In today’s briefing:
- Water Oasis (1161 HK)
- 8801: Mitsui Fudosan – the Largest Japan RE Developer – Let the Rally Continue
- Money Forward (3994) | Net Sales +40%
- Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially
- CanSino Biologics (688185 CH): Limited Downside Is Seen; Meningococcal Vaccines to Drive Growth
- Orient Overseas Intl (316 HK): Spotting Initial Signs of Recovery
- China Healthcare Weekly (Apr14)- Shanghai Shyndec Pharma,Innovative Drug Policy,Ultra Long-Term Bond
- Sa Sa Intl (178 HK): Steady Recovery, but Biased by High Base
Water Oasis (1161 HK)
- Following the positive response to our article on Perfect Medical , we are keen to introduce our readers to another noteworthy company in the healthcare and beauty industry, Water Oasis.
- Despite initial appearances suggesting sluggish revenue growth over the past decade, a deeper examination reveals significant improvements in business quality and consistent shareholder returns through substantial dividends.
- This under-the-radar company, we believe, presents an attractive risk-reward profile.
8801: Mitsui Fudosan – the Largest Japan RE Developer – Let the Rally Continue
- With HK/China continue to see risk-off sentiment; we switch our focus to Japan. Nikkei is up 19% YTD, one of the best performing markets in the world
- Among Japan real estate names, Mitsui Fudosan is a well held name with the largest market cap. 8801 is up 45% YTD while 8802 is up 57% YTD
- Valuation is un-demanding, it is an interesting name to own if investors want exposure to Japan. It is still not too late to chase the rally
Money Forward (3994) | Net Sales +40%
- Money Forward reported Q1 results. Net sales rose 40% YoY to 9.5 billion yen
- Money Forward saw a big jump in profitability, which puts the company on track to meet full year guidance
- The stock has risen around 30% since January. We still see around 7% upside to our target valuation
Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially
- Latest Nanya Tech results showed weak margin rebound. Gross margin rebounded but remained below zero.
- Nanya expects DRAM pricing improvement through 2024E; due to demand for AI related memory products reducing capacity for other DRAM products rather than improvement for Nanya’s main Consumer segment.
- Micron is reportedly increasing prices post Taiwan earthquake and this is positive, but we see Nanya’s 2024E consensus margin expectations set at a high bar and the stock isn’t cheap.
CanSino Biologics (688185 CH): Limited Downside Is Seen; Meningococcal Vaccines to Drive Growth
- In 2023, CanSino Biologics (688185 CH) generated revenue of RMB561.7 million from the sales of meningococcal conjugate vaccines, up 266% YoY.
- This year, consensus is expecting CanSino to report revenue of RMB858 million, up whopping 140% YoY, mainly driven by meningococcal vaccines.
- CanSino is expected to add pneumococcal conjugate vaccine (PCV13) vaccine in its revenue stream in 2025. The company’s PCV13i is a potential best-in-class improved PCV13.
Orient Overseas Intl (316 HK): Spotting Initial Signs of Recovery
- Orient Overseas International (316 HK) saw 27.2% QoQ freight rate uptick in 1Q24. This is a positive start and we should not be too concerned about the 12% YoY decline.
- Its overall load factor also expanded 0.9pp YoY in the quarter, and this is the first YoY improvement since 2Q22. A better utilisation level is good for unit costs.
- At end-FY23, net cash equals 62.4% of the share price, dragging ROE to 7.5% for the next three years. But with such solid financials, its 0.7x P/B is not expensive.
China Healthcare Weekly (Apr14)- Shanghai Shyndec Pharma,Innovative Drug Policy,Ultra Long-Term Bond
- China plans to issue ultra long-term special treasury bond (about RMB1 trillion) to promote large-scale medical equipment renewal, which is expected to boost domestic demand in medical device sector.
- Various regions (e.g. Beijing, Hainan, Guangzhou, Zhuhai) have issued separate supporting policies for innovative drug industry. It may be too early to completely lose hope of Chinese innovative drugs.
- There is “horizontal competition” issue between Taiji and Shanghai Shyndec Pharmaceutical (600420 CH), which is the underlying logic for potential spin-offs and integrations within Taiji and China TCM before 2025.
Sa Sa Intl (178 HK): Steady Recovery, but Biased by High Base
- Masked by a high base, 4Q FY24 sales of Sa Sa International Hldgs (178 HK) edged down by 4.1% YoY. However, sales for mainland China have increased by 18.2%.
- Overall sales for FY24 are in line with market projections and there is potential for further margin expansion. Its 6.7x and 5.9x PERs for FY25F and FY26F are inexpensive.
- The addition of more mainland cities to the Hong Kong individual visit scheme, promotion of Hong Kong tourism, and weaker USD in the medium term are all positive factors.
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