Daily Brief Equity Bottom-Up: Whitehaven Nail the Landing and more

• Blackwater sell down to Nippon and Jfezenhe Steel for US 1.08 billion upfront
• Deal includes selling 30% of Blackwater, reducing net debt by 150 million and potential future contingent payments
• Transaction costs and transition costs higher than expected, but deal significantly impacts balance sheet and future cash flow

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• Shift Inc (3697 JP) s share price has been down 65% YTD as the company’s aggressive investment on HR and system reinforcement led to fall in margins which concerned the market.
• However, the company has adopted several measures to improve its margins, and we expect the investment in HR and others to generate results going forward.
• Though share price has moved up slightly, valuation multiples are at a steep discount, and we would look for building a position.

• Bank Rakyat Indonesia booked flat earnings in 1H2024 despite healthy loan and fee income growth, with a shift towards corporate loans, as it sought to address its problem microloans.
• The bank front-loaded provisions in 1H2024 but recoveries have seen a steep improvement, with 2H2024 to see lower credit costs. Strong loan corporate loan growth is offsetting slower micro.
• Bank Rakyat Indonesia remains a unique proxy for micro-lending in Indonesia, with a depositor base of 176m and the skillset to manage risk in this space. Valuations remain attractive. 

• INOX India Limited (INOX IN) or IIL is into design, engineering and manufacturing of cryogenic tanks and equipment. These are used in industrial gases, LNG, green hydrogen, metallurgy industries, etc
• The company came up with its IPO in December 2023 and has posted a decent growth in the last few years.
• One should however remain cautious about WC trend, receivables provisioning, RPT with promoters, etc.

• Diverse AI Portfolio: Microsoft’s diversified AI investments, including partnerships with G42 and Mistral AI, reduce reliance on OpenAI and ensure continued innovation across multiple AI ventures.
• Azure’s Competitive Edge: The partnership with OpenAI strengthens Azure’s position by offering exclusive AI-driven cloud services, boosting demand from enterprises seeking advanced automation and productivity tools.
• Industry Leadership: As AI investment intensifies across the tech sector, Microsoft’s significant spending outpaces peers, positioning the company as a frontrunner while highlighting competitive pressures in the growing AI landscape.

• Singtex’s sustainable dyeing plant aims to boost profits by enhancing eco-friendly practices in textile industry
• Tata Motors partners with Delta Electronics and Thunderplus Solutions to set up fast charging stations in India
• Epson dominates robotic arm market with three key strategies, solidifying their leadership position in the industry

• Xiaomi reported CY2Q24 revenue, non-IFRS EBIT and non-IFRS net income 5.6%, 32.2%, and 40.0% vs. consensus. 
• Despite the limited scale and numerous incentives offered at launch, Xiaomi reported an EV gross margin of 15.4%. Greater scale and reduced incentives provide further margin upside in C2H24;
• Xiaomi’s smartphone and IoT market share gain have accelerated amid the halo-effect stemming from the SU7. We reiterate our BUY rating, and raise  TP to HK$27.0, implying 28.3x CY25 P/E.

• Boston Scientific Corporation recently reported its second-quarter results, surpassing expectations with a strong performance driven by its cardiovascular portfolio and robust execution across multiple regions.
• The company saw a remarkable 16% growth in operational sales, with organic sales climbing 15%, well above its projected range.
• This growth was bolstered by innovation, clinical evidence, and strategic leadership in various categories.

• Kuaishou reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, and 5.7% vs.  our estimates; and in-line, 9.0% and 14% vs. the consensus. 
• The bright spot was strong growth in its advertising and stabilization in the regulation-affected live streaming. Our BUY case of AI empowering mid-sized traffic platforms is intact;
• We cut TP to HK$75 to reflect the sustained damage of weak consumption. The stock is trading at only 8.5x PE for 2025.

• CyberArk Software demonstrated strong financial performance in the second quarter of 2024, exceeding expectations with significant growth in revenue, operating income, and earnings per share.
• This performance solidifies CyberArk Software’s leadership in the identity security space.
• The company’s planned acquisition of Venafi, a leading provider of machine identity management solutions, is expected to further strengthen its capabilities and competitive position.