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

Intel has more product delays, Coursera's chief competitor is acquired. IBM's email doesn't work and Redhat chief departs. Amazon tries to form a rebel alliance.<div class="content-highlight">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.  </div>

Intel has more product delays, Coursera's chief competitor is acquired. IBM's email doesn't work and Redhat chief departs. Amazon tries to form a rebel alliance.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.  

TMT Weekly: 4 Things That Stood Out the Week of 7/2/​2021

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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The takeovers of Aussie tech companies continue. 
On the 7 June, <a href="https://www.smartkarma.com/entities/altium-ltd" target="_blank" data-smartkarma-citation="entities:18626:1" rel="noopener">Altium Ltd (ALU AU)</a>, a global software company, <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02382370-2A1302312?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">confirmed and subsequently rejected</a> a non-binding proposal from <a href="https://www.smartkarma.com/entities/autodesk-inc" target="_blank" data-smartkarma-citation="entities:13211:1" rel="noopener">Autodesk Inc (ADSK US)</a> - discussed in <a href="https://skr.ma/we6mt" target="_blank" rel="noopener">Altium Ltd (ALU) Rebuffs Autodesk Offer</a>. This was followed on the same day by  <a href="https://www.smartkarma.com/entities/hansen-technologies-ltd" target="_blank" data-smartkarma-citation="entities:12633:1" rel="noopener">Hansen Technologies (HSN AU)</a>, a provider of software and services globally, <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02382235-3A568452?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announcing</a> Australian PE outfit BGH Capital had made a non-binding conditional proposal - see <a href="https://skr.ma/pAK5Y" target="_blank" rel="noopener">Hansen Technologies (HSN AU)'s Assured Deal With BGH</a>.
Now <a href="https://www.smartkarma.com/entities/rhipe-ltd" target="_blank" data-smartkarma-citation="entities:19128:1" rel="noopener">rhipe Ltd (RHP AU)</a>, a provider of cloud-based subscription software-as-a-service licenses,  has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02390415-3A569823?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> a non-binding indicative proposal from Norway's Crayon Group Holdings. 
The proposal is conditional on rhipe having a net cash position of A$31mn at the close of the Offer.
A final binding Offer is conditional on due diligence, the unanimous recommendation from rhipe's board, and no MACs.
rhipe has provided Crayon with limited confirmatory due diligence on a  non-exclusive basis.
The Offer price appears opportunistic and is currently trading through terms. 
 More below the fold. 
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The takeovers of Aussie tech companies continue. 
On the 7 June, Altium Ltd (ALU AU), a global software company, confirmed and subsequently rejected a non-binding proposal from Autodesk Inc (ADSK US) - discussed in Altium Ltd (ALU) Rebuffs Autodesk Offer. This was followed on the same day by  Hansen Technologies (HSN AU), a provider of software and services globally, announcing Australian PE outfit BGH Capital had made a non-binding conditional proposal - see Hansen Technologies (HSN AU)'s Assured Deal With BGH.
Now rhipe Ltd (RHP AU), a provider of cloud-based subscription software-as-a-service licenses,  has announced a non-binding indicative proposal from Norway's Crayon Group Holdings. 
The proposal is conditional on rhipe having a net cash position of A$31mn at the close of the Offer.
A final binding Offer is conditional on due diligence, the unanimous recommendation from rhipe's board, and no MACs.
rhipe has provided Crayon with limited confirmatory due diligence on a  non-exclusive basis.
The Offer price appears opportunistic and is currently trading through terms. 
 More below the fold. 





Rhipe (RHP AU): Crayon Sees Silver in Them Thar Clouds

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

Private Capital Markets

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According to market sources, Bukalapak plans to raise around US$800m in an IPO in Jakarta on the IDX potentially by the end of July, making it the first Indonesian unicorn to list on the local bourse. This would potentially be followed by a SPAC merger in the US, which would value the company at US$4bn-5bn versus the last valuation range of US$2.5-3.0bn. 
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Based on the available financial information and recent indications of growth prospects and the path to profitability, we see the suggested valuations as achievable and find Bukalapak an attractive prospect.  
Bukalapak started as a C2C business and one of Indonesia's earliest e-commerce pioneers,  focusing on consumers and sellers outside the major cities in Indonesia, with a focus on specialty goods at low prices. 
In 2017, the company started Mitra Bukalapak, which focused on digitalizing the sourcing of products for offline warungs and small kiosks, increasing the range of products and reducing their sourcing costs plus improving margins.
Bukalapak now has more than 7m kiosks and 6m merchants on the platform, which provides a self-sustaining ecosystem, which does not demand high levels of promotional activity. 
Bukalapak saw +70% growth in its GMV last year and +130% growth in transactions, with around 34m MAUs and it should achieve +50% growth this year on the current run-rate according to management.
We look at the implied valuations given limited financial information. The company is further along the road to profitability than its e-commerce peers, given its differentiated strategy.
The platform has already attracted some high profile investors including <a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-smartkarma-citation="entities:15273:1" rel="noopener">Microsoft Corp (MSFT US)</a> 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>, both of which see opportunities to collaborate with Bukalapak.
<div class="content-highlight">
One obvious beneficiary of this IPO will be <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a>, which owns over 30% of Bukalapak, in that the investment should realise a higher valuation through its listing. There is also a potential that <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP)</a> may look to collaborate with Bukalapak in some way, given it has taken a 4% stake in <a href="https://www.smartkarma.com/entities/elang-mahkota-teknologi-tbk" target="_blank" data-smartkarma-citation="entities:7752:1" rel="noopener">Emtek (EMTK IJ)</a>.
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According to market sources, Bukalapak plans to raise around US$800m in an IPO in Jakarta on the IDX potentially by the end of July, making it the first Indonesian unicorn to list on the local bourse. This would potentially be followed by a SPAC merger in the US, which would value the company at US$4bn-5bn versus the last valuation range of US$2.5-3.0bn. 

Based on the available financial information and recent indications of growth prospects and the path to profitability, we see the suggested valuations as achievable and find Bukalapak an attractive prospect.  
Bukalapak started as a C2C business and one of Indonesia's earliest e-commerce pioneers,  focusing on consumers and sellers outside the major cities in Indonesia, with a focus on specialty goods at low prices. 
In 2017, the company started Mitra Bukalapak, which focused on digitalizing the sourcing of products for offline warungs and small kiosks, increasing the range of products and reducing their sourcing costs plus improving margins.
Bukalapak now has more than 7m kiosks and 6m merchants on the platform, which provides a self-sustaining ecosystem, which does not demand high levels of promotional activity. 
Bukalapak saw +70% growth in its GMV last year and +130% growth in transactions, with around 34m MAUs and it should achieve +50% growth this year on the current run-rate according to management.
We look at the implied valuations given limited financial information. The company is further along the road to profitability than its e-commerce peers, given its differentiated strategy.
The platform has already attracted some high profile investors including Microsoft Corp (MSFT US) and Standard Chartered (STAN LN), both of which see opportunities to collaborate with Bukalapak.

One obvious beneficiary of this IPO will be Emtek (EMTK IJ), which owns over 30% of Bukalapak, in that the investment should realise a higher valuation through its listing. There is also a potential that Grab (0967655D SP) may look to collaborate with Bukalapak in some way, given it has taken a 4% stake in Emtek (EMTK IJ).

   

Bukalapak - Leading the Unicorn Charge - Buy Emtek

Covering IPOs, Healthcare and Technology Stocks

Andrei Zakharov

Algosun Global

<a href="https://www.smartkarma.com/entities/sumo-logic-inc" target="_blank" data-smartkarma-citation="entities:29265:1" rel="noopener">Sumo Logic Inc (SUMO US)</a> , the pioneer in new category of software Continuous Intelligence, has announced strong 1Q FY22 financial results and the business continued to recover from COVID-19 pandemic. Sumo Logic shares are still down ~26% YTD while Nasdaq Composite index hit fresh all-time highs. Company made two key strategic acquisitions after IPO: Italian corporation and leader in SOAR capabilities DFLabs and leading VC-backed player in open-source monitoring Sensu, Inc. We see modest revenue growth of ~16% in FY22/FY21 and model revenue of $284M in FY23, translating to YoY revenue growth of 21%.

Sumo Logic Inc (SUMO US) , the pioneer in new category of software Continuous Intelligence, has announced strong 1Q FY22 financial results and the business continued to recover from COVID-19 pandemic. Sumo Logic shares are still down ~26% YTD while Nasdaq Composite index hit fresh all-time highs. Company made two key strategic acquisitions after IPO: Italian corporation and leader in SOAR capabilities DFLabs and leading VC-backed player in open-source monitoring Sensu, Inc. We see modest revenue growth of ~16% in FY22/FY21 and model revenue of $284M in FY23, translating to YoY revenue growth of 21%.   

Sumo Logic: Getting Back On Track, Growth Ahead

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.

Equity Capital Markets

Manycore Tech Inc. (MTI), the world’s largest platform for 3D interior design, decoration and construction, aims to raise at least US$100m in its US IPO. The company is backed by IDG, GGV and Hillhouse.MTI is a pure play SaaS provider. As of Mar 21, it had 20,806 enterprise customers across different industry verticals. In addition, it also served over 240,000 and 89,000 paying individuals over FY20 and 1Q21. MTI had a 56.5% market share in the residential cloud-based DDC software market in China.

Manycore Tech Inc. (MTI), the world’s largest platform for 3D interior design, decoration and construction, aims to raise at least US$100m in its US IPO. The company is backed by IDG, GGV and Hillhouse.MTI is a pure play SaaS provider. As of Mar 21, it had 20,806 enterprise customers across different industry verticals. In addition, it also served over 240,000 and 89,000 paying individuals over FY20 and 1Q21. MTI had a 56.5% market share in the residential cloud-based DDC software market in China. 

Manycore Tech Pre-IPO - High but Declining Market Share

United States

Microsoft Corporation operates as a software company. The Company offers applications, extra cloud storage, and advanced security solutions. Microsoft serves customers worldwide.

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Microsoft Corp (MSFT US)

TMT Weekly: 4 Things That Stood Out the Week of 7/2/2021

Intel has more product delays, Coursera's chief competitor is acquired. IBM's email doesn't work and Redhat chief departs. Amazon tries to form a...

Aaron Gabin

Rhipe (RHP AU): Crayon Sees Silver in Them Thar Clouds

The granting of DD indicates Rhipe is open to a firm offer, yet the non-exclusive nature of that DD suggests other suitors are welcome. I'd be...

David Blennerhassett

Bukalapak - Leading the Unicorn Charge - Buy Emtek

Bukalapak has outlined plans to list in Jakarta, giving access to its leading position in enabling warungs in Indonesia. The immediate beneficiary...

Angus Mackintosh

Sumo Logic: Getting Back On Track, Growth Ahead

We reaffirm our 12-month price target of $30 on the shares of Sumo Logic and see further upside potential, driven by accelerated rate of new...

Andrei Zakharov

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TMT Weekly: 4 Things That Stood Out the Week of 7/2/​2021

Intel has more product delays, Coursera's chief competitor is acquired. IBM's email doesn't work and Redhat chief departs. Amazon tries to form a...

Aaron Gabin

Rhipe (RHP AU): Crayon Sees Silver in Them Thar Clouds

The granting of DD indicates Rhipe is open to a firm offer, yet the non-exclusive nature of that DD suggests other suitors are welcome. I'd be...

David Blennerhassett

Bukalapak - Leading the Unicorn Charge - Buy Emtek

Bukalapak has outlined plans to list in Jakarta, giving access to its leading position in enabling warungs in Indonesia. The immediate beneficiary...

Angus Mackintosh

Sumo Logic: Getting Back On Track, Growth Ahead

We reaffirm our 12-month price target of $30 on the shares of Sumo Logic and see further upside potential, driven by accelerated rate of new...

Andrei Zakharov

Manycore Tech Pre-IPO - High but Declining Market Share

Manycore Tech (MTI), the world’s largest platform for 3D interior design, decoration and construction, aims to raise at least US$100m in its US...

Sumeet Singh

TMT Weekly: 4 Things That Stood Out the Week of 7/2/2021