In today’s briefing:
- Sony – State Of Play Highlights VR Ambitions
- Voltas Ltd (VOLT IN) | Expected to Fight Back
- Integra Indocabinet (WOOD IJ) – A Polished Start to the Year
- Crowdstrike FY1Q23: Share Gains Will Lead to Share Gains
- A Pair Trade of Japanese General Trading Companies: Long Marubeni & Short Itochu
- Bukwang Pharmaceutical (003000 KS): Open Innovation Approach on Track to Launch New Drugs
- Weibo (WB US): Ad Growth Clouded by Pandemic and Macro Slowdown
- BDMN – Fixed Deposits with Floating Rate Loans
Sony – State Of Play Highlights VR Ambitions
- Sony’s State of Play today highlighted a variety of games headlined by Capcom’s Street Fighter 6 and Resident Evil 4 Remake and Square Enix’s Final Fantasy 16.
- The title line-up was strong but the standout in our view was the degree of support Sony appears to be getting for PSVR2.
- We had commented on this previously but it is increasingly looking like a key differentiating factor for PlayStation and no longer a gimmick.
Voltas Ltd (VOLT IN) | Expected to Fight Back
- Voltas Ltd (VOLT IN) had a brutal Q4FY24 especially for its UPC segment where it lost market share to rival Havells India (HAVL IN).
- There is a possibility of regaining some of the lost market share with some pricing interventions and high brand equity, however, it will be at cost of margins.
- The sector view remains bearish, however, relative to HAVL, the downside would be limited with market share gains in Air-Conditioners (ACs) as key monitorable.
Integra Indocabinet (WOOD IJ) – A Polished Start to the Year
- Integra Indocabinet’s recent 1Q2022 results confirmed the strong momentum in its wooden furniture and component sales to the US, which have seen even stronger growth than last year.
- Manufactured exports saw growth of +114% YoY in 1Q2022, whilst wooden building components saw growth of +194% YoY, as the company continued to gain market share in the US market.
- Integra Indocabinet trades on 8.3x FY21E PER and 8.1x FY22E PER, with consensus forecast EPS growth of +2.6% and +11.6% for FY2022E and FY2022E looking too low.
Crowdstrike FY1Q23: Share Gains Will Lead to Share Gains
- 61% revenue growth, 17% operating margins (up 720bps YoY) and 32% FCF margins. Best in class growth + profitability.
- ECommerce engine opening up from 4 modules to 12 means higher velocity sales on the come.
- VMWare’s Carbon Black will become a major share donator due to Broadcom acquisition.
A Pair Trade of Japanese General Trading Companies: Long Marubeni & Short Itochu
- We discuss a pair trade among the major Japanese trading companies. We propose going long on Marubeni Corp and going short on Itochu.
- We believe Marubeni has one of the most attractive valuations among the five major Japanese trading companies in terms of ROE vs. P/B and Itochu is the least attractive.
- We like Marubeni’s strength in food and agri businesses. Itochu is more dependent on metals, minerals and energy sectors which tend to be more volatile.
Bukwang Pharmaceutical (003000 KS): Open Innovation Approach on Track to Launch New Drugs
- Bukwang Pharmaceutical (003000 KS) is developing innovative new drug candidates in partnership with pharmaceutical and bio-venture companies in Korea and abroad.
- Antipsychotic lurasidone (brand name: Latuda), in-licensed from Sumitomo Pharma is the lead candidate of Bukwang’s innovative drug pipeline. Lurasidone will be launched in 3–4 years in Korea.
- Recently, Bukwang announced positive phase 1 trial for SOL-804 for the treatment of prostate cancer, in-licensed from Solural Pharma. SOL-804 has an addressable market opportunity of KRW23 trillion in 2027.
Weibo (WB US): Ad Growth Clouded by Pandemic and Macro Slowdown
- Weibo Corp (WB US) delivered robust 1Q22 results with ad revenue growing 10% year-over-year and outperforming other Chinese social networks, which underscores Weibo’s prominent position for advertisers.
- However, widespread lockdowns in China and economic slowdown could pressure Weibo in 2Q, and we expect a gradual recovery in 3Q-4Q with limited visibility.
- We like Weibo attractive valuation at 10x forward P/E; it has amassed MAU 582 million till March 2022 and user engagement has been improving.
BDMN – Fixed Deposits with Floating Rate Loans
- The bank is a former finance company, still holds much term deposits
- As interest rates rise, loan re-pricing can occur, with lower funding costs
- Time deposits are contracting, while CASA accounts are rising 1Q22 YoY
Related tickers: Sony Corp (6758.T), Voltas Ltd (VOLT.NS), Crowdstrike Holdings Inc (CRWD.O), Marubeni Corp (8002.T), Bukwang Pharmaceutical (003000.KS), Weibo Corp (WB.O), Bank Danamon Indonesia (BDMN.JK)
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