1HFY24: Within House Expectation; Bound For Earnings Recovery VSI reported a weak 2QFY24 due to a knee-jerk order cut from its key customer. That said, recovery is on the cards on the back of inventory replenishment and benefits reaped from the enhancement of vertical integration. Additionally, new capabilities commenced for its major customer could lead to better margin enhancement. VSI is still the frontrunner beneficiary of trade diversion, with discussions for prospective contracts at differ...
2QFY24: Within Expectations; All Eyes On Stronger 2HFY24 Earnings Gamuda’s 1HFY24 core net profit came in within expectations, despite making up only 40% of our and consensus’ estimates as we expect stronger earnings in 2HFY24. The outlook for the construction segment remains resilient, underpinned by orderbook of RM24.1b as of end-2QFY24 and a pipeline of mega projects. The property division is set to record stronger earnings in FY24 on lumpy recognition of unbilled sales and higher new propert...
KEY HIG HLIGH TS Company Results Gamuda (GAM MK/BUY/RM5.27/Target: RM5.88) Page 2 2QFY24: Earnings within expectations; anticipate stronger 2HFY24 earnings from both construction and property development segments. Maintain BUY. VS Industry (VSI MK/BUY/RM0.835/Target: RM0.925) Page 5 1HFY24: Within house expectation; recovery is on the way with inventory replenishment alongside fruition reaped from the enhancement of vertical integration. TRADERS’ CORNER Page 8 Star Media Group (STAR MK): Technic...
The residential market experienced a slowdown in 1Q24. We expect developers under our coverage to post unexciting results for 1Q24. The government is expected to announce a real estate measure for low-income earners in 2Q24, but we expect this to have limited impact. The property sector is expected to be boosted by a lower interest rate from the BOT in 2H24. Maintain UNDERWEIGHT.
For LINK’s pre-blackout conference call on 27 Mar 24, the key takeaways are: a) tenant sales growth of Hong Kong retail moderated to +1.3% in 3QFY24 from +3.1% 1HFY24, b) China’s retail sales surpassed pre-COVID-19 levels during CNY, c) the overseas portfolio saw a stronger performance, and d) management reiterated its developed market acquisition strategy. Trim FY24-26 DPU estimates by 0.6-5.4%. Maintain BUY with a target price of HK$48.15.
WuXi Bio’s 2023 revenue rose 11.6% yoy while adjusted net earnings declined by 4.6% yoy. The results are in line. The company expects revenue to grow at 5-10% yoy and non-COVID revenue to expand at 8-14% yoy in 2024. It is also actively expanding overseas production capacities and striving for continued business expansion. However, we note that WuXi Bio’s growth visibility remains weak given its significant exposure to geopolitical risks. Maintain HOLD with a lower target price of HK$12.00.
TUL reported stronger-than-expected revenue and adjusted net profit growth of 21.2% yoy and 70.9% yoy respectively in 2023. We expect strong demand for intermediates/ bulk medicines and animal products to continue supporting strong revenue growth of approximately 10% yoy in 2024, while GPO on insulin products could bring slight margin pressure in 2024. TUL is also making smooth progress in R&D and targets to launch Liraglutide in mid-24. Maintain BUY and target price of HK$10.00.
Attributable net profit grew 24.0% yoy with a 40% payout ratio. In 2023, PPS reported rapid expansion of third-party PM services and improved gross profit margins thanks to effective cost control and high-end development. Significant improvement in receivables was driven by better collection rate. For 2024,management targets 10% yoy growth in revenue, net profit and newly signed GFA. Maintain BUY. Target price: HK$39.90.
PICC P&C’s 2023 results came in slightly below our expectations, mainly due to a lowerthan- expected investment yield. The insurer managed to achieve its CoR target even with natural catastrophe losses in 3Q23. It also increased its dividend payout to 44% despite a profit dip. We expect 2024 profit to rise by at least 25% on a healthier CoR and improved investment yield. We roll over valuation base and raise our 12-month target price to HK$12.10. Upgrade to BUY.
Minth’s 2023 net profit grew 27% yoy to Rmb1,903m, in line with our and consensus estimates. FCF turned positive in 2023 due to a rapid increase in operating cash flows. Management is guiding for 2024 revenue to grow by over 20%. The growth drivers will be orders for battery housing and other EV-related parts. We maintain our 2024/25 net profit forecasts at Rmb2,147m/Rmb2,462m respectively and introduce our 2026 net profit forecast of Rmb2,909m. Maintain BUY. Raise target price to HK$24.00.
Midea’s 2023 results slightly missed consensus and our estimates. However, the company sharpened its competitiveness in the home appliance sector through product upgrading and channel optimisation. In the near term, the upcoming AC peak season will be a catalyst for Midea, in our view. We switch to Midea as our top pick in the home appliance sector. Maintain BUY and raise target price by 13% to Rmb76.20.
Haidilao’s 2023 results were in line with the profit alert. Management aims to maintain its market share at 7-8% against a growing catering market (6-8% yoy) in 2024, by growing the store count by single digits yoy and improving table turnover. Overall, we think the higher table turnover, stable gross margin and operating efficiency will outweigh the cons of wage cost inflation and possible price cuts amid a promotional environment. Maintain BUY and keep target price of HK$18.80 unchanged.
CGS’s attributable net profit decreased 21.6% yoy to Rmb3,940m, with 22.5% paid out as dividends. In 2023, CGS saw a sharp contraction in the VAS business and city service, while gross margin decreased in all segments. After marking Rmb4b in impairment of goodwill and account receivables, the risks remain high. Management targets low- to mid-single-digit revenue growth. We cut our earnings forecast. Maintain HOLD with a lower target price of Rmb5.15.
CMB’s 2023 results are in line with its preliminary results. 4Q23 earnings beat on cost control, lower provisions and trading gains. Management indicated that they will maintain the dividend payout after lifting it to 35%. They also guided that it will be challenging for CMB to achieve positive earnings growth in 1Q24 amid the margin squeeze and tepid fee income. Maintain BUY. Target price: HK$44.00.
Mengniu’s 2023 earnings missed our estimates due to a one-off write-off related to its associates and a withholding tax from dividend distribution. Management guided for 2024 revenue to grow by low- to mid-single-digit and OPM expansion of 30-50bp yoy, thanks to product mix upgrade and lower raw milk prices. Although the change of CEO is positive to its long-term goals, it creates additional uncertainties over Mengniu’s strategic implementation amid the weak market. Maintain BUY. Cut target pric...
BYD posted in-line 2023 net profit of Rmb30b (+81% yoy), at the mid-point of its guided range of Rmb29b-31b. This implies 4Q23 net profit of Rmb8.67b (-19% yoy/-17% qoq). The qoq earnings decline in 4Q23 was due to a margin squeeze as a result of price cuts. Looking ahead, management intends to sustain the price war over the next three years, and targets flat 2024 earnings, with margin erosion offsetting sales volume growth. Cut 2024-25 EPS by 1%/9% respectively. Maintain SELL. Target price: HK$...
KEY HIGHLIGHTS Results BYD Company (1211 HK/SELL/HK$201.60/Target: HK$140.00) 4Q23: Earnings up 19% yoy but down 17% qoq, in line. Management guides for flat earnings in 2024. Maintain SELL. Target price: HK$140.00. China Mengniu Dairy (2319 HK/BUY/HK$17.08/Target: HK$22.50) 2023: Missed estimates on one-off loss; weak demand to persist in the near term. China Merchants Bank (3968 HK/BUY/HK$30.95/Target: HK$44.00) 2023: Rise to the occasion. Country Garden Services (6098 HK/HOLD/HK$5.27...
We expect TTB to post 1Q24 net profit of Bt6,321m (+47% yoy, +30% qoq). The key driver to support yoy and qoq growth will be the tax benefit. Management remains prudent and guided flat loan growth for 2024. The tax benefit will support the earnings outlook and buoy the share price. However, the valuation is not cheap. The positive has largely been priced in, and the upside gain is limited. We maintain HOLD with a higher target price of Bt1.95.
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