In today’s briefing:
- Whitehaven Coal Suspension of Buyback: A Negative Despite Rising Coal Price/ Potential Acquisition
- Himax Vs. Novatek Long/Short: Management Meeting; Himax Historically Cheap
- KakaoBank – Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc
- Taiwan Tech Weekly: Intel ‘AI PC’ Chips On Track to Drive 2024E PC Supply Chain
- Infineon: The Potential Of Silicon Carbide
- Gilead Sciences Inc.: The Unstoppable Growth Machine in Virology and Oncology! – Major Drivers
- Amazon.com Inc.: How Is The Revenue Diversification Beyond AWS & E-Commerce Catalyzing Growth? – Major Drivers
- 10 in 10 with Pasture Holdings Meeting demands of global healthcare system
- Paramount Global: The Streaming Surge – How Did Paramount+ Gain Such Traction? – Major Drivers
- Cloudflare Inc.: Beyond AI – Is Their Cloud Reigning Supreme? – Major Drivers
Whitehaven Coal Suspension of Buyback: A Negative Despite Rising Coal Price/ Potential Acquisition
- The pivot in capital allocation plans of Whitehaven Coal (WHC AU) by suspending its buyback program (up to 25% of outstanding shares) is a big negative for us.
- We think the increase in capex spending in a frothy pricing environment and focus on M&A for spending the 2.6 bn of cash is a coin toss on capital allocation.
- We prefer names that keep their capital allocation plans consistent, e.g., Indo Tambangraya Megah (ITMG IJ), and would take money off the table here.
Himax Vs. Novatek Long/Short: Management Meeting; Himax Historically Cheap
- Himax shares have been in downtrend recently, falling 20% since the end of June vs. Novatek up 12%. We met with the Himax for an update.
- Himax at historically very cheap level relative to Novatek, both are exposed to similar display end-markets. Himax trades at just 1x sales on an absolute basis.
- We have a Structural Long view for both stocks, however from an arb perspective see a Long Himax vs. Short Novatek trade opportunity given the large share price divergence.
KakaoBank – Term Deposits +47% | Net Int Inc/Assets -80bps | Provisions: 10% to 23% of Net Int Inc
- Major pressure on net interest income where deposits are growing much faster than loans in the past six months, especially with term deposits, is creating major NIM contraction
- Earnings may disappoint based on weakening net interest income, weakening margins, and where the overlay is far higher credit costs; from KRW17bn to KRW59bn in 2 yrs to 2Q23
- Operating costs are not helping to support ROA and with a new virtual bank investment in Thailand, costs can remain high; fixing operational risks can also keep costs high.
Taiwan Tech Weekly: Intel ‘AI PC’ Chips On Track to Drive 2024E PC Supply Chain
- Intel kicked off its Innovation conference and announced that its new PC processors with built-in AI coprocessors would launch December 14th. This is positive for the PC supply chain.
- Many types of existing software that used to require expert users can become more valuable with AI capabilities; we believe tomorrow’s AI PC killer apps could be in plain sight.
- Himax Long vs. Novatek Short. Himax is at historically very cheap level relative to Novatek, yet both are exposed to similar display end-markets.
Infineon: The Potential Of Silicon Carbide
- We reiterate our buy case on Infineon. The investment case just gets more exiting at these levels
- Infineon is in an excellent position to capture growth in silicon carbide, now expanding in Kulin with Phase II.
- The Company could generated €7bn in revenues by the end of the decade (up from €3bn) from Silicon Carbide.
Gilead Sciences Inc.: The Unstoppable Growth Machine in Virology and Oncology! – Major Drivers
- Gilead Sciences Inc. delivered mixed results for the previous quarter, with revenues above the analyst consensus.
- Total product sales, excluding Veklury, displayed significant growth, extending the company’s streak of seven consecutive quarters with year-over-year growth in its base business.
- Despite an anticipated decrease in Veklury sales due to reduced hospitalizations, the total product sales, including Veklury, also showed a substantial year-over-year increase.
Amazon.com Inc.: How Is The Revenue Diversification Beyond AWS & E-Commerce Catalyzing Growth? – Major Drivers
- Amazon.com, Inc. delivered positive results and managed an all-around beat last quarter.
- The company has reported revenue of $134.4 billion and operating income of $7.7 billion.
- These are significant contributing causes to AWS’s recent growth and the over twofold increase in revenue over other service providers.
10 in 10 with Pasture Holdings Meeting demands of global healthcare system
10 in 10 with Pasture Holdings Meeting demands of global healthcare system
Paramount Global: The Streaming Surge – How Did Paramount+ Gain Such Traction? – Major Drivers
- Paramount Global managed to exceed analyst expectations in terms of revenue and earnings, demonstrating sustained focus on corporate spending containment and good momentum in its D2C sector.
- Affiliate and subscription revenue increased by a healthy 12% in Q2 and again showed how the combination of traditional and streaming led to net growth for the business.
- Paramount’s 47% increase in D2C subscription revenue was mostly attributable to Paramount+, where the company saw subscriber growth, increased ARPU, and lower churn rates.
Cloudflare Inc.: Beyond AI – Is Their Cloud Reigning Supreme? – Major Drivers
- Cloudflare, Inc. delivered an all-around beat in the previous quarter.
- The second quarter’s total revenue reached 32% year over year to $308.5 million.
- In the quarter, Cloudflare received 10 million active worker applications, a 250% increase since December and a 490% increase year over year.
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