3Q24: Headline Numbers Intact Despite Better Costs After WPRTS 2 Accounting WPRTS beat our forecasts in 3Q24 mainly due to lower amortisation as the new WPRTS 2 concession commenced in Sep 24, extending the concession lifespan by at least 15 years. Headline numbers were still intact. In the medium term (until CT10 startup by 2028), one area of growth may give a further boost to WPRTS’ gateway cargoes, vs chasing for a transshipment recovery. We maintain HOLD on WPRTS with a target price of RM4.2...
GREATER CHINA Economics Inflation: Deflationary pressure persists, particularly for upstream pricing. Results ECARX (ECX US/BUY/US$1.84/Target: US$3.40): 3Q24: Revenue beat despite price competition. Maintain BUY. INDONESIA Update Erajaya Swasembada (ERAA IJ/BUY/Rp438/Target: Rp480): Unclear outlook for 2025; regulatory risk to key brand products. Downgrade to HOLD. MALAYSIA Results 99 Speed Mart Retail (99SMART MK/BUY/RM2.32/Target: RM2.60): 3Q24: Delivers on earnings as it is on the cusp of ...
9M24 Preview: Container Volume Growth Within Expectations In our preview of Westports’ (WPRTS) 9M24 results, we observed that volume growth will continue to be driven by gateway, as the global port congestions had not eased and will continue to adversely impact its transshipment. Despite wide public knowledge on WPRTS 2 concession, we still think that WPRTS lacks medium-term catalysts. Recent volume data already shows fellow competitor NorthPort gaining results from its new yard capacity Block K...
GREATER CHINA Results Ping An Insurance Group (2318 HK/BUY/HK$49.05/Target: HK$69.00) 3Q24: Bountiful harvest after prolonged dry spell. ZTE Corporation (763 HK/HOLD/HK$21.05/Target: HK$19.00) 3Q24: Results miss, expect stringent cost controls before next capex cycle. Downgrade to HOLD. Zijin Mining (2899 HK/BUY/HK$17.40/Target: HK$21.90) 3Q24: In line; mining entities’ gross margin down 1.2ppt qoq on lower copper ASP. Update Jiumaojiu In...
2Q24: Container Yields Surpass Expectations On Surprising VAS Surge WPRTS beat our forecasts mainly due to a VAS revenue surge. 2024 port congestions negatively impacted costs, but mainly for transhipment. Hence, gateway mix remained strong. The readjustments away from the Red Sea generated more ad-hoc calls, more laden boxes handled per call, larger average parcel sizes and higher VAS – all positive drivers on container yields. Assuming this is a high-base effect, risk-reward is balanced. Maint...
GREATER CHINA Results Contemporary Amperex Technology (300750 CH/BUY/Rmb189.35 /Target: Rmb250.00) 2Q24: Earnings in line while revenue misses. Maintain BUY. Update Weichai Power (2338 HK/BUY/HK$13.16/Target: HK$16.00) Upgrade from HOLD to BUY on strong stimulus policy. Raise target price from HK$12.50 to HK$16.00. INDONESIA Results Unilever Indonesia (UNVR IJ/HOLD/Rp2,490/Target: Rp2,700) 2Q24: Weakness and market share loss due to reoccurring boycot...
Downside Risk From Sporadic Port Congestions And M&A Trends Our findings that WPRTS’ loss of market share in 1Q24 to PTP and PSA alongside PSA’s recently reactivated defunct terminals appear to support our theory that WPRTS’ lack of spare capacity is a small competitive disadvantage, amid sporadic global port congestions which have worsened qoq. We preemptively cut WPRTS’ volume assumption. Also, investors may need to digest more M&A trends including a Smart AI port in Negeri Sembilan. Retain HO...
INDONESIA Strategy Rally in 2H24 Likely Our top picks. Banking – BBCA, BBNI, BMRI, BBTN; property – BSDE, CTRA; technology – BUKA; consumer – CMRY; retail – ACES; infrastructure – JSMR. MALAYSIA Update Duopharma Biotech (DBB MK/BUY/RM1.25/Target: RM1.39) Public sector should anchor 2025 earnings as private sector sales outlook appears muted. Maintain BUY with a target price of RM1.39. Westports Holdings (WPRTS MK/HOLD...
GREATER CHINA Strategy Alpha Picks: May Conviction Call Adding CR Beer, Crystal, Geely, Haier, Kuaishou, Ningbo Tuopu, Pinduoduo, Shenzhou, and Tencent to our BUY list, closing out SELL calls. Small-Mid Cap Monthly Reiterate BUY on Crystal International. Sector Automobile Weekly: EV sales pick up; take...
1Q24: Laden Gateway Boosted Profits, But Sporadic Port Congestions A Risk WPRTS’ 1Q24 core profit was boosted by another new high in its gateway mix, especially the laden gateway cargo that command the highest tariffs. However, with flattish Apr 24 volume growth, certain cost spikes will persist due to sporadic port congestion/vessel bunching which could disrupt schedules more than the 2021-22 scenario. We had explicitly highlighted this risk in an earlier update note despite maintaining our for...
Embracing Port Congestion And Container Industry Consolidation Port congestion may re-emerge as a key earnings risk in 2024, as an aftereffect of the Red Sea and Panama Canal crises. With no spare capacity at least in the medium term, we believe WPRTS will continually reassess its position, amid changing M&A trends that are propelling leading shipping liners to co-invest with strategic ports to become global terminal operators (GTO). Noting that its share price is aligned with the global peer av...
GREATER CHINA Sector Automobile Weekly: EV sales rebound for two weeks in a row, but price war intensifies. Maintain UNDERWEIGHT. Top SELLs: BYD, Li Auto and XPeng. Top BUYs: CATL and Yadea. Results ASMPT (522 HK/BUY/HK$102.30/Target: HK$120.00) 1Q24: Solid results, more positive updates to advanced packaging business. EVE Energy (300014 HK/SELL/ Rmb34.27/Target: Rmb20.00) ...
2023: Profits In Line Despite Gateway Volume Charging Up Westports beat expectations on both 2023 container volumes and the high-yield gateway business. However, Westports remains conservative on volume guidance for 2024, as it embarks on the new WPRTS 2 expansion. Without the allowance of tariff hikes, investors may perceive the expansion negatively − the lease payment changes alone will impact the earnings base by 5%. Fortunately, Westports has started renegotiations for the tariff changes. Re...
GREATER CHINA Update Xiaomi Corp (1810 HK/BUY/HK$12.20/Target: HK$21.60): 4Q23 results preview: Solid results on resilient smartphone margins. INDONESIA Strategy Alpha Picks: Outperformance in Jan 24: Our picks are EXCL, MAPI, BMRI, JSMR, BBNI, CTRA, MYOR and AKRA. Results Bank Mandiri (BMRI IJ/BUY/Rp6,675/Target: Rp7,400): 4Q23: Net profit up 15.6% qoq and 52.1% yoy; CASA market share rising. MALAYSIA Strategy Alpha Picks: Eyes Also On Results Season Winners: Our Alpha Picks performance again...
Assessing Disruption Risks in 2024; Supply Chain Crisis Far From Over Although Westports closed 2023 with a new milestone on monthly volumes, the global ports and container industry started the new year of 2024 with new disruption risks. We have identified them as: a) potential supply chain delays of up to one month from the Panama Canal and Red Sea “chokepoints”, b) other geopolitical risks, and c) gateway volumes (exports) delays on new customs procedures, but we do not expect material near-te...
GREATER CHINA Sector Dairy: Slowing demand to weigh on valuations in the near term. Downgrade to MARKET WEIGHT. Switch top pick to Yili. Online Travel Agencies: Strong travel demand visibility into 2024. Server: Edge AI penetration and enterprise investment to accelerate adoption of GenAI. Initiate Coverage Foxconn Industrial Internet (601138 CH/BUY/Rmb12.72/Target: Rmb18.90): Server ODM giant to remain a key winner of the gen ai investment trend. INDONESIA Update Bank Tabungan Negara (BBTN IJ/...
WPRTS 2 Concession Sanctioned, But More Factors Need To Be Ironed Out The long-awaited CT10-17 terminal expansion has been sanctioned. WPRTS 2 will boost capacity from 15m TEUs to 27m TEUs, and the concession period until 2082. Our target price has partially factored in the expansion, but in our view it is still not immune to political risks (exposed to projects like ECRL and Pulau Carey). Key terms (like tariff, capex and funding) are still being finalised, but without this guidance, it is not ...
GREATER CHINA Initiate Coverage iFlytek (002230 CH/BUY/Rmb45.38/Target: Rmb62.00): Trailblazer in voice recognition AI poised to capture AIGC opportunities. Update Li Ning (2331 HK/SELL/HK$21.35/Target: HK$18.80): Unreasonable property purchase reflects weak corporate governance. INDONESIA Update Indocement Tunggal Prakarsa (INTP IJ/BUY/Rp9,375/Target: Rp14,100): Acquisition to regain market share with potential earnings accretion of 11.2%. MALAYSIA Update Westports Holdings (WPRTS MK/BUY/RM3....
3Q23: Profits Beat Expectations On Gateway Volume Charging Up 9M23 core profit surprised positively against our forecasts, as container volume held up well and is above the group’s conservative guidance. The key driver was the highyield gateway business, which again reached a new all-time high. We now believe gateway has more room for growth, in tandem with foreign investments (to set up distribution hubs, including those in Westports Logistic Center). We upgrade forecasts by 4-6%, and take the ...
GREATER CHINA Economics Inflation: Oct 23 inflation lower on pockets of weakness in consumer demand. Results Galaxy Entertainment Group (27 HK/BUY/HK$44.10/Target: HK$57.00): 3Q23: Luck-adjusted EBITDA in line; expect higher opex to meet growing demand. Li Auto (2015 HK/BUY/HK$154.90/Target: HK$312.00): 3Q23: Net profit up 23% qoq to Rmb2.823b, 28% above consensus. Maintain BUY. Target price: HK$312.00. INDONESIA Results Ace Hardware Indonesia (ACES IJ/BUY/Rp825/Target: Rp1,000): 3Q23: Strong ...
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