In today’s briefing:
- SUMCO’s Sobering Outlook For Silicon Wafers
- HK CEO & Director Dealings (23 Feb 2024): Fast Retailing, Far East Consortium, Pharmaron Beijing
- Trial Holdings IPO: The Investment Case
- Geniee (6562) – Record-High Gross Profits and Recognizing Challenges
- Whatever the Proxy Voting Advisor’s Criteria, It Is How Investors Actually Conduct Themselves
- LaKeel (4074) – Ready for the Next Growth Phase
SUMCO’s Sobering Outlook For Silicon Wafers
- Q423 revenues of ¥105.1 billion, about 5% better than forecasted, up 5% QoQ but down ~10% YoY.
- Q124 revenues forecasted to decline 17% QoQ to ¥87 billion. Not surprisingly, EBITDA will also decline 33% QoQ to ¥22.1 billion.
- On a brighter note, demand growth driven by generative AI will roughly double wafer demand for servers (AI+General) by 2027
HK CEO & Director Dealings (23 Feb 2024): Fast Retailing, Far East Consortium, Pharmaron Beijing
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
- The key stocks mentioned in this regular insight are Fast Retailing (9983 JP), Hang Lung (10 HK), Far East Consortium International (35 HK), and Pharmaron Beijing (3759 HK).
Trial Holdings IPO: The Investment Case
- Trial Holdings (5882 JP), a discount store operator in Japan, is seeking to raise US$235 million at the IPO reference price of JPY1,550 per share. Pricing on 11 March.
- Trial aims to act as a one-stop shopping store where consumers can buy whatever they want at a great price. Trial’s basic pricing strategy is Every Day Low Price.
- The investment case rests on steady revenue growth, industry-leading same-store sales growth, solid margin profile and cash generation.
Geniee (6562) – Record-High Gross Profits and Recognizing Challenges
- Heading in a positive direction – we saw the following positives in Q1-3 FY3/24 results; 1) sustained growth trend in quarterly gross profits, 2) all business segments generating positive returns, and 3) signs of progress regarding post-merger integration at Zelto Inc., which recorded strong monthly sales in November 2023.
- The company has maintained FY3/24 guidance, implying an accelerating Q4 sales growth YoY from a seasonal upturn in activity.
- We believe that Zelto Inc. will provide growth opportunities in overseas markets.
Whatever the Proxy Voting Advisor’s Criteria, It Is How Investors Actually Conduct Themselves
- Since many prime market listed companies have already achieved the gender and TCFD criteria, this will unlikely to be a major issue with regard to Glass Lewis’ criteria changes.
- The ROE for the exception rule for companies with large policy shareholdings should have been even higher, not the same as the TSE’s 5-year average ROE of 8%.
- The criteria for maximum tenure of outside directors should not have provided magic number, but rather performance and other factors that would determine whether he/she is qualified for the position.
LaKeel (4074) – Ready for the Next Growth Phase
- Encouraging signs with a positive turnaround in Q4 FY12/23 – Q1-4 FY12/23 results were in line with company guidance, with Q4 FY12/23 demonstrating a major pick-up in LaKeel Product license sales resulting in a recovery in profitability QoQ.
- This was a welcome development from project delays experienced in Q3 FY12/23 and highlights positive underlying demand for LaKeel’s technology.
- Company guidance for FY12/24 reflects expectations of high double-digit sales and earnings growth YoY, and we believe this will be driven by intensifying efforts by LaKeel to increase market penetration of their technology.
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