Equity Bottom-Up: Alibaba Group, Asahi Group Holdings, Siloam International Hospitals, Pinduoduo, KakaoBank, Sariguna Primatirta Tbk PT, PT Surya Citra Media Tbk, Heineken Malaysia Bhd, Bilibili, Genscript Biotech and more

• Alibaba Group (9988 HK)’s 4QFY22 results were yet another disappointment with the company’s revenue growing by 8.9% YoY, a new low after slowing to 9.7% YoY in the previous quarter.
• This was mostly priced-in, considering that 4QFY22 revenue and OP exceeded consensus by 2.3% and 216% respectively.
• However, FY23 and FY24 estimates are still ambitious and there’s a lot of downside risk to consensus from 2QFY22 onwards.

• Q1 cost pressures surprised the market but the share price has already discounted the news
• Underlying beer demand is solid as global economies recover from 2 years of Covid restrictions
• Improving sales mix and higher prices should offset the cost pressures. With Asahi trading at the bottom of its valuation range, our glass is half full on the stock

For our next Corporate Webinar with Siloam International Hospitals (SILO IJ), we are glad to welcome Daniel Phua, CFO, and Varun Khanna, Senior Director of Healthcare Business, Corporate Strategy, and Investments.

In the upcoming webinar, Daniel and Varun will share a short company presentation, after which they will engage in a fireside chat with Smartkarma Analyst Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 21 June 2022, 17:00 SGT.

PT Siloam International Hospitals Tbk (ticker: SILO) is recognised as a reputable and leading operator of private hospital network in Indonesia, with 41 hospitals spread across several islands, namely Java, Sumatra, Kalimantan, Sulawesi, Bali, and Nusa Tenggara. Siloam’s medical team of more than 3,000 general practitioners and specialist doctors, and 8,000 nurses and support staff, offers international quality healthcare services to around two million patients annually.

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

• PDD achieved high growth rates in main businesses and a higher operating margin in 1Q22.
• However, we believe third-party retailers are scared about the logistics problem caused by the lockdown.
• We set a downside of 17% and a price target of US$40.

• We are increasingly concerned about Kakao Bank which has been losing market share to other leading Internet banks in Korea (especially to Toss bank). 
• We are also concerned about the Kakao Bank approving greater amount of loans to customers with weak to moderate credit ratings who have been rejected loans from commercial banks. 
• Our base case valuation of Kakao Bank is market cap of 16.4 trillion won or price of 34,504 won per share, which represents 16.5% lower than the current share price.

• Sariguna Primatirta Tbk PT (CLEO IJ) is Indonesia’s only pure water brand (CLEO), using US-nanotechnology and eco-friendly packaging with a market share of around 5%.
• The company has co-branded with both Alfamart and Indomaret and is launching new health-driven products such as alkaline oxygenated water as well as expanding with new factories.
• Sariguna Primatirta Tbk PT (CLEO IJ) is an uncovered yet high-quality and high growth consumer company owned by the Tanoko Family, which also owns PT Avia Avian (AVIA IJ). 

• PT Surya Citra Media 1Q2022 were more about the future than the past given that its investment in new content and sporting rights depressed margins but should help drive growth.
• It has been gaining FTA TV audience share, helping to drive ad revenues. Vidio is seeing strong growth in paying subscribers with 2.5m in 1Q2022 with 4m targeted by December.
• PT Surya Citra Media Tbk (SCMA IJ) looks cheap versus history and should benefit from the economic recovery, with an increasingly diversified exposure across FTA TV and digital through Vidio. 

• Malaysia’s reopening play for the consumption sector is Heineken Malaysia Bhd (HEIM MK) .
• Q1 22 revenue has bounced back to Q4 19 level and higher than Q1 2019 by 33% before taking into account the potential upside since the reopening of the nightlife.
• Compared to other consumer names in Malaysia such as Carlsberg Malaysia, British American Tobacco, Nestle (Malaysia), and QL Resources, Heineken Malaysia is trading at a discount.

• BILI dismissed employees in game, e-commerce, and video in May.
• We believe the growth rates of minor businesses will slow down significantly in 1Q22.
• However, the operating margin will improve in 2022 and 2023.

• The CARVYKTI commercialization will bring GenScript increasing revenue and cash flow. Together with the rapid growth of GCT CDMO, it is expected to see gradual improvement in GenScript’s financial performance.
• The complex international relations, geopolitical conflicts and anti-globalization risks could weigh on bullish sentiment in the short term or cause stock prices to fluctuate wildly.
• In the long term, GenScript’s “all-in” on GCT area enables it follow the industry trend closely. So,GenScript have the exponential growth potential in valuation, with possibility of surpassing WuXi Biologics.