The Point for Asia Pacific

Research evidence excerpt

The Point for Asia Pacific

Point |

Monday, 29 June 2026

Top Call | Country Top Calls | Key Rating and Target Price Changes

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Top Call

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China Internet - Assessing Valuation Floor Vs Earnings Downside Sensitivity

The significant underperformance of the China Internet sector has intensified,

with the sector continuing as a source of funds for the global AI hardware rally.

This sell-off, however, has created a compelling valuation opportunity that we

believe, and hope is approaching a floor. Key players like PDD, YMM and Meituan

are now trading near their five-year trough multiples. Even after stress-testing for

potential 10-30% downward earnings revisions, valuations remain exceptionally

attractive, particularly on an ex-cash basis. With solid net cash positions and

outstanding buyback programs, we expect companies to accelerate their buyback

pace, and we believe that fundamentals will eventually prevail; companies with

strong core businesses and robust cash generation are well-positioned to navigate

the unprecedented super-cycle. PDD, Meituan screen well and Baidu, Netease,

Trip.com and YMM are very attractive on ex-cash basis.

Alicia Yap, CFA | Brian Gong

Nitto Boseki (3110.T) - If capacity expansion along with price hikes is

announced, how undervalued will the shares look?

We expect Nittobo to announce additional T-glass capacity expansion soon and

perhaps pursue additional price hikes. Our forecasts assume one round of T-glass

price hikes (we assume c30% price hikes began penetrating from April 2026, with

the price up 25% YoY for FY3/27 and up 5% for FY3/28). Under these assumptions

we forecast FY3/28 OP of ¥41bn/EPS of ¥828 and FY3/29 OP of ¥53.7bn/EPS of

¥1,090.