In today’s briefing:
- Grab Holdings (GRAB IJ) – Rationalising With Growth in Mind
- SK Square’s Special Dividend Momentum Trading: Entry Timing at Month End.
- SK Square: Share Cancellation and More Share Buyback Likely from Sale of SK Shieldus in 2H 2023
- Advantest (6857) | Time to Cash in the Chips?
- Alibaba’s Cloud Intelligence Group Spin-Off: The First Look
- Vivendi Acquires A Stake In PCCW’s Viu
- Comms Group Limited – Vodafone Contract Extension and Expansion
- PagerDuty Inc.: AIOps Launch For End-to-End Automation & 3 Other Major Drivers Influencing Its Performance – Financial Forecasts
- Ciena Corporation: Can The Groundbreaking WaveRouter Launch Be A Game Changer? – Key Drivers
- Smartsheet Inc.: 4 Eye-Opening Drivers For This Tech Player – Financial Forecasts
Grab Holdings (GRAB IJ) – Rationalising With Growth in Mind
- Grab‘s announcement this week that it would cut 11% of its workforce was a move to rationalise costs to give the platform a sure footing for longer-term growth.
- Near-Term profit targets would be achieved without these recent cuts which are focused on addressing geographical cost imbalances and taking into account potential automation through the impact of Generative AI.
- The outlook for growth this year looks promising, with the potential for a strong 2H recovery despite employee-related costs but cuts will establish a more competitive cost base long term.
SK Square’s Special Dividend Momentum Trading: Entry Timing at Month End.
- The market’s attention has shifted to the second part, which is the additional utilization of a portion of the harvest result for shareholder returns.
- There is a significant possibility that the timing to allocate the ₩200B for shareholder returns will be advanced to late July or early August.
- We should set up a position aiming for the potential for a special dividend, which may lead to momentum trading flow just before the quarterly ex-div date later this month.
SK Square: Share Cancellation and More Share Buyback Likely from Sale of SK Shieldus in 2H 2023
- SK Square announced that it will cancel treasury shares worth 2.5 million shares on 4 October 2023, which represents 1.8% of its current outstanding shares.
- Our NAV analysis of SK Square suggests NAV of 9.4 trillion won or NAV per share of 66,421 won, representing a 45% upside from current levels.
- SK Square’s positive shareholder return policies including higher share buybacks, cancellations, and dividends are result in further outperformance of SK Square relative to KOSPI this year.
Advantest (6857) | Time to Cash in the Chips?
- Advantest’s stock has doubled in the past two months, outperforming even Nvidia, indicating a potential peak in momentum
- Near term technical indicators suggest the stock could be running out of steam, with few catalysts ahead of July Q1 earnings
- The stock is trading at a significant premium to Japanese-listed SPE peers and its historical EV/EBIT multiple of 15x
Alibaba’s Cloud Intelligence Group Spin-Off: The First Look
- Alibaba (ADR) (BABA US) aims to complete a spin-off of the Cloud Intelligence Group via a stock dividend distribution, with it becoming publicly listed in the next 12 months.
- The Cloud business is pursuing a land-grab strategy to reignite growth. While it is the only profitable Chinese cloud platform, the profitability gap to Amazon AWS highlights the opportunity.
- The aim to bring in external strategic investors before the spin-off will provide a valuation benchmark. Our analysis points to a Cloud business valuation range of US$45-58 billion.
Vivendi Acquires A Stake In PCCW’s Viu
- PCCW Ltd (8 HK) is selling an initial 26.1% equity stake in its streaming platform Viu, to Vivendi SA (VIV FP)‘s Canal+, for US$200mn.
- Via a staggered investment, Canal+ can increase its equity to US$300mn. In addition, a further investment, at Canal+’s option, could result in increasing its stake in Viu to 51%.
- Elsewhere, PCCW’s 18% discount to NAV is the narrowest in over two years.
Comms Group Limited – Vodafone Contract Extension and Expansion
- Comms Group Ltd (ASX:CCG) has announced an extension of the Vodafone contract term to a minimum five-years together with an expansion in the range of services provided in delivering voice connectivity for Microsoft Teams, including the more advanced Operator Connect.
- The extended agreement also includes a minimum monthly payment to CCG of A$30k beginning October 2023.
- While our Vodafone assumptions are unchanged, and our medium-term expectations for Vodafone well above the minimum monthly payment, the revised agreement improves visibility and demonstrates Vodafone’s commitment to the relationship.
PagerDuty Inc.: AIOps Launch For End-to-End Automation & 3 Other Major Drivers Influencing Its Performance – Financial Forecasts
- PagerDuty delivered a mixed set of results in its most recent result, with revenues falling short of Wall Street expectations but above-par earnings.
- In terms of the pipeline, the total ARR and mix from new products significantly improved.
- PagerDuty AIOps offers end-to-end automation, from event intake through auto-remediation, to efficiently manage large volumes of data and events.
Ciena Corporation: Can The Groundbreaking WaveRouter Launch Be A Game Changer? – Key Drivers
- Ciena managed to exceed analyst expectations in terms of revenue as well as earnings.
- Inventory levels decreased by $80 million from Q1 as the operating environment continued to improve.
- As the year progresses, their management anticipates further inventory reductions, which will enable the company to resume the steady rate of cash flow they were experiencing prior to the supply chain disruptions.
Smartsheet Inc.: 4 Eye-Opening Drivers For This Tech Player – Financial Forecasts
- Smartsheet delivered a solid result and managed an all-around beat in the last quarter.
- The quarter’s revenue increased by 31% year over year to $219.9 million, while billings increased by 20% year over year to $215.5 million.
- Enterprise expansions during the quarter included Eli Lilly, Foxtel, Motorola Solutions, and Novocure, and new customer wins included Liberty Media, Hostess Brands, and Eight Eleven Group.
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