In today’s briefing:
- Thaicom: Gulf Energy’s Low-Balled MTO Now Open For Acceptances
- IQIYI (IQ US): Taking a Break
- STMicroelectronics: Building Positions Ahead of the Next Upcycle
- NetEase(NTES.US) 4Q22 Preview: Enter a Period of Lukewarm Performance
- Time to Move Forward to Corporate Governance 2.0, Where the Substance Will Be Questioned
Thaicom: Gulf Energy’s Low-Balled MTO Now Open For Acceptances
- Back on the 7 November, Intouch Holdings (INTUCH TB)‘s board approved the sale of its 41.13% stake in Thaicom Pcl (THCOM TB) to Gulf Energy Development Public Company (GULF TB).
- The sale price was Bt 9.92/share, a 19.3% discount last close. Intouch shareholders overwhelmingly approved the sale on the 28 December, which subsequently triggered an MTO.
- The Offer is now open for acceptances. The Offer closes on the 9 February. Intouch will pass through 100% of the sale proceeds via a special dividend.
IQIYI (IQ US): Taking a Break
- Since we highlighted the compelling asymmetrical risk-return payoff of IQ last November, the stock has surged 200%, compared to 45% gain for KWEB which tracks China ADRs.
- We believe the outperformance was driven by more concrete progress in fundamental turnaround including multiple blockbuster drama released, increase in subscription fee and removal of debt overhang.
- With $7 billion market cap (on diluted basis), IQ already trades at 35 times 2023 earnings, pricing in fair degree of positive prospects. We advise investors to lock in profits.
STMicroelectronics: Building Positions Ahead of the Next Upcycle
- New technologies such as 5G, 3D, Time of Flight and new materials such as silicon carbide and gallium nitride have paved the way for the Company’s long-term growth
- The semis market should reach trough in H1 2023; the low point in share prices is generally a few months before the semis market itself reaches the bottom
- Valuation is appealing at these levels. Discount to peers. Upside potential is over 50%
NetEase(NTES.US) 4Q22 Preview: Enter a Period of Lukewarm Performance
- We estimate that NetEase’s 4Q22 revenue/non-GAAP net income will be in line/12% vs cons. Our 2023’s revenue/non-GAAP net income are in line/12% vs cons.
- In 4Q22, several of NetEase’s mid-tier games saw declines in ranking. We expect that NetEase will have a period of single digit growth in revenue.
- We still rate NetEase BUY and raise TP to US$ 87. But NetEase is not our top pick within China internet space.
Time to Move Forward to Corporate Governance 2.0, Where the Substance Will Be Questioned
- Although Fujitec’s corporate governance framework has improved in places, the Statutory Auditor and Nominating Committee aren’t functioning, and the Board of Directors with a majority of independent directors isn’t functioning.
- METI survey shows that 20% of independent directors are friends of CEO, a glimpse of how companies expect independent outside directors to play a role in endorsing executive management policies.
- With several revisions of Corporate Governance Code, companies have ostensibly made steady progress in corporate governance efforts. However, whether this has been accompanied by substance varies from company to company.
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