Smartkarma Daily Briefs

Yesterday the Nikkei published an article featuring Bain MD Yuji Sugimoto who also featured heavily during their bid for Kioxia.
Sugimoto commented that in the event of a buyout there would be no break-up of Toshiba.
While plausibly a PR move directed at employees that stance raises the question of exactly how they would unlock value.

KKR’s Waste Measurement For Cleanaway?

By David Blennerhassett

The AFR is reporting that KKR is preparing an Offer for waste management outfit Cleanaway Waste Management (CWY AU). No price has been revealed.
This is a business KKR understands. It bought, and shortly thereafter sold, Cleanaway 15 years ago.
KKR also recently sought to acquire Waste Management New Zealand.

Nidec – Weakness Should Be Understood but Downside Risk at Earnings Remains

Consensus expectations for Nidec have drifted towards more reasonable levels in the last few months and a guidance miss is now baked in.
However, our data analysis suggests that while revenue may exceed consensus expectations OP could miss.
Guidance on the other hand could be strong, but with multiples elevated that does not mean there is upside risk here.

Westports Holdings (WPHB.KL) – 1 H22 Outlook Dragged By China Lockdowns

By Maybank Research

Cutting container throughput forecasts
Expecting a contraction in 1H22 container volume
Rising port call duration = lower port efficiencies
Maintain HOLD on balanced risk-reward

Before it’s here, it’s on Smartkarma

Apr 21

Japan: Toshiba Corp, Nidec Corp, Keyence Corp, Kura Sushi Inc and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Toshiba – Some Thoughts on the Bain Article
Nidec – Weakness Should Be Understood but Downside Risk at Earnings Remains
Keyence (6861 JP) | 3 Reasons to Ignore Inflation and Rising Rates
KRUS: Kura’s Roll Keeps Rolling

Toshiba – Some Thoughts on the Bain Article

Yesterday the Nikkei published an article featuring Bain MD Yuji Sugimoto who also featured heavily during their bid for Kioxia.
Sugimoto commented that in the event of a buyout there would be no break-up of Toshiba.
While plausibly a PR move directed at employees that stance raises the question of exactly how they would unlock value.

Nidec – Weakness Should Be Understood but Downside Risk at Earnings Remains

Consensus expectations for Nidec have drifted towards more reasonable levels in the last few months and a guidance miss is now baked in.
However, our data analysis suggests that while revenue may exceed consensus expectations OP could miss.
Guidance on the other hand could be strong, but with multiples elevated that does not mean there is upside risk here.

Keyence (6861 JP) | 3 Reasons to Ignore Inflation and Rising Rates

By Mark Chadwick

The stock has been hit by rising inflation and interest rates. Now is the time to buy
Keyence is well placed to weather the storm given it has pricing power, high margins, and low capital intensity
The P/B valuation of 6x is now back to a normalised range and the stock trades at a discount to global peers.

KRUS: Kura’s Roll Keeps Rolling

By Investment Talk

Kura Sushi is a dinky (~$540M market cap) sushi business that I have reported on for a little over one year.
The US subsidiary is das kind (German for ‘the child’ because, why not) of a well-capitalised parent with over 450 stores in Japan.
It’s a proof of concept venture in a new market, with a tried-and-tested business model, and a parent that provides ample liquidity to its fledging offspring.

Before it’s here, it’s on Smartkarma

Apr 21

United States: Tesla Motors, Netflix Inc, ApeCoin, Iridium Communications, Texas Pacific Land Trust and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Tesla Q1 Preview: 15% Beat at Best, But Margins & Guidance May Disappoint
Forget Elon’s Twitter Spatter. Tesla’s Got Trouble In China.
Netflix 1Q22: Willfull Ignorance
ApeCoin: Catalyst Coming for Most Important Token in the Metaverse
Tesla Q1 Results: Strong Beat But Cautious Outlook
IRDM: Expanding Use Cases
TPL: Not High Enough, Raising Estimates

Tesla Q1 Preview: 15% Beat at Best, But Margins & Guidance May Disappoint

By SC Capital

Tesla’s Q1 results on April 20th (after market) will likely beat Street estimates, but the overshoot may not be as important as profit margins, which should decline versus Q4 2021.
Q2 outlook is grim, given the lockdown of Tesla’s Shanghai factory. Even if output ramps up in May, exports–which are 40% of output–may not recover due to epic port congestion.
Tesla has 2 new factories ramping up as of this month. A slowdown at its most profitable plant amid start-up costs could raise the need for equity financing.

Forget Elon’s Twitter Spatter. Tesla’s Got Trouble In China.

By Vicki Bryan

Tesla is losing ground in China, which it needs to juice its margins, create *all* its profits & cash flow, & fund most of billions spent on capex.
Aging Model Y—its last and only thriving model—won’t save it.
Sales in China were weakening even before what now has become an extended disruption as China fights its worst Covid surge in two years.

Netflix 1Q22: Willfull Ignorance

By Aaron Gabin

Netflix management came off as unprepared for its current circumstances. Ramping competition and TAM saturation have been known for 2 years.
Competitive responses sounded half baked: increasing price to deter password sharing and launching advertising tiers…in 2 years?
The viability of the longterm growth algorithm and 10 year DCFs that Netflix investors have leaned on for years has been rightfully vaporized.

ApeCoin: Catalyst Coming for Most Important Token in the Metaverse

By Josh Du

ApeCoin (APE CURNCY) the $4.5bn market cap token is up over 30% this week while the market continues to trade sideways
The main upcoming catalyst is the Yugalabs metaverse land mint event that is expected to be on April 23rd, the 1 year anniversary of Yugalabs.
Yugalabs is the team behind Bored Ape Yacht Club, and is at the forefront of NFT development. So the market is eagerly awaiting the land mint

Tesla Q1 Results: Strong Beat But Cautious Outlook

By SC Capital

Tesla’s Q1 operating income beat consensus estimates by 38% (ours by 26%), while GAAP net income came in 42% above consensus (36% above ours).
The highly focused automotive gross margin (Ex-ZEV credits) came to 30% versus consensus estimates of 27.8% and ours of 27.5%. Costs were booked in R&D rather than COGS.
The results were solid, but the CFO cautioned on Q2 headwinds. Tesla was up by 5.6% in the after hours on these results, ignoring Tesla’s cautious Q2 outlook.

IRDM: Expanding Use Cases

By Hamed Khorsand

IRDM is benefiting from continued need for satellite connectivity for a growing list of applications. IRDM reported first quarter results where the Company’s billable subscribers rose sequentially
Commercial Internet of things (“IOT”) subscribers remains the growth catalyst for the business even though there are more voice and data customers activating service in the first quarter
IRDM’s IOT service has an expanding use case. During the first quarter earnings call the topic of drones and unmanned aircraft was frequently mentioned

TPL: Not High Enough, Raising Estimates

By Hamed Khorsand

TPL utilizing an unhedged strategy for its oil and gas royalties is set to announce first quarter results that should exceed expectations
Higher energy prices and more production should result in TPL reporting oil and gas royalties materially higher than the fourth quarter.
The increase in production benefits TPL’s water business. Oil producers need water during the fracking process. TPL’s water source is closer to producing oil wells

Before it’s here, it’s on Smartkarma

Apr 21

India: Rainbow Children’s Hospital, BYJU’S, Mindtree Ltd, ACC Ltd, Dalmia Bharat, Policybazaar, NHPC, Tata Power, Aurobindo Pharma and more

By Smartkarma Daily Briefs | Daily Briefs, India

In today’s briefing:

Rainbow Children’s Hospital Pre-IPO – Still Growing but Not All Regions Have Been Performing
India Channel Insight #32 | BYJU’S, Cars24, Udaan
Mindtree: Reassuring Performance, Valuations Full
Mindtree: 4Q in Line; Demand Visibility and Margin- Challenges in FY23
ACC Ltd: Cost Inflation Drags Margin; Upcoming Capacity to Drive Growth
Dalmia Bharat: Growth Insights Are in Place; Valuations Attractive
PB Fintech: Leading Insurance Intermediary; Growth Trajectory Should Stand Out
NHPC: Subansiri Project Progressing Well
Tata Power: RE Business Stake Divestment to Bring in Growth Capital
Aurobindo Pharma- Company Update- A strong rerating candidate

Rainbow Children’s Hospital Pre-IPO – Still Growing but Not All Regions Have Been Performing

Rainbow Children’s Hospital (RCH) aims to raise around US$250m via issuing a mix of primary and secondary shares in its India IPO.
RCH is a multi-specialty pediatric and obstetrics and gynecology hospital chain in India, operating 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds.
In this note, we will talk about the company’s past performance.

India Channel Insight #32 | BYJU’S, Cars24, Udaan

By Pranav Bhavsar

This channel insight focuses on private unicorns backed by Blackrock Inc (BLK US), Tencent (700 HK), Alibaba Group (9988 HK).
There are indications of organic growth slowing down. Cash burn is probably the only possible way to cross the high operating performance seen during COVID.
Investor pressure is mounting, leading to mass hiring or firing in the Industry.

Mindtree: Reassuring Performance, Valuations Full

By Motilal Oswal

MTCL reported a revenue of USD384m (+5.2% QoQ CC) in 4QFY22.
Reported revenue grew 4.8% (inline), driven by broad-based growth across verticals and regions.
Deal TCV rose 9% QoQ to USD390m in 4QFY22.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Mindtree: 4Q in Line; Demand Visibility and Margin- Challenges in FY23

By Nirmal Bang

Mindtree’s (MTCL) 4QFY22 revenue at US$383.8mn, grew by 5.2% QoQ in CC terms, marking 6th consecutive quarter of 5%+ growth, but was tad lower than our estimate of 6%.
EBIT margin of ~18.9% was in line, contracting by 30bps QoQ.
TCV of ~US$390mn (US$375mn in 4QFY21) reflects the need for pick-up in order inflow…(continued).

ACC Ltd: Cost Inflation Drags Margin; Upcoming Capacity to Drive Growth

By Axis Direct

ACC reported revenue growth of 3% YoY and Volume/EBITDA/APAT de-growth of 3%/26%/30% respectively YoY, attributable to lower volume growth and higher cost during the quarter.
The company recorded an EBITDA Margin of 14.3% against 20% YoY, which was below our expectation of 17.6%, primarily owing to the elevated input costs
We value ACC at 10x its CY23E EV/EBITDA to arrive at a TP of Rs 2,300/share, implying an upside of 12% from the CMP

Dalmia Bharat: Growth Insights Are in Place; Valuations Attractive

By Motilal Oswal

DALBHARA is a dominant player in East India with a clinker/grinding capacity share of 18%/17%.
The company will be a beneficiary of: 1) improved consolidation in the region, which should aid an improvement in Cement prices and 2) recent increase in Cement prices in East India.
The management has set yet another aggressive capacity addition target to emerge a pan-India player and achieve a grinding capacity of 110-130mtpa by CY31 (at a 14-15% CAGR)

PB Fintech: Leading Insurance Intermediary; Growth Trajectory Should Stand Out

By ICICI Securities Limited

PB Fintech (PBF) is among the leading insurance and lending intermediaries in India.
It operates principally through its platforms PolicyBazaar/PaisaBazaar, and has also entered into newer businesses.
PBF is well placed to benefit from the rising insurance penetration in India, especially through digital distribution.

NHPC: Subansiri Project Progressing Well

By ICICI Securities Limited

We visited NHPC’s Subansiri Lower hydroelectric project, India’s largest hydro plant under construction with a generation capacity of 2,000MW situated at the Arunachal Pradesh – Assam border in the North-East.
With both the states completely on board and strict monitoring with monthly visits by board level officials of NHPC and senior power ministry officials, the project is progressing at a rapid pace.
Another positive outcome of the progress at Subansiri is that GoI is now working to fast-track other large hydro projects including Dibang (2,880MW), and revive Upper Subansiri (2,000MW) and Middle Subansiri (1,800MW).

Tata Power: RE Business Stake Divestment to Bring in Growth Capital

By ICICI Securities Limited

Tata Power (TPWR) has concluded the long-awaited divestment of stake in its renewables (RE) businesses.
It has consolidated all its RE businesses under one holdco – TPREL – and will be raising Rs40bn by offloading 10.53% stake in the same to GreenForest New Energies Bidco Limited (UK), a consortium of BlackRock and Mubadala, all of which will be used as growth capital for TPREL.
As per our calculations, the transaction will be at an EV of ~Rs520bn-530bn, with pre-money equity valuation of Rs340bn.

Aurobindo Pharma- Company Update- A strong rerating candidate

By Nirmal Bang

We maintain our earnings estimates on Aurobindo Pharma Limited (APL) and reiterate our Buy rating on the stock with a target price (TP) of Rs864, valuing it at 16x March EPS.
APL may be on a rerating journey over the next two years, led by multiple events.
Potential demerger/divestment of Injectables business Approval and ramp-up of biosimilar drugs in the US and Europe Gradual ramp-up of domestic formulations business…(continued).

Before it’s here, it’s on Smartkarma

By Pi Securities PCL, Thailand

Apr 21

Thailand: Eastern Polymer Group, Home Product Center and more

By Smartkarma Daily Briefs | Daily Briefs, Thailand

In today’s briefing:

EPG: Expect Earnings to Remain at High Base, but Growth Is Limited
HMPRO: Expect Strong Earnings Growth YoY in 1Q22

EPG: Expect Earnings to Remain at High Base, but Growth Is Limited

We reiterate BUY rating for EPG but trim down target price to Bt12.60, (Previous TP:14.30) derived from 21xPE’FY23E, (5-year average) or 90% premium to materials sector. We reduce PE multiple
Expect the company to post 4QFY22 (Jan-Mar) core profit at Bt398m (+7%YoY -2%QoQ)
Solid demand for automotive-parts in Thailand and Australian. Concern over rising raw material remain under control at least in the next two quarter

HMPRO: Expect Strong Earnings Growth YoY in 1Q22

By Pi Securities PCL, Thailand

With a limited upside to our target price and concern over decreasing people purchasing power following a rise in inflation, we downgrade our recommendation from BUY to HOLD
We expect HMPRO to report 1Q22 net profit at Bt1.49bn (+9%YoY, -16%QoQ),
YoY growth will be supported by solid demand for WFH products, government stimulus scheme (Shop Dee Mee Khuen in Jan –15 Feb 2022), and solid revenue growth from Mega Home

Before it’s here, it’s on Smartkarma

Apr 21

South Korea: Seegene Inc, Kakao Pay, LG Energy Solution, Tailim Paper, KakaoBank and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

MSCI Korea May SAIR: One Adds & One or Two Deletes
Kakao Pay Passive Play Opportunity on June 9
LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits
Tailim Paper IPO Valuation Analysis
Kakao Bank: Headwinds in Transition to Endemic & Overhang from Stock Options Conversion into Equity

MSCI Korea May SAIR: One Adds & One or Two Deletes

By Sanghyun Park

At this point, we have only one candidate for addition: Hyundai Heavy Industries (329180 KS).
Seegene Inc (096530 KS) currently ranks at the bottom by market cap and is closely followed by Green Cross (006280 KS). So, we have two strong candidates for exclusion.
The passive outflow size of Green Cross is relatively large. In the case of HHI, HHI’s share price may become more volatile as we move into the SAIR announcement.

Kakao Pay Passive Play Opportunity on June 9

By Sanghyun Park

A passive play opportunity for Kakao Pay (377300 KS) is approaching.
Its float rate will likely be raised in the KOSPI 200 June rebalancing. Then, in the KOSPI 200 IT Sector Index, it will again experience the most significant passive inflow.
The recent share price volatility has increased considerably. So, instead of a preemptive position buildup, a shorter-window passive play seems more appropriate just before the rebalancing trading day.

LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits

LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO in Jan 22. Its three-month lockup is set to expire soon.
LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
In this note, we will talk about the lock-up dynamics and updates since our last note.

Tailim Paper IPO Valuation Analysis

By Douglas Kim

Our base case valuation of Tailim Paper is target price of 19,692 won, which is at the low end of the IPO price range. We would pass on this IPO.
Our target price of 19,692 won is based on 5.8x EV/EBITDA using 2021 EBITDA. The EV/EBITDA multiple of 5.8x is at a 40% premium to the comps’ average.
Tailim Paper has higher sales growth rate, operating margins, and ROE than its peers. However, it has a weaker balance sheet than its peers.

Kakao Bank: Headwinds in Transition to Endemic & Overhang from Stock Options Conversion into Equity

By Douglas Kim

Efforts to normalize people’s lives to pre-COVID levels are likely to be a big negative on Kakao Bank as it could slow down the demand of its non-contact fintech services.
One of the near-term concerns on Kakao Bank is that there could be more than 1 million shares that could be sold by insiders that recently exercised their stock options.
We expect a further downside (20-25%) on Kakao Bank due to lofty valuations, ending social distancing measures, and potential selling by insiders that recently converted their stock options into equity.

Before it’s here, it’s on Smartkarma

Apr 20

Financials: Shin Kong Financial Holding, NFT, Apple Inc, AllianceBernstein Holding LP, Adidas AG, First Pacific Co, Tokyo Stock Exchange Tokyo Price Index Topix, CLP, Ichigo Inc, ICICI Prudential Life Insurance and more

By Smartkarma Daily Briefs | Daily Briefs, Financials

In today’s briefing:

Shin Kong Financial Holdings Placement – Deal Appears to Be Very Well Flagged
Sporting Crypto: To License or Not to License?
Oakmark Select Fund: Q1 2022 Commentary
Fiduciary Management All Cap Equity Q1 2022 Investment Letter
Oakmark International Fund: Q1 2022 Commentary
Morning Views Asia: China Vanke, First Pacific Co
Japan’s Governance: About an Article on Quarterly Disclosure Controversy
Chilean Peso Is a Buy if One Can Stomach the Volatility
Ichigo (2337): Positive Impression on Successful Sales of Hotel and Commercial Facility
ICICI Prudential Life Insurance: Growth Impacted by Strong Base and 3rd Wave; VNB Guidance Retained

Shin Kong Financial Holdings Placement – Deal Appears to Be Very Well Flagged

Shin Kong Financial Holding (2888 TT) (SKFH) aims to raise around US$400m via an accelerated primary GDS offering.
This will be the third fundraising by the company in as many years. Both the prior deals did well and this one too appears to be well flagged.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Sporting Crypto: To License or Not to License?

By Sporting Crypto

NFTs have opened up a new can of worms for sports rights holders. There’s confusion and misunderstanding, and a lot of people seem to think that there are a lot of grey areas.
The reality is, that there are fewer grey areas than you’d think.
The relevance is that within the NFT world – those who have made their own IP, have seen crazy upside.

Oakmark Select Fund: Q1 2022 Commentary

The Oakmark Select Fund declined 6% in the first quarter of 2022 compared to a 5% decline in the S&P 500.
The Oakmarks Select Fund is based on a disciplined quantitative and qualitative screening process, according to the company’s research process.

Fiduciary Management All Cap Equity Q1 2022 Investment Letter

The Fed Funds Rate went higher than the inflation rate to tame it, the Fed Funds rate went higher in the past fifty years.
The Fed has made some adjustments, are optimistic about the COVID-affected names, and are confident in the lineup we have today.

Oakmark International Fund: Q1 2022 Commentary

Oakmark International Fund returned -8.7% for the quarter ended March 31, 2022.
The fund’s research process is based on a disciplined quantitative and qualitative screening process, says Oakmark.
The firm says it believes businesses must offer significant profit potential and be run by managers who think and act as owners.

Morning Views Asia: China Vanke, First Pacific Co

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

China Vanke
First Pacific Co

Japan’s Governance: About an Article on Quarterly Disclosure Controversy

By Aki Matsumoto

Although the debate over the elimination of quarterly disclosures has resurfaced, it is likely that quarterly disclosures will continue by consolidating financial disclosure documents into a single document.
There were concerns that TSE stock trading volume would decline if quarterly disclosure were abolished, based on the poorly reasoned argument that “quarterly disclosure encourages short termism among investors.”
Financial Summary is required to disclose information promptly for “importance of disclosing information on investment decisions.” Quarterly Securities Report is required as a legal document for “reliability of financial statements.”

Chilean Peso Is a Buy if One Can Stomach the Volatility

By Gautam Jain, PhD, CFA

The Chilean peso has performed well this year but it has still lagged behind its peers and the broad EM currencies on a longer horizon.
The currency has been weighed down by high oil prices, a dovish turn by the central bank, and concerns around the Constitutional Convention and the possibility of new pension withdrawals.
While these concerns are valid, my view is that the currency should outperform, albeit with high volatility, due to its high carry, cheap valuations, and eventually, diminishing political noise.

Ichigo (2337): Positive Impression on Successful Sales of Hotel and Commercial Facility

By Mita Securities

Ichigo (2337, the company) announced full-year results for FY2/22. Net profit came in at 6.5bn (+28.8% YoY), within the company’s guidance range of 5.0-8.0bn yen
The company’s FY2/23 guidance is for NP of 6.5-8.5bn yen (+0.4-31.3% YoY). The QUICK consensus NP forecast is 8.8bn yen and our NP forecast is 8.0bn yen
The company announced share buybacks. The maximum number of shares to be repurchased is 1.17% of the total number of shares outstanding (excluding treasury shares)

ICICI Prudential Life Insurance: Growth Impacted by Strong Base and 3rd Wave; VNB Guidance Retained

By Nirmal Bang

Growth impacted by strong base and 3rd wave; VNB guidance retained ICICI Pru Life reported subdued APE growth of ~4% YoY on account of a strong base and impact of 3rd covid wave in Jan22.
Company’s growth outlook is positive given the strong contribution from new product launches over the last two years and turnaround in the retail protection segment
VNB growth in FY22 was mainly led by the non-linked savings segment, which contributed 91% to incremental profit…(continued).

Before it’s here, it’s on Smartkarma

Apr 20

Equity Capital Markets: Shin Kong Financial Holding, WT Microelectronics and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Shin Kong Financial Holdings Placement – Deal Appears to Be Very Well Flagged
WT Microelectronics Placement – Short Interest on the Rise, Could Lift the Debt Overhang

Shin Kong Financial Holdings Placement – Deal Appears to Be Very Well Flagged

Shin Kong Financial Holding (2888 TT) (SKFH) aims to raise around US$400m via an accelerated primary GDS offering.
This will be the third fundraising by the company in as many years. Both the prior deals did well and this one too appears to be well flagged.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

WT Microelectronics Placement – Short Interest on the Rise, Could Lift the Debt Overhang

By Clarence Chu

WT Microelectronics (3036 TT) is looking to raise approximately US$190m in its Primary GDS offering to repay foreign currency denominated debt and for procuring raw materials in foreign currencies.
While we can’t explicitly state that the deal is well-flagged, the firm has seen its gearing ratio increase and CFO was negative in its latest financial year.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Before it’s here, it’s on Smartkarma

Apr 20

TMT: Kakao Pay, WT Microelectronics, Mindtree Ltd, Apple Inc, Gogo Inc, Amkor Technology and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Kakao Pay: End of 6 Months Lock-Up Period Could Further Put Negative Pressure on Share Price
WT Microelectronics Placement – Short Interest on the Rise, Could Lift the Debt Overhang
Mindtree-LTI: A Potential US$20bn+ Indian Tech Merger; Mindtree Could Outperform LTI
Oakmark Select Fund: Q1 2022 Commentary
Earnings Quality Short Candidates: Gogo, Progress Software, Envista, Dun & Bradstreet
Where Are the Value Stocks?
Mindtree: Robust Revenue Growth; Better Execution

Kakao Pay: End of 6 Months Lock-Up Period Could Further Put Negative Pressure on Share Price

By Douglas Kim

Kakao Pay’s six months end of the lock-up period comes up on 3 May, which could further put negative pressure on its share price.
Other factors including heightened competition, lack of margin improvement in 2021, and lifting nearly all social distancing measures in Korea are likely to further negatively impact Kakao Pay.
We expect additional 20 to 30%+ downside risk for Kakao Pay from current levels over the next 6-12 months.

WT Microelectronics Placement – Short Interest on the Rise, Could Lift the Debt Overhang

By Clarence Chu

WT Microelectronics (3036 TT) is looking to raise approximately US$190m in its Primary GDS offering to repay foreign currency denominated debt and for procuring raw materials in foreign currencies.
While we can’t explicitly state that the deal is well-flagged, the firm has seen its gearing ratio increase and CFO was negative in its latest financial year.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

Mindtree-LTI: A Potential US$20bn+ Indian Tech Merger; Mindtree Could Outperform LTI

By Janaghan Jeyakumar, CFA

On Monday, Bloomberg reported that Larsen & Toubro (LT IN) was planning a merger between its public-listed subsidiaries Mindtree Ltd (MTCL IN) and Larsen & Toubro Infotech (LTI IN).
The companies have responded by saying that the news reports of a merger between MINDTREE and LTI are “speculative in nature“.
Below is a closer look at the likelihood of this Deal and the valuations of the two companies involved in this event.

Oakmark Select Fund: Q1 2022 Commentary

The Oakmark Select Fund declined 6% in the first quarter of 2022 compared to a 5% decline in the S&P 500.
The Oakmarks Select Fund is based on a disciplined quantitative and qualitative screening process, according to the company’s research process.

Earnings Quality Short Candidates: Gogo, Progress Software, Envista, Dun & Bradstreet

By Eric Fernandez, CFA

This model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.
They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts. When the company’s issues become well-known, there is often multiple compression as well as a rerating.
These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings.

Where Are the Value Stocks?

By Cappuccino Finance

Amkor Technology manufactures and sells advanced semiconductor equipment.
They make semiconductor packaging and test services for leading semiconductor companies such as Intel, Samsung, AMD, and etc
The overall semiconductor industry has been growing, and Amkor’s revenue has been growing nicely as well.

Mindtree: Robust Revenue Growth; Better Execution

By Axis Direct

Mindtree reported strong revenue growth of 5.4% QoQ and stood at Rs 2,897 Cr in Q4FY22, reporting revenue growth of 49.1% YoY.
The company posted operating profits of Rs 608 Cr, registering a growth of 2.7% QoQ, demonstrating the company’s superior execution and better service mix
We recommend a BUY on the stock and assign 35x P/E multiple to its FY24E earnings of Rs 135.8/share to arrive at a TP of Rs 4,830/share, implying an upside potential of 22% from CMP.

Before it’s here, it’s on Smartkarma