In today’s briefing:
- Travelsky (696): Time to Fly
- Screen Holdings (7735 JP): Export Restrictions Add to Uncertainty
- Infineon Technologies: Top European Semi Player At A Discount.
- [Bilibili(BILI US, SELL, TP US$12.3)Update]: Still Struggling to Balance Growth and Monetization
- Oriental Land: A Potential Beat Next Quarter, but Unrealistic Consensus for Long-Term
- Taiwan Tech Weekly: Japan Semi Restrictions Take Effect; Apple IPhone Volumes; Hon Hai Acquisition
- Asymchem Laboratories (6821.HK) Vs Pharmaron Beijing (3759.HK) – Deep Dive the Logic and the Outlook
- Pounding the Table on EPAM
- Santen Pharmaceutical (4536 JP): Aims to Ride Patent Cliff Through Focus on Improving Profitability
- Visa Earnings: Business Momentum Is Likely To Be Sustained, But Clouds Are Gathering
Travelsky (696): Time to Fly
- Share price of Travelsky Technology Ltd H (696 HK) is still down YTD as investors are still overly cautious on Chinese travel data.
- YTD operational data shows that the number of flights processed is very close to the pre-COVID era.
- The company announced a profit alert recently, that should help to boost share price.
Screen Holdings (7735 JP): Export Restrictions Add to Uncertainty
- Japan’s new restrictions on exports of semiconductor production equipment to China are a potential threat to Screen.
- TSMC’s announcement that 2023 capex is likely to be at the low end of the forecast range is another negative.
- Share price consolidation should continue until guidance is lowered or verified.
Infineon Technologies: Top European Semi Player At A Discount.
- Infineon benefits from a strong market position in an industry with high barriers to entry.
- The Company’s backlog of €36bn, representing over 2x annual revenues, reduces the impact of end-market volatility.
- Silicon carbide, the material for semiconductor wafers, is becoming more prevalent. Infineon is well on track to have a material cost advantage and better technology versus its silicon carbide competitors.
[Bilibili(BILI US, SELL, TP US$12.3)Update]: Still Struggling to Balance Growth and Monetization
- We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts.
- However, most of these catalysts appear to be minor. BILI management is fully aware of the challenges in the industry.
- We maintain a SELL rating, and investors may consider shorting BILI after <Uma Musume> is launched.
Oriental Land: A Potential Beat Next Quarter, but Unrealistic Consensus for Long-Term
- There is a possibility that Oriental Land (4661 JP)‘s revenue and OP in 1QFY24 could surpass the consensus estimates by 8% and 21%, respectively.
- However, the outlook for the next three quarters may be different, as consensus appears inflated with annual OP expectations of ¥154.5bn compared to the company’s guidance of ¥122bn.
- We find medium term consensus expectations unrealistic, leading to potential downside for Oriental Land. We expect FY+2 EV/OP to decline from 46x to 20-30x.
Taiwan Tech Weekly: Japan Semi Restrictions Take Effect; Apple IPhone Volumes; Hon Hai Acquisition
- Japan’s semiconductor technology export restrictions took effect on Sunday and are unlikely to ease for China any time soon.
- Apple is reportedly telling suppliers that its flagship iPhone volumes will be similar to last year.
- Hon Hai acquires 50% stake in German auto chassis maker, marking a significant expansion in its EV manufacturing efforts.
Asymchem Laboratories (6821.HK) Vs Pharmaron Beijing (3759.HK) – Deep Dive the Logic and the Outlook
- Understanding the essential differences in business characteristics of CRO and CDMO could help investors better understand the differences between Asymchem and Pharmaron in terms of investment logic, financial performance, and prospects.
- Since Pharmaron didn’t obtain COVID-19 big orders, it would maintain normal revenue growth in 2023. However, increasing labor costs and uncontrollable investment business would lead to unsatisfactory net profit performance.
- Asymchem’s performance would be disappointing in 2023. However, its growth momentum is expected to restore after it digest the impact of COVID-19 orders. Then, Asymchem’s valuation could surpass Pharmaron afterwards.
Pounding the Table on EPAM
- As most AI heavyweight stocks (e.g. Nvidia, Microsoft) have already soared, some investors may be left feeling that they have missed the AI bandwagon.
- We believe there’s a delayed “AI winner” which the market is still sleeping on: EPAM Systems.
- With the stock back at ~$230, the risk-reward here is highly attractive in our view.
Santen Pharmaceutical (4536 JP): Aims to Ride Patent Cliff Through Focus on Improving Profitability
- Santen Pharmaceutical (4536 JP) expects generic competition for mainstay product in Japan in FY24, while overseas business should continue stable growth. The company guided for FY24 revenue of ¥273B (-2%).
- Due to the absence of impairment loss, Santen is expected to report operating profit of ¥32B in FY24 from an operating loss of ¥3B in FY23.
- Santen has unveiled new medium-term management plan, which calls for revenue of ¥280B, core operating profit of ¥56B, core ROE ratio of 13%, and core EPS growth rate of 10%+.
Visa Earnings: Business Momentum Is Likely To Be Sustained, But Clouds Are Gathering
- Visa continues to deliver as the company fully capitalizes on recent macroeconomic and industry-wide tailwinds.
- The expectations for the upcoming quarter are high and the second half of the fiscal year is also likely to be more challenging.
- This creates certain risks for the share price that are not necessarily priced in at the moment.
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