In today’s briefing:
- Alibaba: More Money to Be Made on The Short Side
- Sony (6758 JP): Image Sensors Set for Rebound & Long-Term Expansion
- NTT (Buy) – Updated Forecasts and Comments on Telework
- Ping An Healthcare and Technology (1833.HK) – Untenable Business Model Worsen the Logic and Outlook
- Ashok Leyland (AL IN) | Outperforming but Warrants Caution
- Grab (GRAB US) – Mapping Out a More Prudent Future
Alibaba: More Money to Be Made on The Short Side
- After rising more than 40% since Q4 earnings, Alibaba (ADR) (BABA US) is threatening to break out from a downtrend that lasted a little less than 20 months.
- We think this bounce is quite normal given the fact that the stock lost more than 76% of its value during a challenging time period.
- We remain confident that Alibaba has more downside potential and thinks that this is yet another opportunity to make money on the short side.
Sony (6758 JP): Image Sensors Set for Rebound & Long-Term Expansion
- Aided by the weak yen, Imaging & Sensing Solutions should return as a major profit driver in FY Mar-23.
- Capacity expansion should help SONY regain image sensor market share over the next 3-4 years.
- Participation in TSMC’s foundry project in Kyushu should add to the division’s long-term potential.
NTT (Buy) – Updated Forecasts and Comments on Telework
- NTT has adopted a progressive telework policy that reportedly allows up to 50% of eligible employees (30,000) to work from anywhere in Japan
- All telcos are likely to go down this path although NTT stands out as a larger and more traditional domestic company than KDDI or Softbank
- We have updated our model for new segment reporting. Our new forecasts support a ¥4,500 target price (March 2023) and we remain at Buy.
Ping An Healthcare and Technology (1833.HK) – Untenable Business Model Worsen the Logic and Outlook
- Just as we analyzed before, things get worse for PAGD. The loss expanded and gross margin declined. The gap between PAGD and its peers (JD Health, Alibaba Health) is widening.
- PAGD’s Achilles’ heel is its business model/profit model is untenable. The new HMO services system would not help turn things around because China’s national condition is different from the US.
- Being on the wrong track, PAGD’s financial performance is expected to further weaken. We are conservative about PAGD’s outlook. Any brief upwards movement is just dead cat bounce.
Ashok Leyland (AL IN) | Outperforming but Warrants Caution
- Ashok Leyland (AL IN) ‘s volumes recovered in FY22 thanks to a much milder than expected omicron wave and market share gains.
- Discounting lead gains, the absence of retail fleet owners in the market, and little excitement around the scrappage policy all warrant caution.
- While the stock is currently outperforming, channel feedback and valuations point to caution.
Grab (GRAB US) – Mapping Out a More Prudent Future
- Grab continues to innovate and adapt to more challenging times, with a needle focus on moving toward profitability with ongoing efforts to reduce incentives and rationalise non-core businesses.
- The launch of GrabMaps is interesting in that it has the potential to generate new revenue streams, create substantial cost savings, and enable targeted advertising adding to the enterprise segment.
- Grab (GRAB US) has cash liquidity of US$8.2bn, which makes it look cheap relative to its market cap of only US$8.9bn and it is trading on 2.0x FY2023E EV/Sales.
Related tickers: Sony Corp (6758.T), NTT (Nippon Telegraph & Telephone) (9432.T), Ping An Healthcare and Technology Company Limited (1833.HK), Ashok Leyland (ASOK.NS)
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