Daily Brief Equity Bottom-Up: Unibail-Rodamco-Westfield: The Retail Community and more

• Unibail-Rodamco-Westfield (URW AU), Europe’s largest listed commercial property company, recently reported solid 3Q23 financials (through to September 2023). 
• Covid played havoc on shopping mall players/developers – URW is still down 62% from its Covid cliff versus an average of 24% for a basket of peers.
• Investor concerns over URW’s strategy and leverage have been a drag on the stock; however its long-term plan is finding the right path. 

• Astra International’s results are a testament to both the company’s resilience in the face of declining commodity prices, with autos. motorcycles and finance take up the reins of driving growth.
• Astra continues to introduce new EV models with a focus on hybrid variants, which have been selling well. It is increasingly investing in sustainable businesses including geothermal and nickel assets.
• Astra International (ASII IJ) remains a well-managed core proxy for Indonesia’s key growth drivers, with new investments aligning the company with the country’s growth drivers. Valuations are attractive versus history.

• Our trading thesis is to go long JinkoSolar Holding (JKS US) and go short JA Solar Technology (002459 CH) in the next 3-6 months.
• The three major reasons include higher momentum for JinkoSolar post 3Q 2023 results, much higher EBITDA growth for JinkoSolar from 2022 to 2024, and relative valuations. 
• Some of the factors driving lower share price of Chinese solar stocks this year include higher US tariffs, excessive manufacturing capacity, and declining prices of solar wafers and panels.

• WeWork appears to be approaching bankruptcy; we expect SoftBank’s exposure to be at least USD1.4bn including credit lines
• Arm Holdings post-IPO performance has been lacklustre, but we continue to believe that it remains dangerously over-valued against peers – and Arm provides 30% of the group’s equity value
• We believe that JPY depreciation has supported SoftBank Group’s share price (given the high share of USD-denominated portfolio assets); in addition, we still see risks to current private company valuations

• During 9M2023, Otsuka Holdings (4578 JP) reported revenue growth of 17% YoY to ¥1,479B, driven by 21% YoY revenue growth in pharmaceutical segment due to 16% growth in global products.
• Despite the recording of impairment losses, operating profit increased 77% YoY to ¥203B, leading to a 460 bps expansion of margin to 13.7%. Net profit zoomed 46% YoY to ¥162B.
• The company has raised 2023 revenue guidance, second time this year. Otsuka now expects 2023 revenue to grow 14% YoY to ¥1,985B, 4% ahead of prior guidance of ¥1,905B.

• Chinese-founded fast-fashion retailer Shein acquired British online fashion brand Missguided from Frasers Group Plc, as the Singapore-based fashion giant continues to expand overseas.
• Under the deal, Shein and Missguided’s founder Nitin Passi have formed a joint venture to manage the brand and access its intellectual property under a licensing agreement.
• Shein will also manufacture Missguided’s products through its on-demand production model, and sell on both companies’ websites, Shein said in a statement.

• TPL Summary Texas Pacific Land (TPL) reported third quarter results where a decline in daily production led to lower than expected oil and gas royalties.
• The rate of production has always been the variable part of TPL’s results. In Q3 production levels were impacted by the summer heat in Texas causing abnormal electricity levels
• TPL reported third quarter revenue of $158.0 million compared to our estimate of $178.7 million

CLIQ Digital continues to deliver good progress as it focuses on conversions through its customer base through its bundled content offering. In 9M23, revenue and EBITDA grew by 25% year-on-year to €242m and €39m respectively, at a maintained margin of 15.9%. CLIQ’s focus on acquiring more profitable customers with a higher lifetime value is delivering progress against key performance indicators, including growth of 21% in the customer base value. Our estimates remain unchanged, while management has reiterated its FY23 and mid-term FY25 guidance. CLIQ continues to trade at a significant discount to our peer group across EV/sales and EV/EBITDA multiples. Our implied share price comes to €62, reflecting continuing upside to the current price on our estimates.

• HWKN reported fiscal second quarter (September) results with improved gross margin and continued reversal of last in first out (“LIFO”) reversals
• HWKN converted inventory to cash that was then used to reduce the debt balance allowing HWKN to acquire two more water treatment businesses
• The quarter included a sharper decline in industrial sales than expected. However, the higher gross margin in water treatment and health and nutrition segments were able to offset the impact

• ASRT has not had any news to rekindle investor interest since reporting second quarter results. ASRT is scheduled to report third quarter results on November 8, 2023
• Ahead of the news, we are readjusting our expectations for Indocin. We are minimizing the revenue potential from Indocin in our earnings model.
• Going forward, Rolvedon becomes the primary revenue generator. ASRT should generate positive net income with Rolvedon sales ramping