In today’s briefing:
- BILIBILI (BILI US): Can Achieving Breakeven Justify US$10bn Market Cap?
- IHI (7013) | Boeing Orders Take Off
- China Internet Weekly (12Dec2022): Bilibili, Tencent, JD.com
- Akeso Biopharma (9926.HK) – Behind the Deal with Summit: A Snake Swallows an Elephant?
- Humana Inc.: Initiation of Coverage – Expansion Of CenterWell & Other Drivers
- AutoZone Inc.: Initiation of Coverage – Business Model & Key Drivers
- Getaround This SPAC Deal
- IDEX Corporation: Initiation of Coverage – & Other Drivers
- Newmont Corporation: Initiation of Coverage – Macro For Gold Mining & Other Drivers
- Sporting Crypto – Dec 12th: Starbucks Launch Web3 Loyalty Program; Odyssey
BILIBILI (BILI US): Can Achieving Breakeven Justify US$10bn Market Cap?
- BILIBILI shares have rallied more than 200% since early November on prospects of China exiting zero-COVID, short covering, and accelerated breakeven timeline.
- Yet simply achieving breakeven doesn’t justify its US$10 billion valuation. It has to be accompanied by decent profitable growth – an unlikely scenario given the aggressive downsizing needed for breakeven.
- BILI’s businesses also entail structurally low margin. Stock could easily de-rate by 30% or more when growth euphoria recedes and disappointed profitability checks in during 2023.
IHI (7013) | Boeing Orders Take Off
- Boeing’s stock price is recovering sharply as it benefits from recent multi-billion-dollar order wins
- Japanese stocks (IHI, MHI, KHI & Subaru) are highly geared into the Boeing supply chain
- We highlight IHI as a top pick on this thematic and believe aero-engine revenues will continue to recover, driving a stock re-rating
China Internet Weekly (12Dec2022): Bilibili, Tencent, JD.com
- Bilibili is dismissing employees in live streaming, cartoon, and main station.
- The Chinese mobile game market began to expand, but the global market is shrinking.
- JD.com chairman reorganized its company, reducing the departments from eight to three.
Akeso Biopharma (9926.HK) – Behind the Deal with Summit: A Snake Swallows an Elephant?
- Akeso Biopharma Inc (9926 HK) and Summit Therapeutics entered into a collaborative and licensing agreement for AK112, which has set a new record for China’s innovative drug license-out cooperation.
- While the market remained positive about the transaction, there are also doubts. We deep dive the potential logic of the deal.
- We recommended investors not to neglect “the nature of the deal” and “the real motivation” behind. It’s also important to see whether the subsequent operations can make some achievements overseas.
Humana Inc.: Initiation of Coverage – Expansion Of CenterWell & Other Drivers
- This is our first report on Humana, a leading player in the medical insurance space in the U.S.
- The company’s third quarter results were reasonably strong as it met Wall Street’s revenue expectations while managing an earnings beat.
- In addition to improving plan offers for their larger membership, the management strengthened their consumer segment strategy.
AutoZone Inc.: Initiation of Coverage – Business Model & Key Drivers
- This is our first report on AutoZone, one of the largest distributors of automotive replacement parts and accessories in the U.S.
- The company had a strong fourth quarter, and managed an all-around beat.
- However, its domestic, commercial sales made up 30% of its domestic auto parts sales.
Getaround This SPAC Deal
- This week, digital car-sharing platform Getaround made the headlines as the latest De-SPAC casualty to crash and burn on its stock market debut.
- After initially announcing plans to go public through a merger with interPrivate II Acquisition Corp in a deal valuing the combined company at $1.2 billion in May 2022, the company saw a decline of 65% on its debut.
- Essentially, at its current valuation, the market thinks that Getaround is worth a little more than the cash generated from its SPAC deal and less than half of the total cash it has raised to date.
IDEX Corporation: Initiation of Coverage – & Other Drivers
- This is our first report on industrials major, IDEX Corporation.
- The company is regularly in the news for its frequent acquisitions and generated good results in the third quarter, surpassing Wall Street expectations on all fronts.
- We initiate coverage on the stock of IDEX Corporation with a ‘Hold’ rating.
Newmont Corporation: Initiation of Coverage – Macro For Gold Mining & Other Drivers
- This is our first report on global gold mining giant, Newmont Corporation.
- In Q3, they produced 1.5 million ounces of gold and nearly 300,000 gold equivalent ounces from copper, silver, lead, and zinc.
- We initiate coverage on the stock of Newmont Corporation with a ‘Hold’ rating.
Sporting Crypto – Dec 12th: Starbucks Launch Web3 Loyalty Program; Odyssey
- Starbucks have launched a Web3 loyalty program called Odyssey.
- Members can engage in ‘journeys’, a series of activities, such as playing interactive games or taking on fun challenges to deepen their knowledge of coffee and Starbucks.
- They will be rewarded with a digital collectable ‘journey stamp’ — and yep, you guessed it — they’re NFTs.
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