In today’s briefing:
- J Tower (4485) – Once Ambitious, Still High Growth, Sells Itself Low/Cheapish.
- JTOWER (4485 JP): DigitalBridge’s 162% Takeover Premium Offer Is Opportunistic
- Appier (4180) | The Hidden Gem in AI Marketing
- Tencent (700 HK): 2Q24, Gross Margins of All Business Lines Improved Significantly
- BusinessOn Communication (138580 KS): SkyLake’s Delisting Offer
- Tencent 2Q: Recent Launch of DnF Mobile Helps Domestic Gaming Return to Growth
- TSMC (2330-TT): Revisiting Previous Bullish Themes Following Outperformance
- Shift Up: 2Q 2024 Results Analysis
- Squarespace Inc.: A Bear’s Perspective! – Major Drivers
- Sun* (4053 JP): 1H FY12/24 flash update
J Tower (4485) – Once Ambitious, Still High Growth, Sells Itself Low/Cheapish.
- JTower (4485 JP) IPOed itself Dec-2019 at ¥1,600/share. An 8-bagger in a year, fell by half, doubled, fell 70%, then doubled, fell 35%, up 50%. That’s the first 3yrs.
- Since then, the trend has been lower. The stock is down 80+% in 2 years, especially painful after an equity raise at just under ¥5,000 6 months ago.
- But the stock today closed at ¥1,430, and the Tender Offer is at ¥3,600. A 150% premium. That’s big, but it may be “too low.” An interesting case.
JTOWER (4485 JP): DigitalBridge’s 162% Takeover Premium Offer Is Opportunistic
- JTower (4485 JP) has recommended a tender offer from DigitalBridge Group (DBRG US) at JPY3,600, a 161.8% premium to the undisturbed price of JPY1,375 (13 August).
- Despite the hefty takeover premium, the offer is light (compared to historical trading ranges and the recent placement) and opportunistically timed (the share price has fallen 61% since 9 May).
- Nevertheless, barring a spurt of activism, the offer should succeed as the required 40.7% minority acceptance rate is not onerous and should be comfortably met by Japanese cross-holders.
Appier (4180) | The Hidden Gem in AI Marketing
- Appier achieved 32% YoY sales growth in Q2, driven by strong US market performance and balanced revenue from both new and existing customers.
- The company’s EBITDA margin improved to 13%, reflecting strong operating leverage despite ongoing investments in growth initiatives.
- Trading at a 2.9x EV/FY25 revenue multiple, Appier is undervalued relative to peers, with significant upside potential from sustained growth and strategic initiatives.
Tencent (700 HK): 2Q24, Gross Margins of All Business Lines Improved Significantly
- Total revenue increased by 8% YoY in 2Q24, lightly higher than 1Q24 and 4Q23.
- The gross margins of all business lines Improved significantly YoY.
- We set the upside at 35% and the price target at HK$506 for the end of 2025. Buy.
BusinessOn Communication (138580 KS): SkyLake’s Delisting Offer
- On the 25th July, SkyLake Equity Partners acquired a 46.9% stake from Praxis Capital Partners in BusinessOn Communication (138580 KS), Korea’s leading B2B SaaS company; plus 24.3% from BusinessOn’s management.
- SkyLake has now launched a Tender Offer for 28.94% of BusinessOn. The Tender offer price is ₩15,849/share.
- Super clean deal. SkyLake will acquire all shares tendered. There is no minimum tendering % condition.
Tencent 2Q: Recent Launch of DnF Mobile Helps Domestic Gaming Return to Growth
- Tencent (700 HK) reported 2Q2024 results today which beat consensus. Domestic gaming resumed growth driven by the successful launch of DnF Mobile which continues to dominate charts in China.
- All three business segments saw improvement in margins driven by Tencent’s high-margin businesses incl. mini-programs, video accounts, short-videos, etc.
- We expect continued recovery in Tencent’s earnings, however, remain cautious given slowdown in consumption spending and macroeconomic uncertainties.
TSMC (2330-TT): Revisiting Previous Bullish Themes Following Outperformance
- Taiwan Semiconductor (TSMC) (2330 TT) has significantly outperformed this year, driven by a global AI-driven tailwind resulting in substantial revenue growth acceleration and a significant earnings upgrade cycle.
- Record levels of FCF generation have supported dividend increases, and whilst future DPS expectations seem conservative, the current dividend yield suggests future increases have been priced in.
- TSMC trades just above its 5-year historic average trading levels and at a premium to its key competitors, other smaller listed foundries, its main customers, and large suppliers.
Shift Up: 2Q 2024 Results Analysis
- On 14 August, Shift Up (462870 KS) reported its 2Q 2024 results, which was the first earnings report post its IPO.
- Shift Up reported sales of 65.2 billion won (up 65.4% YoY and 19.5% below consensus) and OP of 45.1 billion won (up 49% YoY and 21.4% below consensus) in 2Q24.
- The company is preparing for a PC release of Stellar Blade in the near future to continue its strong popularity and it expects better results on PC than on console.
Squarespace Inc.: A Bear’s Perspective! – Major Drivers
- Squarespace’s First Quarter 2024 Earnings revealed a strong performance, with revenue up by 19% and bookings increasing by 23%, surpassing the provided guidance on both metrics.
- The unlevered free cash flow margin stood at 32%, contributing to a positive outlook for the fiscal year 2024 in terms of both revenue and free cash flow.
- Throughout the quarter, growth was primarily fueled by consistent organic momentum in the company’s core business, particularly in website services which experienced robust retention and an uptick in new customer growth both domestically and internationally.
Sun* (4053 JP): 1H FY12/24 flash update
- Revenue: JPY6.5bn (+6.5% YoY), Operating profit: JPY727mn (-15.6% YoY), Recurring profit: JPY697mn (-31.7% YoY).
- Number of recurring revenue customers at end-Q2: 127 companies (+9.5% YoY), Monthly ARPU in Q2: JPY5,080,000 (-4.5% YoY).
- Revenue for Creative & Engineering service line: JPY5.7bn (+7.4% YoY), Talent Platform service line: JPY451mn (+3.2% YoY).
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