In today’s briefing:
- Offshore China ETFs Rebalance Preview: Big Price Moves Could Lead to Four Changes
- Initial Thoughts on the Webtoon Entertainment IPO
- Nintendo (7974) | Delayed…Or Just Fashionably Late
- Tencent (0700.HK): Revisiting Wechat Channels
- Taiwan Top 50 ETF Rebalance Preview: Alchip (3661) Could Replace Feng Tay (9910)
- Practical Issues with English Disclosure Sites in Korea (Feat. LG Display) & FSC’s Latest Solutions
- AMAT. Post Earnings Surge For No Good Reason
- MicroStrategy: Is Its Bitcoin Strategy Changing The Game? – Major Drivers
- Dynatrace Inc: Demand For Observability & Application Security Can Push Their Revenues In 2024? – Major Drivers
- CyberArk Software: Is Their New Secure Cloud Access Product A Game Changer? – Major Drivers
Offshore China ETFs Rebalance Preview: Big Price Moves Could Lead to Four Changes
- As of the review cutoff date of 19 February, there could be four changes for the iShares A50 China (2823 HK) / CSOP China A50 (HKD) (2822 HK) in March.
- Shaanxi Coal Industry, Hygon Information Technology, CGN Power and China Everbright Bank could replace Aier Eye Hospital Group, Bank Of Ningbo, WuXi AppTec and Jiangsu Yanghe Brewery.
- CGN Power (1816 HK) is a potential iShares China Large-Cap (FXI) (FXI US) inclusion while Hygon Information Technology C (688041 CH) is an inclusion to a global index in March.
Initial Thoughts on the Webtoon Entertainment IPO
- Naver Corp (035420 KS) is trying to complete the IPO of its affiliate Webtoon Entertainment in the US stock market as early as June 2024.
- The expected value of Webtoon Entertainment (post IPO) is about US$3 billion to US$4 billion. Webtoon Entertainment is seeking to raise about US$500 million in this IPO.
- The IPO of Webtoon Entertainment in the US is likely to have a positive impact on Naver Corp (035420 KS).
Nintendo (7974) | Delayed…Or Just Fashionably Late
- Nintendo’s share price fell ~6% on rumours of Switch 2 delay, wiping around $4 billion of the market cap
- We do not believe that a one quarter delay will have any impact on the console’s long-term sell-through or the stock’s valuation
- With Sony’s PS5 faltering, Nintendo is launching at an opportune time. We turn bullish on the stock with ~25% upside from here
Tencent (0700.HK): Revisiting Wechat Channels
- One year ago, we published a note valuing Wechat Channels at US$29 billion by applying 25xPE to RMB8 billion net profit out of RMB37 billion revenue by 2024.
- Fast forward to today, the platform’s priority has been further elevated by Tencent management in its attempt to pursue high quality growth.
- We review our thesis on Wechat Channels based on recent channel checks and now believe that the platform could represent ~35% of Tencent’s total incremental profit from 2024 to 2026.
Taiwan Top 50 ETF Rebalance Preview: Alchip (3661) Could Replace Feng Tay (9910)
- With the review period complete, Alchip Technologies is a high probability inclusion and Feng Tay Enterprise is a high probability deletion for the Yuanta/P-Shares Taiwan Top 50 ETF in March.
- Passive trackers will need to buy around 0.4x ADV in Alchip Technologies (3661 TT) and sell 4x ADV in Feng Tay Enterprise (9910 TT).
- There will be positioning in both stocks, though it appears larger in Alchip Technologies (3661 TT) as compared to Feng Tay Enterprise (9910 TT).
Practical Issues with English Disclosure Sites in Korea (Feat. LG Display) & FSC’s Latest Solutions
- Foreign traders face challenges in LG Display’s rights offering. While LG Display provides updates through English disclosures, detailed schedule information exclusive to the Korean prospectus is missing.
- To ensure access to all Korean disclosures, use the DART English service. DART imports English disclosures from KIND and provides English titles for Korean-only disclosures. Use translation tools like ChatGPT.
- FSC enhances services to address practical issues. For lengthy documents, only English titles are available. FSC will provide English for subtitles, tables, and charts, using an automatic translation system.
AMAT. Post Earnings Surge For No Good Reason
- Q124 revenues of $6.71 billion, at the high end of the guided range and essentially flat sequentially both QoQ and YoY
- Q224 revenue $6.5 billion at the midpoint, a modest downward movement of 3% QoQ and in line with what we saw from peers KLAC and LRCX
- Still a great company with excellent growth prospects, just not in 2024
MicroStrategy: Is Its Bitcoin Strategy Changing The Game? – Major Drivers
- MicroStrategy Inc’s fourth quarter 2023 earnings point towards a strong performance from being the world’s largest corporate holder of bitcoin, possessing 190,000 bitcoins with a market value of $8.1 billion.
- Over 2023, the company added another 56,650 bitcoins to its portfolio costing $1.9 billion, making the company’s bitcoin strategy a long-term focus.
- 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.
Dynatrace Inc: Demand For Observability & Application Security Can Push Their Revenues In 2024? – Major Drivers
- According to Dynatrace’s fiscal third quarter 2024 earnings, the company delivered solid results driven by its ability to successfully navigate a continually changing market.
- Annual recurring revenue (ARR) grew by 21% year over year, while subscription revenue increased by 23% over the same period.
- Non-GAAP operating income steadily increased to $105 million representing 29% of revenue and robust free cash flow margin was delivered at 25% on a trailing 12-month basis.
CyberArk Software: Is Their New Secure Cloud Access Product A Game Changer? – Major Drivers
- Underpinned by an urgent need for a more secure digital landscape, CyberArk Software has emerged with a wholesome performance in the fourth quarter of the fiscal year 2023.
- An impressive 60% YoY growth of Subscription ARR has led CyberArk to become an exclusively recurring revenue company, with an astounding 95% of total bookings coming via subscriptions.
- CyberArk marked the close of 2023 by bolstering its market leadership in the realm of Identity Security Platforms with a robust growth quarter.
💡 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
