Daily Brief Equity Bottom-Up: WH Group (288 HK):  Potential US Listing Of Smithfield Foods Could Be A Catalyst and more

• According to public news yesterday, WH Group (288 HK) plans to list its US pork business Smithfield Foods, the largest US pork producer, back in the US again. 
• WH Group currently trades at 5x 2024E PE, assuming earnings return to the 2022 level in 2024E.  Since 2016, the company has had an average PE of 11x. 
• The stock is a buy with a fairly strong catalyst in the potential US listing of the Smithfield Foods business, while downside is limited. 

• ASML reported Q323 revenues of €6.7 billion, largely in line with guidance, down 3% QoQ but up 15.5% YoY. Q423 revenue forecast of €6.9 billion. 
• ASML remains on track for a remarkable 30% YoY growth in 2023 revenues
• ASML forecasting 2024 as a zero growth year as order intake in Q323 falls to €2.6 billion, massively down on the €8.9 billion in the year-ago quarter. 

• Giordano, one of the most recognizable apparel business in Asia, has been improving its operations materially with solid growth in sales and profits. 
• Giordano provides very high dividend yield and payout. The consensus expects DPS of HKD 0.28 for Giordano in 2023, which would suggest a dividend yield of 12.8%. 
• We like the company’s high dividend yield, loyal customer base, and attractive valuations. It is trading at EV/EBITDA of 3.6x and P/B of 1.5x. 

• Bank Central Asia (BBCA IJ) released another set of positive numbers in 3Q2023, outperforming the overall sector on loan and CASA growth, allowing the banks to maintain NIMs and profitability.
• The bank’s digital banking franchise continues to grow, with 31 million users of its mobile banking, boosting transactions and customer numbers, with a broadening of features and service offerings available. 
• Consumer banking, SME, and Corporate lending will continue to drive loan growth and credit costs continue to come down boosting profits. Bank Central Asia remains a core holding. 

• In this insight, we summarized NWD’s FY2023 results.  We think the gearing and balance sheet, the biggest concern that market has, has been clearly addressed
• NWD has announced disposal of its stake in NWS, and will have more corporate actions to come.  The dividend expectation is reset
• We view most of the negatives are priced in at current valuation.  NWD is much better than a Chinese developer, and should not be trading at 0.19x PB

• ASX Ltd (ASX AU) is seeing weakness across key revenue items with best delta in what is non- core, net interest income. Suddenly, its operating cash flow is negative.
• New listings are down from 217 companies to 57 companies YoY to FY23 and their market capitalization is down from AUD59bn to AUD3bn YoY to FY23.
• SG&A costs seem to be rising structurally now at 28% of gross profit in FY23 compared with 23% in FY22 and compared with 17-19% in preceding years.

Since launch in 2011, the Diverse Income Trust (DIVI) has grown its dividend every year (compounding at an average annual rate of 6.5%), including during the global pandemic, when many UK dividends were cut. The strength of the trust’s revenue growth is also reflected in its capital appreciation that has enabled DIVI to deliver robust total returns. As globalisation has fractured over the last three years, equity income strategies have become increasingly popular with global investors, and the UK top 100 index (in US dollar terms) has outperformed other developed market indices. DIVI’s two co-managers, Gervais Williams and Martin Turner, are very optimistic because they believe that UK large-cap stocks will continue to outperform and historically UK small-caps have outpaced the performance of their larger peers. In this scenario, the prospects for the trust’s multi-cap approach look very favourable.

• IRDM used its third quarter results as means to update investors on where operating EBITDA would end up for 2023 and the continued progress with direct to device
• IRDM reported quarterly results missing our estimates due to a larger than expected decline in equipment revenue. 
• The Qualcomm (QCOM) partnership is poised to emerge as the most significant catalyst for 2024

Basilea has announced an expansion of its portfolio to foster long-term growth, a key strategic priority for management, leveraging expertise in the commercialisation of its two key anti-infective products, Cresemba and Zevtera. The company will in-license GR-2397, a clinical-stage antifungal compound targeting invasive mould infections, mainly caused by the Aspergillus species. The Phase II-ready asset has Qualified Infectious Disease Product, Orphan Drug and Fast Track designations from the US FDA for invasive aspergillosis, which often leads to priority review post a New Drug Application (NDA) filing and grants 10 years of US market exclusivity. Basilea will make an upfront payment of $2m, followed by ~$69m in milestones and tiered royalties. Our valuation of Basilea remains unchanged, and will be reassessed once additional information becomes available.

OPAP’s management is successfully executing its strategy of growing the core brands and customer interactions online and offline, as evidenced by increasing online exposure and revitalising growth in its mature retail core activities, while maintaining its leading corporate and social responsibility (CSR) credentials. Its exclusive licences in the majority of its activities enable high levels of profitability, cash generation and shareholder returns. We see attractive upside to our DCF-based valuation of €17.9/share, with the added appeal of a prospective dividend yield of 10.7%.