Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

Equity Capital Markets

Procore Technologies  / Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/procore-technologies-inc" target="_blank" data-smartkarma-citation="entities:28882:1" rel="noopener">Procore Technologies Inc (PCOR US)</a> , US construction project management software unicorn, has decided to tap capital markets with IPO again. In March, company filed updated S-1 registration document with the SEC but did not specify expected price range and how many shares it plans to sell to investors. We have favorable view on Procore Technologies IPO and believe that President Biden’s $2T infrastructure plan will have a positive impact on construction industry in the United States and especially on the business of Procore.  </p><p><a href="https://www.smartkarma.com/entities/procore-technologies-inc" target="_blank" data-smartkarma-citation="entities:28882:1" rel="noopener">Procore Technologies Inc (PCOR US)</a>  has raised a total of ~$650 million in funding over 14 rounds, according to Crunchbase. Tech unicorn was backed by leading venture capital firms ICONIQ Strategic Partners, Bessemer Venture Partners, Tiger Global Management and D1 Capital Partners. We believe Procore will go public this month. Goldman Sachs, J.P. Morgan, Barclays and Jefferies are lead underwriters on the deal.   </p>

Procore Technologies Inc (PCOR US) , US construction project management software unicorn, has decided to tap capital markets with IPO again. In March, company filed updated S-1 registration document with the SEC but did not specify expected price range and how many shares it plans to sell to investors. We have favorable view on Procore Technologies IPO and believe that President Biden’s $2T infrastructure plan will have a positive impact on construction industry in the United States and especially on the business of Procore.  Procore Technologies Inc (PCOR US)  has raised a total of ~$650 million in funding over 14 rounds, according to Crunchbase. Tech unicorn was backed by leading venture capital firms ICONIQ Strategic Partners, Bessemer Venture Partners, Tiger Global Management and D1 Capital Partners. We believe Procore will go public this month. Goldman Sachs, J.P. Morgan, Barclays and Jefferies are lead underwriters on the deal.   

Procore Technologies IPO: Valuation Update. Shifting Focus to $2T Infrastructure Plan

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<div><p><a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (9959 HK)</a> is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis will commence trading on Friday, 9 April. Linklogis priced its IPO at HK$17.58 and <a href="https://inews.hket.com/article/2926566/%E3%80%90%E6%96%B0%E8%82%A1IPO%E3%80%91%E8%81%AF%E6%98%93%E8%9E%8D%E7%A7%91%E6%8A%809959%E6%9A%97%E7%9B%A4%E3%80%80%E7%8F%BE%E5%8D%876-%E3%80%81%E6%97%A9%E6%AE%B5%E6%9B%BE%E8%B7%8C%E8%BF%91%E4%B8%80%E6%88%90?mtc=40001&amp;srkw=IPO%E6%9C%80%E5%BF%AB%E6%9C%80%E9%BD%8A" target="_blank" rel="noopener">currently trading around 6% higher</a> at HK$18.70 in the Futu securities grey market. The grey market performance is a welcome surprise in light of the choppy market conditions and declining market sentiment on Chinese tech names. The most recent HKEx tech IPO, <a href="https://www.smartkarma.com/entities/bairong" target="_blank" data-smartkarma-citation="entities:31486:1" rel="noopener">Bairong (1569395D CH)</a>, closed -16% below its IPO price on the first day and has not yet recovered.    </p></div><div><p>In <a href="https://www.smartkarma.com/insights/linklogis-ipo-initiation-isupply" target="_blank" data-smartkarma-citation="insights:47017" rel="noopener">Linklogis IPO Initiation: ISupply</a>, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-every-little-helps" target="_blank" data-smartkarma-citation="insights:49480" rel="noopener">Linklogis IPO: Every Little Helps</a>, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:49693" rel="noopener">Linklogis IPO: Valuation Insights</a>, we noted that the IPO price range is reasonable.</p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of HK$19.28 per share. Our DCF sensitivity analysis shows that the IPO price remains reasonable and the grey market factors in achievable market share and margin forecasts. We continue to think that the IPO price represents good value. </p></div></div></div>

Linklogis (9959 HK) is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis will commence trading on Friday, 9 April. Linklogis priced its IPO at HK$17.58 and currently trading around 6% higher at HK$18.70 in the Futu securities grey market. The grey market performance is a welcome surprise in light of the choppy market conditions and declining market sentiment on Chinese tech names. The most recent HKEx tech IPO, Bairong (1569395D CH), closed -16% below its IPO price on the first day and has not yet recovered.    In Linklogis IPO Initiation: ISupply, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In Linklogis IPO: Every Little Helps, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive. In Linklogis IPO: Valuation Insights, we noted that the IPO price range is reasonable.Updating for the final IPO net raise, our base-case DCF derived price target of HK$19.28 per share. Our DCF sensitivity analysis shows that the IPO price remains reasonable and the grey market factors in achievable market share and margin forecasts. We continue to think that the IPO price represents good value. 

Independent Insight Provider, Japanese equities, LightStream Research

Scott Foster

Independent Insight Provider, Japanese equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p>Oracle Japan announced unusually poor 3Q results and unexciting guidance for FY May-21 as a whole. This was primarily due to the collapse of Cloud &amp; On-Premise License revenues. Drastic cost cutting saved the bottom line.</p><p>Both the results and guidance compare unfavorably with those of the parent company, Oracle Corporation. Japan is simply not one of Oracle's better markets. </p><p>Oracle Japan is considerably more expensive than Oracle Corp., much less profitable, and notably illiquid. We see no reason to own it. </p>

Oracle Japan announced unusually poor 3Q results and unexciting guidance for FY May-21 as a whole. This was primarily due to the collapse of Cloud &amp; On-Premise License revenues. Drastic cost cutting saved the bottom line.Both the results and guidance compare unfavorably with those of the parent company, Oracle Corporation. Japan is simply not one of Oracle's better markets. Oracle Japan is considerably more expensive than Oracle Corp., much less profitable, and notably illiquid. We see no reason to own it. 

Oracle Japan (4716 JP): What's Going Down?

<div><p><a href="https://www.smartkarma.com/entities/linklogis" target="_blank" data-smartkarma-citation="entities:31126:1" rel="noopener">Linklogis (LINK HK)</a> is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis is backed by <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, CITIC Capital, GIC and <a href="https://www.smartkarma.com/entities/standard-chartered-plc" target="_blank" data-smartkarma-citation="entities:193:1" rel="noopener">Standard Chartered (STAN LN)</a>. </p></div><div><p>At the proposed IPO price range of HK$16.28-18.28 per share, Linklogis will have a market cap of HK$36,864-41,393 million ($4.7-5.3 billion). At the mid-point of the IPO price range, the net proceeds are HK$7,581.3 million ($976 million). Six cornerstone investors will purchase $365 million worth of the offer shares (36.22% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are BlackRock, Fidelity International, Janus Henderson, Ontario Teachers’, Sequoia Funds and EDB Investments. </p></div><div><div>
<p>In <a href="https://www.smartkarma.com/insights/linklogis-ipo-initiation-isupply" target="_blank" data-smartkarma-citation="insights:47017" rel="noopener">Linklogis IPO Initiation: ISupply</a>, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In <a href="https://www.smartkarma.com/insights/linklogis-ipo-every-little-helps" target="_blank" data-smartkarma-citation="insights:49480" rel="noopener">Linklogis IPO: Every Little Helps</a>, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive.</p>
<div class="content-highlight"><p>Notwithstanding the recent de-rating of Chinese tech names, our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. </p></div>
</div></div>

Linklogis (LINK HK) is a leading technology solution provider for supply chain finance in China. Its solutions optimise the payment cycle of supply chain transactions and digitalize the entire workflow of supply chain finance. Linklogis is backed by Tencent Holdings (700 HK), CITIC Capital, GIC and Standard Chartered (STAN LN). At the proposed IPO price range of HK$16.28-18.28 per share, Linklogis will have a market cap of HK$36,864-41,393 million ($4.7-5.3 billion). At the mid-point of the IPO price range, the net proceeds are HK$7,581.3 million ($976 million). Six cornerstone investors will purchase $365 million worth of the offer shares (36.22% of the offer shares at the mid-point of the IPO price range). The cornerstone investors are BlackRock, Fidelity International, Janus Henderson, Ontario Teachers’, Sequoia Funds and EDB Investments. 
In Linklogis IPO Initiation: ISupply, we stated that Linklogis is an attractive play on China’s supply chain finance market by combining a sensible monetisation model, high customer retention rate (good revenue visibility) and strong operating leverage. In Linklogis IPO: Every Little Helps, we noted that based on the PHIP which discloses the 2020 results and recent developments, we continue to believe that Linklogis’ fundamentals are attractive.
Notwithstanding the recent de-rating of Chinese tech names, our valuation analysis suggests that the IPO price range is attractive. Overall, we would participate in the IPO. 


Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<p>Across our active Global fund universe, Value managers have seen $41bn in outflows over the past 5-years, compared to $65bn of inflows in to Growth funds.</p><p>With Value funds capturing some long awaited outperformance this year, we analyse the current holdings set up among the 63 active Value funds in our analysis.</p><p>Overweights in EMEA persist against underweights in Asia and the Americas.  Financials, Materials and Industrials are the key overweights versus underweights in Information Technology.</p><p>US Financials are the standout overweight, with <a href="https://www.smartkarma.com/entities/citigroup-inc" target="_blank" data-smartkarma-citation="entities:279:1" rel="noopener">Citigroup Inc (C US)</a> and <a href="https://www.smartkarma.com/entities/american-express-co" target="_blank" data-smartkarma-citation="entities:916:1" rel="noopener">American Express Co (AXP US)</a> the key positions.  The FAAMG group of stocks remain key underweight holdings, though <a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-smartkarma-citation="entities:15273:1" rel="noopener">Microsoft Corp (MSFT US)</a> is the most widely held of the group. <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> is almost totally avoided and in Asia, <a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a> , <a href="https://www.smartkarma.com/entities/jd-com-inc-adr" target="_blank" data-smartkarma-citation="entities:446:1" rel="noopener">JD.com Inc (ADR) (JD US)</a> and <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a> screen as 'Unloved' by global active Value managers.</p>

Across our active Global fund universe, Value managers have seen $41bn in outflows over the past 5-years, compared to $65bn of inflows in to Growth funds.With Value funds capturing some long awaited outperformance this year, we analyse the current holdings set up among the 63 active Value funds in our analysis.Overweights in EMEA persist against underweights in Asia and the Americas.  Financials, Materials and Industrials are the key overweights versus underweights in Information Technology.US Financials are the standout overweight, with Citigroup Inc (C US) and American Express Co (AXP US) the key positions.  The FAAMG group of stocks remain key underweight holdings, though Microsoft Corp (MSFT US) is the most widely held of the group. Tesla Motors (TSLA US) is almost totally avoided and in Asia, Meituan (3690 HK) , JD.com Inc (ADR) (JD US) and Pinduoduo (PDD US) screen as 'Unloved' by global active Value managers.

United States

VMware, Inc. provides virtualization solutions from the desktop to the data center. The Company's solution products addresses a range of IT problems, which includes cost and operational inefficiencies, business continuity, software lifecycle management and desktop management.

Electronic Arts Inc. develops, publishes, and distributes branded interactive entertainment software worldwide for video game consoles, personal computers, handheld game players, and cellular handsets. The Company also provides online game-related services.

ServiceNow, Inc. provides enterprise information technology (IT) management software. The Company designs, develops, and produces prepackaged computer software, cloud services, and IT service management platform. ServiceNow serves customers throughout the United States.

Check Point Software Technologies Ltd. develops, markets and supports a range of software and hardware products and services for information technology (IT) security and offers its customers a network and gateway security solutions, data and endpoint security solutions and management solutions.

Fair Isaac Corporation provides analytics, including predictive modeling, decision analysis, intelligence management, decision management systems, and consulting services.  The Company helps companies in countries around the world acquire customers more efficiently, increase customer value, reduce fraud, lower operating expenses, and enter new markets more profitably.

Synopsys, Inc. supplies electronic design automation solutions to the global electronics market.  The Company provides design technologies to creators of advanced integrated circuits, electronic systems, and systems on a chip. Synopsys also provides consulting services and support to its customers to streamline the overall design process and accelerate time to market.

Activision Blizzard, Inc. publishes, develops, and distributes interactive entertainment software and peripheral products. The Company's products cover diverse game categories, including action/adventure, action sports, racing, role playing, simulation, first-person action, music-based gaming and strategy.

Workday, Inc. provides enterprise cloud-based applications. The Company offers human capital, spend, and financial management, as well as payroll, initiatives and higher education solutions. Workday serves the finance, healthcare, manufacturing, education, and technology industries worldwide.

HubSpot, Inc. provides a cloud-based marketing and sales software platform. The Company offers integrated applications that helps in lead generation and social marketing.

Fortinet Inc. provides network security solutions. The Company offers network security appliances and related software, and subscription services. Fortinet systems integrate the industry's broadest suite of security technologies, including firewall, VPN, antivirus, intrusion prevention (IPS), Web filtering, antispam, and traffic shaping.

Nintendo Co., Ltd. globally develops, manufactures and sells home-use video game hardware and software in home entertainment business.  The company also produces home-game products including cards.

Nexon Co., Ltd. mainly develops and services, online games for PC and mobile devices. The company also offers consulting services related to online-games. Nexon operates in Japan.

Dassault Systemes operates as a software company. The develops and offers 3Dexperience platform to create innovative new products and services using virtual experiences. Dassault Systemes serves aerospace, construction, business services, consumer packaged goods, high-tech, life science, health care, marine, energy, and industrial equipment industries worldwide.

WiseTech Global Pty Ltd provides various technology and information technology management solutions. The Company offers cloud based various technology platforms, market specific software and logistics technology solutions, such as edienterprise, a platform supply chain logistics management system, software-as-a-service, and clinical management software. 

Constellation Software Inc is a software holding company.  The Company acquires mission-critical, vertical market software companies, and helps them to grow.

Spotify Technology S.A. provides music streaming services. The Company offers commercial free music and ad-supported services to subscribers. Spotify Technology serves clients worldwide.

Dassault Systemes is a technology company. The company provides software applications services designed to support client company's innovation processes. The company's line of business includes provision of 3D design software, 3D digital mock up and product lifecycle Management. Dassault Systemes also provides several software brands.

Xero Limited offers an online accounting system.  The software features bank transaction importing, a cashbook, a general ledger, invoicing, accounts receivable, accounts payable, financial reporting, and management of expense claims.

CAPCOM CO., LTD. develops consumer video game software.  The Company also develops, manufactures, markets, and leases arcade game machines.  Capcom also operates amusement facilities.

International Games System Co., Ltd. plans, designs, develops, manufactures, and markets software and hardware for arcade games, PC games, and Internet on-line games.

Oracle Corporation supplies software for enterprise information management. The Company offers databases and relational servers, application development and decision support tools, and enterprise business applications. Oracle's software runs on network computers, personal digital assistants, set-top devices, PCs, workstations, minicomputers, mainframes, and massively parallel computers.

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Oracle Corp (ORCL US)

Procore Technologies IPO: Valuation Update. Shifting Focus to $2T Infrastructure Plan

Procore IPO is still one the most anticipated IPOs in 2021 and we believe Procore shares have substantial upside potential to last round valuation...

Andrei Zakharov

Linklogis IPO: Trading Debut

Linklogis priced its IPO at HK$17.58 and trading around 6% higher at HK$18.70 in the Futu securities grey market. We continue to think that the IPO...

Arun George

Oracle Japan (4716 JP): What's Going Down?

Oracle Japan reported unusually poor 3Q results and weak full-year guidance, underperforming Oracle Corp by a wide margin. It is also more...

Scott Foster

Linklogis IPO: Valuation Insights

Linklogis has launched its IPO to raise net proceeds of $976m at the mid-point. Notwithstanding the recent de-rating of Chinese tech, we think that...

Arun George

Where Are Global Value Funds Positioned?

With Value funds capturing some long awaited outperformance this year, we analyse the current holdings set up among the active Global Value funds...

Steven Holden

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