In today’s briefing:
- Korea’s New SSF/SSO Listing on July 25 & LG Energy’s Massive Lockup Release on July 27
- SoCar IPO – Refiling Updates – Latest Earnings Do Not Change Investment Thesis
- Air Closet Files for IPO
- Super Hi Spin-Off: Unexciting Fundamentals
- Tesla Q2 EPS Should Miss, But Beware of Musk’s Need for Strong Results
- Tactical TMT 2Q Earnings Trading Idea: Short Tesla
- Tactical TMT 2Q Earnings Trading Idea: Short NFLX
Korea’s New SSF/SSO Listing on July 25 & LG Energy’s Massive Lockup Release on July 27
- The KRX will list 20 new single stock futures (SSF) and 5 single stock options (SSO) next Monday, July 25, including LG Energy Solution (373220 KS).
- It seems very probable that the replacement demand for futures (short) will increase substantially due to a possible saturation of the loan market.
- This situation, coupled with local pensions’ basis trading, can lead to a significantly distorted basis. We should do basis trading or play pair trading (with LG Chem) on this.
SoCar IPO – Refiling Updates – Latest Earnings Do Not Change Investment Thesis
- SOCAR (403550 KS) is looking to raise up to US$157m in its upcoming Korea IPO.
- SoCar is a Korean car sharing business which aims to become an all-in-one mobility solutions provider beyond car sharing, with approximately 80% domestic market share in the car sharing space.
- The firm remains loss-making with no signs of being profitable in the near/medium term. In this note, we will take a look at its refiling updates.
Air Closet Files for IPO
- Subscription rental services have become increasingly mainstream and the earlier start ups are now maturing into larger businesses. One of the first, Air Closet, plans an IPO later this month.
- Air Closet specialises in renting out clothing from major labels but also in taking away the burden of choice by arranging for styles to be picked in-house.
- As well as this growing service, Air Closet has also just launched a rental service for gadgets ranging from kitchen appliances to cameras.
Super Hi Spin-Off: Unexciting Fundamentals
- Haidilao International announced the spin-off plan of its overseas arm, Super Hi.
- We take a quick look at Super Hi’s fundamentals. We think it is unlikely for Super Hi to achieve the level of economy of scale as Haidilao in China.
- We think the valuation of Super Hi should be compared to F&B peers in the ASEAN region given that its business is mainly focused on the ASEAN region.
Tesla Q2 EPS Should Miss, But Beware of Musk’s Need for Strong Results
- We see Tesla’s Q2 GAAP EPS at $1.01, which is 34% below consensus estimates of $1.53.
- Tesla’s Q2 should be horrible given the lockdown of its Shanghai factory and huge startup costs at its 2 new factories, but beware of FSD revenue recognition.
- Elon Musk needs Tesla’s share price to be high, in light of how many shares he may need to sell if forced to buy Twitter. Q2 numbers could be “massaged”.
Tactical TMT 2Q Earnings Trading Idea: Short Tesla
- We think Tesla’s FSD narrative is ready to crack: head of autopilot departed, 200 employees fired, and no progress on FSD.
- Tesla has to guide down full year production and gross margin targets (for reasonable reasons…will this be ignored this time?)
- Ever increasing competition from the low end may eventually confine LT sellside DCF based estimates.
Tactical TMT 2Q Earnings Trading Idea: Short NFLX
- Netflix net add bogey appears to be for 2Q losses in the -2-3M range (guide was -2M), if it hits this number is irrelevant, the 3Q/2H22 guide is more important.
- BBG was bullish on NFLX’s quarter recently, but we think misses the forest from the trees regarding ever ramping competition.
- Ad-Based Netflix subs *might* hit by end of 2022, but won’t move the needle for 18 months.
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