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• This transaction is looking increasingly toast. The ACCC has outlined significant preliminary competition concerns with Dye & Durham’s (D&D) proposed acquisition of Link Administration (LNK AU).
• Separately, Link’s subsidiary, Link Fund Solutions Limited, has been notified that an application for a “Group Litigation Order” has been filed in the English High Court. 
• Link has to exit PEXA for this transaction to proceed. But how badly do D&D want PEXA? Will they walk? Time to look at Link fundamentally, separate from D&D’s Offer.

• The ACCC’s Statement of Issues noted “significant preliminary competition concerns” in relation to Dye & Durham/DND’s acquisition of Link Administration (LNK AU). The findings will be announced on 8 September.
• There is no easy fix. We think that satisfying the ACCC requires a PEXA Group (PXA AU) stake disposal which could trigger a material adverse clause.
• Link aims to proceed with the 13 July scheme meeting but this is a broken deal. While our SoTP suggests upside, there are no short-term positive catalysts.

• Nexon (3659 JP) founder Kim Jung Ju tried to sell his holdco in 2019, didn’t, now shares are higher, but he passed suddenly in Q1. The stock popped.
• Inheritance tax issues for the estate are complicated, but the buyback just executed might signal a “pause” for a while. 
• In the meantime, recent underperformance in terms of Peer-relative earnings forecasts suggests the stock could drift.

• ExaWizards (4259 JP) raised around US$300m in its Japan IPO in Dec 2021, where its IPO had been priced at the top end of its indicative price range.
• ExaWizards is an AI service provider in Japan, it develops and delivers AI products with the aim of addressing industry and social issues.
• While in our view, we would not expect a large block to come from this lockup expiry, we could expect some scattered selling across the shareholders.

• After a 50% fall in the share price, Lasertec looks cheap on an historical basis and trades at a discount to ASML  
• The secular growth outlook for its extreme ultraviolet (EUV) inspection systems is brighter than ever  
• Lasertec should be a core holding for Japan growth funds on expectations for continued earnings growth and high returns on equity 

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• Reuters and several other news media outlets reported that Baidu (BIDU US) is planning to sell its stake in iQIYI Inc (IQ US) .
• Baidu has supposedly valued iQiyi at US$7bn, implying US$8.2 per ADR which is at a 78% premium to iQiyi’s last close of US$4.6 per ADR.
• IQiyi reported first-ever operating profit in 1Q2022 driven by huge cost cutting. However, it is yet to be seen if the company could continue to maintain margins without compromising growth.

• Erajaya‘s 1Q2022 results do not reflect the company’s prospects for FY2022, given the impact of Omicron, the chip shortage, and significant IT upgrades taking place, all of which depressed performance.
• The company is stepping up its outlet expansion this year, with plans to add 400-500 new outlets in an effort to gain market share post-pandemic by expanding its network.
• Erajaya is adding new retail JVs outside its handset and IoT businesses including JD Sports, Wellings Pharmacy, Grand Lucky, and Paris Baguette, jointly managing these JVs.

• Sea Ltd (SE US)’s share price fell 7.42% yesterday after a report broke out about mass layoffs across Shopee’s international operations.
• We think Shopee has a fundamentally flawed business model and tinkering here and there won’t be enough to make Shopee a world-class business.
• With Free Fire falling fast and Shopee starved of funds, we fear that there could be another leg down for Sea Ltd shares in the short term.

• Tech weakness has not only eroded the underlying asset value but raised concerns on leverage and the potential for an ARM IPO. The discount expanded by 4pp in one week
• The timing and pricing of an ARM IPO looks more precarious as the semiconductor sector fell 13% over two days and is now down 34% from all-time highs
• Currency tailwinds have provided some offset with an unprecedented dollar move mimiting downside in Softbank shares to 8% YTD versus a 24% decline for the $-based ADR

• This year’s consensus OCF is at least ₩75T, and CAPEX is ₩45T, less than last year. As a result, we will likely reach an FCF of ₩30T.
• Then the yearend special DPS would be ₩764, which provides dividend yields of 2.97% (Ord) and 3.22% (Pref), respectively, even based on the conservative OCF estimates.
• This is a sufficiently attractive dividend yield for Pref. Hence, unless the SEC’s price enters a sharp uptrend, the bullish Pref will likely continue. 

• MicroStrategy Inc (MSTR US) is trading at a ~2% discount to NAV as the crypto rout moves into a higher gear.  
• Bitcoin briefly dipped below US$25k in the last 24 hours, an 18-month low. If it falls another 18%, this will trigger a margin call on one of MicroStrategy’s loans.
• All is not well elsewhere in cryptoland. Ethereum touched a 17-month low; the Luna/Terra ecosystem has crashed; and crypto lender Celsus capitulated ~60% this morning after freezing withdrawals. 

• I will discuss the points on the Nikkei article, “TSE Reorganization Leads to Shareholder Proposal: British Fund to Subsidiary of Nippon Steel Corporation.”
• Since the parent-subsidiary listing is related to the parent company’s market capitalization, I don’t believe that the issue is one that can be postponed so long.
• NSSOL, which maintains stable profitability and cash generation, is expected to see its share price rise further if NSSOL becomes independent and foreign shareholding will increase.

• Stay short ahead of Q1 results. Full year guidance remains too high and will likely be cut later this year
• Yaskawa remains a cyclical stock that correlates with the SOX index – higher interest rates are impacting valuation multiples
• We see 20% downside risk towards 3x price to book

• Our base case valuation LG Energy Solution is implied market cap of 75 trillion won or target price of 319,089 won, representing 25% below current share price.
• Currently, LGES is trading at a premium valuation multiple on a EV/EBITDA (2023E) versus CATL. We believe LGES should trade at a discount to CATL in the next 6-12 months. 
• LGES’s 6 months lock-up ends on 27 July and there are 4.3% of outstanding shares that can be sold which is likely to put negative pressure on share price.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
• This week, the highest spreads are Sezzle Inc (SZL AU), 21Vianet Group (VNET US), Link Administration Holdings (LNK AU), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU). 
• The lowest gross spreads are Virtus Health (VRT AU), Crown Resorts (CWN AU), Irongate Group (IAP AU), AKM Industrial (1639 HK), Beijing Enterprises Urban Resources (3718 HK). 

• Maintain HOLD; Labour and raw mat issues remain
• Addt’l 3k workers to arrive in the coming months
• One-off levy and recruitment costs could drag 4Q NP
• Costs impact within expectations

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• IPO volumes remain subdued across the region, although a number of deals are said to be looking to launch soon.
• Placements stole the limelight this week too with Kakao Pay’s selldown by Ant and Joy Spreader’s crash pulling the scales even on last week’s better performing deals.

• Bilibili reported 1Q2022 results yesterday. Revenue grew 29.6% YoY to RMB5.1bn (vs consensus RMB5.04bn) while operating losses as a % of revenue increased to 39.4% from 26.4% in 1Q2021.
• Monthly Paying Users (MPUs) reached 27.2m vs 20.5m in 1Q2021, however, blended ARPU declined to RMB41.8 from RMB43.4 a year ago suggesting that user growth comes at lower pricing.
• Bilibili’s ADS’ closed 15% lower at the end of yesterday’s trading as widening losses and softer guidance for 2Q2022 disappointed the market.

• Inside is a recap of movements in the last week relating to the Hong Kong Stock-Shanghai and Shenzhen Northbound Connect facilities, broken down by company and industry.
• Overall, net inflow was ~US$6.5bn, split between Shanghai (+US$5.5bn) and Shenzhen (+US$1.0bn).
• The largest inflows were into LONGi Green Energy Technology (601012 CH) and Kweichow Moutai (600519 CH). The largest outflows were in CATL (300750 CH) and Cosco Shipping Holdings (601919 CH).

• China announced game approval last night for June batch, after a break in May.
• We discussed in our previous note that China had resume game approval but at a slower pace.
• Tencent and Netease continue to score zero in June domestic game approval.

• As reported by Reuters, yesterday China’s gaming regulator granted licences for 60 new games, none of which were published by Tencent or NetEase. 
• The two dominant companies in the industry did not feature in the list of 45 approvals in April either and this pattern should not be ignored by investors. 
• The lack of approval of foreign titles in the two batches is also striking and a further negative in our view.

• Elon can’t get out of his stupidly overpriced, but solidly binding agreement to buy Twitter. But he can tie it up in court indefinitely. 
• Meanwhile, Twitter’s prospects for operational improvement are mixed at best.
• Twitter is left in limbo, as are its investors. What should bondholders do?

• With only one change expected in September using a 12 month minimum listing history, we expect the index committee to continue using a 6 month minimum listing history.
• That will see the maximum of 5 changes that are permitted at a single rebalance resulting in a one-way turnover just shy of 5%.
• Over the last few rebalances, the adds have outperformed the deletes post the end of the review period. That’s expected given passive trackers need to buy/sell a lot of stock.

• GoGoX Holdings (GOGO HK) is a major online intra-city logistics platform in Asia. It has passed the listing hearing for an HKEx IPO to raise US$100-150 million.   
• In GOGOX IPO Initiation: A Less than Perfect Delivery, we noted that as the losses are expected to persist over the next three years, we would avoid the IPO.
• In this note, we examine the PHIP for the 2021 results and recent developments. The fundamentals remain unattractive and we would give the IPO a pass. 

• GoTo (GOTO IJ)  announced 1Q2022 and FY2021 results on 30th May. Gross income grew by 43.5% YoY in 2021 with a growth of 53.5% YoY in 1Q2022.
• However, gross margins show no improvement and operating losses have also worsened with the merger of Tokopedia in May 2021.
• GoTo plans to turnaround its profitability through synergies, improved monetisation and cost efficiencies. However, we don’t expect profits in the near future.

• Net Protections Holdings, a buy now pay later service provider, raised around US$570m via selling a mix of primary and secondary shares in its Japan IPO in Dec 2021.
• As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.
• In this note, we will talk about the upcoming lock-up expiry on 12th Jun 2022.

• Crypto and equity correlations are at all-time highs this year as both are negatively impacted by global headwinds like rate hikes. However, correlations decoupled over the past two weeks
• Equities were in the positives while crypto prices continued to decline due to idiosyncratic factors such as the continued impact from Luna and the execution risks of ETH 2.0 merger
• However, public crypto valuation is now overly depressed and the worst may be over with the Luna impact while the ETH 2.0 execution risk will be derisked imminently 

• Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
• During a volatile quarter, the Diamond Hill All Cap Select Fund held up meaningfully better than the Russell 3000 Index.
• After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
• While the year-to-date pullback in equity markets has created some investment opportunities, broad market valuations remain above historical averages.

• Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
• During a volatile quarter, the portfolio held up better than the Morningstar Global Markets ex-US Index by a decent margin.
• After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
• We expect to see varying states of economic growth aroundthe world in 2022 and believe persistent inflation will be one of the mostcritical risk factors economies face this year.

• Didi shares jumped 24% on reports regulatory relief was at hand. That is good news for Softbank although the halo effect boosting Alibaba had more of a valuation impact
• Less noticed but also relevant as a potential outcome is the de-listing of Zhangmen Education which fell 50% Monday and is down 97% for VF in total
• Softbank shares trade at a 43% discount to fair value and remain range-bound.  Tech market sentiment remains the primary driver and we continue to be cautious

• This article updates NTT DATA by referring my earlier article although Hopes of NTT Data becoming a wholly owned subsidiary are far from fulfilled after the May 9th news conference.
• My previous article stated reorganization with NTT’s overseas operations is priority to strengthen NTT Data’s overseas business. NTT Data’s stock price is highly valued while NTT Data’s profitability is lacking.
• The timing of NTT Data becoming a wholly owned subsidiary will depend solely on how quickly the company can raise its profitability while it focuses more on domestic business.

• Rhizome Partners LP is a Delaware limited partnership, aims to achieve long-term capital appreciation while limiting the risk of loss.
• For the first quarter of 2022, Rhizome Partners generated a net loss of 9.9% versus a 4.6% loss.
• We may be experiencing a regime change in the market in 2022.
• Investors seem to have started to favor profitable companies trading at low multiples of existing cash flow over companies with uncertain payoffs in ten years.
• We still favor good businesses with healthy margins, good balance sheets, structural moats, high returns on invested capital, rational competitors, pricing power, and reasonable growth.

• Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
• Amid a rocky market quarter overall, Diamond Hill Mid Cap Fund’s negative returns still outpaced the Russell Midcap Index by a healthy margin in Q1.
• After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
• From current levels, equity market returns over thenext five years are likely to be below historical averages.

• Diamond Hill invests on behalf of clients through a shared commitment to its valuation-driven investment principles, long-term perspective, capacity discipline and client alignment.
• During a volatile quarter, Diamond Hill Large Cap Fund held up better than the Russell 1000 Index by a decent margin in Q1.
• After a strong rebound in 2021, global GDP growth is expected to moderate in 2022.
• From current levels, equity market returns over the next five years are likely to be below historical averages.

• Horizon Kinetics LLC, founded in 1994, is an independently owned and operated investment adviser. With a long-term absolute return mindset, and based on first-hand research, our portfolios tend to be concentrated and avoid tracking or mimicking any benchmark or index.
• Texas Pacific Land Corp is entering into a strategic alliance with two cryptocurrency mining companies to develop a mining operation on some of TPL’s land.
• The public discussion has now turned to how “aggressive” the central bank will be in raising interest rates in order to try to stem inflation.
• Debt-to-GDP ratio can increase for a very prolonged period of time, like the 39 years from1980 to 2019, without the economy experiencing serious inflationary pressures.
• If the supply of oil were to grow even as high as 2% a year, while the supply of currency to pay for it is growing at 12% a year, then the price of oil measured in currency is going to go up.

• The Nikkei Index team proposed several changes to the Nikkei 225 Average methodology last week. They include capping, a semi-annual (vs annual) review, and a change in “liquidity” measure.
• It helps move membership away from the low price low weight names which populate the bottom of the index. Slowly. 6 names a year. That’s not enough.
• And it doesn’t fix the historical anomalies rendering the index unsuitable as benchmark (and BOJ tool). I propose more changes below. You can submit this or yours in the consultation.

• Our base case valuation of HPSP is implied market cap of 810 billion won or target price of 38,228 won per share.
• This is 53% higher than the high end of the IPO price range of 25,000 won.  Given the solid upside, we have a POSITIVE view of the HPSP IPO.
• Our base case valuation uses our estimated net profit of 79.8 billion won in 2022 and P/E of 10.2x which is the median valuation multiple of its peers. 

• During the #1 product and growth conference Amplify 2022 in Las Vegas, Amplitude (AMPL US)  introduced the Customer Data Platform (CDP) with integrated product analytics.  
• The company expanded partner integration with Snowflake Inc (SNOW US)  to improve data connectivity while Amplitude Experiment sees strong traction with customers. 
• With shares down ~65% YTD, Amplitude has underperformed the Nasdaq Composite (-23%). Our PT is $28.00, implying ~14x EV/2022E revenue and ~10x EV/2023E revenue.