In today’s briefing:
- Toshiba (6502 JP): Sanctions on YMTC Help Kioxia
- Xiaomi: Massive Layoffs to Rescue Falling Margins
- Ryohin Keikaku: Beat On The Cards, Big Moves To Follow
- Grab (GRAB IJ) – Moving Forward on a Number of Fronts
- JD Health (6618.HK) – Some Positive Updates in Business
- LyondellBasell: Looking For Safety And High Dividends In 2023
Toshiba (6502 JP): Sanctions on YMTC Help Kioxia
- The U.S. government put YMTC on its Entity List in early December, effectively cutting it off from U.S. semiconductor equipment companies and other U.S. technology.
- YMTC’s Xtacking architecture was good enough for Apple, but it will now have trouble maintaining its 5% market share, let alone ramping up production of its new 232-layer device.
- This will take some of the competitive pressure off Kioxia and benefit Toshiba, which owns 41% of its shares.
Xiaomi: Massive Layoffs to Rescue Falling Margins
- Several news media outlets reported that Xiaomi Corp (1810 HK) has started laying off about 10-15% of its employees across several units of its smartphone and internet services businesses.
- Xiaomi’s margins have come under pressure with entering into the premium smartphones segment which has resulted in aggressive expansion of offline stores.
- The company’s 3Q2022 revenues declined 9.7% YoY as a result of decrease in revenue from all three business segments while margins further dropped compared to 3Q2021.
Ryohin Keikaku: Beat On The Cards, Big Moves To Follow
- Ryohin Keikaku (7453 JP) rose 24% following an earnings beat in the previous quarter. However, the share price progression afterwards was less than we anticipated.
- Our analysis points to one more big earnings beat as consensus is still conservative on cost assumptions.
- We think Ryohin Keikaku could take another big stride towards our target price following 1QFY23 results, due on the first week of January 2023.
Grab (GRAB IJ) – Moving Forward on a Number of Fronts
- Our recent update with Grab (GRAB US) management revealed a number of interesting product-led initiatives that will drive future growth and customer retention as well as save on costs.
- Grab (GRAB US) has already seen significant progress on Grab Unlimited given its link to promos plus it is focusing on higher-spending customers to reduce the need for subsidies.
- The company’s valuations look attractive relative to growth and considering it is moving more quickly towards profitability plus it has more than ample cash to make it there.
JD Health (6618.HK) – Some Positive Updates in Business
- JD Health (6618 HK) is on the right track in terms of business model and investment logic. The Company has also begun to enter a virtuous circle in financial performance.
- There were some positive business updates in term of To B business in 22Q1-Q3, which would bring JD Health closer to establishing a complete “retail pharmacy + healthcare service” ecosystem.
- For trading strategy, at present, considering the complex external environment, we recommend investors to do short-term trade, rather than long-term hold.
LyondellBasell: Looking For Safety And High Dividends In 2023
- LyondellBasell has become a business worth considering for anyone looking for relatively safe and high dividend yield in 2023.
- Lower margins in key segments are largely priced-in as management prepares to reduce capacity.
- Strong cash flow positioning and recent deleveraging efforts have significantly reduced risks related to future dividend payouts.
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