In today’s briefing:
- Pinduoduo (PDD): 4Q21, Undervalued Growth Rate and Record Profit Since IPO, Buy
- US Expansion of Travel Bans the First Step in Broader Escalation?
- China Power International (2380 HK): Transformation to Soon Bear Fruits
- Premier Anti-Aging Company: Getting to an Interesting Level
- ASICS (7936): Time for a Bounce
- Vanguard (5347.TT): We Think Vanguard Can Easily Reach 1Q22 Guidance.
- PHC Holdings (6523 JP): Eyeing a Bigger Pie of Global Diabetes Management Solution
- Recent IPO Insights: Xometry
Pinduoduo (PDD): 4Q21, Undervalued Growth Rate and Record Profit Since IPO, Buy
- PDD’s total revenue growth was low 4Q21, as the company gave up on direct sales.
- However, we believe the revenue growth will bounce back in 2023.
- PDD cut sales and marketing expense, so we believe operating margin will improve in following two years.
US Expansion of Travel Bans the First Step in Broader Escalation?
- The US just expanded travel bans against Chinese officials said to be repressing ethnic and religious minorities.
- The timing, a few days after a Biden-Xi call on Russia that appeared to achieve little of substance is telling.
- Noises out of the UK have been similarly aggressive here and the question now is how Europe responds.
China Power International (2380 HK): Transformation to Soon Bear Fruits
- 2H21 is bad for China Power International (2380 HK) as coal price surged. But the positive news is that its wind and solar segments logged a 50.6% full-year profit growth.
- There is good progress on transformation and it has 7GW of clean energy capacity to come on stream in FY22. This is equivalent to 46% of the existing capacity.
- CPI said coal-fired plants are marginally profitable in Jan-Feb; meanwhile, hydropower will do better in this year. Overall, these set the stage for a turnaround.
Premier Anti-Aging Company: Getting to an Interesting Level
- We last wrote on this relatively small Japanese cosmetics company in September 2021 suggesting that it could be worth keeping an eye on given its cheaper valuation compared to peers.
- Premier Anti-Aging (4934 JP) shares are down 80% from the peak, mostly because it was sold-off alongside the low quality names in Mothers.
- It seems early to turn outright bullish on Premier Anti-Aging yet. However, if you are short other unprofitable names in Mothers, we think Premier Anti-Aging is a sensible long hedge.
ASICS (7936): Time for a Bounce
- Demand for ASICS running shoes remains strong. That should become clear as factories reach full capacity and shipping problems recede.
- Profit margins will expand due to less discounting and an improved channel mix.
- We turn bullish following a 30% decline from 52-week high. The stock is now trading at undemanding multiples versus peers.
Vanguard (5347.TT): We Think Vanguard Can Easily Reach 1Q22 Guidance.
- It’s NTD$4.976~5.176bn to go in March to reach the 1Q22 guidance of NTD$13.2~13.6bn.
- Despite Consumer and Smartphone demands could be weak in 1Q because of seasonality, we still see the demands can be strong in PMIC, Auto, 5G and etc.
- For the continuous 8” demand, the clients have high willingness to sign up an LTA (long term agreement), which explains the strong demand situation now.
PHC Holdings (6523 JP): Eyeing a Bigger Pie of Global Diabetes Management Solution
- PHC Holdings (6523 JP) is a diversified healthcare company, which serves ~$25 billion broader end-market, of which global glucose monitoring is the largest end-market.
- The company’s diabetes management business is the highest margin earning segment and is poised to grow through expanding presence in continuous glucose monitoring system.
- PHC can be an early investment idea as a passive play on the fastest growing segment of the global diabetes management segment ahead of its global launch of next-generation CGM.
Recent IPO Insights: Xometry
- Two-Sided online marketplace connecting buyers and sellers. But is this more Amazon or Angi?
- Game changing acquisition in December of Thomas should turbocharge growth and margins for 2022-2023.
- At 4x sales, this is a very high growth asset that has been crushed since IPO, down 55%. Interesting entry point.
Related tickers: Pinduoduo (PDD.O), Alibaba Group (BABA.N), China Power International (2380.HK), ASICS Corp (7936.T), Vanguard Intl Semiconductor (5347.TWO)
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