In today’s briefing:
- Yue Yuen (551 HK): Putting Their Best Feet Forward
- Yue Yuen Industrial Holdings (551.HK) – Challenging Prospects Overshadow Undervaluation
- 2023 High Conviction: NTT (Buy) – Surging DoCoMo Underappreciated as Markets Step Back from Value
- Softbank Group – China Rebound Has Helped After End-Of-Buyback Hangover
- Quick Idea’s
- Malaysian Banks September 2022 Results Screener; RHB Stands Out, and Stick with CIMB
Yue Yuen (551 HK): Putting Their Best Feet Forward
- Despite a softening global demand backdrop, Yue Yuen Industrial (551 HK), a global leader in the manufacture of athletic/outdoor and casual footwear, recently recorded its best 9M results since 2017.
- Yue Yuen’s shares have only just recovered from a 20-year low.
- From both a historical perspective and relative to peers, Yue Yuen is undemanding here.
Yue Yuen Industrial Holdings (551.HK) – Challenging Prospects Overshadow Undervaluation
- Yue Yuen is essentially a large traditional manufacturing company, which once benefitted from China’s cheap labor and has brilliant history. But challenges seem inevitable as labor costs gradually increase.
- Despite 22Q1-Q3 solid performance, in the environment of high inventory of brand customers and downward pressure on global economy, the order visibility of Yue Yuen in 22Q4/23Q1 could be low.
- Either domestic demand or external demand, the overall situation may not be optimistic. Yue Yuen’s valuation is basically lower than its peers. However, we still recommend investors to remain vigilant.
2023 High Conviction: NTT (Buy) – Surging DoCoMo Underappreciated as Markets Step Back from Value
- We have tweaked our numbers after Q2 results and catching up with the company. In particular, we come away with more confidence in wireless / fintech growth
- NTT looks cheap at 11x FY22e EPS v 12x for KDDI even as relative growth is expected to be better with ~9% EPS growth
- Shares have outperformed TOPIX (+18% YTD v -3%) and this should continue in 2023 as solid financial performance and an attractive shareholder returns story provide support
Softbank Group – China Rebound Has Helped After End-Of-Buyback Hangover
- Alibaba is up 20% QTD and the public Vision Fund portfolio is on track for its first positive quarter in almost two years thanks to China upside, mostly for Didi
- That has kept the share price elevated even as the discount to fair value has expanded since buybacks ended at Q2 results
- At 34% now, there is room for the discount to expand further as the range before the buyback surge was generally closer to 40%
Quick Idea’s
- 111, inc (YI) has run up to $3.25. For a spread of only about 11%.
- Which is not all that attractive since there is no definitive agreement signed. So I am closing it with a quick 13% gain here.
- These Chinese merger situations sometimes randomly spike up, and I think it is wise to trade around them when upside isn’t as juicy anymore.
Malaysian Banks September 2022 Results Screener; RHB Stands Out, and Stick with CIMB
- Of the six Malaysian banks screened, we highlight RHB Bank and retain CIMB on the buy list; PB Bank and Maybank are quality but seem fairly valued
- RHB Bank has, in the September quarter, meaningfully improved its pre-provision profitability versus its peers; RHB’s high CET1 ratio suppresses its ROE, and it is attractive on PE and PEG
- CIMB once again improved its positive post-provision returns which is constructive for CIMB’s share price given its modest valuations versus its peers; its high NPL ratio is fully provisioned
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