In today’s briefing:
- TSMC Just Provided Substantial Visibility into Their Long-Term Growth Estimate; ASML Adds Color
- JD.com (JD US / 9618 HK): Announced 2.8% Share Buyback In 1Q24 + My 1Q24 Preview
- Taiwan Dual-Listings Monitor: TSMC Breaks Down From Extreme, UMC Discount Near Historical Low
- Innovent Biologics(1801 HK)– More than Just a GLP-1 Play
- China Healthcare Weekly (Apr.21) – M&As in Biotech, Capital Is Bullish on Non-Tumor Sectors, Tofflon
- Monthly Chinese Express Tracker | March ASPs Fell, Again | Volumes Moderated, Including X-Border
- Shift: On a Road to Recovery
- TSMC, ASML, VAT Group, and Alphawave Earnings
- CanSino Biologics (6185.HK/688185.CH) – 2024 Is the Best Time to Bottom-Fish This Stock
- Bell Financial Group Ltd – Strong start to FY24 with Q1 PBT +60%
TSMC Just Provided Substantial Visibility into Their Long-Term Growth Estimate; ASML Adds Color
- TSMC and ASML reported 1Q24 results last week; both stocks have fallen post results, impacted by global concerns despite a strong outlook for these two leaders into 2025E.
- TSMC guided for strong growth not just in 2024E, but if one digs into management’s comments, they actually provided strong visibility into their 2028E internal revenue expectations.
- For ASML, its EUV product business is the key indicator to watch. We believe TSMC shares will continue to re-rate even through a period of global economic softness.
JD.com (JD US / 9618 HK): Announced 2.8% Share Buyback In 1Q24 + My 1Q24 Preview
- JD.com (9618 HK) announced this week that it has repurchased 2.8% of the outstanding shares of the company in the first quarter of 2024.
- Improved shareholder returns is a key thesis for the stock, given that there is little market expectation on such given limited track record.
- A positive catalyst on full year performance could be the government’s announced stimulus policy for home appliance in April this year (trading old for new).
Taiwan Dual-Listings Monitor: TSMC Breaks Down From Extreme, UMC Discount Near Historical Low
- TSMC: +9.2% Premium, Major Breakdown From Previous Historically Extreme High
- UMC: -1.9% Discount, Is Near Low End of Historical Range
- ASE: +10.4%; ADR Short Interest Jumps to Very High Level vs. History
Innovent Biologics(1801 HK)– More than Just a GLP-1 Play
- Innovent is most well-known as the developer of mazdutide in China, however this is overshadowing a strong portfolio of oncology drugs in a very high growth market.
- China’s approach to healthcare is being defined by having the biggest diabetic population, over 4 million new cancer cases per year, and over 100 million living with obesity.
- We expect the valuation gap between the two first-to-market GLP-1 drugs, and competition to close. Oncology drug sales and valuations will continue its growth trajectory.
China Healthcare Weekly (Apr.21) – M&As in Biotech, Capital Is Bullish on Non-Tumor Sectors, Tofflon
- We have seen four transactions of MNC acquiring Chinese Biotech companies. However, this does not mean that domestic big pharmaceutical companies will also participate in the acquisition of small Biotech.
- The underlying investment logic of innovative drug is undergoing changes. Non-oncology fields, such as autoimmunity, CNS, endocrine metabolism, and ophthalmology will be the main hot directions of investment and R&D.
- Shanghai Tofflon Science A (300171 CH) is still in downward trend. We’re not optimistic about its 2023 results. We don’t recommend bottom-fish this stock unless there is a major catalyst.
Monthly Chinese Express Tracker | March ASPs Fell, Again | Volumes Moderated, Including X-Border
- ASPs remain under pressure as STO, J&T gain volume share in ground segment
- March showed a surprising slowdown in pace of international volume growth
- We believe Q423 and Q124 company-level profitability will mostly disappoint
Shift: On a Road to Recovery
- Shift Inc (3697 JP) ’s share price has been down more than 50% YTD with the release of 1QFY08/2024 results in January 2024 which saw a drop in margins.
- The company’s aggressive investment in HR and system reinforcement led to a decline in margins, however, margins saw a QoQ improvement in 2QFY08/2024.
- Despite there being an improvement in 2Q and the company expecting the margins to bounce back in 4Q, Shift’s share price has continued to fall.
TSMC, ASML, VAT Group, and Alphawave Earnings
- It’s time for the main event: earnings are upon us. As is customary, let’s start with TSMC, move to ASML and Alphawave, and then discuss VAT Group.
- TSM revenue is above guidance, gross margins are a bit ahead of the midpoint, and operating margins are at the high end of guidance.
- First, while this is a good result, semiconductors are due for a correction. I wrote about this in March, and SOXX has quietly crept downwards since then.
CanSino Biologics (6185.HK/688185.CH) – 2024 Is the Best Time to Bottom-Fish This Stock
- We would see CanSino’s performance pick up obviously in 2024 – Revenue of meningococcal vaccines would up about 50% YoY. Both R&D and SG&A expenses would show a declining trend.
- Starting from 2025, CanSino’s product matrix will become more diverse.Its financial performance will enter a virtuous cycle. Revenue in 2025 may exceed expectations, depending on the approval time of PCV13i.
- CanSino is one of the few domestic vaccine companies that has ability to explore the international market. Mispricing/expectation differences in the market will give investors the opportunity for excess returns.
Bell Financial Group Ltd – Strong start to FY24 with Q1 PBT +60%
- Bell Financial Group Ltd (ASX:BFG) is a diversified provider of financial products and software solutions within, and increasingly outside, its traditional full-service stockbroking business.
- A Q1 FY24 trading update provided at the group’s AGM on 19 April points to revenue growth of 17% and PBT growth of 60% to $9.3m, with all divisions said to be profitable.
- This compares to a RaaS H1 FY24 PBT growth estimate of 69%, placing the group on track to achieve our H1 estimates.
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