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 may eventually breakeven on FCF at some point in the future. We have said for the past two quarters that Netflix is a good relative short given Deceleration in Subscriber Growth, Rising Churn, and Rising FCF burn. As we detail below, the stock tends to not work when subscriber growth decelerates. Admittedly, the rising FCF burn hasn’t played out….yet. Once production opens up post virus, we expect Netflix to resume its cash burning ways.</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 may eventually breakeven on FCF at some point in the future. We have said for the past two quarters that Netflix is a good relative short given Deceleration in Subscriber Growth, Rising Churn, and Rising FCF burn. As we detail below, the stock tends to not work when subscriber growth decelerates. Admittedly, the rising FCF burn hasn’t played out….yet. Once production opens up post virus, we expect Netflix to resume its cash burning ways.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.

Alpha-Centric ESG Research

Kyle Rudden

<p>After a year-long investigation, the U.S. Department of Justice (DOJ) <a href="https://www.justice.gov/opa/pr/justice-department-sues-monopolist-google-violating-antitrust-laws" target="_blank" rel="noopener">announced</a> that it filed a civil <a href="https://www.justice.gov/opa/press-release/file/1328941/download" target="_blank" rel="noopener">antitrust lawsuit</a> against Google; owned by, and nearly synonymous with, <a href="https://www.smartkarma.com/entities/alphabet-inc-cl-c" target="_blank" data-smartkarma-citation="entities:11369:1" rel="noopener">Alphabet (GOOG US)</a>.</p><p>Not exactly a surprise since Google and its FAANG brethren have been in the crosshairs for a while. Still, the formality hits hard. Like getting dumped; you know it's coming, but the words still sting.</p><p>DOJ's case is already quoted <em>ad nauseam</em> in the media, so I will regurgitate just a few small bits for context, then delve into my particular "angle" on this – i.e., how the U.S. Elections factor in.</p><p>In Facebook parlance, "<em>It's Complicated</em>," but here is the gist:</p><ul>
<li>Antitrust cases of this magnitude and complexity can be drawn out over many, many years.</li>
<li>Long-term, big-picture? Bad. Even just the overhang. Bad for Google, foreboding for others.</li>
<li>If you zoom in to a smaller near-term window, however… it's still bad. But maybe, a bit less.</li>
<li>The 2020 U.S. Elections could change the antitrust mood and direction, even if Trump wins.</li>
<li>Google will still have issues (there is bi-partisan thirst for its blood, just on different terms).</li>
<li>Still, post-elections, this likely goes from "bad and chaotic" to "bad, but somewhat orderly."</li>
</ul><p><em>This is a quick take on what is still today's news, but the overall thought process is similar to <a href="https://www.smartkarma.com/insights/delisting-deceitful-chinese-companies-act-not-a-slam-dunk-and-has-more-bark-than-bite-if-it-passes" target="_blank" data-smartkarma-citation="insights:40025" rel="noopener">"Delisting Deceitful Chinese Companies Act" Not a Slam Dunk and Has More Bark Than Bite if It Passes</a>.</em></p>

After a year-long investigation, the U.S. Department of Justice (DOJ) announced that it filed a civil antitrust lawsuit against Google; owned by, and nearly synonymous with, Alphabet (GOOG US).Not exactly a surprise since Google and its FAANG brethren have been in the crosshairs for a while. Still, the formality hits hard. Like getting dumped; you know it's coming, but the words still sting.DOJ's case is already quoted ad nauseam in the media, so I will regurgitate just a few small bits for context, then delve into my particular "angle" on this – i.e., how the U.S. Elections factor in.In Facebook parlance, "It's Complicated," but here is the gist:
Antitrust cases of this magnitude and complexity can be drawn out over many, many years.
Long-term, big-picture? Bad. Even just the overhang. Bad for Google, foreboding for others.
If you zoom in to a smaller near-term window, however… it's still bad. But maybe, a bit less.
The 2020 U.S. Elections could change the antitrust mood and direction, even if Trump wins.
Google will still have issues (there is bi-partisan thirst for its blood, just on different terms).
Still, post-elections, this likely goes from "bad and chaotic" to "bad, but somewhat orderly."
This is a quick take on what is still today's news, but the overall thought process is similar to "Delisting Deceitful Chinese Companies Act" Not a Slam Dunk and Has More Bark Than Bite if It Passes.

Google Antitrust Lawsuit: The 2020 Election Angle

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

<p>Our objective with this weekly is to highlight notable developments in the India internet and consumer sector focusing on public and private companies. The sub-sectors covered include payment providers, e-commerce retailers,  social media platforms and consumer companies.</p>
<ul>
<li>PUBG Corporation struggles to make a come back in India. After breaking ties with <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> as their distribution partner in India - the company now looks at <a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> to be their godfather.</li>
<li>
<a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> pumps in another 7 billion INR into its payments platform Amazon Pay to give it the push it needs with the Indian festive season around the corner.</li>
<li>
<a href="https://www.smartkarma.com/entities/titan-co-ltd" target="_blank" data-smartkarma-citation="entities:12630:1" rel="noopener">Titan Co Ltd (TTAN IN)</a> shines on in its journey back to normalcy with a great performance this quarter.</li>
</ul>

Our objective with this weekly is to highlight notable developments in the India internet and consumer sector focusing on public and private companies. The sub-sectors covered include payment providers, e-commerce retailers,  social media platforms and consumer companies.

PUBG Corporation struggles to make a come back in India. After breaking ties with Tencent Holdings (700 HK) as their distribution partner in India - the company now looks at Bharti Airtel (BHARTI IN) to be their godfather.

Amazon.com Inc (AMZN US) pumps in another 7 billion INR into its payments platform Amazon Pay to give it the push it needs with the Indian festive season around the corner.

Titan Co Ltd (TTAN IN) shines on in its journey back to normalcy with a great performance this quarter.


India Internet & Consumer Weekly | Airtel, Amazon & Titan

European Event-Driven Analyst

Patryk Basiewicz

PGB Research

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/grupa-allegro-sp" target="_blank" data-smartkarma-citation="entities:29685:1" rel="noopener">Allegro (0919412D PW)</a> (Allegro) is listing on the Warsaw Stock Exchange with trading confirmed to begin on October 12. The offer price is PLN43 per share. At listing, Allegro's free-float will be PLN9.1 or EUR2.05bn, which is sizable.</p>
<p>Below I show three scenarios for long-term value for Allegro with respect to Amazon's entry, with a DCF valuation. I also include what would Allegro's "Market Prices" be if (1) the actual price is 25% below the fundamental value and (2) if the actual price is 15% below the fundamental value.</p>
<p>I see the table of valuation below a grid with which to guide, from a long-only perspective, for entry into the stock or for selling your allocation. </p>

Allegro (0919412D PW) (Allegro) is listing on the Warsaw Stock Exchange with trading confirmed to begin on October 12. The offer price is PLN43 per share. At listing, Allegro's free-float will be PLN9.1 or EUR2.05bn, which is sizable.
Below I show three scenarios for long-term value for Allegro with respect to Amazon's entry, with a DCF valuation. I also include what would Allegro's "Market Prices" be if (1) the actual price is 25% below the fundamental value and (2) if the actual price is 15% below the fundamental value.
I see the table of valuation below a grid with which to guide, from a long-only perspective, for entry into the stock or for selling your allocation. 

Allegro.eu IPO: Assessing Durability of Polish Listing and Largest Listed Co.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<div>
<p>With the long drawn out merger of CCT+CMT finally approved with minimal resistance, with the little there was coming mostly from CCT holders, the combined entity will add to the bunch of listed REITs which offer a mix of office and retail exposure. </p>
</div>
<p>For investors interested in obtaining Singapore (SG) office or suburban retail exposure, the pure play options are now fairly limited.</p>
<p></p>
<div>
<p><strong>Links to my previous REITs insights:</strong></p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-what-s-been-cooking-this-year" target="_blank" rel="noopener">Singapore REITs - What’s Been Cooking This Year,</a> I spoke about how the REITs have performed this year and touched upon some of the factors that have been driving them. </li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-sgreits-retail-reits-share-price-has-been-more-resilient-than-it-should-be" target="_blank" rel="noopener">Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be,</a> covers the factors that have been impacting retail REITs. </li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-office-reits-this-time-it-s-different" target="_blank" rel="noopener">Trade Ideas SG Office REITs - This Time It’s Different</a> covers how the office REITs might fare better.</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-industrial-reits-bigger-names-have-been-holding-up-a-little-too-well" target="_blank" rel="noopener">Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well </a> looks at the industrial REITs</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-get-out-of-jail-free-card-for-the-tenants" target="_blank" rel="noopener">Singapore REITs - Get Out of Jail Free Card, for the Tenants</a> I spoke about how the recent changes announced by the government would benefit the smaller tenants more than the landlords.</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-eu-us-focus-reits-the-orphaned-lot-is-starting-to-look-interesting" target="_blank" rel="noopener">Trade Ideas SG EU/​US Focus REITs - The Orphaned Lot Is Starting to Look Interesting</a> looks at the EU/US focussed REITs trading wider than their SG and US listed peers</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-sgreits-update-on-office-vs-retail-trade-up-8-so-far" target="_blank" rel="noopener">Trade Ideas for SGREITs - Update on Office Vs Retail Trade, up 8% so Far</a> I spoke about the recent updates impacting the REITs and implications of Suntec Results</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-sgreits-more-updates-on-office-vs-retail-trade-from-kreit-and-mct-results" target="_blank" rel="noopener">Trade Ideas for SGREITs - More Updates on Office Vs Retail Trade from KREIT and MCT Results</a> I spoke about KREIT and MCT results</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sgreits-office-vs-retail-vs-industrial-up-16-so-far" target="_blank" rel="noopener">Trade Ideas SGREITs - Office Vs Retail Vs Industrial, up 16% so Far</a> I spoke about sticking to the trade till CMT results and post that switching to office versus industrial</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-update-even-as-circuit-breaker-ends-2q-dpu-for-retail-reits-will-be-close-to-0" target="_blank" rel="noopener">Singapore REITs Update - Even as Circuit Breaker Ends, 2Q DPU for Retail REITs Will Be Close to 0</a> I covered the impact of the governments plans for circuit breaker exit</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-singapore-reits-coming-back-to-life" target="_blank" rel="noopener">Trade Ideas for Singapore REITs - Coming Back to Life</a> I covered the updates over the Jan-Mar 2020 earnings season</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-reits-will-have-to-fund-some-sme-rents-by-law" target="_blank" rel="noopener">Singapore REITs - REITs Will Have to Fund Some SME Rents, by Law</a>, I spoke out the updates from the Fortitude budget</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-new-rental-relief-framework-for-smes" target="_blank" rel="noopener">Singapore REITs - New Rental Relief Framework for SMEs</a>, I spoke about the impact of the rental relief for SMEs</li>
</ul>
</div>


With the long drawn out merger of CCT+CMT finally approved with minimal resistance, with the little there was coming mostly from CCT holders, the combined entity will add to the bunch of listed REITs which offer a mix of office and retail exposure. 

For investors interested in obtaining Singapore (SG) office or suburban retail exposure, the pure play options are now fairly limited.


Links to my previous REITs insights:




Singapore REITs - What’s Been Cooking This Year, I spoke about how the REITs have performed this year and touched upon some of the factors that have been driving them. 

Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be, covers the factors that have been impacting retail REITs. 

Trade Ideas SG Office REITs - This Time It’s Different covers how the office REITs might fare better.

Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well  looks at the industrial REITs

Singapore REITs - Get Out of Jail Free Card, for the Tenants I spoke about how the recent changes announced by the government would benefit the smaller tenants more than the landlords.

Trade Ideas SG EU/​US Focus REITs - The Orphaned Lot Is Starting to Look Interesting looks at the EU/US focussed REITs trading wider than their SG and US listed peers

Trade Ideas for SGREITs - Update on Office Vs Retail Trade, up 8% so Far I spoke about the recent updates impacting the REITs and implications of Suntec Results

Trade Ideas for SGREITs - More Updates on Office Vs Retail Trade from KREIT and MCT Results I spoke about KREIT and MCT results

Trade Ideas SGREITs - Office Vs Retail Vs Industrial, up 16% so Far I spoke about sticking to the trade till CMT results and post that switching to office versus industrial

Singapore REITs Update - Even as Circuit Breaker Ends, 2Q DPU for Retail REITs Will Be Close to 0 I covered the impact of the governments plans for circuit breaker exit

Trade Ideas for Singapore REITs - Coming Back to Life I covered the updates over the Jan-Mar 2020 earnings season

Singapore REITs - REITs Will Have to Fund Some SME Rents, by Law, I spoke out the updates from the Fortitude budget

Singapore REITs - New Rental Relief Framework for SMEs, I spoke about the impact of the rental relief for SMEs



Trade Ideas for Singapore REITs - Implications from CCT+CMT Merger

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Amazon.com Inc (AMZN US)

Netflix 3Q20: Still Chill?

We reiterate our view that Netflix will have a hard time making subscriber #s for the next few quarters due to the massive pull-in from 1H20. When...

Aaron Gabin

Google Antitrust Lawsuit: The 2020 Election Angle

What, precisely, the U.S. DOJ antitrust case will mean for Google, only time will tell. One thing is certain, however. Politics – particularly the ...

Kyle Rudden

India Internet & Consumer Weekly | Airtel, Amazon & Titan

This week we cover Airtel's attempt to reinforce its E-sports strategy with talks bring PUBG back, Amazon Pay gearing up for the festive season,...

Pranav Bhavsar

Allegro.eu IPO: Assessing Durability of Polish Listing and Largest Listed Co.

Allegro is listing on the Warsaw Stock Exchange with trading confirmed to begin on October 12. The offer price is PLN43 per share. At listing,...

Patryk Basiewicz

Trade Ideas for Singapore REITs - Implications from CCT+CMT Merger

In my earlier insight on Singapore's Fortitude budget, Singapore REITs - REITs Will Have to Fund Some SME Rents, by Law, I had mentioned the...

Sumeet Singh

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