In today’s briefing:
- Softbank Group – Another China Shock as Markets Fret over Macro Environment
- Tokyo Electron (8035) | WFE Scenarios Suggest Stock May Have Hit Bottom
- Nidec (6594) | Solid Traction
- Lowya – the Zozo of Home Decor?
Softbank Group – Another China Shock as Markets Fret over Macro Environment
- HK markets fell to 13-year lows as President Xi solidified his hold on power, raising concerns for private businesses that have already struggled with harsher regulation
- Softbank looks smart for its early settlement of Alibaba-linked derivative contracts in August as political worries have shares testing new lows
- But exposure remains with Alibaba’s 12% decline equal to $3.3bn (¥485bn) in lost value. Shares have rallied throughout October but China news appears to have stalled the move
Tokyo Electron (8035) | WFE Scenarios Suggest Stock May Have Hit Bottom
- We expect strong Q2 results from TEL but full year earnings guidance is a risk
- WFE demand is deteriorating rapidly. Will TEL provide any thoughts on the 2023 outlook?
- We provide a scenario analysis for different WFE scenarios…the stock may have bottomed
Nidec (6594) | Solid Traction
- Positive impression of Q2 results: sales +28% YoY beat consensus, OP +16% in-line.
- Near term headwinds for the precision motors and appliance businesses, but FX will significantly offset downside risk
- We remain bullish on the stock given solid progress in the e-Axle business. We see the division turning a profit next year
Lowya – the Zozo of Home Decor?
- Lowya is an online furniture brand run by Vega Corp that hit the headlines with 42% growth in 2020 while most other lifestyle retailers were reeling from the pandemic.
- Sales fell last year post-Covid and won’t grow much this year either but Lowya wants to become a ¥60 billion business and looks a good bet for the long-term.
- Lowya will shift to a mall model similar to Zozo which should allow it to grow faster, while tie-ups with major retailers like Aeon should raise brand awareness fast.
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