From Nippon Yusen to AEM to Alibaba 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:

Mitsubishi Heavy (7011) | Flying High

We remain bullish. The stock has performed well this year and but 13x EV/EBIT seems reasonable given the structural drivers

• MHI's stock fell 7% following the announcement of results. Guidance for FY3/25 missed analyst expectations
• Even so, MHI remains a key beneficiary of the global shift to clean energy and national policies aimed at bolstering national security?
• We remain bullish. The stock has performed well this year and but 13x EV/EBIT seems reasonable given the structural drivers

By Mark Chadwick in Equity Bottom-Up

HK Strategy: Where Are the Short-Term Opportunities?

Li Auto, Link REIT, China Mengniu, Hang Lung Properties, and Galaxy Entertainment are massive laggards YTD but the recent rebound from the trough is limited. We see opportunities for them to catch up.

• Many have missed out on the 14%, or 2,300 points, rally of the HSI in the last 9 trading days. There are still several stocks that look interesting now.
• Li Auto (2015 HK), Link REIT (823 HK), China Mengniu Dairy Co (2319 HK), Hang Lung Properties (101 HK) and Galaxy Entertainment Group (27 HK) are massive laggards YTD.
• As they have only experienced limited rebounds from the 19-Apr trough, they are set to catch up. Also, their earnings prospects look positive this year.?

By Osbert Tang, CFA in Thematic (Sector/Industry)

Nippon Yusen (9101) - Another Big Buyback Announced, But Details Matter

Nippon Yusen today announced erns, guidance, a div hike, and an added buyback to last year's new MTMP. The stock reacted well. The buyback is optically big, actually smaller, and details matter.

• Last May, Nippon Yusen Kk (9101 JP) announced buybacks of ￥200bn over 2 years. In August, they changed it to say? ￥200bn in the next nine months.
• That helped support the stock through early March. It was big, and a decent percentage of ADV. Today, they announced earnings and guidance and another ￥100bn buyback through April 2025.
• Earnings were OK. Guidance is a little low vs the Street. The stock popped 5% from where it was trading. Lower impact vs 2023. More cross-holder overhang consideration.?

By Travis Lundy in Event-Driven

Alibaba (BABA US): Margin Pressure Overstated

We believe consensus overstates margin pressure for Alibaba March quarter results, which will usher in an mild earnings recovery cycle that lead us to see 50% upside to current price.

• We feel consensus overstates margin pressure for Alibaba’s March quarter results. We expect its group adjusted EBITA to deliver single-digit growth vs. investors’ concern about earnings retreat.
• March quarter should mark start of an earnings recovery cycle in our view, as improving China macro and well-executed business revamp plan put Alibaba back on growth track.
• This also means an end to its multiple contraction which lasted for five quarters. We see 50% upside on double-digit earnings growth and multiple expansion over next 12 months.

By Eric Chen in Equity Bottom-Up

Alibaba (BABA US) 4Q24 Preview: Many Moves Under One-Digit Growth, 46% Upside

We believe Alibaba has been actively raising its revenue growth, but this the effect cannot be seen in the short run. We conclude the stock has an upside of 46% and a price target of US$120.

• We believe revenue will grow by 6% YoY in 4Q24, but by 11% for FY2026 (roughly 2025 calendar year).
• We believe Alibaba has been actively raising its revenue growth, but this the effect cannot be seen in the short run.
• We conclude the stock has an upside of 46% and a price target of US$120.

By Ming Lu in Equity Bottom-Up

Nintendo (7974) | Negative Surprise....Not Really

The initial market reaction may be negative, we would use that as an opportunity to buy into the stock for the cyclical upturn in FY3/26.

• Operating profit: FY3/24 OP was 529 billion yen (+4.9% YoY) vs analyst estimates of 537 billion (1.5% miss)
• FY3/25 Operating guidance is 400 billion yen, significantly below analyst expectations of 480 billions (-16% miss).
• The initial market reaction may be negative, we would use that as an opportunity to buy into the stock for the cyclical upturn in FY3/26.

By Mark Chadwick in Equity Bottom-Up

AEM Holdings: More Short-Term Pain; Highly Attractive Valuation for Long-Term Investors

AEM posted a very weak quarter. Business should improve dramatically by FY25. Long-term investors should accumulate aggressively on current weakness.

• AEM (AEM SP) published dismal 1Q24 results and kept its modest guidance for 1H24.
• AEM has announced new customer wins going into FY25 which should improve results materially next year. The sell-side has downgraded estimates aggressively making room for upside surprises next year.
• AEM has seen an implosion in investor confidence because of the inventory issues, and slow orders from its key customer Intel Corp (INTC US). Long-term investors should accumulate here.?

By Nicolas Van Broekhoven in Equity Bottom-Up

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