In today’s briefing:
- Tencent/Netease: China Game Approval Resumption Is a Relieve, but Not Out of Tunnel
- HHC: NAV Rising
- Conch Venture (586 HK): Improving Risk-Reward Profile
- Asymchem Laboratories (6821.HK/002821.CH) – Concerns on Future Growth Momentum
- GTX: The Macro Factor
Tencent/Netease: China Game Approval Resumption Is a Relieve, but Not Out of Tunnel
- China announced game approval last night, after 8 months of silence.
- We discussed in our previous note that China would resume game approval.
- There is no game approved for Tencent and Netease this round but we believe their approval will come in due time.
HHC: NAV Rising
- HHC updated its NAV to $170 a share from $150 a share last year after the return of retail and the Las Vegas Ballpark to normal operation.
- HHC has started to redeploy its free cash flow with $250 million portion dedicated to share repurchases.
- The improvements in the business we have cited over the past year contributed to HHC raising its NAV estimate
Conch Venture (586 HK): Improving Risk-Reward Profile
- Following CCEP spin-off and share price decline, China Conch Venture (586 HK) is now at more attractive valuations relative to the stub, on sum-of-the-parts and on PER multiple.
- Growth profile should improve in next two years and it has an optimistic expectation of of 76% increase in waste treatment and 79% growth in on-grid electricity for FY22.
- New business initiatives including anode and cathode materials of lithium iron phosphate and lithium batteries and used lithium batteries treatment may provide potential medium term upside.
Asymchem Laboratories (6821.HK/002821.CH) – Concerns on Future Growth Momentum
- The three large orders for COVID-19 small molecule drugs are mostly one-off revenues, and after 2022, Asymchem Laboratories (6821 HK)‘s performance could decline from a high base.
- In essence, Asymchem mainly relies on cost advantage of large-scale capacity to obtain orders.Without core leading technology in frontier of medicine, Asymchem is difficult to enjoy sustainable industry development dividend.
- Overall, Asymchem’s moat is not strong enough, and the certainty of the Company’s long-term performance growth is also not high. It could be a short-term trade rather than long-term hold.
GTX: The Macro Factor
- In the first quarter, automakers have been back to stops and starts with segments of their production runs due to parts availability
- GTX’s product mix makes the Company vulnerable to the ongoing supply chain issues arising from the war in Ukraine
- In March 2022 there was a 7.2 magnitude earthquake in Japan that resulted in power loss and infrastructure damages
Related tickers: Tencent (0700.HK), Howard Hughes Corp (HHC.N), China Conch Venture Holdings (0586.HK), Garrett Motion (GTX)
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