TMT/Internet

We discuss the potential additions and deletions in the upcoming June 2022 KOSDAQ150 rebalance. The ongoing war in Ukraine has impacted the potential additions/deletion candidates in KOSDAQ150.
The recent new additions (among potential inclusions) include Nexon GT Co Ltd (041140 KS) and Netgames (225570 KS), and SNK Corp (950180 KS).
The top 10 potential exclusions are down on average 25.7% YTD, underperforming KOSDAQ which is down 9.6% in the same period.

Before it’s here, it’s on Smartkarma

Mar 26

TMT: AKM Industrial, LG Energy Solution, Pagseguro Digital Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

AKM (1639 HK): Timeline Clarified As Pre-Conditions Nearly Fulfilled
LG Energy Solution: End of the 3 Months Lock Up Period, Higher Short Selling, & JV with Stellantis
Payment Companies – Thoughts on Screen Snapshots 1Q22

AKM (1639 HK): Timeline Clarified As Pre-Conditions Nearly Fulfilled

By David Blennerhassett

Flexible printed board player AKM Industrial (1639 HK) has announced the approvals for the pre-conditions attached to the Scheme are in the final stages.
Separately, the Court date for sanctioning the Scheme has been listed for the 19 July.
Trading at a gross spread to terms of 3.6%, including the final dividend.

LG Energy Solution: End of the 3 Months Lock Up Period, Higher Short Selling, & JV with Stellantis

We discuss the end of the three months lock-up period, higher short selling of LG Energy Solution as well as the recent JV formation with Stellantis.
At the current price of 439,000 won, we believe there is a 15% downside risk to LG Energy Solution shares over the next 3-6 months.
LGES’s share price has rallied by 8% since the news about the JV with Stellantis have been announced but we believe this rally is likely to be short-lived.

Payment Companies – Thoughts on Screen Snapshots 1Q22

By Victor Galliano

Our negative recommendations from December – especially Paytm – worked better than our positive ones, given 1Q22 market conditions; we see much value in payment companies but we remain selective
Based on our screens, we continue to favour Mastercard in the megacaps, we stick with PagSeguro and Getnet, adding Nexi which looks very oversold, despite its fundamental headwinds
We take Paytm off the sell list, but we remain negative on DLocal on its very demanding valuations, and we add Kakao Pay to the negative list

Before it’s here, it’s on Smartkarma

Mar 25

TMT: Bukalapak, Novatek Microelectronics Corp, Adobe Systems, Shopify Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems
Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.
Adobe: Price Increase Bullish or Bearish?
Shopify ($SHOP)

Bukalapak (BUKA IJ) – Building a Warchest of Ecosystems

By Angus Mackintosh

Bukalapak (BUKA IJ) is rapidly broadening its exposure to a greater range of services, with the latest move increasing its exposure to gaming, a potential future cash cow.
We have already seen Bukalapak (BUKA IJ) making bold moves into digital banking through Allo Bank Indonesia and a direct commitment to online groceries through AlloFresh with Trans Retail Indonesia.
We continue to focus on the improving fundamentals of Bukalapak (BUKA IJ) and its growing ecosystem and would use any short-term trading anomalies to accumulate the stock.

Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.

By Patrick Liao

Novatek’s monthly revenue is increasing above 20% YoY from July 2020. However, the growth trend seems slowing down from 1Q22.
The price for DDIC (Display Driver IC) is the lowest among in the foundry companies’ products although its demand quantity can be large, which gives its actual price bargaining power.
Somehow, the end demand still needs a Display with related ICs for the application. So, there must be some certain suppliers to complete the supply chain.

Adobe: Price Increase Bullish or Bearish?

By Aaron Gabin

Adobe’s stock has pulled back 35% since November, a far larger drawdown than megacap software peers on fears of pulled in growth for Creative Cloud.
Weak initial guidance for 2022 was reiterated this past week, implying reacceleration in 2H22.
Price increases should serve as a tailwind in 2H22, providing a good entry point on a quality compounder that is trading at 5 year trough multiples.

Shopify ($SHOP)

By MT Capital

Today I will be completing an in-depth analysis on Shopify. Within, I will spend time breaking down the opportunity in front of the company, both broadly within the e-commerce space as a whole, as well as more specifically from a value proposition point of view.
In addition, I will break down the company’s business model, clearly outline how the company makes money, analyze their most recent earnings report, delve into some KPIs and discuss some bear and bull cases that some investors should be wary of going forwards.
As always, the format of this research piece can be seen outlined below, feel free to skip ahead to the sections that you feel will be most useful.

Before it’s here, it’s on Smartkarma

Mar 24

TMT: Tencent, Samsung Electronics, GoTo, Xiaomi Corp, Bukalapak and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Tencent (700 HK): 4Q21, Weak Revenue and Significant “Other Gains”, 30% Downside
Samsung Family’s Inheritance Tax Situation & Future Block Deals
GoTo Vs Bukalapak Vs Grab Vs Sea
Xiaomi 4Q: Good Results Despite a Challenging Environment
Bukalapak IPO Lock-Up – Scattered Shareholding Could Put Some Pressure on the Share Price
Tencent 4Q2021: Disappointing Earnings but Expected

Tencent (700 HK): 4Q21, Weak Revenue and Significant “Other Gains”, 30% Downside

Tencent’s revenue growth continued to slow down to 8% YoY in 4Q21.
The company used more extraordinary income to bolster EPS in recent years.
We believe the stock has a downside of 28% within 2022.

Samsung Family’s Inheritance Tax Situation & Future Block Deals

By Sanghyun Park

The family is done with selling stakes in Samsung Life Insurance and Samsung SDS. What remains now is the sale of a 0.33% stake in Samsung Electronics by Hong Ra-hee.
Hong Ra-hee’s 0.33% stake in Samsung Electronics is highly likely to appear soon. The deadline is April 25th. It will likely cause an impact of 1.5x ADTV.
Additional stake sales are likely. SDS for sure, and probably more Life. But more SamE? This remains unclear due to the substantially lower controlling stake percentage.

GoTo Vs Bukalapak Vs Grab Vs Sea

GoTo (1379371D IJ) is the leading digital ecosystem in Southeast Asia. It has extended its book build for a $1.3 billion IPO to 24 March.
In GoTo Gojek Tokopedia IPO: Valuation Insights, we noted that our valuation analysis suggests that the price range is aggressive and unattractive.
In this note, we compare GoTo vs Bukalapak (BUKA IJ), Grab (GRAB US) and Sea Ltd (SE US)‘s relevant businesses across GTV, take rates and segmental margins.

Xiaomi 4Q: Good Results Despite a Challenging Environment

Xiaomi Corp (1810 HK) reported 4Q2021 results on Tuesday. Revenue grew 21.4% YoY to RMB85.6bn (vs consensus RMB82.1bn) while reported OP declined 54.0% YoY to RMB4.5bn (vs consensus RMB4.3bn).
Adjusted OP (excluding fair value adjustment and other gains) grew 21.4% YoY to RMB85.6bn, with an adjusted OPM of 4.0% vs 3.0% in 4Q2020.
Xiaomi’s smartphone revenues bounced back in 4Q2021 after growing less than 1.0% YoY during the previous quarter. The company also announced a share buyback of HK$10bn.

Bukalapak IPO Lock-Up – Scattered Shareholding Could Put Some Pressure on the Share Price

Bukalapak (Buka) raised US$1.5bn in Aug 2021 when it priced its IPO at the top end of its pricing range.
Buka is an Indonesian e-commerce company. The company operates an online consumer-to-consumer (C2C) marketplace. It also operates Mitra Bukalapak (Mitra) which provides online-to-offline (O2O) services to MSMEs.
The pre-IPO shareholders will be released from the lockup on 6th April 2022.

Tencent 4Q2021: Disappointing Earnings but Expected

Tencent (700 HK) reported 4Q2021 results yesterday. Revenue grew 7.9% YoY to RMB144.2bn (vs consensus RMB146.5bn) while non-IFRS OP decreased 13% YoY to RMB33.2bn.
This marks the slowest quarterly revenue growth for Tencent since 2004 mainly due to lower VAS revenue growth and decline in revenue from online advertising.
Tencent’s 4Q revenues were in line with our forecast of RMB144bn while adjusted OPM of 23% was slightly below our estimates of 26%.

Before it’s here, it’s on Smartkarma

Mar 23

TMT: Nomura Research Institute Ltd, Kuaishou Technology, Tencent Music, Ums Holdings, Xiaomi Corp, Capcom Co Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Nomura Research Placement – Has Sold Before, Deal Might Be More Reflective on the Parent’s Results
Potential MSCI Upweights in May: Kuaishou, JD Health, Akeso
Tencent Music (TME): 4Q21, Revenue Down for First Time
UMS Holdings: Excellent Results in 2021 & Valuation Has Become More Attractive After Recent Sell-Off
Xiaomi (1810 HK): 4Q21, Growth Rate Bounced Up, as High End Strategy Worked
Capcom – The Prospects for Street Fighter 6
TME 4Q Results: Earnings Continue to Weaken

Nomura Research Placement – Has Sold Before, Deal Might Be More Reflective on the Parent’s Results

Nomura Holdings is looking to raise around US$486m via selling 2.5% of Nomura Research.
This is not the first sale by Nomura and hence, might not come as a complete surprise.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Potential MSCI Upweights in May: Kuaishou, JD Health, Akeso

By Brian Freitas

We see a potential increase in the FIF for Kuaishou Technology (1024 HK), JD Health (6618 HK) and Akeso Biopharma Inc (9926 HK) at the MSCI May SAIR.
The increase in FIF will require passive funds to buy 79.45m shares of Kuaishou (1024 HK), 57.35m shares of JD Health (6618 HK) and 15.32m shares of Akeso (9926 HK).
Short interest has started to inch higher on Kuaishou, while short interest is rising sharply on JD Health and Akeso.

Tencent Music (TME): 4Q21, Revenue Down for First Time

In 4Q21, TME’s revenue decreased YoY for the first time since its IPO.
We do not believe the music rise will cover the social entertainment decline in 2022.
Either, we do not believe social entertainment will recover based on its operating data.

UMS Holdings: Excellent Results in 2021 & Valuation Has Become More Attractive After Recent Sell-Off

UMS Holdings’ stock price has been oversold in the past several weeks. It posted excellent results in 4Q 2021 and its valuations have become more attractive.
If the global semiconductor cycle undergoes a major downtrend, UMS Holdings would not be immune from such downturn and the company is likely to experience lower sales and profit growth.
We believe that UMS Holdings has 20% to 40%+ upside from current levels over the next one year, based on historical valuation multiples in the past three years.

Xiaomi (1810 HK): 4Q21, Growth Rate Bounced Up, as High End Strategy Worked

The growth rate of total revenue bounced up and all business lines grew strongly in 4Q21.
Smartphone revenue grew more rapidly than smartphone shipment, as the high-end strategy worked.
We set an upside of 56% and a price target of HK$21 for the year end 2021.

Capcom – The Prospects for Street Fighter 6

By Mio Kato

A month ago Capcom announced Street Fighter 6 with a small trailer featuring no actual gameplay footage.
Given the somewhat haphazard launch of Street Fighter 5 expectations for the title are likely to be moderate.
However, there has been much progress since the launch of Street Fighter 5 and there are some promising signs to consider.

TME 4Q Results: Earnings Continue to Weaken

TME reported 4Q2021 results on Monday. Revenue for the quarter decreased 8.7% YoY to RMB7.61bn (vs consensus RMB7.66bn) and reported OP decreased 47.3% YoY to RMB682m (vs consensus RMB1.3bn).
Revenue from Online music services grew single digit (4%) for the first time while revenue from Social Entertainment services dropped further during the quarter.
TME expects its revenues to decline in 2022 as it expects the social entertainment services business to remain under pressure due to competition and regulatory pressure.

Before it’s here, it’s on Smartkarma

Mar 22

TMT: Razer Inc, Samsung Sds, Link Administration Holdings, Alibaba Group, Vanguard Intl Semiconductor, Xometry and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Caymans To Decapitate The Headcount
Samsung SDS Placement – Deal Is Very Well Flagged and the Stock Is Cheap, but It’s a Tough One
Link Admin (LNK AU): Scheme On Track as Proposal Emerges For RSS Business
US Expansion of Travel Bans the First Step in Broader Escalation?
Link’s Privatisation by DND on Track to Complete in June/July
Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes
Vanguard (5347.TT): We Think Vanguard Can Easily Reach 1Q22 Guidance.
Recent IPO Insights: Xometry

Caymans To Decapitate The Headcount

By David Blennerhassett

The Cayman Islands is seeking to eliminate the “headcount test” for Schemes of Arrangement.
Such an amendment will provide greater certainty for Hong Kong Schemes, wherein 59% of all listed companies are Cayman Islands incorporated.
This development arrives a tad late for Razer Inc (1337 HK), which is trading wide to terms, exactly on account of the fact it could potentially fail the headcount test.

Samsung SDS Placement – Deal Is Very Well Flagged and the Stock Is Cheap, but It’s a Tough One

Kookmin Bank Trust Department is looking to raise up to US$321m via selling 3.9% of Samsung SDS.
The deal appears to be very well flagged as the ultimate sellers are the Samsung family.
In this note, we will run the deal through our ECM framework and talk about the recent updates.

Link Admin (LNK AU): Scheme On Track as Proposal Emerges For RSS Business

By David Blennerhassett

Link Administration Holdings (LNK AU) announced that all applications for regulatory approvals have been submitted. The Scheme explanatory booklet will be submitted to ASIC this week.
Separately, discussions with LCFH have not resulted in an agreement for the sale of Link’s BCM business. Additionally, a proposal from FNZ Group for the RSS business was rejected.
The ACCC and FCA approvals are the key risks to the deal completing.

US Expansion of Travel Bans the First Step in Broader Escalation?

By Mio Kato

The US just expanded travel bans against Chinese officials said to be repressing ethnic and religious minorities.
The timing, a few days after a Biden-Xi call on Russia that appeared to achieve little of substance is telling.
Noises out of the UK have been similarly aggressive here and the question now is how Europe responds.

Link’s Privatisation by DND on Track to Complete in June/July

Link Administration Holdings (LNK AU) notes that the Dye & Durham (DND) privatisation scheme remains on track for a June/July completion. Scheme document will be submitted to the ASIC shortly.
Link also noted that it was unable to reach a binding agreement with LC Financial Holding for the sale of the BCM business.
Key hurdles are ACCC clearance and the Woodford investigation. We would be buyers up to A$5.2 per share (implies 70% deal probability).

Block Deal Sale of Samsung SDS by the Lee Family to Pay for Inheritance Taxes

The Samsung Group owner Lee family wants to partially sell their stake in Samsung Sds worth 390 billion won in a block deal.
The block deal sale involves 3.02 million shares of Samsung SDS or 3.9% of outstanding shares.
We would avoid this block deal as the company may face continued overhang sale issue in the next 1-2 years.

Vanguard (5347.TT): We Think Vanguard Can Easily Reach 1Q22 Guidance.

By Patrick Liao

It’s NTD$4.976~5.176bn to go in March to reach the 1Q22 guidance of NTD$13.2~13.6bn.
Despite Consumer and Smartphone demands could be weak in 1Q because of seasonality, we still see the demands can be strong in PMIC, Auto, 5G and etc.
For the continuous 8” demand, the clients have high willingness to sign up an LTA (long term agreement), which explains the strong demand situation now.

Recent IPO Insights: Xometry

By Aaron Gabin

Two-Sided online marketplace connecting buyers and sellers. But is this more Amazon or Angi?
Game changing acquisition in December of Thomas should turbocharge growth and margins for 2022-2023.
At 4x sales, this is a very high growth asset that has been crushed since IPO, down 55%. Interesting entry point.

Before it’s here, it’s on Smartkarma

Mar 21

TMT: Tobila Systems Inc, GoTo, Samsung SDI, GitLab, BigCommerce Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Tobila Systems: The Monopoly that You Probably Never Heard Of (Even as Its Customer)
GoTo IPO: A No Go
KOSPI 200 IT (TIGER ETF) Rebalancing Preview
Gitlab 4Q22 Earnings: Impressive
GoTo IPO: Peer Comparison and Valuation
BigCommerce: Stock Selloff Looks Finished As Valuation Hit $1.5 Billion

Tobila Systems: The Monopoly that You Probably Never Heard Of (Even as Its Customer)

By Steven Chen

With less than 60 employees, Tobila Systems is the absolute dominator in the space that can make a significant impact on Japan’s society;
The valuation starts to look attractive while the fundamentals remain sound;
Partly benefiting from being the first entrant to this niche with a robust flywheel business model, the company now “monopolizes” both the supply side and the distribution side.

GoTo IPO: A No Go

Superapp GoTo has filed for an IPO to list its shares on the Indonesian Stock Exchange to raise US$1.2bn at a market capitalisation of US$25.0bn.
The company plans to use most of the proceeds on developing its businesses including Gojek, Tokopedia and fintech services.
Our analysis on the company’s financials suggests the company has been burning cash to grow its business and may not be able to generate any profits in the near future.

KOSPI 200 IT (TIGER ETF) Rebalancing Preview

By Sanghyun Park

KOSPI 200 IT sector index rebalances twice a year in June and December. The effective date for the upcoming rebalancing is June 10.
The IT sector has a high degree of price cointegration of the stocks within the sector. Therefore, the impact/price correlation is robust despite a smaller impact size.
At this point, the following three stocks deserve our attention: Samsung SDI, Kakao Pay, and LG Corp. We can expect a passive inflow of +0.15x for these highly liquid names.

Gitlab 4Q22 Earnings: Impressive

By Aaron Gabin

Revenue grew 69% YoY to $78M vs. consensus at $70M (+52%), with very impressive underlying growth metrics that show the larger customers are the fastest growing.
Increased selling through hyperscaler partners may aid S&M leverage over time.
Acquisition of Opstrace accelerates the platform expansion into observability, but right now positioned vs. nonconsumption rather than against Datadog.

GoTo IPO: Peer Comparison and Valuation

Superapp GoTo (1379371D IJ) has filed for an IPO to list its shares on the Indonesian Stock Exchange to raise US$1.1-1.25bn at a valuation of about US$24-26bn.
The company plans to use the proceeds to develop its business including for customer acquisition, product development and sales and marketing.
Our SOTP valuation implies that GoTo’s shares are overvalued at the indicative IPO price range.

BigCommerce: Stock Selloff Looks Finished As Valuation Hit $1.5 Billion

By Andrei Zakharov

Shares of BigCommerce Holdings (BIGC US) slipped below the IPO price of $24.00 per share, and at current valuation, we see limited downside risk for BigCommerce stock investors.
In 2020, Intuit Inc (INTU US) offered to acquire BigCommerce for $1.5 billion, according to CNBC and other public sources. Both BigCommerce and Intuit didn’t provide a comment.
Insider selling activity has slowed down noticeably over the past three months and BigCommerce Holdings (BIGC US) insiders sold ~$5 million worth of shares.

Before it’s here, it’s on Smartkarma

Mar 20

TMT: Alphabet Inc Cl C, GoTo, Meituan, Tencent, Apple Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Vulcan Value Partners Q4 And Annual 2021 Letter
GoTo Gojek Tokopedia IPO: Valuation Insights
Meituan (3690 HK) 182 Rejection Level and Draw Down Buy Support
ECM Weekly (20th Mar 2022) – JD.com, Tencent, Prosus, GoTo, Ferretti, Green Tea, Recbio, Abacus
GreenWood Investors Fourth Quarter 2021 Letter

Vulcan Value Partners Q4 And Annual 2021 Letter

By Fund Newsletters

We are value investors – business analysts with a long-term time horizon focused on purchasing publicly traded companies that are competitively entrenched at significant discounts to intrinsic worth.
After very strong absolute and relative returns through the first nine months of the year, all of our investment strategies lagged their benchmarks during the fourth quarter.
All of our portfolios are fully invested in world class businesses with stable values trading at a significant discount to intrinsic worth.

GoTo Gojek Tokopedia IPO: Valuation Insights

GoTo (1379371D IJ) is the leading digital ecosystem in Southeast Asia. It seeking to raise up to $1.3 billion. Bookbuilding ends on 21 March.
In GoTo Gojek Tokopedia IPO Initiation: Island Shopping, we noted that the fundamentals are mixed as the high growth is accompanied by ongoing losses and cash burn.
Our valuation analysis suggests that the price range is aggressive and unattractive. We would give the IPO a pass.

Meituan (3690 HK) 182 Rejection Level and Draw Down Buy Support

By Thomas Schroeder

Meituan met the 104 macro buy support and short covering spike. 180 resistance to cap for a give back to let the dust settle and set up a fresh long.
180-182 resistance is where old price lows and the 38.2% retracement coincide and expected to induce a reaction lower.
200 and 222 intermediate barriers are in focus. Buy support below 142 lies near 120 on a steep give back sequence.

ECM Weekly (20th Mar 2022) – JD.com, Tencent, Prosus, GoTo, Ferretti, Green Tea, Recbio, Abacus

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
GoTo (1379371D IJ) launched its bookbuild but decided to keep it local, with no international bookrunners.
Placements continue to trickle in with Abacus Property (ABP AU) managing to raise US$150m odd. All eyes will be on JD.com Inc. (9618 HK) in the coming week.

GreenWood Investors Fourth Quarter 2021 Letter

By Fund Newsletters

GreenWood Investors is a mostly-long, deep value investment firm focused on areas of extreme pessimism, structural inefficiencies and low competition.
Our fourth quarter performance reflected a worldwide capitulation away from nearly everything except the large tech companies.
We want to be optimized for both the short, medium and long-term, and seek rare investments that look attractive from all perspectives.
We’ve given significant consideration to owning the big tech monopolies since 2012.
We’ve been finding highly compelling short opportunities in addition to maintaining a high sense of urgency in sifting through the wreckage brought on by the most recent market turmoil.

Before it’s here, it’s on Smartkarma

Mar 19

TMT: Sea Ltd, Wiwynn Corp and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Sea Ltd.’s Money Machine Is Broken, Downside Is Not Fully Priced-In
Wiwynn Corp Placement – Selldown’s Timing Is Curious but Previous Deal Had Performed Well

Sea Ltd.’s Money Machine Is Broken, Downside Is Not Fully Priced-In

By Oshadhi Kumarasiri

Perhaps, misled by the Chinese tech rally due to the change in stance from the Chinese Government, Sea’s shares rose by 33% compared to the broader market’s 8.3%.
With fundamentals deteriorating and the Federal Reserve signalling an aggressive rate hike outlook, Sea Ltd (SE US)’s 33% move seems unwarranted.
Meanwhile, the downside potential is quite significant as Sea trades at a significant FY+2 EV/Sales premium to regional peers whose cyclical bottoms are unknown.

Wiwynn Corp Placement – Selldown’s Timing Is Curious but Previous Deal Had Performed Well

By Clarence Chu

Wistron Corp (3231 TT) aims to raise around US$204m (NT$5.8bn) via selling 3.3% of its stake in subsidiary, Wiwynn Corp (6669 TT) . This would not be a clean-up.
The timing is curious given Wiwynn having just announced its plans to offer up to 17m new shares in a primary follow-on offer.
In this note, we will talk about the firm’s track record and run the deal through our ECM framework.

Before it’s here, it’s on Smartkarma

Mar 18

TMT: Softbank Group, Razer Inc, GoTo, LINE Corp, Meituan, HashiCorp, Intuit Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Softbank Group – China Bounce Erases a Week of Losses
Razer’s Offer Spread Risk/Reward – FY21 Results
GoTo IPO – Valuation – Missed the Tide, Boat Won’t Rise
LINE Gift: The Next Stage
Meituan (3690 HK): Authorities Turned Friendly to Internet Companies, Upgrade to Buy
Will Cisco Make A Bid For HashiCorp As Valuation Fell By Half From The IPO Price?
Intuit: A Strategy Shift And High Momentum Exposure

Softbank Group – China Bounce Erases a Week of Losses

By Kirk Boodry

Softbank is a $23bn winner on the China bounce as Alibaba (+37% over 2 days, $18bn) and Vision Fund (+$4.8bn) recovered from selling pressure over the last week
Improving sentiment aside the discount remains above 50% and the rebound appears to be more about correcting excess selling than a change in market outlook
We remain wary of Chinese exposure in the near-term on political, regulatory and economic risks although the worst appears to be over for now

Razer’s Offer Spread Risk/Reward – FY21 Results

Razer Inc (1337 HK)‘s FY21 results beat consensus revenue by 8% but came below consensus EBIT by 3%, based on CapitalIQ data.
The management did their best to dampen sentiment by pointing out slowing growth momentum and margin compression due to significant growth investments in 2022.
We think that the results/outlook do little to increase the attractiveness of the offer. We would be buyers up to HK$2.5 per share (implies 65% deal probability).

GoTo IPO – Valuation – Missed the Tide, Boat Won’t Rise

GoTo aims to raise around US$1.25bn from a local listing, which will mainly be targeted at domestic investors.
GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
In this note, we will talk about the company’s valuation.

LINE Gift: The Next Stage

By Michael Causton

LINE Gift has doubled its user base to 20 million in a year, and added merchants like Seven Eleven, but isn’t content with this.
It has only just integrated with Zozo and Yahoo Shopping and expects these new partners, as well as new TV ad campaigns, to deliver a major increase in user numbers.
The collaboration with Z Holdings’ through Yahoo Shopping and Zozo shows the potential for leveraging the groups’ huge user base.

Meituan (3690 HK): Authorities Turned Friendly to Internet Companies, Upgrade to Buy

Central Financial Working Committee turned friendly to overseas listed internet Companies.
We believe Meituan will be free from the pressure of anti-monopoly rules.
Meituan stock has fallen significantly and we upgrade it to BUY.

Will Cisco Make A Bid For HashiCorp As Valuation Fell By Half From The IPO Price?

By Andrei Zakharov

Shares of HashiCorp (HCP US) , a leading VC-backed infrastructure automation company, fell ~50% below the IPO price of $80.00 per share.
HashiCorp (HCP US) is a multi-product company that helps to accelerate cloud adoption. The company reported total revenue of $321M in FY’22 ended Jan-22, up 51% year-over-year.
According to public sources, Cisco Systems (CSCO US) has already approached HashiCorp with an acquisition offer in 2019. However, both Cisco and HashiCorp declined to comment on rumors.

Intuit: A Strategy Shift And High Momentum Exposure

By Vladimir Dimitrov, CFA

Intuit returned a negative 27% since I warned for pending risks for the share price back in November of last year.
While most of that disappointing performance was due to market related risks, the company’s strategy seems to be changing rapidly.
Shifting the focus from a pure organic-led growth to an M&A frenzy is a bad omen in the already richly priced software space.

Before it’s here, it’s on Smartkarma