In today’s briefing:
- Fast Retailing (9983) – Summer Is the Time for Shorts
- WinSemi (3105.TT): 1Q22 Preview- We Think the Hope Is in 3Q22.
- TSMC – Great 1Q But Scope For Further Good News Looks Limited
- Bukalapak (BUKA IJ) – Increasing Clarity with a Focus on Category Leadership
- Ace Hardware Indonesia (ACES IJ) – Back on an Expansion Tack
- Square Enix – Kingdom Hearts 4 and the Implications for Next Year’s Pipeline
- SanBio (4592 JP): Marketing Approval of First Product Expected This Year in Japan
- Money Forward Q1 22 Results: Mixed Quarter but Underlying KPIs Solid
- Fast Retailing: New Growth Pillar May Not Be Strong Enough to Support the Weight of Valuation
Fast Retailing (9983) – Summer Is the Time for Shorts
- Interim results were surprisingly strong considering the headwinds from China and rising costs
- 2H guidance looks optimistic. China remains a key risk and we still see risks to the gross margin
- The “R” word. Rising inflation, Rising Interest rates = Recession. Probably not good for consumers and certainly not good for high stock multiples
WinSemi (3105.TT): 1Q22 Preview- We Think the Hope Is in 3Q22.
- WinSemi’s revenue was NTD$5.56bn in 1Q22, which was -7.3% YoY and -22.96% QoQ.
- We think WinSemi’s revenue could be seeing upside until 3Q22, and it could be still struggling in 2Q22.
- The optical devices decreased the weakest. The communication infrastructure aligned the supply chain. The handset and WiFi decreased seasonality and the WiFi router was impacted because of chip shortage.
TSMC – Great 1Q But Scope For Further Good News Looks Limited
- TSMC’s 1Q results were extremely strong with revenue 4.15% above consensus and OP 9.04% above consensus.
- With the strong pricing power and favourable forex factored in consensus OP estimates for the year have moved up to TWD954bn in line with our start of year estimate.
- However, that now leaves limited further upside in our view and we expect earnings to decline next year rather than rise.
Bukalapak (BUKA IJ) – Increasing Clarity with a Focus on Category Leadership
- Bukalapak’s (BUKA IJ) results saw very strong growth from its Mitra Business, with a much slower marketplace but we see the latter picking up as its specialty strategy is developed.
- The launch of both Allo Bank Indonesia and Allo Fresh over the next two quarters should provide some excitement, whilst its gaming marketplace Itemku is already profitable.
- Take rates should improve in 2022 as Bukalapak (BUKA IJ) offers a broadening array of services across its Mitra and marketplace verticals. Valuations look attractive versus peers.
Ace Hardware Indonesia (ACES IJ) – Back on an Expansion Tack
- Ace Hardware Indonesia (ACES IJ) recently released its FY2021 results which reflected the intermittent lockdowns on the top line but cost controls meant the bottom line finish almost flat.
- The company benefitted from its regional diversity during the pandemic as not all cities were affected in the same way but its exposure to malls is quite high.
- Ace Hardware will resume its expansion plans in 2022 with plans for 15 new stores plus it will be a big beneficiary of easing mobility, given low online sales.
Square Enix – Kingdom Hearts 4 and the Implications for Next Year’s Pipeline
- Square Enix held their 20th anniversary event for Kingdom Heart over the weekend announcing a number of mobile titles as well the next mainline title Kingdom Hearts 4.
- While a release date was not offered we would expect a launch during the next fiscal year.
- Just as importantly, the announcement lends added weight to already leaked information on the company’s upcoming pipeline.
SanBio (4592 JP): Marketing Approval of First Product Expected This Year in Japan
- SanBio Co Ltd (4592 JP) is expected to receive approval for its first regenerative cell medicine SB623 for treating chronic motor deficit from traumatic brain injury in Japan this year.
- SB623, with current and future indication approvals, is targeting a large patient population of more than 50 million in major pharmaceutical markets globally. The indications have large unmet need.
- SanBio has a pipeline of five other pre-clinical drug candidates, entailing visibility beyond SB623.
Money Forward Q1 22 Results: Mixed Quarter but Underlying KPIs Solid
- Money Forward (3994 JP) posted solid Q1 financial results as revenue growth rebounded and EBITDA losses were within management’s forecast
- But revenue guidance for Q2 was weaker than expected and represents the lowest YoY growth to date which has raised questions on the effectiveness of marketing spend
- Full year guidance remains intact and the company expects that underlying growth in recurring revenue to remain robust which is positive for the long term thesis
Fast Retailing: New Growth Pillar May Not Be Strong Enough to Support the Weight of Valuation
- Even though 2QFY22 results were broadly in line with consensus, Fast Retailing (9983 JP)’s share price rose 8.8% as markets expected the worst amidst the Russian controversy and Shanghai lockdowns.
- However, this price movement seems unwarranted given the impact of Shanghai lockdowns could only be seen in the 3QFY22 financial statements.
- During earnings, FR introduced North America & Europe as new growth drivers to replace the declining Chinese market. But we are not convinced that they are up to the task.
Related tickers: Fast Retailing (9983.T), Win Semiconductors (3105.TWO), Taiwan Semiconductor Sp Adr (TSM.N), Ace Hardware Indonesia (ACES.JK), Square Enix Holdings (9684.T), SanBio Co Ltd (4592.T), Money Forward (3994.T), Fast Retailing (9983.T)
Before it’s here, it’s on Smartkarma
