In today’s briefing:
- Activision Blizzard – An Unsightly Mess
- SSE50 Index Rebalance Preview: Five Changes Coming Up in June
- Codan (CDA AU): Balancing Defence And Accelerated Preparedness
- SoftBank Group (9884 JP) – Revolut’s Impending Valuation Write-Down?
- [ACM Research Inc. (ACMR US, BUY, TP US$30) Earnings Preview]: Tool Monopoly for Next YMTC Expansion
- Schrole Group Ltd – Strong Growth in Q1 Cash Receipts in a Usually Quiet Quarter
- AppLovin Corporation: Is AXON 2 The New Secret Weapon For Growth? – Key Drivers
- Elastic N.V.: Revolutionizing Data Organization and Management – Key Drivers
- [Bilibili Inc. (BILI US, SELL, TP US$15.4)]: Long-Term Challenge Exists Amid Short-Term Catalysts
- Nutanix Inc: The Next Amazon Of Hybrid Multi-Cloud Computing? – Key Drivers
Activision Blizzard – An Unsightly Mess
- Last night the CMA chose to block the merger between Microsoft and Activision Blizzard in the UK on the grounds that it would harm competition in cloud gaming.
- The merits of that position are highly debatable in our view but that does not mean that the decision is bad for consumers.
- It also does not mean that the decision is bad for Microsoft in our view.
SSE50 Index Rebalance Preview: Five Changes Coming Up in June
- With 2 trading days left in the review period, we see 7 potential adds/5 potential deletes in June. However, there can be a maximum of 5 changes at a rebalance.
- We estimate one-way turnover of 5.58% at the June rebalance leading to a one-way trade of CNY 4.22bn. Index arb balances could increase the impact on the stocks.
- The potential adds have outperformed the potential deletes over the last couple of months and have underperformed over the last week.
Codan (CDA AU): Balancing Defence And Accelerated Preparedness
- The highly-anticipated Defence Strategic Review, released on the 24 April, clarifies the five key missions for the Australian Defence Force: maritime, land, air, space, and cyber.
- One takeaway recommended Defence balance the need for local content against its timely acquisition, suggesting increased off-the-shelf acquisitions. This may favour overseas contractors in place of the domestic industry.
- Codan (CDA AU), whose metal detectors and communications technology are used by the military, is one SME whose procurement speed may be scrutinised.
SoftBank Group (9884 JP) – Revolut’s Impending Valuation Write-Down?
- We have already questioned SoftBank’s private company valuation marks; a Schroders trust recently announced a 46% valuation cut in its Revolut investment, acquired at the July 2021 funding round
- SVF2 acquired 5% of Revolut, also in July 2021; third party valuation providers indicate that the Revolut USD valuation has fallen by at least 50% in 2022
- July 2021 was Revolut’s most recent funding round, implying that Softbank may yet need to mark down its valuation; this could also apply to the funds’ other private companies
[ACM Research Inc. (ACMR US, BUY, TP US$30) Earnings Preview]: Tool Monopoly for Next YMTC Expansion
- We expect ACMR to report C1Q23 top-line and IFRS net income 2.8% and 83% vs. consensus, respectively.
- We expect it to raise FY the mid-point of its guidance to US$560mn~, due to YMTC orders and 4Q23 order visibility;
- We are buyers into earnings but avoid long-positions between reporting dates due to geopolitical risk exposure.
Schrole Group Ltd – Strong Growth in Q1 Cash Receipts in a Usually Quiet Quarter
- Schrole Group Ltd (ASX:SCL) is an Australian software company focused on providing human resource technology solutions to the international education and training sector.
- Schrole has developed a suite of five HR Software-as-a-Service (SaaS) offerings including the core product, Schrole Connect, a SaaS-based staff recruitment platform.
- Schrole Group has reported a 23% increase in quarter-on- quarter cash receipts to $1.29m and a narrowed operating cash loss of $0.37m, in what Is a seasonally quiet quarter for the company.
AppLovin Corporation: Is AXON 2 The New Secret Weapon For Growth? – Key Drivers
- AppLovin Corporation had a disappointing quarter as it delivered significantly wider-than-expected losses and a negative bottom-line even though its revenues were above Wall Street expectations.
- Its results in the quarter included the performance of the software platform, which increased 24% year over year.
- For the first quarter of the upcoming year, they anticipate total revenue and EBITDA to be roughly flat compared to the fourth quarter which implies another possible loss-making quarter.
Elastic N.V.: Revolutionizing Data Organization and Management – Key Drivers
- Elastic NV has managed to deliver another all-around beat in its last result and increased its revenue by 27% in the last quarter.
- Though there have been challenges and obstacles in the macro environment recently, such as problems regarding the supply chain, Elastic has maintained its growth trajectory.
- We also have a dedicated analysis of the company’s Environmental, Social, and Governance (ESG) risk scores in order to evaluate the sustainability risk.
[Bilibili Inc. (BILI US, SELL, TP US$15.4)]: Long-Term Challenge Exists Amid Short-Term Catalysts
- We estimate that BILI’s 1Q23 rev./adj. net income are 3%/11% vs cons.
- We raise gaming/ads revenue starting from 2Q23 because of 1) an increasing number of newly approved games; and 2) increasing possibilities that pre-roll ads could be launched.
- Yet, we still maintain SELL rating and TP unchanged because of concerns about its content ecosystem. Our TP implies 1.7X PS in 2023.
Nutanix Inc: The Next Amazon Of Hybrid Multi-Cloud Computing? – Key Drivers
- Nutanix delivered a strong first quarter with an all-around beat.
- The company’s renewals continue to be strong, exceeding its projected metrics.
- Nutanix managed to deliver a successful quarter with efficient growth in the number of customers as well as in revenue and ACV billings.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
