In today’s briefing:
- Bilibili Follow-On Offering – Seems Opportunistic
- Ant Group – Headlines Overwhelmingly Positive & Hides Micro Loans Business’ Value
- PayPal Holdings Inc (PYPL US): TSS Target Achieved in 12 Days (+12.5%)
- Aequitas 2022 IPOs and Placements Performance Review – From the Busiest Year to the Slowest Year
- Oak Holdings/Vantage Towers: Tendering Vs. Domination Agreement
- XPER: CES and a New Catalyst
- Bilibili Follow-On Offering: Limited Upside
- Huobi Market Share Plummets in 2022
- IRDM: Snapping to a New Price Target
Bilibili Follow-On Offering – Seems Opportunistic
- Bilibili Inc (BILI US) aims to raise around US$400m via a follow-on ADS offering.
- The company plans to use most of the proceeds to redeem its 2026 notes.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
Ant Group – Headlines Overwhelmingly Positive & Hides Micro Loans Business’ Value
- News headlines on Ant Group are overwhelmingly positive these days and they try to hide the fact that the consumer finance business is worth just 1/2 of last year’s value.
- We think the main reason why markets are so optimistic these days is that they seem to think that regulatory crackdowns on the platform economy are finally over.
- With Jack Ma surrendering control of Ant Financial Services Group (6688 HK) just a few days ago, could anybody say that regulatory pressure is really over?
PayPal Holdings Inc (PYPL US): TSS Target Achieved in 12 Days (+12.5%)
- On 16 December we determined that the new interim downtrend low at 69.77 would likely fail and produce an 8% to 13% correction to 75.00/78.50 in 1-2 weeks.
- PYPL US subsequently bottomed at 66.39, before reversing to 78.48 (+12.5% from 69.77), 12 days after our recommendation.
- Please refer to our publication on 19 October 2022 … “Introducing Our Tactical Trend Reversal Methodology: TSS (Trend Sustainability Score)” for a description of our proprietary TSS methodology.
Aequitas 2022 IPOs and Placements Performance Review – From the Busiest Year to the Slowest Year
- 2022 marked our seventh year covering Equity Capital Markets (ECM) in Asia Pacific. 2022 was rather quiet ending with us covering one of the lowest number of IPOs and placements.
- We ended 2022 with an accuracy rate of 74.6% across 55 IPOs that we covered and 70.5% across 78 placements.
- For those not familiar with our coverage, we aim to cover all IPOs and placements with a minimum deal size of US$100m across Asia-Pacific, including China ADRs.
Oak Holdings/Vantage Towers: Tendering Vs. Domination Agreement
- The agreement between Vodafone and the consortium values the company at a generous 24x EV/Fwd EBITDA, 19% premium over the 3-month VWAP (14.7% above my DCF-based fair value estimate).
- Nevertheless the spread (+0.44%) signals that Oak Holdings may not obtain the necessary 95% to squeeze-out. Risk arb funds are betting on higher returns from a Domination Agreement.
- On rather aggressive assumptions (90% payout, 4.5% rate of return, 2.5% growth) a dividend-discount model provides a €39.6/share valuation. This could still turn into another messy Kabel Deustschland scenario.
XPER: CES and a New Catalyst
- XPER used the CES event this year to make several news announcements, but the biggest news for XPER was the one released by Roku Inc. (ROKU).
- The ROKU announcement causes TiVo being the only independent TV operating system. We believe this could result in XPER establishing greater market share for its TVOS than originally expected
- During CES Verstel introduced a series of TVs under multiple brands that would use TiVo TVOS. Additionally, XPER revealed more automakers that are releasing car models with AutoSense and AutoStage
Bilibili Follow-On Offering: Limited Upside
- Bilibili announced a follow-on equity offering of 15.34m ADS priced at $26.65 per ADS partially in exchange for convertible senior notes due 2026 (US$384.8m) and to replenish its cash reserves.
- Each ADS represents one ordinary share and new equity offering of 15.34m shares will account for approx. 3.7% of the company’s extended share capital post follow-on offering.
- Bilibili Inc (BILI US) ADS dropped 5.76% following the announcement of the follow-on offering and we believe there is limited upside.
Huobi Market Share Plummets in 2022
- Price Movements: Most Layer 1 tokens have struggled versus ETH since December, but SOL and ATOM have recently outperformed.
- Market Liquidity: Curve’s 3pool – made up of USDT, USDC, and DAI – has seen its total value locked fall from $5.5bn to just $600mn over the past year.
- Derivatives: Both SOL and LDO experienced a short squeeze as each token unexpectedly rallied.
IRDM: Snapping to a New Price Target
- The technology agreement IRDM had first announced in July 2022 became clear with the official naming during CES.
- QCOM has entered into a service provider agreement with IRDM that would result in new Snapdragon with satellite connectivity
- The news is more significant than a smartphone maker since QCOM’s mobile processors are used by multiple smartphone makers
💡 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
