In today’s briefing:
- Zozo – In Line as Reopening Looms
- Omron – Downgrade on Normalising Profitability
- KDDI (Buy) – Q3 21 Results Reaction: Slight Beat with Share Buy-Back Sweetener
- China’s Central Bank Digital Currency; Is It a Major Threat to Non-Bank Digital Payment Providers?
- Koito – Hit by Material Costs and Unexpected Plan Changes
- Bangkok Dusit Medical (BDMS TB): Thailand Reopening+ Less Severe Omicron= Continued Business Revival
- VGI: Positive for Short-Term Outlook While Long-Term Remain Promising
Zozo – In Line as Reopening Looms
- Zozo results were in line to slightly strong with revenue beating consensus by 3.3% and OP 1.3% higher.
- That slight beat was driven by very aggressive advertising spend however and we expect the recent correction for the stock to continue.
- The question in our mind is whether this will eventually head under ¥1,000 as we previously predicted.
Omron – Downgrade on Normalising Profitability
- Omron reported its 3QFY22 results on 28th January which saw revenues of ¥190.9bn (+5.8% QoQ, +13.4% YoY) and OP of ¥19.2bn.
- The reported results were 0.6% and 17.1% lower than the consensus estimates for revenue and OP respectively.
- This weakness also lead to a downgrade in guidance the size of which was a touch surprising.
KDDI (Buy) – Q3 21 Results Reaction: Slight Beat with Share Buy-Back Sweetener
- Financial beat as enterprise sales grow and consumer mobile pressure stabilizes. A rebound in mobile user growth was a key driver
- The company has raised its FY21 buyback program to a record ¥200bn
- We are raising our target price from ¥4,030 to ¥4,440 and remain at Buy
China’s Central Bank Digital Currency; Is It a Major Threat to Non-Bank Digital Payment Providers?
- The pilot launch of the e-CNY, China’s sovereign digital currency effectively competes with domestic mobile payment apps including Alipay, WeChat and Weixin Pay; the e-CNY registered 261m downloads in 2021
- Seven domestic commercial banks are included as the e-CNY’s operators, all of which offer extensive branch networks and large bases of retail customers to accelerate the digital currency’s distribution
- The e-CNY’s broader digital payments usage should erode Alipay, WeChat and Weixin Pay market shares; yet we believe that the competitive threat is seemingly well discounted in Alibaba share valuations
Koito – Hit by Material Costs and Unexpected Plan Changes
- Koito reported its 3QFY22 results yesterday and saw revenues of ¥199.7bn (+18.3% QoQ, -4.4% YoY) and OP of ¥14.2bn (7.1% OPM up 2.0% points QoQ).
- The reported revenue was 6.5% higher than consensus estimates while operating profit was -9.2% lower creating a mixed picture.
- Margins should normalise over time unlocking upside while underlying demand remains very healthy.
Bangkok Dusit Medical (BDMS TB): Thailand Reopening+ Less Severe Omicron= Continued Business Revival
- Bangkok Dusit Medical Services (BDMS TB) should benefit from Thailand’s resumption of quarantine-free travel from February 1. International patients contributed 30% of total revenue of BDMS in pre-pandemic period.
- With the less severe Omicron variant, BDMS non-COVID revenue is expected to recover. Its revenue and net profit through first nine months of 2021 are still lower than pre-pandemic levels.
- Digitalization initiatives of BDMS will be a stable source of income and long-term growth driver for the company, contributing 10–15% of total revenue in next five years.
VGI: Positive for Short-Term Outlook While Long-Term Remain Promising
- We maintain BUY rating for VGI with the new target price of Bt6.50 (Previous TP: Bt8.10), derived from SOTP method or 50% premium to Thai media peers. Target price downgrade
- Bt12.9bn from Capital raising will be utilized to pay loan repayment from JMART 15% stake investment (Bt8.2bn) and future business expansion via M&A.
- Expect 4QFY22 earnings (Jan’22-Mar’22) to face a hiccup given Omicron virus spread in Jan’22.We anticipate the media revenue stream to retreat to 70%of the level we have seen during pre-pandemic
Related tickers: ZOZO Inc (3092.T), Omron Corp (6645.T), KDDI Corp (9433.T), Alibaba Group (BABA.N), Koito Manufacturing (7276.T), Bangkok Dusit Medical Services (BDMS.BK), VGI PCL (VGI.BK)
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