In today’s briefing:
- Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
- Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?
- Meituan Is the Biggest Beneficiary of China’s Domestic Travel Recovery
- MT/ Meituan (3690 HK): 1Q24, Total Revenue Up by 25% and Initiatives Loss Down by 45%
- Jardine Matheson – The Slow Grind Lower Can Continue
- Water Oasis (1161 HK): Dividend Cut As Company Gets Conservative
- TSMC (2330.TT; TSM.US): ASML’s High-NA EUV Machine Will Not Be Required Until 2027 at TSMC.
- Saizeriya (7581 JP): Buy On Any Weakness On A More Profitable Japan And Continued Strength In China
- Tech Supply Chain Tracker (07-Jun-2024): Air Liquide to invest $250M in US location for Micron gas.
- ASEAN EV Ecosystem Update: Initiatives to Build a Regional EV Ecosystem Continues
Toyota Industries (6201) – TMC’s Sale of TI Shares Is Innocuous, TI’s Valuation Remains Uncompelling
- Last September, Toyota Motor (7203 JP) Group affiliate Aisin (7259 JP) said they would get rid of ALL their cross-holdings. That signalled a future sea change in Toyota intra-group relations.
- It meant all Toyota group companies could do that. The big moves started with a multi-party offering of Denso Corp (6902 JP) shares – Toyota, Toyota Industries, and Aisin sold.
- Then others. Then in March, Denso announced a 2.5yr selldown of ~¥460bn of Toyota Industries shares. That meant a TI buyback was likely. We got one. Now we have details.
Lasertec. Colossal Fraud Or Multi-Award Winning Mask Inspection Supplier?
- Activist short seller Scorpion alleges Lasertec is a “colossal fraud” and “ticking time bomb”
- Most of their allegations relate to problems with Lasertec’s EUV mask inspection tools
- Lasertec achieved Intel’s distinguished supplier ward for the past six years and last December landed an award from TSMC for “Distinguished EUV Mask Inspection and Metrology Collaboration”. What gives?
Meituan Is the Biggest Beneficiary of China’s Domestic Travel Recovery
- During the upcoming Dragon Boat Festival, both flight and railway traffic seems sluggish, indicating a cooled-down enthusiasm for long-distance trips due to budget constraints.
- Data points to booming short-distance travel with self-driving as the major means, helped by lower price;
- Benefiting from hotel booking and catering, Meituan is the biggest beneficiary of such consumption downgrade.
MT/ Meituan (3690 HK): 1Q24, Total Revenue Up by 25% and Initiatives Loss Down by 45%
- Total revenue increased by 25% YoY and all business lines grew strongly.
- In 1Q24, the operating losses from new initiatives decreased by 45% YoY, but new initiatives revenue still grow.
- We conclude that the price target can be double of the market price.
Jardine Matheson – The Slow Grind Lower Can Continue
- There is nothing in the main investments at JM that suggests the grind lower on ROE and net profit will suddenly reverse, rather it should continue
- Astra International, Hong Kong Land, and DFI Retail are key to JM and there is little joy here, with HKL potentially having more valuation impairments
- Quarterly figures from Astra, which are a window on the current interim for JM, are not positive, with the worst quarter in over one year
Water Oasis (1161 HK): Dividend Cut As Company Gets Conservative
- Water Oasis (1161 HK) reported profits down 30% YoY (ex-one-off profits down 9% YoY only), but commentary cited headwinds in the business due to muted HK economic sentiment.
- Anticipating these headwinds, the company cut its semi-annual dividend by 50% to only 3.5 cents (implying a 7% yield on the current share price) despite a massive cash buildup.
- Net cash at 396 mn HKD is now 58% of the market cap. Given the current economic backdrop, we see a conservative approach to dividend payment in the medium term.
TSMC (2330.TT; TSM.US): ASML’s High-NA EUV Machine Will Not Be Required Until 2027 at TSMC.
- Taiwan Semiconductor (TSMC) – ADR (TSM US) is planning to launch its 2nm in 2025.
- TSMC is expected to acquire one High-NA EUV machine this year for R&D purposes, but it will not be used for commercial production.
- TSMC is expected to increase the cost of its Chip-on-Wafer-on-Substrate (CoWoS) package by around 15% in 2H24.
Saizeriya (7581 JP): Buy On Any Weakness On A More Profitable Japan And Continued Strength In China
- After a strong 68% increase in share price in 2023, Saizeriya (7581 JP) has been trading range bound, and up 8% year-to-date in 2024.
- Continued weakness in Japan on the profitability front in 1HFY24 offset continued strong performance in China.
- Japan’s operating profit is set to improve in the second half of the current fiscal year (ending August), and China’s strength will continue on the back of accelerating store openings.
Tech Supply Chain Tracker (07-Jun-2024): Air Liquide to invest $250M in US location for Micron gas.
- Air Liquide investing $250M in new US facility for Micron gas supply, reflecting commitment to growth and sustainability.
- Maruti Suzuki focusing on renewable energy expansion in India, showing dedication to environmental initiatives and reducing carbon footprint.
- EVs driving demand for high-tech satellite dishes, while Nvidia aims to hire 50% foreign workers for new R&D center in Taiwan. EU-China tariff risks highlighted.
ASEAN EV Ecosystem Update: Initiatives to Build a Regional EV Ecosystem Continues
- Countries across the ASEAN region continue to invest on developing their respective EV markets with governments introducing new initiatives and offering further incentives.
- The price war among Chinese EV players has escalated in recent month, causing pressure on non-Chinese players. European and Japanese EV makers are increasingly looking at ASEAN for cost advantage.
- The four companies we looked at have reported earnings and we have discussed their latest results and our investment thesis.
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