In today’s briefing:
- KOSPI200 June ’24 Rebalance: Index Changes Released, 6 Additions & 6 Deletions
- Unexpected Inclusion of Cosmo AM&T in KOSPI 200 Sparks Notable One-Day Flow Via KOSPI 200 IT
- Tech Supply Chain Tracker (25-May-2024): Global EV charger market & key players
- Formosa Sumco Technology – Earnings, Returns, Financial Position, Worsening Dramatically
- [Kuaishou (1024 HK, BUY, TP HK$83) Target Price Change]: Out-Performance in Off-Season Thanks to GAI
- Warner Music Group: A Tale Of Increasing Presence in Dynamic Music Markets! – Major Drivers
- Fox Corporation: A Robust Network Portfolio and Targeted Content Strategy! – Major Drivers
- Roblox Corporation: Will Enabling In-World Advertising Catalyze Revenue Growth? – Major Drivers
- Gen Digital: A Story Increasing Personalization and Empowerment through AI! – Major Drivers
- Akamai Technologies: Will The Management Focus on High-Growth Compute and Security Business Pay Off? – Major Drivers
KOSPI200 June ’24 Rebalance: Index Changes Released, 6 Additions & 6 Deletions
- The KRX have announced the index changes for the KOSPI200 June review.
- The index will be rebalanced in the closing auction on Thursday the 13th of June.
- There will be 6 additions to the index and 6 deletions.
Unexpected Inclusion of Cosmo AM&T in KOSPI 200 Sparks Notable One-Day Flow Via KOSPI 200 IT
- Unexpectedly, KRX included Cosmo AM&T (005070 KS) despite not meeting the market cap cutoff and excluded DB Hitek (000990 KS) and Lotte Energy Materials (020150 KS).
- Cosmo AM&T’s unexpected inclusion triggers a significant one-day passive flow event through the KOSPI 200 IT, the sector index with the largest AUM.
- Sector index rebalancing, a single-day event managed by one ETF operator, more significantly correlates flow direction with price impact. We should consider a long-short setup for these on June 13th.
Tech Supply Chain Tracker (25-May-2024): Global EV charger market & key players
- Global EV charger market overview with key players highlighted in the industry, including a focus on technological advancements.
- Ex-IBM Chief Accessibility Officer seeks to revolutionize digital inclusion in Taiwan’s manufacturing sector through innovative strategies and initiatives.
- Updates on notebook shipment for April 2024, global smartphone sales in the first quarter of 2024 as well as collaborations such as SDC & Lenovo teaming up to launch slidable display devices by 2025.
Formosa Sumco Technology – Earnings, Returns, Financial Position, Worsening Dramatically
- The company recently announced poor earnings down 56% YoY in 1Q24
- Dwindling cash is another major concern especially with higher debt/ebitda
- At 15-25% ROE is sensible but now back toward 5% there is less enthusiasm
[Kuaishou (1024 HK, BUY, TP HK$83) Target Price Change]: Out-Performance in Off-Season Thanks to GAI
- Kuaishou reported C1Q24 revenue, IFRS OP, and IFRS Net income inline, 58%, and 78% vs. our estimates; and inline, 67% and 86% vs. consensus
- Company suggested contribution of Generative AI (GAI) to the growth of the advertising business to be substantial;
- We reiterate our BUY rating and raised target price to HK$83, implying 17x PE in 2025.
Warner Music Group: A Tale Of Increasing Presence in Dynamic Music Markets! – Major Drivers
- Warner Music Group (WMG) demonstrates its influence in the music industry with a global team that continuously delivers for its artists and drives the business forward. In the second quarter earnings call transcript, Warner Music Group specified that the total revenue increased by 7% with Recorded Music and Music Publishing increasing by 4% and 19% respectively. This growth reflects the company’s efficacy in creating and promoting music in various genres and throughout all stages of artists’ development. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.
Fox Corporation: A Robust Network Portfolio and Targeted Content Strategy! – Major Drivers
- Fox Corporation reported strong Q3 fiscal year 2024 results, demonstrating its ability to distinguish itself from its peers with a 7% EBITDA growth and the steady performance of its brands. However, these results were compared against last year’s Q3 which benefited significantly from the windfall of Super Bowl LVII.
- Fox’s total affiliate revenue fees showed promising growth, with a 4% increase driven by the benefits of recent renewals. This was evident in both the Television and Cable segments. However, advertising revenues were down due to the absence of the Super Bowl and fewer NFL broadcasts compared to the previous year. If the shortfall from NFL games were disregarded, overall advertising revenues would have increased slightly. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.
Roblox Corporation: Will Enabling In-World Advertising Catalyze Revenue Growth? – Major Drivers
- Roblox Corporation reported its results of their first quarter 2024 earnings and reported that daily active users (DAUs) hit over 77 million, marking a 17% increase from the same period the year before. Year-on-year growth for users above the age of 13 was particularly impressive, at 22%.
- Japan, a significant gaming market, reported a growth surge of 50%, while India saw similar success, boasting a growth rate of 58%.
- There was also positive news relating to revenue, which hit $801 million, marking a 22% year-on-year rise and exceeding the company’s own projected range of $755 million to $780 million. Bookings were $923.8 million, landing firmly within the predicted guidance range of $910 million to $940 million. However, Baszucki highlighted expectations were for a higher figure, sparking some concern. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.
Gen Digital: A Story Increasing Personalization and Empowerment through AI! – Major Drivers
- Gen Co., a leader in consumer cybersafety, wrapped up its fourth quarter of fiscal 2024, showing impressive financial growth and gains in operations. Over the fiscal year, the company recorded consistent operational results, making it their fifth year of organic growth. This growth is driven by an increasing awareness of cybersafety needs among consumers, making it a dynamic and compelling market opportunity. Gen’s focus solely on cybersafety sets them apart from competitors who may have other substantial interests. The company’s dedicated teams are continuously uncovering, researching, and stopping new threats. In the fiscal year ’24, over 12 billion attacks were blocked by using threat telemetry data and advanced AI capabilities. Gen’s strong technology offering on all major platforms combined with AI capabilities and market-leading visibility across the entire ecosystem has positioned the company to lead the way in consumer cybersafety. Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.
Akamai Technologies: Will The Management Focus on High-Growth Compute and Security Business Pay Off? – Major Drivers
- Akamai Technologies, Inc.’s first quarter earnings showed strong growth in the company’s security and compute sectors, while facing headwinds in the delivery product line. The financial results saw revenue grow to $987 million, reflecting an 8% increase year-over-year in both constant currency and reported. Non-GAAP earnings per share were reported at $1.64, a 17% increase year-over year and 18% in constant currency. Furthermore, the fast-growing parts of Akamai’s business, including security and cloud computing, grew to represent ultimately 2/3 of total revenue, with an impressive growth of 22% over Q1 of 2023.
- Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.
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