Smartkarma Daily Briefs

• A bit over a year ago Renesas Electronics (6723 JP) announced its transaction to buy Dialog Semiconductor (DLG GR) for €4.8bn (roughly ¥624bn) and the transaction closed end-August 2021.
• In September, Renesas announced a “Progress Update” covering various business segments, expectations for supply in the sector, and eventual “shareholder return” policy.
• This past week the Nikkei carried an article talking about a possible stock buyback later this year. I explore.

• Nikkei reported that Meituan intends to pay better compensation to small-and-medium restaurants and to delivery workers to prove that the company is in line with Beijing’s common prosperity measures.
• As Shanghai is under strict Covid lockdown, Meituan has seen a sharp rise in demand for grocery deliveries, however, margins are expected to be thin due to additional costs.
• The company has been under tremendous pressure to improve its cost structure and is undertaking 10-20% job cuts across all its business units.

• One Store revised its IPO filings, changing the comps but maintaining the same price range of 34,300 won to 41,700 won.
• The bankers used new comps in the valuation analysis (Tencent, Naver, Kakao Corp, and Nexon). The P/S multiple is slightly higher than previously but IPO discount range is also higher.
• Our target price of 48,713 won is 28% higher than the mid-point of the IPO price range of 38,000 won. 

• Tencent’s increase in investment acquisition activity has coincided with a general weakness in equity prices and valuation levels.
• Tencent management’s assessment of the fair value of its listed investee holdings, of RMB982.8bn on 31 December 2021, equates to roughly 27.4% of its market cap.
• The market value of Tencent’s investee holdings in more-mature, Chinese-listed, internet-orientated holdings equates to roughly 9% of its current market cap.

• Twitter Inc (TWTR US) announced a poison pill in a press release Friday with details in an 8-K Monday. It will dividend out one right/share on record date 25 April. 
• The right would allow Rightsholders, under certain conditions, to purchase $420 of shares for $210. That number is not a coincidence. 
• Some will get upset by this, but there is a lot of fine print. And I review how the poison pill fits into Delaware hostile defence standards.

• ONE Store (ONE KS) is looking to raise up to US$228m in its Korean IPO.
• One Store delayed its bookbuild by two weeks, with book building slated to run between 9th-10th May 2022. Listing, as well, has been pushed back to end May.
• Peers have slightly corrected since our last note and in our view, from a historical perspective, the low end seems justified.

• Infosys 4Q disappoints; Downgrade cycle upon us sooner than expected (INFY) reported US$4,280mn revenue for 4QFY22 (below our estimate of US$4,407mn) reflects ~1.2% growth QoQ in CC terms against our estimate of 4.3%.
• EBIT margin at ~21.5% (our estimate: ~23%) declined by 200bps QoQ.
• INFY attributed this weakness in revenue to seasonality (fewer working days), Covid impact and a one-off issue connected with a certain client (~100bps)…(continued).

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• Infosys Ltd (Infy) reported Q4FY22 revenue of Rs 32,276 Cr, up 1.3% QoQ and 0.8% QoQ (in CC terms) which was below our expectations.
• The company’s operating profit stood at Rs 6,956 Cr, reporting a de-growth of 7.3% on a QoQ basis.
• We recommend a BUY rating on the stock and assign a 29x P/E multiple to its FY24E earnings of Rs 71/share to arrive at a TP of Rs 2,060/share, implying an upside of 18% from the CMP.

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• NTGR spent the Q12022 reducing channel inventory of lower priced wireless routers, but there is still a lack of catalyst for consumers to upgrade after buying a router in 2020
• NTGR’s balance sheet makes the stock look attractive at current levels, but the first quarter has too many variables to push us off the sidelines
• During the first quarter of 2022 it was visible the degree of discounting NTGR had undertaken in the channel to remove lower priced wireless routers, or sub $299 price point

• Q4FY22 operating performance missed our expectations.
• Revenues grew by a mere 1.2% QoQ CC, while EBITM declined 190bps to 21.6%.
• Operating performance remained weak due to seasonality, a Covid-related impact in the early part of the quarter and a clientrelated contractual provision (likely to be recovered in FY23).

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.