In today’s briefing:
- Kingston Financial (1031 HK): What Will Chu Choose To Do?
- Liquidity Risk Short Candidates: Blink Charging, Natera, Axonics, Enviva
- What Are the Prospects for a Meta Rebound?
- GTX: The Macro Adjustment
Kingston Financial (1031 HK): What Will Chu Choose To Do?
- Hong Kong brokerage Kingston Financial (1031 HK) was suspended this morning pursuant to Hong Kong’s Takeovers Code.
- Chu Yuet Wah is the largest shareholder with 74.6% of shares out.
- Shares are down 98% from the January 2018 peak. A chunky premium may be on the cards if a firm Offer unfolds.
Liquidity Risk Short Candidates: Blink Charging, Natera, Axonics, Enviva
- Liquidity shorts can be great short candidates. The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements.
- Liquidity shorts have built-in catalysts, have moderate to higher betas, and can have strong down moves if a crisis develops. They can go bankrupt, pushing the stock price near zero.
- Today we are flagging Blink Charging., Natera, Axonics, and Enviva.
What Are the Prospects for a Meta Rebound?
- Meta now trades at 14x P/E and 6x fwd EV/EBITDA…valuation inline with Paramount and Warner Brothers Discovery. This is nuts!
- While the drumbeat of competitive concerns and self inflicted wounds has piled up in the past month, even core Facebook is not in a death spiral of engagement.
- META is investing in new ad tech and ad formats, and has the ability to cut significant opex from its budget that could yield 10-20% upside to current 2023 consensus.
GTX: The Macro Adjustment
- Continued improvement in automobile inventory levels should benefit Garrett Motion (GTX)
- GTX has experienced a decline in turbochargers sold over the past year due to supply chain issues causing carmakers to have lumpy ordering rates.
- Ahead of the second quarter results, we had highlighted the foreign exchange headwind the weaker Euro could play. The Euro continued to depreciate versus the US Dollar in the third quarter
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