Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul>
<li>This is our first report on legacy workspace technology major, Xerox Holdings Corporation.</li>
<li>With increasing digitization in workplaces, the company is facing a challenging macro-economic landscape and has become a loss making company over the past few quarters.</li>
<li>Among major acquisitions, Xerox has recently acquired Go Inspire for growing the presence of digital services in the UK.</li>
</ul>


This is our first report on legacy workspace technology major, Xerox Holdings Corporation.
With increasing digitization in workplaces, the company is facing a challenging macro-economic landscape and has become a loss making company over the past few quarters.
Among major acquisitions, Xerox has recently acquired Go Inspire for growing the presence of digital services in the UK.


Xerox Holdings Corporation: Initiation of Coverage – New Products Launches

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

On Friday post market close, S&amp;P Dow Jones announced the results of the March review for the <a href="https://www.smartkarma.com/entities/s-p-500" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 (SPX INDEX)</a> that will be effective after the close of trading on 19 March.There are 4 additions - <a href="https://www.smartkarma.com/entities/nxp-semiconductors-nv" target="_blank" data-smartkarma-citation="entities:9801:1" rel="noopener">Nxp Semiconductors Nv (NXPI US)</a>, <a href="https://www.smartkarma.com/entities/penn-national-gaming-inc" target="_blank" data-smartkarma-citation="entities:5588:1" rel="noopener">Penn National Gaming (PENN US)</a>, <a href="https://www.smartkarma.com/entities/generac-holdings-inc" target="_blank" data-smartkarma-citation="entities:16223:1" rel="noopener">Generac Holdings (GNRC US)</a> and <a href="https://www.smartkarma.com/entities/caesars-entertainment-corp" target="_blank" data-smartkarma-citation="entities:15532:1" rel="noopener">Caesars Entertainment (CZR US)</a>. To balance that out, there are 4 deletions - <a href="https://www.smartkarma.com/entities/flowserve-corp" target="_blank" data-smartkarma-citation="entities:20555:1" rel="noopener">Flowserve Corp (FLS US)</a>, <a href="https://www.smartkarma.com/entities/sl-green-realty-corp" target="_blank" data-smartkarma-citation="entities:1548:1" rel="noopener">Sl Green Realty (SLG US)</a>, <a href="https://www.smartkarma.com/entities/xerox-holdings-corp" target="_blank" data-smartkarma-citation="entities:17585:1" rel="noopener">Xerox Corp (XRX US)</a> and <a href="https://www.smartkarma.com/entities/vontier-corp" target="_blank" data-smartkarma-citation="entities:28857:1" rel="noopener">Vontier Corp (VNT US)</a>.We estimate one-way turnover will be around US$22.4bn and the funding trade will see selling on a lot of the current index constituents.The biggest impact of the changes will be on <a href="https://www.smartkarma.com/entities/nxp-semiconductors-nv" target="_blank" data-smartkarma-citation="entities:9801:1" rel="noopener">Nxp Semiconductors Nv (NXPI US)</a> where we estimate passive funds will need to buy around 11 days of ADV on the stock. The impact on the other stocks is much lower due to the move between the <a href="https://www.smartkarma.com/entities/s-p-500" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 (SPX INDEX)</a> and the S&amp;P Mid Cap 400 indices.

On Friday post market close, S&amp;P Dow Jones announced the results of the March review for the S&amp;P 500 (SPX INDEX) that will be effective after the close of trading on 19 March.There are 4 additions - Nxp Semiconductors Nv (NXPI US), Penn National Gaming (PENN US), Generac Holdings (GNRC US) and Caesars Entertainment (CZR US). To balance that out, there are 4 deletions - Flowserve Corp (FLS US), Sl Green Realty (SLG US), Xerox Corp (XRX US) and Vontier Corp (VNT US).We estimate one-way turnover will be around US$22.4bn and the funding trade will see selling on a lot of the current index constituents.The biggest impact of the changes will be on Nxp Semiconductors Nv (NXPI US) where we estimate passive funds will need to buy around 11 days of ADV on the stock. The impact on the other stocks is much lower due to the move between the S&amp;P 500 (SPX INDEX) and the S&amp;P Mid Cap 400 indices.

S&P500 Index Rebalance: NXPI Is the One to Watch

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

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.

<ul><li>Xerox announced on Tuesday (31st March) that it is withdrawing its tender offer to acquire HP and will no longer seek to nominate its candidates for HP’s board of directors.</li></ul><blockquote>
“The current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP Inc. (NYSE: HPQ) (“HP”). Accordingly, we are withdrawing our tender offer to acquire HP and will no longer seek to nominate our slate of highly qualified candidates to HP’s Board of Directors”
- Xerox
</blockquote><ul>
<li>The company has mentioned that it is prioritising the health, safety and well-being of its employees, customers, partners and stakeholders and its broader response to the pandemic over and above all other considerations.</li>
<li>As we highlighted in our previous insights on Xerox-HP deal, the deal was too big for Xerox who has a market cap of around US$4bn while HP has a market cap of around US$24bn. Though Xerox reiterated that it has obtained the financing required to fund the deal, we believe the ongoing Covid-19 pandemic and the resulting economic uncertainty would have made it difficult for Xerox to obtain the necessary funds.</li>
</ul>

Xerox announced on Tuesday (31st March) that it is withdrawing its tender offer to acquire HP and will no longer seek to nominate its candidates for HP’s board of directors.
“The current global health crisis and resulting macroeconomic and market turmoil caused by COVID-19 have created an environment that is not conducive to Xerox continuing to pursue an acquisition of HP Inc. (NYSE: HPQ) (“HP”). Accordingly, we are withdrawing our tender offer to acquire HP and will no longer seek to nominate our slate of highly qualified candidates to HP’s Board of Directors”
- Xerox

The company has mentioned that it is prioritising the health, safety and well-being of its employees, customers, partners and stakeholders and its broader response to the pandemic over and above all other considerations.
As we highlighted in our previous insights on Xerox-HP deal, the deal was too big for Xerox who has a market cap of around US$4bn while HP has a market cap of around US$24bn. Though Xerox reiterated that it has obtained the financing required to fund the deal, we believe the ongoing Covid-19 pandemic and the resulting economic uncertainty would have made it difficult for Xerox to obtain the necessary funds.


Xerox Calls Off Its Bid for HP Amid COVID-19 Pandemic; A 5-Months Long Battle Comes to an End

<ul>
<li>In a turn of events surrounding the HP-Xerox merger deal, HP announced on Thursday (20th February) that its board of directors have adopted a shareholder rights plan (poison pill) and declared a dividend distribution of one preferred share purchase right on each outstanding share of HP common stock.</li>
<li>A poison pill is a type of defense used by a target company to prevent a hostile takeover by an acquirer.</li>
<li>The announcement to adopt the shareholder rights plan follows Xerox’s announcement of its intent to commence a tender offer to acquire all of the outstanding shares of HP common stock.</li>
<li>The shareholder rights plan includes a number of measures which could help fend off a takeover bid and is only exercisable if a person or group acquires more than 20% or more of HP’s common stock, subject to certain exceptions.</li>
<li>The plan has a limited duration and will expire in one year on 20th February 2021.</li>
</ul>


In a turn of events surrounding the HP-Xerox merger deal, HP announced on Thursday (20th February) that its board of directors have adopted a shareholder rights plan (poison pill) and declared a dividend distribution of one preferred share purchase right on each outstanding share of HP common stock.
A poison pill is a type of defense used by a target company to prevent a hostile takeover by an acquirer.
The announcement to adopt the shareholder rights plan follows Xerox’s announcement of its intent to commence a tender offer to acquire all of the outstanding shares of HP common stock.
The shareholder rights plan includes a number of measures which could help fend off a takeover bid and is only exercisable if a person or group acquires more than 20% or more of HP’s common stock, subject to certain exceptions.
The plan has a limited duration and will expire in one year on 20th February 2021.


HP Adopts Poison Pill to Battle Xerox Bid; Delay the Inevitable by Aiming to Secure Better Valuation

<ul>
<li>It was reported by Nikkei and several other news media outlets that Fujifilm will be terminating the brand licensing and sales cooperation partnership with Xerox at the end of March 2021.</li>
<li>As a result of the withdrawal from Fuji Xerox partnership, Fujifilm will not be able to sell Xerox branded products in the Asia Pacific region. At the same time, Fujifilm will not have to pay about JPY10bn in license fees it pays annually to Xerox.</li>
<li>Fujifilm later announced that its board of directors have resolved to change the trade name of its subsidiary, Fuji Xerox to FUJIFILM Business Innovation Corp. after the Technology Agreement between Xerox and Fuji expires on March 31, 2021.</li>
<li>As per Fujifilm’s announcement, the company aims to expand into a wide range of business areas going forward such as cloud, AI, artificial intelligence and IoT.</li>
<li>At the same time, the company will work swiftly to strengthen its document and adjacent businesses. The company will continue to engage in the sale of Xerox’s photocopiers and other products even after the expiry of the current agreement.</li>
<li>Fujifilm could enter the US and the European markets with its own brand, while Xerox can engage in selling its own products directly in Asia Pacific thereby the two companies will compete with each other for market share.</li>
</ul>


It was reported by Nikkei and several other news media outlets that Fujifilm will be terminating the brand licensing and sales cooperation partnership with Xerox at the end of March 2021.
As a result of the withdrawal from Fuji Xerox partnership, Fujifilm will not be able to sell Xerox branded products in the Asia Pacific region. At the same time, Fujifilm will not have to pay about JPY10bn in license fees it pays annually to Xerox.
Fujifilm later announced that its board of directors have resolved to change the trade name of its subsidiary, Fuji Xerox to FUJIFILM Business Innovation Corp. after the Technology Agreement between Xerox and Fuji expires on March 31, 2021.
As per Fujifilm’s announcement, the company aims to expand into a wide range of business areas going forward such as cloud, AI, artificial intelligence and IoT.
At the same time, the company will work swiftly to strengthen its document and adjacent businesses. The company will continue to engage in the sale of Xerox’s photocopiers and other products even after the expiry of the current agreement.
Fujifilm could enter the US and the European markets with its own brand, while Xerox can engage in selling its own products directly in Asia Pacific thereby the two companies will compete with each other for market share.


Fujifilm to End Sales Partnership with Xerox in 2021

United States

Avid Technology, Inc. develops, markets, sells, and supports a variety of software and systems for creating and manipulating digital media content. The Company develops and sells digital editing systems and newsroom computer systems, as well as digital audio systems.  Avid's products are used worldwide in production and post-production film, video, and television facilities.

NCR Corporation manufactures financial transaction machines and other products. The Company produces automated teller machines (ATM), self-checkout and self-service kiosks, point-of-sale workstations and scanners; manufactures printer consumable products; and manages networks and servers for ATMs and kiosks.

Stratasys Ltd. manufactures three-dimensional printers.  The printers build three-dimensional models by depositing multiple layers of resin one on top of another based on data from three-dimensional computer aided design files.  The Company's products are used by designers, engineers and manufacturers to visualize, verify and communicate product designs.

3D Systems Corporation provides comprehensive 3D products and services. The Company develops, manufactures, and markets 3D printers, print materials, software, haptic devices, scanners, and virtual surgical simulators. 3D Systems operates worldwide.

Eastman Kodak Company develops, manufactures, and markets imaging products for businesses.  The Company provides disruptive technologies and imaging solutions in the product goods packaging, functional and digital printing markets.  Eastman Kodak also offers products and services in Entertainment Imaging and Commercial Films.

Immersion Corporation develops and licenses hardware and software technologies that enable users to interact with computers using their sense of touch.  The Company's patented TouchSense technologies enable computer peripheral devices to deliver tactile sensations that correspond to on-screen events.

CPI Card Group Inc. provides financial payment card solutions and related services. The Company engages in the design, production, data personalization, packaging, and fulfillment of retail gift and loyalty cards. CPI Card Group serves customers worldwide.

CTS Corporation designs and manufactures electronic components and sensors to original equipment manufacturers in the automotive, communications, medical, defense and aerospace, industrial and computer markets.

PC Connection, Inc. is a direct marketer of personal computers and related peripherals, software, accessories, and networking products. The Company sells to small and medium-sized businesses. PC Connection carries high turnover products in inventory, and in addition provides customer service and technical support.

Benchmark Electronics, Inc. provides contract electronics manufacturing and design services.  The Company serves original equipment manufacturers of medical devices, industrial control equipment, testing and instrumentation products, and telecommunications equipment.  Benchmark also offers product design, printed circuit board layout, prototyping and test development services.

Legend Holdings Corporation, through its subsidiaries, operates in information technology, real estate, financial services, agriculture and food, modern service, and chemical and energy materials sectors in China and internationally.

Hiyes International Co., Ltd. manufactures and markets image scanners, scanner peripheral products, speakers, personal computers, main boards, workstations, and notebook computers.

Ennoconn Corporation is involved in the design and development of industrial mother boards primarily in Taiwan.  The Company provides hardware system solutions to various market applications, including point-of-sales (POS), banking automation, kiosk, lottery, and industrial automation.

Founder Technology Group Corp. manufactures and markets computer products and office appliances.  The Company's products include personal computers, servers, notebooks, printers, digital cameras, MP3 products, blueprint machines, blue printing paper, and shredding machines.  Founder Technology also develops computer software and produces multi-layer printed circuit boards (PCBs).

HTC Corporation designs, manufactures, assembles, processes, and sells smart mobile devices; and provides after-sales services worldwide.

Primax Electronics Ltd mainly manufactures consumer and business electronics. Products include imaging products, computer peripherals, office equipment and communication devices.

Konica Minolta Inc is mainly engaged in manufacturing office equipment and performance materials. It also operates health care businesses. The Company also makes copiers, personal computer peripherals, optical lenses, and measuring instruments.

TOSHIBA TEC CORPORATION manufactures electronic equipment for distribution system, document processing, and household use.  The Company's products include Point of Sale (POS) systems, bar code scanners, copy machines, printers, and vacuum cleaners.

Transcend Information Inc. manufactures and markets dynamic random access memory (DRAM) modules and computer mother boards.  The Company exports most of its products worldwide.

Mitac Holdings Corporation distributes GPS and server products worldwide.  The Company has developed a comprehensive range of cloud services and cloud computing products with a focus on enterprise and terminal products, as well as smart handheld devices.

Xerox Holdings Corporation operates as a holding company. The Company, through its subsidiaries provides printers, scanners, supplies, and accessories. Xerox Holdings serves health care, insurance, government and retail sectors worldwide.

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Xerox Holdings (XRX US)

Xerox Holdings Corporation: Initiation of Coverage – New Products Launches

This is our first report on legacy workspace technology major, Xerox Holdings Corporation. With increasing digitization in workplaces, the company...

Baptista Research

S&P500 Index Rebalance: NXPI Is the One to Watch

There are 4 changes to the S&P500 with NXP Semiconductors the largest beneficiary of the changes. Estimated one-way turnover is US$22.4bn and there...

Brian Freitas

Xerox Calls Off Its Bid for HP Amid COVID-19 Pandemic; A 5-Months Long Battle Comes to an End

Xerox announced on Tuesday (31st March) that it is withdrawing its tender offer to acquire HP and will no longer seek to nominate its candidates...

Shifara Samsudeen, ACMA, CGMA

HP Adopts Poison Pill to Battle Xerox Bid; Delay the Inevitable by Aiming to Secure Better Valuation

In a turn of events surrounding the HP-Xerox merger deal, HP announced on Thursday (20th February) that its board of directors have adopted a...

Shifara Samsudeen, ACMA, CGMA

Fujifilm to End Sales Partnership with Xerox in 2021

It was reported by Nikkei and several other news media outlets that Fujifilm will be terminating the brand licensing and sales cooperation...

Shifara Samsudeen, ACMA, CGMA

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