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In today’s briefing:
- GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
- Link Admin: Speculation Mounts that DND Will Revive the Deal with a Lower Offer
- Meituan Push into Sell Resistance
- Long Idea: EPAM Systems
- Z Holdings (4689) | An Online Goldmine
- Money Forward (3994 JP): Raising Our Rating to Buy. Cash Is King
- Accenture – Good Performance; Macro Weakness Begins to Show up in Some Aspects
GCL Poly (3800 HK): Double Index Inclusion & HUGE Passive Inflows
- After being suspended for 7 months for not publishing its 2020 annual results, Gcl Poly Energy Holdings Limited (3800 HK) resumed trading on 1 November 2021.
- We expect Gcl Poly Energy Holdings Limited (3800 HK) to be added to the MSCI China Index in August and to the FTSE All-World Index in September.
- Passive index trackers will need to buy over US$1.1bn of stock over the next few months. The stock has run-up inline with peers and this demand could keep it supported.
Link Admin: Speculation Mounts that DND Will Revive the Deal with a Lower Offer
- The AFR reports that after weeks of talk, Dye & Durham (DND) is expected to lob a revised lower proposal for Link Administration (LNK AU) as soon as this week.
- Presumably, DND’s justification for a lower offer is to facilitate ACCC approval timelines. It remains to be seen if this is enough for the Board to recommend a lower offer.
- Tweaking the IE’s valuation range for the current peer multiples and PEXA Group (PXA AU) share price points to a Link valuation range of A$3.52-4.40 per share.
Meituan Push into Sell Resistance
- Meituan is starting to show waning upside momentum as it near key resistance at 220/230 (sell or short zone) ahead of a harder pullback cycle that will be choppy initially.
- Meituan has outperformed its peer group but due for a pullback. Price and RSI rising wedges are maturing and nearing a bearish inflection point to short (watch poor buy volume).
- Tactical rally window in mid July with a better rally cycle slated for August head of a negative September.
Long Idea: EPAM Systems
- EPAM is an IT Services firm that does high end software development for Fortune 2000 customers.
- One of the great under the radar compounders of all time. Feb 2012 IPO-Feb 2022: ~27% revenue, earnings, FCF CAGR, 45% equity CAGR.
- Core engineering talent historically in Ukraine, Belarus, and Russia, this is the overhang. We think great management team can navigate relocation and return to growth.
Z Holdings (4689) | An Online Goldmine
- Z HD’s media business accounts for 80% of consolidated earnings.
- We believe that the combination of Yahoo Japan and LINE is driving new synergies and growth opportunities.
- We believe that the media business alone could justify an EV of ¥4.5t, way above ZHD’s current EV of ¥3.5t
Money Forward (3994 JP): Raising Our Rating to Buy. Cash Is King
Our new target price 4,000 yen; Raising our rating to Buy
We believe that market participants have become increasingly concerned about the sustainability of high growth for loss-making SaaS companies
We raise our 2Q (Mar-May) FY11/22 sales forecast from 5.102bn yen to 5.145bn yen (+28.8% YoY, company guidance median 4.912 bn yen)
Accenture – Good Performance; Macro Weakness Begins to Show up in Some Aspects
- Consistent performance in 3QFY22: ACN’s revenue for 3QFY22 stood at US$16.16bn, an increase of 22% in USD terms and 27% in LC terms.
- Five forces to be harnessed by clients: ACN believes that there are five forces that clients should harness over the next decade to drive growth.
- These are total enterprise reinvention, talent, sustainability, metaverse continuum and the ongoing tech revolution.
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