In today’s briefing:
- Sea Ltd: Something to Think About if You Are Starting to Lean Towards the Bullish Side
- Align Technology (ALGN US) Vs. Angelalign Technology (6699 HK): Which One Is Better Investment
- The Current Huge Gap of VGA Card Demand over Supply May Reverse in 2H22/2023
- Will Samsung Follow Apple and Be Forced to Stop Selling Smartphones in Russia Due to FDPR Rule?
- Suzhou Zelgen Biopharmaceuticals (688266.CH) – Uncertainty Leads to Inaccurate Prediction on Outlook
- KYEC (2449.TT): A Slow 1Q22 Is Likely to Occur, Which Could Present an Entry Point.
- HANA: 2022 Net Profit to Grow Despite Additional Costs
- HHC: Value Gets More Appealing
- CENTEL: Brighter Outlook in 2022 and Beyond
- EM Banks and Financials – The Rebalancing in Index Weightings from the LatAm Perspective
Sea Ltd: Something to Think About if You Are Starting to Lean Towards the Bullish Side
- Sea Ltd (SE US)’s outperformance ended abruptly yesterday following the 4Q21 earnings release with the share price giving away 2/3rd of the gains made during the last five days.
- The company’s share price rallied around 30% in the last week of February, alongside rallying markets following a steep correction leading up to the Ukraine crisis.
- With the fundamentals continuing to deteriorate and interest rates expected to continue trending upwards, we expect Sea to continue its downtrend until its valuation multiples reach the pre-pandemic low level.
Align Technology (ALGN US) Vs. Angelalign Technology (6699 HK): Which One Is Better Investment
- Align Technology (ALGN US) is better investment idea than its Chinese competitor Angelalign Technology (6699 HK), due to its larger global scale of operation, early mover advantage, and cheaper valuation.
- Align Technology is well-positioned for 20%+ revenue and earnings growth through 2024, driven by large and underpenetrated TAM of 19 million annual ortho starts.
- Align Technology shares are trading at a steep discount to Angelalign Technology shares. Price erosion due to the increasing competition remains the key risks for both the companies.
The Current Huge Gap of VGA Card Demand over Supply May Reverse in 2H22/2023
- 1H22 is likely the peak for VGA card. Our checks with VGA card makers indicate VGA card price fell in January/February and likely to continue for the rest of 2022.
- Potential supply surge, demand decline, and price drop will all lead VGA market to trend south in 2H22.
- VGA makers will be negatively impacted in 2H22. Gigabyte may be hit the most whereas Asustek may hit the least. Nvidia should also be hit at a certain degree.
Will Samsung Follow Apple and Be Forced to Stop Selling Smartphones in Russia Due to FDPR Rule?
- On 2 March, it was reported in numerous media that Apple Inc will stop all product sales in Russia. This is a measure in response to Russia’s invasion of Ukraine.
- The US-led Foreign Direct Product Rule (FDPR) regulation may force a more stringent sanction that could force Samsung to stop selling smartphones in Russia.
- Despite these concerns about FDPR, the decision as to whether to totally block Samsung’s smartphone sales to Russia has not been finalized.
Suzhou Zelgen Biopharmaceuticals (688266.CH) – Uncertainty Leads to Inaccurate Prediction on Outlook
- We analyzed Suzhou Zelgen Biopharmaceuticals (688266 CH)’s key products(Donafenib, recombinant human thrombin for topical use, Alkotinib, Jaktinib, etc.). They have to face fierce competition, VBP impact and small market size.
- Through Gensun Biopharma, Zelgen has established the ability to develop advanced tumor immunotherapy drugs. Whether it can continue to launch new products is the key to test Zelgen’s R&D system.
- We are cautious about Zelgen because uncertainties led to inaccurate prediction on market size and outlook.Investors can choose to “catch” a rebound, but Zelgen is far from a complete reversal.
KYEC (2449.TT): A Slow 1Q22 Is Likely to Occur, Which Could Present an Entry Point.
- It is usually the low season in the 1st quarter, and we expect the revenue/GM is about NT$8.55bn/25.5% in 1Q22 respectively.
- KYEC’s main clients are MediaTek, NVDA, XLNX and etc., and some demands in Automotive also rising up quickly.
- In real terms, the shareholder might receive the same dividend amount of about NT$2.5+ for 2021. We think it likely targets a 5% dividend yield.
HANA: 2022 Net Profit to Grow Despite Additional Costs
- Analyst meeting came out with negative tone. The company’s Korean SiC segment will continue to incur costs throughout 2022.However, the 45% tumble in share price since Nov’21 factored in negative
- We expect 22E core profit will remain flat YoY at Bt2.3bn. Additional costs and microchip shortages will offset the growth from capacity expansion.
- Bleak outlook until 3Q22. Additional costs will drag core earnings until 3Q22. Current share prices are cheap and provide opportunity for share accumulation.
HHC: Value Gets More Appealing
- HHC reported fourth quarter and full year 2021 ahead of our expectations on the heels of a super-pad sale and larger recognized amount of condominium sale revenue.
- HHC is now setting up for compounded growth in funds from operation (“FFO”) through plans for continued investment in its MPCs
- HHC’s disposal of its hospitality assets allowed HHC to aggressively repurchase its shares in the fourth quarter and into 2022
CENTEL: Brighter Outlook in 2022 and Beyond
- Analyst meeting came out with a positive tone. We expect 2022 EBITDA to grow by 78%YoY supported by strong recovery in hotel businesses especially in Maldives and Dubai.We maintain BUY
- 4Q21 EBITDA reached the highest level since 1Q20 at Bt977m (+113%YoY, +307%QoQ) backed by strong recovery of hotel performance especially in Maldives and Dubai.
- The company plans to open39 new hotels with 8,038 rooms by 2025 and 200-250 new food stores of existing brands and JV brands in 2022 which could support earnings momentum
EM Banks and Financials – The Rebalancing in Index Weightings from the LatAm Perspective
- The prospect of Russia being excluded from key emerging market indices is very real, in our view, and here we focus on the iShares MSCI Emerging Markets ETF
- The main beneficiaries of an index re-balancing would be the dominant EM Asian economies, and select African economies, but we cannot disregard LatAm and in particular we concentrate on financials
- Largest weightings aside, we highlight our preferred LatAm financial names based on fundamentals; Banco do Brasil, B3, BanColombia and Banco del Bajio, we also remove Banorte from the sell list
Related tickers: Sea Ltd (SE.N), Align Technology (ALGN.O), Gigabyte Technology (2376.TW), Samsung Electronics (005930.KS), King Yuan Electronics Co, Ltd. (2449.TW), Hana Microelectronics (HANA.BK), Howard Hughes Corp (HHC.N), Central Plaza Hotel (CENTEL.BK), Banco Do Brasil Sa (BBAS3.SA)
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