In today’s briefing:
- NEC (6701 JP): Generative AI Is the Spark, Not the Driver
- HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs
- Last Week in Event SPACE: Keisei Electric /Oriental Land, SingTel, Alumina/Alcoa, Li Ning
- Quiddity Leaderboard BSE/SENSEX Jun 24: Who Will Replace Wipro?
NEC (6701 JP): Generative AI Is the Spark, Not the Driver
- The P/E ratio has risen above 20x this fiscal year from no more than 13x in the previous four years, reflecting successful restructuring and investor enthusiasm for AI.
- Profit margins are rising, but remain moderate in absolute terms with room for further improvement. The shares may consolidate, but they do not look overvalued.
- Management is aiming for generative AI sales of ¥50 billion in three years time. This is less than 2% of total sales, but a positive indicator for NEC’s software business.
HK Connect SOUTHBOUND Flows (To 15 Mar 2024); Strong Net Buying on Tencent and ETFs
- A shares were up small on the week. The spivvier the better. HK was up better, especially among the liquid names.
- Net SOUTHBOUND buying was +HK$21.4bn in the fourth post-holiday week vs +HK$17bn the week before. SOUTHBOUND has net bought every day since the end of Chinese New Year.
- The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was a net buy the second week in a row.
Last Week in Event SPACE: Keisei Electric /Oriental Land, SingTel, Alumina/Alcoa, Li Ning
- Even if you were an activist, or a trader with an activism tilt, be long Keisei Electric Railway Co (9009 JP) vs. Oriental Land (4661 JP).
- Reportedly, Singtel (ST SP) is negotiating a sale of Optus. Both Singtel and Optus scotch those rumours.
- Alumina Ltd (AWC AU) and Alcoa (AA US) enter into a Scheme. As expected. The key question: is CITIC, with 18.9% of shares out, supportive?
Quiddity Leaderboard BSE/SENSEX Jun 24: Who Will Replace Wipro?
- In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 Indices in the June 2024 index rebal event.
- As things stand, there could be one index change for the SENSEX index but there is room for these names to change during the remainder of the reference period.
- Separately, there could be five ADDs/DELs for the BSE 100 index and six ADDs/DELs for the BSE 200 index.
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