Overview
This comprehensive report provides in-depth insights into the performance and future prospects of some of the leading companies in Asia, including Xiaomi Corporation, Bukalapak.com, GoTo GoJek Tokopedia, My EG Services, PropNex, and PTT. The analysis covers financial results, market performance, strategic initiatives, and future outlooks.
Xiaomi Corporation (1810 HK)
3Q24 Results Preview: Robust Growth in IoT Segment
Xiaomi Corporation is set to report its 3Q24 earnings later this month. We anticipate an adjusted net profit of RMB6.0 billion, which is 7% above Bloomberg consensus estimates. The earnings beat will primarily be driven by strong sales and profitability in the IoT products segment, while the smartphone, internet services, and EV businesses will be largely in line.
Performance Highlights
For 3Q24, we expect Xiaomi’s revenue to grow by 28.0% year-on-year to RMB90.7 billion. This growth is driven by a continued recovery in smartphone shipments and strong IoT product sales in both domestic and overseas markets. Margins are expected to moderate by 2.2 percentage points year-on-year and 0.2 percentage points quarter-on-quarter to 20.5%, with product mix improvements for IoT segments partially offsetting the increase in component costs in the smartphone business. Operating expenses for Xiaomi’s core business continue to be well controlled, with the core business operating expense ratio declining by 1.6 percentage points year-on-year to 14%.
Internet Services Business
This segment’s revenue is expected to increase by 7.2% year-on-year and 0.6% quarter-on-quarter to RMB8.3 billion in 3Q24, while the margin is expected to trend back down to around 75% due to the increasing contribution from gaming-related products, which generally incur higher distribution fees and therefore carry lower margins.
EV Business
Xiaomi has succeeded in delivering more than 20,000 units of the SU7 in October 2024 and is well on track to reaching the target of 100,000 units cumulatively by November 2024 and 120,000 units by December 2024. The EV business is expected to generate revenue of RMB8.2 billion (+28.2% year-on-year) in 3Q24, with margin expanding by 0.6 percentage points to 16.0%. New locked orders continue to be solid, while the recently announced SU7 Ultra variant has received strong pre-order numbers.
Future Outlook
We fine-tune our assumptions for the smartphone and IoT businesses for 2024-26, mainly due to the improving product mix across both segments. For the EV segment, we expect deliveries to continue picking up in 2025-26, with the average selling price increasing slightly due to a better mix and the introduction of a new SUV model early next year.
Valuation and Recommendation
We maintain our BUY rating and raise the target price to HK\$31.70, based on HK\$27.40 for the core business, which is based on 20.7x 2024F PE, and HK\$4.30 for the EV business, which is based on the 10-year DCF valuation. Our EV valuation is now based on a WACC of 10.8%.
Bukalapak.com (BUKA IJ)
3Q24: Restructuring Looms as BUKA Exits Some Businesses
Bukalapak.com reported a core NPAT of Rp36 billion in 3Q24, declining 41.9% year-on-year and 88.2% quarter-on-quarter. The drop in revenue was due to BUKA discontinuing some of its businesses to focus on four main businesses: Mitra, gaming, investment, and retail.
Performance Highlights
BUKA reported a 9M24 core NPAT of Rp342 billion, compared with a Rp74 billion loss in 9M23. The reported 9M24 results are below UOBKH’s 2024 NPAT forecast of Rp637.3 billion but ahead of the street’s forecast of Rp230 billion. With the decision to focus on profitable businesses, BUKA’s TPV is expected to decline by 30-40%. Non-recurring charges will occur as BUKA phases out inventory, incurs penalties from early contract terminations, and faces employee layoff costs due to business closures.
Future Outlook
In the next several quarters, BUKA will enter a restructuring phase to streamline its operations and reduce cost structure. We foresee a potential downgrade to our rating as BUKA enters the restructuring phase.
Valuation and Recommendation
We downgrade to HOLD with a target price of Rp120. We value BUKA by using GOTO as a reference, assuming BUKA commands a 30% discount to GOTO’s EV/GMV value and a 65% discount to account for potential earnings miss.
GoTo GoJek Tokopedia (GOTO IJ)
3Q24: Strong Performance Overall But Below Consensus Expectation
GoTo recorded a net loss of Rp1,614 billion in 3Q24, up 32.4% year-on-year but down 12.2% quarter-on-quarter. GOTO’s on-demand service recorded the third consecutive quarter of positive adjusted EBITDA.
Performance Highlights
GOTO reported a 9M24 NPAT loss of Rp4,313 billion, improving 54.8% year-on-year from a loss of Rp9,548 billion in 9M23. The reported 9M24 results are above UOBKH’s NPAT expectation but below consensus expectations.
Future Outlook
GOTO expects to achieve breakeven EBITDA in 2024, with 4Q24 projected to be the largest contributor. GOTO Financial is forecasted to generate positive EBITDA by 4Q24, one year earlier than its previous guidance.
Valuation and Recommendation
We maintain our BUY rating with a target price of Rp86. Our target price is derived using a Fair EV/GMV of 0.18 and a 20% discount from GOTO’s fair value accounting.
My EG Services (MYEG MK)
Concreting E-government Presence; Unravelling Zetrix’s Potential
MYEG’s prospects remain rejuvenated with emerging catalysts such as earnings growth from Zetrix-related services and involvement in multiple Malaysian e-government projects. The recent commercial launching of Zetrix cross-border services provides assurance on stable recurring revenue and healthy cash flows moving forward.
Zetrix as a Growth Focus
After investing over RM1 billion to develop its Zetrix blockchain, MYEG launched multiple applications on the platform. These include Ztrade blockchain platform in the China customs, certificate of origin (COO) authentication services, smart contract verifiable credentials (VC), and blockchain-based digital signing and others. Government-to-government blockchain applications under the Zetrix platform solidify MYEG’s presence within the domestic e-government space.
Collaborations and Future Prospects
MYEG has commenced collaborations with Heitech Padu for e-government projects. The recent commercial launch of Ztrade’s two-way cross-border services with China customs is expected to drive more Zetrix token sales, higher transaction fees, and gas fees. We anticipate an annual revenue of over RM650 million via charging gas fees, service fees per credential/contract, and annual fees upon optimal utilization of Ztrade services.
Valuation and Recommendation
We maintain our BUY rating with an unchanged target price of RM1.42, implying a 16x 2025F PE.
PropNex (PROP SP)
Solid Outlook for the Next 12-18 Months
PropNex’s outlook for the next 12-18 months appears solid with stable to higher transaction volumes in the private and HDB markets. New launch units are expected to increase meaningfully based on property developers’ timelines.
Market Performance
At a recent institutional investor call, PropNex highlighted that over 4,600 new units will have been launched for sale in 2H24 compared with just under 2,000 units in 1H24. PropNex continues to achieve 60-70% market share in new launches. The company saw a positive impact on property transaction volumes following the US Fed’s interest rate cut in mid-September.
Future Outlook
PropNex expects private new sale volumes to reach 5,000-5,500 units by end-24. HDB resale volumes are expected to grow by 7-10%, while private resale volumes are expected to grow by 15-24%. PropNex maintained a healthy net cash position of S\$116 million as at end-1H24.
Valuation and Recommendation
We maintain our BUY rating with a target price of S\$0.98. Our target PE multiple of 12.0x is in line with the company’s average since 2021 and is pegged to our 2025 EPS estimate.
PTT (PTT TB)
3Q24 Net Profit Expected to Decline qoq and yoy
We expect PTT’s 3Q24 net profit to decrease both quarter-on-quarter and year-on-year, primarily due to lower profits from subsidiaries and affiliates. The gas business’ EBITDA is expected to remain flat quarter-on-quarter due to reduced impact from the single pool gas policy.
Performance Highlights
We expect PTT to report a 3Q24 net profit of Bt15.3 billion, down 57% quarter-on-quarter and 51% year-on-year. EBITDA from the gas business is expected to remain flat quarter-on-quarter, partly due to reduced impact from gas costs under the single pool policy. However, the gas business faced negative headwinds in 3Q24, including a decline in sales volume and an increase in production costs.
Future Outlook
We expect a quarter-on-quarter recovery in 4Q24 core net profit, driven by improvements in the exploration and production (E&P) and refinery businesses. However, this outlook is partly offset by higher liquefied natural gas (LNG) prices.
Valuation and Recommendation
We maintain our BUY rating with an SOTP-based target price of Bt38.00 in 2025. In the oil & gas sector, we prefer Bangchak Corporation (BCP TB) and Indorama Ventures (IVL TB).
