In today’s briefing:
- Quiddity Primer: The Ongoing Evolution of the Hang Seng Index
- Xiaomi(1810.HK): Huawei’s Restrictions (Another) Signal of More to Come
- O2Micro Shareholders Approve Merger. Completion Remains Opaque
- Meta Platforms 4Q22: Zuckerberg Got Religion?
- Peris.ai, a Cybersecurity Startup Built by Ritase Co-Founder, Gets East Ventures Backing
- Visa Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (02/23)
- KDDI (Buy) – Q3 22 Results Reaction: Super Mobile but Full-Year Targets Look Challenging
- A $6m Bet to Mix Crypto and Traditional Gaming
- Mastercard Inc: Treasury Intelligence Platform & Other Drivers
- E-Scooter Rental Startup WeMo Nets US$15M for Thailand, Indonesia Expansion
Quiddity Primer: The Ongoing Evolution of the Hang Seng Index
- The Hang Seng Index (HSI INDEX) is a blue-chip index that represents the performance of the large cap stocks listed in the Hong Kong Stock Exchange.
- The index is undergoing some significant composition changes and the index provider currently uses a highly subjective constituent selection process which is quite challenging to decode.
- In this insight, we take a look at Quiddity’s approach to solving this Hang Seng constituent selection puzzle and the historical performance of past rebalance events.
Xiaomi(1810.HK): Huawei’s Restrictions (Another) Signal of More to Come
- Likely new 4G restrictions will delay Huawei’s ability to launch mid-range offerings at volume. Xiaomi stands to gain 1.2ppts of share in 2024 vs. our prior forecast.
- However, new limits are long-term negative, as it (1) raises the chance for cascading limits on China 3Cs; (2) triggers reduced 3C electronics demand; (3) weaker industry electronics demand.
- The impact of the latest set of restrictions will likely prove net negative, in our view, as a result we re-iterate our SELL rating and HK$7.3 TP.
O2Micro Shareholders Approve Merger. Completion Remains Opaque
- At the EGM held on January 31, O2Micro International (OIIM US)’s shareholders voted in favoor of the Merger Agreement.
- The Offerors didn’t have the necessary two-thirds for the voter to be a foregone conclusion, therefore the outcome wasn’t assured. Although it was an okay offer. With proxy advisor support.
- Yet even after the vote, this is still trading 7.1% below terms. The drawn-out completion of Glory Star New Media Group Holdings (GSMG US) is evidently uppermost in investors’ minds.
Meta Platforms 4Q22: Zuckerberg Got Religion?
- Meta lowered 2023 expense guide by $5B (or 5%) to $89bn-$95bn and capex guide by $4B (or 11%) to $30bn-$33bn
- Metaverse spending continues, META lost $4.3B on $700M in revenue this quarter and losses are expected to accelerate in 2023.
- Zuck said the word efficiency 18x and AI 15x…Evidently, these are his priorities!
Peris.ai, a Cybersecurity Startup Built by Ritase Co-Founder, Gets East Ventures Backing
- Indonesian cybersecurity-as-a-service startup Peris.ai has raised an undisclosed sum in funding led by East Ventures, with participation from Magic Fund.
- The startup will use the money to build and enhance its cybersecurity platform, train Machine Learning and AI capabilities, and nurture the ethical hacker community.
- Peris is supported by a community of more than 1,200 ethical hackers.
Visa Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (02/23)
- Visa’s performance in the last quarter was solid and it managed an all-around beat as a result of consistent domestic volumes and transactions, as well as a persistent improvement in international travel.
- Therefore, they are working to position Visa favorably for the future, whether with conventional issuers or co-brand partners.
- 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.
KDDI (Buy) – Q3 22 Results Reaction: Super Mobile but Full-Year Targets Look Challenging
- Core mobile revenue fell 4% but that is an improvement from 7-8% declines over the last few quarters and including value-added sales (VAS), retail mobile spend is up
- Competitive challenges remain with elevated churn and visible declines in roaming revenue from Rakuten (although sequential change has been modest)
- KDDI has kept guidance for FY22 operating income growth unchanged despite unanticipated expenses for rising fuel costs and the July network failure
A $6m Bet to Mix Crypto and Traditional Gaming
- Oh Baby Games said it’s working on an arcade racer that features recognizable figures. Called What The Kart, the company’s first blockchain-powered game will feature personalities from Crypto Twitter
- The startup said What The Kart will also feature streamers and different communities across the Crypto Twitter sphere.
- The game aims to mix recognizable characters with the tried-and-tested Mario Kart racing formula
Mastercard Inc: Treasury Intelligence Platform & Other Drivers
- Mastercard delivered a decent result in the last quarter as consumer spending has been steady.
- Mastercard has strengthened and expanded its long-standing relationship with Citi and Bank of America.
- Mastercard’s open banking initiatives are supported by connections to over 3000 banks and other financial institutions in 18 markets.
E-Scooter Rental Startup WeMo Nets US$15M for Thailand, Indonesia Expansion
- WeMo Corp, an e-scooter rental company based in Taiwan, has completed its US$15 million Series A+ round of financing led by AppWorks.
- WeMo will use the money to expand its service to Southeast Asia, mainly in Indonesia and Thailand.
- It is building partnerships with governments, investors, businesses, and transportation providers throughout the region to offer green transportation and fleet management services.
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