In today’s briefing:
- Zomato Vs Swiggy: The Great Indian Delivery War
- Grab Holdings (GRAB US) – High-Value Products Take the Helm
- The Beat Ideas: Prakash Industries Limited, A Mining Catalyst
- Geely (175 HK): 3Q24, Revenue up by 20% and Operating Profit up by 129% (2nd Largest in China)
- Appier (4180) | Record Quarter
- Aem: Hoping for Better 2025
- Plover Bay 1523 HK: Parsing the Profit Alert, And A Few Updates
- ASML Investor Day: Oops They Did It Again. Different Story, Same 2030 Targets.
- Freee 1Q: Turns Profitable Sooner Than We Expected
- Applied Materials: The Stock Is Reasonably Valued on Modest Expectations. More Attractive than ASML.
Zomato Vs Swiggy: The Great Indian Delivery War
- Swiggy (1255298D IN) debuts with an 8% premium, raising Rs. 11,328 crore in IPO for Dark store expansion, brand promotion, tech & inorganic growth.
- Swiggy lags behind Zomato across metrics, while Zomato diversifies with high-growth ticketing and “Going Out” segments.
- With both segments is on the edge of becoming Contribution and EBITDA positive, one need to look the results of upcoming quarters of swiggy carefully.
Grab Holdings (GRAB US) – High-Value Products Take the Helm
- Grab booked an impressive performance in 3Q2024, with strong evidence of its high-value products such as advance bookings gaining traction along with increasing monthly transacting users through its Saver offering.
- The company’s delivery business benefitted from strong performance from GrabMart and GrabFood. Its Grab Unlimited subscription hit record new highs, with users transacting four times as frequently as non-users.
- Grab also saw a strong performance from GrabFin and its digital banks, which all started lending in November plus rapid deposit growth. Guidance increased reflecting a more positive outlook.
The Beat Ideas: Prakash Industries Limited, A Mining Catalyst
- Prakash Industries (PKI IN) Bhaskarpara Coal Mine is now received all the government approvals ensuring stable, self-supplied coal for steel production as well as open market sale.
- This development reduces raw material costs, boosts EBITDA potential, and strengthens PIL’s valuation amid past corporate governance concerns.
- PIL has manageable debt and with rising EBITDA, the company is available at a very attractive valuation compared to its peers.
Geely (175 HK): 3Q24, Revenue up by 20% and Operating Profit up by 129% (2nd Largest in China)
- Geely’s revenue grew by 20% YoY and deliveries increased by 19% YoY in 3Q24.
- The operating margin improved to 5.3% in 3Q24 versus 2.9% in 3Q23.
- We conclude an upside of 58% and a price target of HK$22 for the end of 2025.
Appier (4180) | Record Quarter
- In Q3 FY24, Appier achieved record-breaking revenue, reaching JPY 9.1 billion, marking a 28% year-over-year growth.
- Operating income for Q3 surged by 2.5 times YoY to JPY 788 million, with the operating margin improving by 4.3 percentage points to 8.7%.
- At less than 4x EV/Sales and 16x FY25 EBITDA the stock does not appear expensive.
Aem: Hoping for Better 2025
- AEM (AEM SP) released 3Q24 numbers and bumped its guidance higher as its key customer pulled forward some orders.
- In 2025 it will be the first year where customers outside of Intel will make up the majority of AEM’s revenues. This is a big milestone for AEM.
- Continued business from Intel and growth in new key accounts means we should expect FY25 revenue growth. Guidance for FY25 will come by February 2025.
Plover Bay 1523 HK: Parsing the Profit Alert, And A Few Updates
- Plover Bay Technologies (1523 HK) issued a profit alert stating that the profit for the first 10 months of FY24 grew by>10% over the entire FY23 profit (28 mn USD).
- Nov/Dec tend to be decent business months for the company, so we expect the profit to be a little over 40 million USD for FY24, implying a 17-18x FY24 PE.
- The company has net cash of more than 50 mn USD and consistent ROEs of more than 35% (currently >65%), with excellent prospects for future growth.
ASML Investor Day: Oops They Did It Again. Different Story, Same 2030 Targets.
- ASML maintains its 2030 targets: revenue EUR44-60bn, Gross Margin 56-60%. But the narrative has changed, again. In 2022, it was Mature nodes (DUV) and EUV. In 2024, it’s AI.
- What’s changed? Lower growth in Smartphone, PC, Auto. AI bigger than expected. Server DRAM and HBM is the major positive change. NAND is revised down sharply. It’s actually believable.
- The guidance implies Operating Profits growing between 9.5-17.5% Cagr over 2024-2030. That’s pretty good but the stock is trading at 27x 2025 EPS, 22x 2026. No room for disappointment.
Freee 1Q: Turns Profitable Sooner Than We Expected
- Freee KK (4478 JP) reported 1QFY06/2025 results which saw the company generating its first-ever Adj. operating profit, earlier than we expected.
- The company has begun capitalising its software assets (decline in R&D costs as % of revenue) and this coupled with fall in S&M costs have contributed to profits.
- The corporate paying customers surpassed more than 200k for the first time and we expect freee’s earnings to continue to improve going forward.
Applied Materials: The Stock Is Reasonably Valued on Modest Expectations. More Attractive than ASML.
- Management reiterates 1) growth accelerating on Advanced Logic (Gate All Around, Back Side Power), Advanced Packaging incl HBM, DRAM capacity additions 2) improving margins 3) energy-efficient computing driving materials innovation.
- The risk is Mature node Capex slowdown in China, which we think is underestimated for 2025. China revenue: AMAT 30%, ASML 47%.
- AMAT is trading at reasonable multiples on modest Consensus expectations, upside possible as 2nm and HBM accelerate. ASML is trading on rich multiples, on rich expectations, less room for upside.
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