Equity Bottom-Up: Softbank Group, Seven & I Holdings, Fujitsu Ltd, JD Health, Southern Alliance Mining Ltd, JCET Group, Mitsubishi Heavy Industries, Wuxi Biologics and more

• Vision Fund’s public portfolio dropped $18.6bn (-24%) in Q4. China concerns grabbed headlines but it was Asian names (Coupang, Grab) that drove losses
• Public investments held at the parent level fell 41% (-$1.3bn), led by SoFi (-$862mn), Lemonade (-$189mn) and THG (-$147mn) 
• We expect that Softbank will also need to write down private investments although it is not clear just how far private valuations have tracked public changes

• After raising full-year guidance in 3QFY22 due to stronger than expected performance in the overseas business, Seven & I is scheduled to release the fourth-quarter results on 7th April 2022.
• Domestic performance has been relatively stable, but 7-Eleven Inc should outperform expectations in the US through the yen depreciation and rising fuel retail margins.
• Thus, we would buy Seven & I Holdings (3382 JP) leading up to earnings expecting substantial upside on a potentially large earnings beat.

• The shares have rebounded by nearly 30% since the 1st of February. Consolidation seems likely while waiting for evidence that management’s sales and profit targets can be met.
• As Japan’s No. 1 IT services company, Fujitsu should benefit from the ongoing digitalization of Japan’s public and private sectors, the roll-out of 5G and the development of 6G.
• Risks for investors include the weakening yen and economic slowdown. A history of IT system failures also raises a red flag.

• The YoY growth rate of product revenue accelerated in 2H21, compared to 1H21.
• In China, many cities are locked down; therefore, we believe people need online medical shopping.
• However, the stock is overvalued compared with other online and offline medical stores.

For our next Corporate Webinar we are glad to welcome Southern Alliance Mining Ltd (SAML SP) CFO, Lim Wei Hung. In the upcoming webinar, Wei Hung will share a short company presentation, after which he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. A live Q&A session will follow.

The Corporate Webinar will be hosted on Tuesday, 12 April 2022, 17:00 SGT.

Southern Alliance Mining Ltd. is an established producer of high-grade iron ore products in Malaysia. It listed on the Catalist board of Singapore Exchange on 26 June 2020 (SGX:QNS). Headquartered in Pahang, Malaysia, the Group is principally involved in the exploration, mining, and processing of iron ore for subsequent sale. The Group sells (i) iron ore concentrate of low level of impurities with total Fe grade of between 62% to 65%, to steel mills and trading companies mainly located in Malaysia and China; and (ii) pipe coating materials that are crushed iron ore with a natural characteristic of a higher density for subsea pipes.

The Group’s primary mining asset, the Chaah Mine, is an open mine pit consisting of two mining leases and covering an aggregate area of 225.7 hectares. In addition to the Chaah Mine, the Group has also been granted the right to carry out exploration and mining operations at three potential iron ore mines located in Johor, Malaysia (“Exploration Assets”). The Group has commenced exploration activities since February 2022 at the Exploration Assets to identify mineral deposits for further business growth. The Group has also extended its core business to include mining of gold and other precious metals, base metals, and minerals as well as trading in other commodities. 

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. 

• JCET has reported 2021 annual results, and there was RMB$8.59bn/9.5% of revenue/NM percentage in 4Q21. JCET 2021 grew 6.0% QoQ and 11.5% YoY respectively.
• Despite US-China trade war, the revenue from US clients are taking 50.2% in 2021, which is growing 23% from 2020 to 2021. 
• Given the 5G and China Automotive are developing actively, we believe these two applications shall be keeping the energetic momentum.

• MHI benefits from the structural themes of energy security and carbon neutrality
• MHI’s Energy Systems account for over 60% of operating profits
• The inevitable push to restart nuclear plants in Japan will be a catalyst for the share price

• The continuous increase of backlog and CMO projects would provide high visibility and certainty for the growth of Wuxi Biologics (2269 HK) in 2022.
• Given the complex international relations, it is possible that the US may add WuXi Biologics to any sanctions list again in the future, which means large stock price volatility.
• There could be some short-term rally, but due to the lack of clear positive “signals” in the industry, we do not think it means a complete “reversal” for WuXi Biologics.