In today’s briefing:
- Whitehaven Coal – 35% of Mkt Cap Cash/ Aggressive Capital Allocation The Key
- China Healthcare Weekly (March.3) – TCM New Policy, Pfizer to Acquire Seagen, Haohai Biological
- Broadcom’s Strong Quarterly Results In The Light Of Its Acquisition-Led Strategy
- Abbott Laboratories: Major Drivers
- Plug Power Inc.: Major Drivers
- Veeva Systems Inc.: Major Drivers
- Las Vegas Sands Corp: Major Drivers
- Lowe’s Companies Inc.: Collaboration With Klein Tools & Other Drivers
- Merck & Co. Inc.: Licensing Agreement With Kelun Biotech & Other Drivers
- Okta Inc.: Major Drivers
Whitehaven Coal – 35% of Mkt Cap Cash/ Aggressive Capital Allocation The Key
- Whitehaven Coal (WHC AU) underwhelming capital allocation in H1 2023 may have disappointed investors, but armed with a war chest of 2.47 bn AUD (35% mkt cap), we remain optimistic.
- The company aims to purchase 240 mn shares ( or about 25% of outstanding shares ) over and above the 10% it completed from last year’s buyback phase.
- Trading at 2.2x/3.2x FY23e/FY24e, the stock is extremely cheap with a conservative dividend yield of 9.1%/6.3% FY23e/FY24e ( assuming a 20% dividend-only payout ratio).
China Healthcare Weekly (March.3) – TCM New Policy, Pfizer to Acquire Seagen, Haohai Biological
- The General Office of the State Council issued favorable policy for TCM industry. However, TCM still has to face VBP, therefore Zhangzhou Pientzehuang Pharmaceutical Co. (600436 CH) and Gushengtang are our top picks..
- Pfizer is in talks to acquire Seagen in a deal worth over US$30 billion, but we remain conservative about whether this transaction would ultimately bring expected contributions to Pfizer.
- Haohai’s business model fails to bring ideal performance. Increasing competition/declining gross margin cast doubts on the outlook of medical aesthetics business. We’re not optimistic about its potential valuation upside.
Broadcom’s Strong Quarterly Results In The Light Of Its Acquisition-Led Strategy
- Broadcom remains as one of the best-positioned semiconductors stocks, but lower topline growth is to be expected going forward.
- Broadcom has so far done a great job at expanding its product and service offerings through M&A deals.
- Broadcom Inc. (NASDAQ:AVGO) has just reported yet another strong fiscal Q1 2023 quarter, marked by high top and bottom line growth.
Abbott Laboratories: Major Drivers
- Abbott saw another highly successful quarter and managed an all-around beat as routine testing trends and hospital-based procedures continued to improve progressively in several areas.
- In the quarter, the sales growth was impacted negatively by a year-over-year decline in the Covid test sales.
- With the recovery of the manufacturing brand, production of its non-WIC brands has increased.
Plug Power Inc.: Major Drivers
- Plug Power’s performance in the quarter was very disappointing as it failed to meet the revenue expectations of analysts.
- The company reported wider than expected losses and it continues to deliver weak results adversely affecting its market sentiment.
- Plug electrolyzers and cryogenic equipment is anticipated to be used in their operations to create and deliver liquid hydrogen via Plug trailers.
Veeva Systems Inc.: Major Drivers
- Veeva Systems finished the year on a strong note with both, its revenues as well as earnings exceeding the expectations of analysts as well as the management.
- The management claims that it was a watershed year for clinical data management, with significant momentum in emergent areas like Safety, Link, and Compass.
- We give Veeva Systems a ‘Hold’ rating with a revised target price.
Las Vegas Sands Corp: Major Drivers
- Las Vegas Sands delivered a highly disappointing result as it failed to meet Wall Street expectations in terms of revenues as well as earnings.
- The track record in the non-gaming, scale, and diversity makes Las Vegas Sands uniquely position to cater to all the segments of the market.
- We provide the stock of Las Vegas Sands with a ‘Hold’ rating with a revision in the target price.
Lowe’s Companies Inc.: Collaboration With Klein Tools & Other Drivers
- Lowe’s Companies delivered a mixed set of results in the fourth quarter.
- Another notable category, Paint, saw strong pro-growth driven by its MVPs Pro Paint Rewards and Pro JobSIGHT delivery.
- Among other updates, Lowe’s collaborated with Klein Tools to give Klein Tools a strong presence in the electrical and tool departments of Lowe’s.
Merck & Co. Inc.: Licensing Agreement With Kelun Biotech & Other Drivers
- Merck has delivered a strong quarterly result to end 2022 and surpassed the analyst consensus estimates in terms of revenues as well as earnings.
- The top-line performance was driven by strength across the company’s key pillars, hospitals, vaccines, and oncology, and a significant contribution from LAGEVRIO.
- The animal health business of Merck delivered strong operational growth.
Okta Inc.: Major Drivers
- Okta delivered a strong fourth-quarter performance which was highlighted by an all-around beat as well as a significant improvement in profitability and cash flow.
- The end of the 2023 fiscal was strong, with sustained improvement in its go-to-market business performance.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
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