In today’s briefing:
- Arm IPO – Don’t Worry, It’ll Be Fine
- When Giants Run Out of Gas; Some Among Super Seven Are Losing Steam
- StubWorld: Axiata Is Coming Up Cheap
- CSI300 Index Rebalance Preview: 14 Potential Changes in December
- ARM Holdings IPO Valuation Analysis
- Doosan Robotics: Bankers Provide Additional P/S Valuation and Surge in Price of Rainbow Robotics
- JF Wealth Lock-Up – At Least US$465m to Be Unlocked, Needs Some Selling to Improve Its Liquidity
- VNG IPO: The Bear Case
- Taiwan Tech Weekly: TSMC to Decide on ARM This Week; Elan, Yageo, ChipMOS Flying; AI PC Wave Signals
- VNG Pre-IPO – Local Peers Comparison
Arm IPO – Don’t Worry, It’ll Be Fine
- So the terms are out for Softbank’s attempt to list Arm.
- In typical sparkling form, Masayoshi Son has clocked a ~19% drawdown within weeks.
- Good thing all the bankers will easily get their $8bn loan paid back in full and aren’t subject to conflicting interests…?
When Giants Run Out of Gas; Some Among Super Seven Are Losing Steam
- Super Seven are chiefly responsible for the rally in the S&P 500. >80% of the index gains this year were due in large part to the Super Seven.
- Amazon, Apple, Google, Meta, Microsoft, Nvidia, & Tesla are referred to as Super Seven. S&P is market-cap weighted. Little wonder that Super Seven have an outsized impact on it.
- Having strongly priced in expectations, investors wait for the Super Seven to deliver. Falling short can result in sharp price pullback. What next for the Super Seven?
StubWorld: Axiata Is Coming Up Cheap
- Axiata Group (AXIATA MK)‘s NAV discount and implied stub are around their lows since the CelcomDigi (CDB MK) / Digi.com merger last November.
- Preceding my comments on Axiata are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
CSI300 Index Rebalance Preview: 14 Potential Changes in December
- Over 85% of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
- We estimate a one-way turnover of 1.93% at the December rebalance leading to a one-way trade of CNY 6.93bn.
- The huge inflow to passive trackers has led to the gap between the potential adds and deletes narrowing. That should reverse as passive will need to sell the deletes.
ARM Holdings IPO Valuation Analysis
- Our base case valuation of Arm Holdings is target price of US$36.3 per share, which represents 23% lower than the lower end of the IPO price range.
- We estimate Arm’s sales to reach US2,832 million in FY2024 (up 5.7% YoY) and US$3,038 million in FY 2025 (up 7.3% YoY).
- Given the lack of upside, we have a NEGATIVE view of Arm Holdings. Our valuation sensitivity analysis suggests implied price of US$29.4 to US$43.9 per share.
Doosan Robotics: Bankers Provide Additional P/S Valuation and Surge in Price of Rainbow Robotics
- The bankers provided additional valuation framework using P/S basis for Doosan Robotics and based on this methodology, the IPO price range is from 19,000 won to 24,000 won.
- This does not mean that the bankers have actually lowered the IPO price range but rather they have provided another framework to value the company.
- We continue to have a Positive view of the Doosan Robotics IPO.
JF Wealth Lock-Up – At Least US$465m to Be Unlocked, Needs Some Selling to Improve Its Liquidity
- JF Wealth Holdings (9636 HK) was listed on 10th March 2023, its one-year lockup will expire on 9th Sept 2023.
- The firm had raised around US$129m in its Hong Kong IPO, at the bottom end of its indicative price range.
- JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.
VNG IPO: The Bear Case
- VNG (VinaGame) (VNG US) is Vietnam’s leading, homegrown digital ecosystem. VNG has filed for a Nasdaq listing to raise US$300 million.
- In VNG IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on the Communications and Media business’ faltering fundamentals, the Fintech business’ uncertain path to profitability and VNG’s underlying cash burn.
Taiwan Tech Weekly: TSMC to Decide on ARM This Week; Elan, Yageo, ChipMOS Flying; AI PC Wave Signals
- ARM IPO — TSMC says will decide this week whether to participate. ARM is a company potentially without peers and enjoys support from Apple, Nvidia, AMD, and Samsung.
- Elan, Yageo, ChipMOS top gainers in Taiwan — Three of our Longs have done well most recently on high volume and little new public news.
- Recent Dell & HP results provide additional clarity on the coming AI PC wave.
VNG Pre-IPO – Local Peers Comparison
- VNG (VinaGame) (VNG US), Vietnam’s leading internet platform, aims to raise up to US$300m in its US IPO.
- VNG is Vietnam’s leading homegrown digital ecosystem, as per the company, with diverse product offerings across games, communications and media, fintech and other opportunities
- We looked at the company’s past performance in our earlier notes. In this note, we undertake a comparison versus its local competitors.
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