In today’s briefing:
- TOPIX Inclusions: Who Is Ready (Jan 2023)
- Weimob Placement – Share Price Momentum over the past Few Months Have Been Strong
- Tencent(700.HK) 4Q22 Preview:Turning Points Are Emerging
- Korea M&A Outlook in 2023: What’s for Sale?
- EQD | Tencent (700 HK): Use Derivatives to Protect Recent Gains
- CSRC Sanction Is Likely Darkness Before Dawn
- Ant Group’s Lending Unit Gets Approval for $1.5 Billion Capital Boost
- Chinese Intel Alternative Makes Consumer Play With Retail Store
- A Look at Gemini USD
- ATEN: Shifting to a Second Half Event
TOPIX Inclusions: Who Is Ready (Jan 2023)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Dec 2022).
- Our latest top pick for TOPIX Inclusion pre-events is Artspark Holdings (3663 JP).
Weimob Placement – Share Price Momentum over the past Few Months Have Been Strong
- Weimob Inc. (2013 HK) is looking to raise about US$205m in its primary placement to fund R&D, upgrade marketing systems, and for general working capital purposes.
- On an ADV basis, the deal is a relatively small one at just 3.6 days of the firm’s three month ADV.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
Tencent(700.HK) 4Q22 Preview:Turning Points Are Emerging
- Our Tencent 4Q22’s rev. is in line, while non-IFRS net income would beat cons. by 5.2%. We estimate that top and bottom line will grow 13%/14% YoY in 2023.
- We suggest major business lines see turning points in 4Q22, supported by rebound of Peacekeeper Elite’s gross billings, approval of new game codes, monetization of Wechat Video Account, etc.
- Tencent is one of our top picks. Video Account, global game publishing, and margin beat are three major catalysts. Our TP HK$ 407 implies 26.1X PE in 2023.
Korea M&A Outlook in 2023: What’s for Sale?
- More than 20 trillion won (US$16 billion) worth of deals are up for M&As in 2023.
- However, due to high interest rates and differences on valuations among buyers and sellers, the M&A market in Korea is likely to continue to be weak in 2023.
- In this insight, we discuss 24 companies that are up for M&As this year in Korea, including Hanon Systems, SK Shieldus, and K Car.
EQD | Tencent (700 HK): Use Derivatives to Protect Recent Gains
- Stock is up over 80% from October lows and almost 10% in 2023 already
- Sentiment over fundamentals appears to be driving the rally and stock is back in the worlds top 10 most valuable companies
- We consider some option strategies to roll profits and reduce exposure
CSRC Sanction Is Likely Darkness Before Dawn
- CSRC’s rectification on FUTU to suspend new user registration from mainland China while allow service continuation to existing user is well expected. We believe the market over-reacted;
- FUTU caters to overseas Chinese and populations falling outside of major currency zones. This market supports a paying user growth of 12% and revenue growth of 19% CAGR to 2025.
- We maintain BUY and cut TP from US$58.5 to US$50 due to moderate decline in mainland China users.
Ant Group’s Lending Unit Gets Approval for $1.5 Billion Capital Boost
- Ant Group Co. Ltd.’s online lending subsidiary has been given the go-ahead from regulators to boost its registered capital by 10.5 billion yuan ($1.5 billion), marking a key step forward in the fintech giant’s government-driven, year-long revamp
- The approval was granted a month and a half after some of the unit’s shareholders disclosed the plan, underscoring the recent pledge by authorities to promote healthy development
- Ant Group, backed by billionaire Jack Ma’s e-commerce giant Alibaba Group Holding Ltd., has been conducting a rectification required by the government since a regulatory storm saw its planned blockbuster IPO suspended in November 2020
Chinese Intel Alternative Makes Consumer Play With Retail Store
- Loongson Technology Corp. Ltd., a Chinese chip architecture developer, took a major step into the consumer market by opening its first brick-and-mortar pop-up store
- Loongson is also exhibiting its development kits and solutions for printers, smart door locks, and treadmills in the store
- This is not the first time Loongson has attempted to enter the consumer market. The firm opened an online store on e-commerce platform JD.com in October 2021, selling laptops, desktops, and their components like motherboards and memory kits
A Look at Gemini USD
- The fall of the FTX and Alameda house of cards built atop a seemingly innocuous token – FTT – has raised skepticism about centralized exchanges and the tokens that they issue.
- Attention was first turned to Binance, BNB, and BUSD; as a result, BUSD’s market cap fell from $23.5bn to $16.5bn in just 90 days, though Binance has seemingly passed its stress test.
- Attention has now turned to Gemini, Genesis, and Digital Currency Group (DCG).
ATEN: Shifting to a Second Half Event
- The recent wave of layoff related headlines along with companies putting greater scrutiny on cash outflows could result in ATEN experiencing slower than expected revenue growth in 2023
- When there are layoffs and changes to employees working more from the office it is likely to reduce the number of security devices purchased
- Our lowered revenue outlook comes with the expectation ATEN would be able to ramp revenue in the second half of the year
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