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In today’s briefing:
- Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months
- Crypto Weekly: Will Hong Kong Be the Macau of Crypto?
- AInnovation Technology IPO Initiation: Code Amber
- AKM Industrial’s Privatisation Bid
- HSIE Results Daily: HCL Technologies
- Money Forward (3934) – Solid, Not Spectacular
Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months
- Mercari was expected to announce at some point that it would attempt to transfer to TSE Prime. They have now announced.
- This will end up being a BIG TOPIX inclusion in May or June.
- And the changes to the TOPIX Free Float Weight Methodology will mean it is bigger than it would have been under the old regime (despite unchanged FFW).
Crypto Weekly: Will Hong Kong Be the Macau of Crypto?
- HKMA released a discussion paper on the regulation of stablecoins in Hong Kong which seems to suggest a divergence in regulatory approach towards crypto from China’s current stance
- China has historically allowed banned activities from the mainland to operate in a controlled environment such as gaming in Macau
- We explore the potential that HK is the perfect firewalled environment where crypto could be allowed to develop without contagion for the rest of China
AInnovation Technology IPO Initiation: Code Amber
- AInnovation Technology (AIT HK) is a fast-growing enterprise AI solutions provider in China. It is set to launch an HKEx IPO to raise up to US$157 million.
- The fundamentals are mixed as diverging growth profiles of key segments, low market share and cash burn are accompanied by a narrowing loss margin.
- Overall, we believe the negatives outweigh the positives and we would give the IPO a pass.
AKM Industrial’s Privatisation Bid
- Akm Industrial (1639 HK) announced a privatisation offer from Alpha Luck and AKM Meadville at HK$1.82 per scheme share, a 14.47% premium to last full trading day price of HK$1.59.
- The key pre-condition is several regulatory approvals which be forthcoming as Alpha Luck is indirectly 100% owned by the SASAC.
- The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). We think the offer price is reasonable and the scheme will pass.
HSIE Results Daily: HCL Technologies
We maintain our BUY rating with a target price of INR 1,485, valuing the HCLT stock at 22x Mar-24E EPS, factoring in +13/14% CAGRs in revenue/EPS over FY21-24E HCL Technologies: We maintain BUY on HCL Tech (HCLT), supported by strong growth in services (+5.3% QoQ CC) and recovery in P&P (+24.5% QoQ CC). The services growth was led by ER&D but the ~200 bps decline in margin was higher than peers. Key attributes that support our growth outlook are: (1) growth momentum in ER&D services (+8.3 QoQ CC), supported by digital engineering and IoT services; (2) robust TCV of USD 2.14bn (+64% YoY growth), led by eight large deals in services and product; and (3) strong fresher hiring, which will continue in FY23E.
Money Forward (3934) – Solid, Not Spectacular
- Money Forward reported full year results post close on Friday. The stock will react negatively…probably.
- The stock is down 45% from its 52-week high, along with most high growth SaaS stocks
- The fundamentals, earnings and growth remain intact, but valuations are unlikely to recover as excess liquidity drains out of the market. One for patient LT investors
Before it’s here, it’s on Smartkarma