From Lasertec Corp to Oriental Watch to Mercari here's what you need to know this week.

The Smartkarma Weekly Starter is a newsletter published every Sunday and pulls together the top research notes published over the last 7-days from across our platform.

In this week's edition of the Smartkarma Weekly Starter, we get a quick rundown on the top engaged insights for the week.

Start your week off on the right foot with:

Oriental Watch (398 HK): Sluggish Sales But Deep Value And Rolex Resilience

We provide an update on Oriental Watch. Trading at 7.7x PE with 60% of the market capitalization in cash and a 13% dividend yield there is deep value in the name.

• Hong Kong's watch and jewelry sales were weak in Q2 CY24 (-24% YoY) as dampened sentiment continues to plague overall retail sales across regional sectors.?
• However, Oriental Watch (398 HK), with its Rolex and Patek Phillipe portfolio, is expected to be more resilient than the rest of the watch industry.?
• The company is still a very good dividend play, trading at 7.6x FY25 PE, with 60% of the market cap in cash and a 13.5% dividend yield.?

By Sameer Taneja in Equity Bottom-Up

Narrative and Numbers | Household Durables | FY24

Indian durables industry set for growth. Symphony Ltd and Whirlpool of India are the ones to watch, while TTK Prestige faces ongoing challenges.

• This Insight is focued on Whirlpool of India (WHIRL IN) ; Crompton Greaves Consumer Electricals (CROMPTON IN) ; TTK Prestige (TTKPT IN) & Symphony Ltd (SYML IN).?
• As per ARs, the Indian durables industry is poised for significant growth due to increasing consumer demand, premiumization trends, and government support.
• SYML and WHIRL are the ones that warrant attention. Challenges faced by TTKPT are likely to continue.

By Pranav Bhavsar in Equity Bottom-Up

Mercari (4385) | Activist to Add Urgency

Q4 results show slowing GMV growth but better costs, management bullish on FY6/25 guidance, activist investor sees restructuring and fintech upside.

• Q4 results were a mixed bag with GMV growth slowing to just 6%. However, costs came in better than expected, boosting margins
• Management surprise the market with bullish FY6/25 guidance. Expects GMV growth to accelerate to +10% and sees OP at a healthy 22-25 billion yen
• Activist investor Oasis has taken a stake in the company. There is an obvious restructuring angle in addition to significant upside from fintech expansion?

By Mark Chadwick in Equity Bottom-Up

A Scenario Analysis: If Fed Initiates a Rate Cut Cycle, How Should Investors Position Themselves?

We conducted a scenario analysis on Asia real estate if Fed is to initiate a new rate cut cycle.? Within Asia, we expect Hong Kong, China and Singapore RE stocks to benefit while Japan will suffer.

• Jackson Hole is annual event among central bankers and economists, where Fed Chair Powell will also be speaking on Friday
• In the scenario of a new Fed rate cut cycle, we expect Hong Kong RE, China RE and Singapore RE to benefit, while investors can reduce exposure in Japan RE
• We also recommend some trade ideas based on our analysis and suggest specific stocks

By Jacob Cheng in Thematic (Sector/Industry)

Long 6920 Lasertec Corp | Short 6525 Kokusai Electric

Long Lasertech after a good set of numbers, Scorpion Capital concerns debunked; Short 6525 Kokusai Electric over continuing concerns over the US upcoming trade restriction announcement.

• Long Lastertec after a solid set of numbers and the easing of concerns raised by the recent Scorpion Capital short sellers report.
• Short 6525 Kokusai Electric over continuing concerns over the US upcoming trade restriction announcement in September.
• This was previously seen as a dangerous short due to its high outstanding short interest, although it has now unwound to almost zero.

By Andrew Jackson in Equity Bottom-Up

How Many Chinese Growth Equity Names Are Growing at Double Digits?

More Chinese growth equity names growing at double digit than single and more are accelerating in growth in C2H24. Pessimism can turn into self-fulfilling prophecy. Consumer confidence is key.

• With consumption in the doldrums, one would expect none growing at double digits. This is actually not the case;?
• Further, how many Chinese Growth Equity names are accelerating in growth in the second half? Quite a lot;
• We reiterate our view that Chinese Internet names are took-all winners with strong pricing power, which are showing when they need to. The weak market sentiment is self-fulfilling.

By Ying Pan in Thematic (Sector/Industry)

KS / Kuaishou (1024 HK): 2Q24, Significant Margin Improvement and 100% Stock Upside

The gross margin improved 5 pp (percentage points) YoY and the operating margin improved 7 pp YoY in 2Q24. In 2Q24, total revenue grew by 12% YoY, with the main business up by 22% YoY.

• The gross margin improved 5 pp (percentage points) YoY and the operating margin improved 7 pp YoY in 2Q24.
• In 2Q24, total revenue grew by 12% YoY, with the main business up by 22% YoY.
• Three cross-sectional comparisons reach similar stock upsides about 100%. Buy.

By Ming Lu in Equity Bottom-Up

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