Daily Brief Equity Bottom-Up: Tokyo Electron (8035 JP): MAGIC Versus Reality and more

• The market welcomed TEL’s 3Q results and new guidance, but sales, profits and margins continue to decline year-on-year.
• An optimistic consensus sees a new cyclical high in the second half of the decade, but avoids the question of disengagement from China.
• Inventories are at a record high. Valuations out to FY Mar-25 do not look attractive. 

This is Part 1 of our exclusive deep dive on “Sogo Shosha”, or Japanese trading companies.

We’ve decided to break this deep dive into two parts given its length.

Part 1 will build the foundation and covers the business, history, and a discussion of Berkshire’s investment.

• Bajaj Finance Ltd (BAF IN) reported decent profitability. Growth was somewhat muted due to competition, however, this seems temporary.
• The immediate focus of BAF to drive the next leg of growth is to deepen its product penetration across its existing branches. Currently, only 3% branches have 80%+ products.
• BAF revealed its long-term strategic plan wherein it plans to enter into newer categories like Auto, Agri, and CV which comprise 28% of the Indian retail credit market.

• The benefits of assisted reproduction being covered by medical insurance are limited. Its main role is still to delay not fundamentally reverse the decline of China’s birth rate.
• If the valuation collapse occurs collectively in one field, it basically reflects that Miss Market does not hold much hope for this field in the future, such as cell therapy. 
• We mainly analyzed some key points of the companies that investors may be interested in, such as iRay Technology (688301 CH) and Shanghai Medicilon Inc (688202 CH).

• Lululemon Athletica Inc.’s calendar year margin compression is due to variable costs that will probably adjust lower this year.
• Many analysts mistake’monetized costs’ such as excess amortization for cash costs.
• Lululemon Athletica Inc. (NASDAQ:LULU) stock has surged by nearly 2000% since its initial public offering in 2007.

• Electronic Arts delivered a mixed set of results in the last quarter.
• In the quarter more than 10 million new players entered into the community which drives strong engagement.
• The player network of EA also continues to grow and its flagship, EA SPORTS FIFA delivered strong engagement this quarter across the company’s entire ecosystem.

• Sysco delivered a mixed set of results for the last quarter and it was able to surpass the analyst consensus estimate in terms of revenues as result of double-digit sales growth.
• However, despite a decent earnings growth year-over-year and strong volume growth as well as market share gains, the company missed out on meeting earnings expectations.
• Sysco continues to advance its growth strategy with progress in its digital tools, merchandising initiatives, and supply chain investments in sales.

• Equinor rose 75% over the three-year period but has stalled.
• European gas prices may be nearing a bottom, according to the company.
• The company’s 10-year outlook looks good after record profits this quarter. It has been offered as an alternative to U.S.

• Bill.com generated decent second-quarter result with revenues beyond market expectations and narrower-than-expected losses.
• Its extensive and expanding partner and network ecosystem offered a competitive advantage by allowing them to access new firms efficiently.
• With the joint objective of generating additional value for SMBs, they collaborate with an SMB’s most reliable advisors, including their accounting firms and financial institutions.

• The company carried out some major acquisitions in the year including the $3.7 billion purchase of ChemoCentryx followed by the even bigger, $27.8 billion acquisition of Horizon Therapeutics.
• Their portfolio will also grow due to the addition of Horizon Therapeutics.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.