In today’s briefing:
- Kakao Pay Passive Play Opportunity on June 9
- Tesla Q1 Preview: 15% Beat at Best, But Margins & Guidance May Disappoint
- Forget Elon’s Twitter Spatter. Tesla’s Got Trouble In China.
- Netflix 1Q22: Willfull Ignorance
- LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits
- Tesla Q1 Results: Strong Beat But Cautious Outlook
- KRUS: Kura’s Roll Keeps Rolling
- HMPRO: Expect Strong Earnings Growth YoY in 1Q22
Kakao Pay Passive Play Opportunity on June 9
- A passive play opportunity for Kakao Pay (377300 KS) is approaching.
- Its float rate will likely be raised in the KOSPI 200 June rebalancing. Then, in the KOSPI 200 IT Sector Index, it will again experience the most significant passive inflow.
- The recent share price volatility has increased considerably. So, instead of a preemptive position buildup, a shorter-window passive play seems more appropriate just before the rebalancing trading day.
Tesla Q1 Preview: 15% Beat at Best, But Margins & Guidance May Disappoint
- Tesla’s Q1 results on April 20th (after market) will likely beat Street estimates, but the overshoot may not be as important as profit margins, which should decline versus Q4 2021.
- Q2 outlook is grim, given the lockdown of Tesla’s Shanghai factory. Even if output ramps up in May, exports–which are 40% of output–may not recover due to epic port congestion.
- Tesla has 2 new factories ramping up as of this month. A slowdown at its most profitable plant amid start-up costs could raise the need for equity financing.
Forget Elon’s Twitter Spatter. Tesla’s Got Trouble In China.
- Tesla is losing ground in China, which it needs to juice its margins, create *all* its profits & cash flow, & fund most of billions spent on capex.
- Aging Model Y—its last and only thriving model—won’t save it.
- Sales in China were weakening even before what now has become an extended disruption as China fights its worst Covid surge in two years.
Netflix 1Q22: Willfull Ignorance
- Netflix management came off as unprepared for its current circumstances. Ramping competition and TAM saturation have been known for 2 years.
- Competitive responses sounded half baked: increasing price to deter password sharing and launching advertising tiers…in 2 years?
- The viability of the longterm growth algorithm and 10 year DCFs that Netflix investors have leaned on for years has been rightfully vaporized.
LG Energy IPO Lock-Up – Some Might Be Tempted to Book Profits
- LG Energy Solution (LGES) raised US$10.8bn in its South Korea IPO in Jan 22. Its three-month lockup is set to expire soon.
- LGES is the EV battery unit of LG Chem. The company is a major supplier to customers including Tesla and General Motors.
- In this note, we will talk about the lock-up dynamics and updates since our last note.
Tesla Q1 Results: Strong Beat But Cautious Outlook
- Tesla’s Q1 operating income beat consensus estimates by 38% (ours by 26%), while GAAP net income came in 42% above consensus (36% above ours).
- The highly focused automotive gross margin (Ex-ZEV credits) came to 30% versus consensus estimates of 27.8% and ours of 27.5%. Costs were booked in R&D rather than COGS.
- The results were solid, but the CFO cautioned on Q2 headwinds. Tesla was up by 5.6% in the after hours on these results, ignoring Tesla’s cautious Q2 outlook.
KRUS: Kura’s Roll Keeps Rolling
- Kura Sushi is a dinky (~$540M market cap) sushi business that I have reported on for a little over one year.
- The US subsidiary is das kind (German for ‘the child’ because, why not) of a well-capitalised parent with over 450 stores in Japan.
- It’s a proof of concept venture in a new market, with a tried-and-tested business model, and a parent that provides ample liquidity to its fledging offspring.
HMPRO: Expect Strong Earnings Growth YoY in 1Q22
- With a limited upside to our target price and concern over decreasing people purchasing power following a rise in inflation, we downgrade our recommendation from BUY to HOLD
- We expect HMPRO to report 1Q22 net profit at Bt1.49bn (+9%YoY, -16%QoQ),
- YoY growth will be supported by solid demand for WFH products, government stimulus scheme (Shop Dee Mee Khuen in Jan –15 Feb 2022), and solid revenue growth from Mega Home
Before it’s here, it’s on Smartkarma
