In today’s briefing:
- Canon ADR Cancellation – There May Be A Trade To Do
- Absolutely GINORMOUS Citizen Watch (7762 JP) Buyback
- [Meituan (3690 HK) Downgrade to SELL]: The Rise of Douyin Is Likely to Hurt Meituan
- Meituan to Hire 10k Employees to Compete with Douyin’s Food Delivery Business
- [Weibo (WB US) Target Price Change]: Rebound After Temporary Disturbance, Maintain BUY
- Taiwan Tech Weekly: Latest Key Results Add More Expectations for a 2H23E Turnaround
- Bitcoin And The Tax-Loss Harvesting Rally
Canon ADR Cancellation – There May Be A Trade To Do
- Last week (on 10 February), Canon Inc (7751 JP) announced it intended to delist its ADRs from the NYSE.
- Canon is the third Japanese company to do so in two months, after Eisai Co Ltd (4523 JP) announced in December and Olympus Corp (7733 JP) in January.
- No related investment opportunity but there may be a trade to do.
Absolutely GINORMOUS Citizen Watch (7762 JP) Buyback
- Today, Citizen Watch (7762 JP) reported Q3 earnings, and a BIG buyback.
- It is a VERY BIG BUYBACK at up to 75mm shares (25.61% of shares out), with an allocation of up to ¥40bn (which is ~22.1% at last price).
- The buyback is to be executed over the next year. Buyback structure (undisclosed) matters and shareholder structure matters too. There is a big short. This could get really interesting.
[Meituan (3690 HK) Downgrade to SELL]: The Rise of Douyin Is Likely to Hurt Meituan
- We expect Meituan to report 18% YoY topline growth in C4Q22, in line with cons. Our non-IFRS net margin est. is 1.9ppt higher than cons.
- In-Store would be impacted by Douyin’s category expansion and deepening penetration in lower-tier cities.
- We downgrade Meituan to SELL and cut TP to HK$137 due to pressure from competition for in-store.
Meituan to Hire 10k Employees to Compete with Douyin’s Food Delivery Business
- On Tuesday last week, short-video app Douyin announced that it plans to offer its food delivery service in more Chinese cities expanding its current trial in Beijing, Chengdu and Shanghai.
- Following this, on Wednesday last week, Meituan announced that it plans to recruit 10,000 workers in 1Q2023 across a number of its business divisions including technology development and customer services.
- Though we don’t expect Douyin’s entry into food delivery to have large impact, increased competitive pressure and headcount increase would drag down Meituan’s profitability in the near-term.
[Weibo (WB US) Target Price Change]: Rebound After Temporary Disturbance, Maintain BUY
- We estimate that Weibo’s top line/bottom line would be 1.3%/9.0% vs cons., as the continuous cost-saving measures offset the impacts of temporary disturbance caused by reopening.
- We remain optimistic about Weibo’s rebound in 1H23 as the macro improves, with top line/bottom line beating cons. by 2.2%/5.5% in 2023.
- Reiterate BUY rating and raise TP to US$ 26.9, implying 11.7X PE in 2023.
Taiwan Tech Weekly: Latest Key Results Add More Expectations for a 2H23E Turnaround
- This week we digest key takeaways from some of the latest key industry results that came out (ASE Technologies (TW), Novatek (TW), and Tokyo Electron (JP)).
- ASE and Tokyo Electron exhibited their insulated positions during the current inventory corrections happening, delivering decent margins and beating expectations. Novatek also beat expectations.
- Forward expectations are generally for a worse 1Q23E ahead followed by the beginning of a recovery in 2Q23E. Is this becoming simply the consensus view, however?
Bitcoin And The Tax-Loss Harvesting Rally
- Bitcoin sold off in December and rallied in January for a reason.
- Big banks are coming with a digital payments option. Big banks will have a digital payment option in the coming days.
- Bitcoin sold off last month and rallied again in January, with a rise in popularity in the wake of contagion.
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