PC than on console.
[Earnings Review] Occidental Beats Q2 Estimates with Boosted Output and Stronger Realisations
- Occidental’s Q2 revenue grew 1.7% YoY but missed estimates by 1.7%. Net profit surged by 34.9% YoY and beat estimates by 32.5%.
- Total production rose by 3.3% YoY led by robust growth in the Permian and Gulf of Mexico. Production touched its highest in four years.
- Average crude oil realisations rose 8.6% YoY, and natural gas increased by 11.3%, while domestic gas realisations fell sharply by 60.3% YoY.
Fu Shou Yuan (1448.HK) – Negative Growth in 24H1 Seems Inevitable
- According to the management, the performance of 24H1 should be better than that of 21H1, but Fu Shou Yuan’s performance in 2024 full year may still fall short of expectations.
- In the future, the development strategy of Fu Shou Yuan would rely more on endogenous growth. Without aggressive M&A, long-term revenue growth rate could fall to single digit.
- Special dividends will continue in the future. However, one major risk for Fu Shou Yuan is policy risk. The bottom line is the demand for the funeral industry always exists.
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