TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>We have been longtime fans of Netflix the product and Netflix’s management team can rightfully be described as visionary. They had the vision to have the public markets fund an experiment in business models that appears now set to breakeven on FCF in 2021. We have said since last year that Netflix is a good relative short given the extreme pull-in of demand from COVID, and the fact that Netflix’s stock performance tracks the pace of sub growth, and the shockingly weak guidance for 2Q21 implies this stock will continue to be the #1 large cap funding short for the foreseeable future. But for how long?</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

We have been longtime fans of Netflix the product and Netflix’s management team can rightfully be described as visionary. They had the vision to have the public markets fund an experiment in business models that appears now set to breakeven on FCF in 2021. We have said since last year that Netflix is a good relative short given the extreme pull-in of demand from COVID, and the fact that Netflix’s stock performance tracks the pace of sub growth, and the shockingly weak guidance for 2Q21 implies this stock will continue to be the #1 large cap funding short for the foreseeable future. But for how long?Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p><a href="https://www.smartkarma.com/entities/mnc-vision-networks-tbk-pt" target="_blank" data-smartkarma-citation="entities:28658:1" rel="noopener">MNC Vision Networks (IPTV IJ)</a>'s subsidiary, PT Asia Vision Network (AVN), just announced that it will merge with Malacca Straits Acquisition Company Limited (NASDAQ: MLAC), a NASDAQ listed SPAC. This would be the first Indonesian company to undertake a SPAC listing in the U.S.</p>
<p>With the merger, the company's valuation is estimated to reach USD573m, with the transaction expected to be completed by the end of 2Q2021 or early  3Q2021. The transaction is also expected to bring around USD135m in fresh funds to the company, assuming there's no adjustment to the purchase price. </p>
<p>PT Asia Vision Network (AVN) is Indonesia’s fastest-growing Over-The-Top (OTT) media business and is the holding company of Vision+, the 3rd largest broadband, and IPTV operator in Indonesia.</p>
<p><a href="https://www.smartkarma.com/entities/malacca-straits-acquisition-company-limited" target="_blank" data-smartkarma-citation="entities:32226:1" rel="noopener">Malacca Straits Acquisition Company (MLAC US)</a> is a publicly-traded special-purpose acquisition company, owned by Kenneth Ng, who has a fund management background. </p>
<p>President Director of <a href="https://www.smartkarma.com/entities/global-mediacom-tbk-pt" target="_blank" data-smartkarma-citation="entities:14005:1" rel="noopener">Global Mediacom (BMTR IJ)</a>, Hary Tanoesoedibjo, the major shareholder of <a href="https://www.smartkarma.com/entities/mnc-vision-networks-tbk-pt" target="_blank" data-smartkarma-citation="entities:28658:1" rel="noopener">MNC Vision Networks (IPTV IJ)</a> stated that the merger would not only help increase the company's cash flow but also strengthen the company's position as one of the leaders in the Indonesian OTT market. </p>
<p>A successful SPAC listing for Asia Vision Networks (AVN) has the potential to crystalize some of the hidden value from its underlying businesses through a NASDAQ listing and hence provide a reference valuation for <a href="https://www.smartkarma.com/entities/mnc-vision-networks-tbk-pt" target="_blank" data-smartkarma-citation="entities:28658:1" rel="noopener">MNC Vision Networks (IPTV IJ),</a> as it remains the major shareholder even after the proposed SPAC listing is complete.</p>
<p>The belief is that AVN's growth potential will be more appreciated by US investors, especially since that market has a more developed IPTV and broadband ecosystem. Penetration rates for both Pay-TV and high-speed broadband are still very low in Indonesia relative to other ASEAN countries, underpinning future growth prospects. </p>

MNC Vision Networks (IPTV IJ)'s subsidiary, PT Asia Vision Network (AVN), just announced that it will merge with Malacca Straits Acquisition Company Limited (NASDAQ: MLAC), a NASDAQ listed SPAC. This would be the first Indonesian company to undertake a SPAC listing in the U.S.
With the merger, the company's valuation is estimated to reach USD573m, with the transaction expected to be completed by the end of 2Q2021 or early  3Q2021. The transaction is also expected to bring around USD135m in fresh funds to the company, assuming there's no adjustment to the purchase price. 
PT Asia Vision Network (AVN) is Indonesia’s fastest-growing Over-The-Top (OTT) media business and is the holding company of Vision+, the 3rd largest broadband, and IPTV operator in Indonesia.
Malacca Straits Acquisition Company (MLAC US) is a publicly-traded special-purpose acquisition company, owned by Kenneth Ng, who has a fund management background. 
President Director of Global Mediacom (BMTR IJ), Hary Tanoesoedibjo, the major shareholder of MNC Vision Networks (IPTV IJ) stated that the merger would not only help increase the company's cash flow but also strengthen the company's position as one of the leaders in the Indonesian OTT market. 
A successful SPAC listing for Asia Vision Networks (AVN) has the potential to crystalize some of the hidden value from its underlying businesses through a NASDAQ listing and hence provide a reference valuation for MNC Vision Networks (IPTV IJ), as it remains the major shareholder even after the proposed SPAC listing is complete.
The belief is that AVN's growth potential will be more appreciated by US investors, especially since that market has a more developed IPTV and broadband ecosystem. Penetration rates for both Pay-TV and high-speed broadband are still very low in Indonesia relative to other ASEAN countries, underpinning future growth prospects. 

MNC Vision Networks (IPTV IJ) - SPAC Listing to Realize Value

Meta Platforms (Facebook) / Equity Bottom-Up

<p>Large cap growth stocks have done nothing for 9 months. We think they represent great entry points into 1Q21 earnings. We prefer Facebook and Amazon.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  </p></div>

Large cap growth stocks have done nothing for 9 months. We think they represent great entry points into 1Q21 earnings. We prefer Facebook and Amazon.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.  

Whatever Happened to FANG? Why Its Time to Reload on Large Cap Growth

<p>We’ve been bullish on Disney since early last year when its stock fell below $100 on pandemic concerns, as the market was underestimating the power of the DTC business. That underestimation no longer exists and Disney’s upside to its current valuation is becoming harder to justify as we near $200/share. Disney’s quarter was good enough to keep the bull case intact: booming DTC business and soon to fully re-open Parks business driving a rebound in earnings growth. When we invest on the long side, we want to be able to generate a &gt;30% one year return, so what do we have to believe on Disney from here for 2021?</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

We’ve been bullish on Disney since early last year when its stock fell below $100 on pandemic concerns, as the market was underestimating the power of the DTC business. That underestimation no longer exists and Disney’s upside to its current valuation is becoming harder to justify as we near $200/share. Disney’s quarter was good enough to keep the bull case intact: booming DTC business and soon to fully re-open Parks business driving a rebound in earnings growth. When we invest on the long side, we want to be able to generate a &gt;30% one year return, so what do we have to believe on Disney from here for 2021?Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Disney 1Q21: Is Streaming Enough to Support $200?

<p>Spotify printed a modest beat on 4Q and a particularly poor guidance for 2021 – even for a company that chronically underwhelms on guidance. What strikes us is this is one of the worst business models of a large cap TMT company we’ve ever seen. The future bliss of podcasting driven profitability is clearly just that…future bliss. Management has NEVER explained how podcasting will translate into a more profitable business other than through hazy comments about “holistic nature of churn reduction and new users”…it reminds us of Reed Hastings when he promised that one day Netflix would be FCF positive years ago…but at least Netflix had an operating model with inherent operating leverage and pricing power, neither of which is present with Spotify. We can justify downside to $125, but realistically think $200 is a reasonable price target.</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

Spotify printed a modest beat on 4Q and a particularly poor guidance for 2021 – even for a company that chronically underwhelms on guidance. What strikes us is this is one of the worst business models of a large cap TMT company we’ve ever seen. The future bliss of podcasting driven profitability is clearly just that…future bliss. Management has NEVER explained how podcasting will translate into a more profitable business other than through hazy comments about “holistic nature of churn reduction and new users”…it reminds us of Reed Hastings when he promised that one day Netflix would be FCF positive years ago…but at least Netflix had an operating model with inherent operating leverage and pricing power, neither of which is present with Spotify. We can justify downside to $125, but realistically think $200 is a reasonable price target.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

United States

Netflix Inc. is an Internet subscription service for watching tv shows and movies. Subscribers can instantly watch unlimited TV shows and movies streamed over the Internet to their TVs, computers and mobile devices and in the United States, subscribers can receive standard definition DVDs and Blu-ray Discs delivered to their homes.

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Netflix Inc (NFLX US)

Netflix 1Q21: We Ran Out of Content

Netflix just issued its weakest guidance in years. We think subscriber growth will reaccelerate in a few quarters, making Netflix a sneaky long by...

Aaron Gabin

MNC Vision Networks (IPTV IJ) - SPAC Listing to Realize Value

MNC Vision (IPTV IJ) will push forward with a SPAC listing for its IPTV and Broadband business under Asia Vision Networks. This should be a provide...

Angus Mackintosh

Whatever Happened to FANG? Why Its Time to Reload on Large Cap Growth

Macro tends to control the market in between earnings seasons, when fundamental performance matters less. As we approach 1Q21 earnings in a few...

Aaron Gabin

Disney 1Q21: Is Streaming Enough to Support $200?

We move to the sidelines on Disney after being long for the past year. We think the stock has fully valued a streaming business that has a little...

Aaron Gabin

Spotify 4Q20: Just Trust Us

Spotify printed an OK quarter paired with awful guidance for 2021, especially given that its excuses for missing guidance were they reasons they...

Aaron Gabin

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