In today’s briefing:
- When Giants Run Out of Gas; Some Among Super Seven Are Losing Steam
- Modern Dental Group (3600 HK): Stellar 1H23 Result- Volume Drives Revenue Growth; Net Profit Doubled
- Budweiser APAC: Chinese Beer Makers Poised for a Breakout
- Taiwan Tech Weekly: TSMC to Decide on ARM This Week; Elan, Yageo, ChipMOS Flying; AI PC Wave Signals
- NextEd Group (NXD): Whiplash! Market Reaction to Australia’s Visa Changes Highlights the Risk.
- AKR Corporindo (AKRA IJ) – Chemicals, Copper, Gold, and Silver
- [Luckin Coffee (LKNCY US, BUY, TP US$44) TP Change]: Moutai Latte Is Not Just a Blockbuster
- APAC Insurers Series (#3): Initial Theses At Different Stages of Being Played Out
- 1Q Follow-Up – Japan System Techniques (4323 JP)
- Swatch Group: Revival Of The Swiss Brand
When Giants Run Out of Gas; Some Among Super Seven Are Losing Steam
- Super Seven are chiefly responsible for the rally in the S&P 500. >80% of the index gains this year were due in large part to the Super Seven.
- Amazon, Apple, Google, Meta, Microsoft, Nvidia, & Tesla are referred to as Super Seven. S&P is market-cap weighted. Little wonder that Super Seven have an outsized impact on it.
- Having strongly priced in expectations, investors wait for the Super Seven to deliver. Falling short can result in sharp price pullback. What next for the Super Seven?
Modern Dental Group (3600 HK): Stellar 1H23 Result- Volume Drives Revenue Growth; Net Profit Doubled
- Modern Dental Group (3600 HK) reported strong 1H23 performance, with 12% YoY revenue growth to HK$1.6B, driven by increase in demand for its products from existing, returning, and new customers.
- With increasing economies of scale resulting from China re-opening and global dental industry recovery and increase in the proportion of digital solution cases, net profit jumped 109% YoY to HK$210M.
- Despite macroeconomic headwinds, the company is confident that the medium and long-term global demand for dental prosthetics is expected to continue due to key irreversible demographic factors and trends.
Budweiser APAC: Chinese Beer Makers Poised for a Breakout
- With shares trading near its all-time low since its listing on HKEX in 3Q19, we think it could be worthwhile taking another look at Budweiser Brewing APAC (1876 HK)’s valuation.
- China’s beer industry and regional markets are expected to sustain growth momentum in Q3, driven by tourism’s impact on increased beer consumption.
- We think it’s worth keeping an eye on Budweiser APAC, as we suspect that it could start to break out from the current downtrend in the near term.
Taiwan Tech Weekly: TSMC to Decide on ARM This Week; Elan, Yageo, ChipMOS Flying; AI PC Wave Signals
- ARM IPO — TSMC says will decide this week whether to participate. ARM is a company potentially without peers and enjoys support from Apple, Nvidia, AMD, and Samsung.
- Elan, Yageo, ChipMOS top gainers in Taiwan — Three of our Longs have done well most recently on high volume and little new public news.
- Recent Dell & HP results provide additional clarity on the coming AI PC wave.
NextEd Group (NXD): Whiplash! Market Reaction to Australia’s Visa Changes Highlights the Risk.
- Agile Response to Visa Changes: NextEd’s nimble approach to the end of the COVID-19 408 visa showcases adaptability in uncertain times.
- Tech Sector Growth Potential: Expanding in the thriving tech field, NextEd taps into strong post-study work rights and sector support.
- Regulatory Challenges: Navigating regulatory shifts, NextEd’s resilience shines amid uncertainty in the non-university education landscape.
AKR Corporindo (AKRA IJ) – Chemicals, Copper, Gold, and Silver
- AKR Corporindo (AKRA IJ) has secured another major land plot sale at its JIIPE industrial estate in Gresik, with an area of 67 hectares to a Chinese chemical manufacturer.
- The sale puts the company on track to exceed its full-year target sales for the estate. It has also been divulged that the Freeport Smelter is now 75% complete.
- AKR Corporindo (AKRA IJ) remains a crucial proxy for the Indonesian economy through its fuel and chemical distribution business, with JIIPE targeting the EV Battery value chain as future tenants.
[Luckin Coffee (LKNCY US, BUY, TP US$44) TP Change]: Moutai Latte Is Not Just a Blockbuster
- Luckin Coffee’s new blockbuster Moutai Latte achieved 5.42mn cup sold with RMB100mn GMV in first day.
- We think Luckin Coffee had effectively achieved two goals through the new premium product: 1) de facto price lifting; 2) extend potential customer base and step into the monetization stage.
- We raised our 2023 revenue and non-GAAP NI on Luckin by 1.6%/4.4%. We maintain the stock as BUY rating and raise TP by US$1 to US$44/ADS.
APAC Insurers Series (#3): Initial Theses At Different Stages of Being Played Out
- PICC P&C’s thesis has materialized and played out well this year, with the stock being HK’s best-performing Chinese insurer.
- Samsung Life’s share price recovered slightly since our last update as LT Korean government bond yields further increased.
- Prudential’s thesis is slowly being played out, with its P/BV discount to AIA having narrowed; but still a long way to go.
1Q Follow-Up – Japan System Techniques (4323 JP)
- Japan System Techniques announced its 1Q results for FY24/3 after the close of the market on August 10 (Thursday).
- Key figures on a consolidated basis ; operating profit fell 53.3%, to ¥122 mn on a 10.2% rise in sales, to ¥5,640 mn.
- Ordinary profit fell 53.6%, to ¥134 mn, and net income attributable to the parent company fell 72.4%, to ¥61.
Swatch Group: Revival Of The Swiss Brand
- Swatch Group enjoys a strong competitive position in the Swiss watch industry, with leading positions across all price segments
- Swatch Group’s 17 watch brands and 2 multi-brand retail companies demonstrate an incredible creativity and savoir-faire
- The stock is currently trading well below its 10-year historical P/E mean.
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