In today’s briefing:
- NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
- Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
- Grab Holdings (GRAB US) – High-Value Products Take the Helm
- SBI Fintech Solutions: Tender Offer and Delisting
- Appier (4180) | Record Quarter
- Zinka Logistics IPO – Has Grown Rapidly but Looks Expensive
- Aem: Hoping for Better 2025
- ASML Investor Day: Oops They Did It Again. Different Story, Same 2030 Targets.
- Freee 1Q: Turns Profitable Sooner Than We Expected
- CCC Intelligent Solutions Holdings Inc.: Can Its Adoption of New Solutions Give Them A Competitive Edge? – Major Drivers
NEC Network (1973 JP) Tender Offer – The Landscape Has Fully Changed
- On 29-October, NEC Corp (6701 JP) announced a low-ball TOB to buy out subsidiary Nec Networks & System Integr (1973 JP). It deserved activism, but finding an activist was tough.
- On 7 November, it got an activist, and I wrote on 8-November the Landscape Had Changed that they might have bought 6mm shares more in 5 days. They bought 8.4mm.
- The Landscape Has FULLY Changed. The details now matter quite a bit. NEC has two basic choices. Neither are that palatable. But Target Advisor DCF was ¥3,073-4,688 without synergies.
Korea Pushes to Expand Director’s Duty of Loyalty: Focus on Hostile Takeover-Risk Conglomerates
- A Democratic Party insider noted some proposals need legal tweaks, so the December 10 deadline may slip, but they’re set on passing the expanded director loyalty duty.
- FKI analyzed top conglomerates’ shareholder structures and found four of the top 10 facing substantial risks.
- We need more clarity before jumping in, but with MBK driving Korea’s hostile M&A scene and the Commercial Act amendments, local chaebols facing control battles are a key KOSPI theme.
Grab Holdings (GRAB US) – High-Value Products Take the Helm
- Grab booked an impressive performance in 3Q2024, with strong evidence of its high-value products such as advance bookings gaining traction along with increasing monthly transacting users through its Saver offering.
- The company’s delivery business benefitted from strong performance from GrabMart and GrabFood. Its Grab Unlimited subscription hit record new highs, with users transacting four times as frequently as non-users.
- Grab also saw a strong performance from GrabFin and its digital banks, which all started lending in November plus rapid deposit growth. Guidance increased reflecting a more positive outlook.
SBI Fintech Solutions: Tender Offer and Delisting
- After the market close on 14 November, SBI Fintech Solutions announced that the Japanese financial group SBI is pushing for a tender offer and delisting of SBI Fintech Solutions.
- The tender offer price is 5,000 won per share, which is 36% higher than the closing price on 14 November. The tender offer size amount is about 26 billion won.
- Given the relatively solid upside, we believe SBI Holdings is likely to successfully complete this tender offer and take the company private.
Appier (4180) | Record Quarter
- In Q3 FY24, Appier achieved record-breaking revenue, reaching JPY 9.1 billion, marking a 28% year-over-year growth.
- Operating income for Q3 surged by 2.5 times YoY to JPY 788 million, with the operating margin improving by 4.3 percentage points to 8.7%.
- At less than 4x EV/Sales and 16x FY25 EBITDA the stock does not appear expensive.
Zinka Logistics IPO – Has Grown Rapidly but Looks Expensive
- Blackbuck (1355652D IN) is looking to raise about US$130m in its India IPO.
- Zinka Logistics (Blackbuck) is India’s largest digital platform for truck operators (in terms of number of users), with 963,345 truck operators transacting on its platform in FY24, as per Redseer.
- Previously, we talked about the company’s historical performance. In this note, we share our quick thoughts on peer comparison and valuation.
Aem: Hoping for Better 2025
- AEM (AEM SP) released 3Q24 numbers and bumped its guidance higher as its key customer pulled forward some orders.
- In 2025 it will be the first year where customers outside of Intel will make up the majority of AEM’s revenues. This is a big milestone for AEM.
- Continued business from Intel and growth in new key accounts means we should expect FY25 revenue growth. Guidance for FY25 will come by February 2025.
ASML Investor Day: Oops They Did It Again. Different Story, Same 2030 Targets.
- ASML maintains its 2030 targets: revenue EUR44-60bn, Gross Margin 56-60%. But the narrative has changed, again. In 2022, it was Mature nodes (DUV) and EUV. In 2024, it’s AI.
- What’s changed? Lower growth in Smartphone, PC, Auto. AI bigger than expected. Server DRAM and HBM is the major positive change. NAND is revised down sharply. It’s actually believable.
- The guidance implies Operating Profits growing between 9.5-17.5% Cagr over 2024-2030. That’s pretty good but the stock is trading at 27x 2025 EPS, 22x 2026. No room for disappointment.
Freee 1Q: Turns Profitable Sooner Than We Expected
- Freee KK (4478 JP) reported 1QFY06/2025 results which saw the company generating its first-ever Adj. operating profit, earlier than we expected.
- The company has begun capitalising its software assets (decline in R&D costs as % of revenue) and this coupled with fall in S&M costs have contributed to profits.
- The corporate paying customers surpassed more than 200k for the first time and we expect freee’s earnings to continue to improve going forward.
CCC Intelligent Solutions Holdings Inc.: Can Its Adoption of New Solutions Give Them A Competitive Edge? – Major Drivers
- CCC Intelligent Solutions’ third-quarter fiscal 2024 performance highlighted both consistent financial growth and evolving challenges within the insurance and vehicle repair industries.
- The company reported a total revenue of $238 million, reflecting an 8% increase year-over-year, slightly exceeding their guidance range.
- Adjusted EBITDA was $102 million, a 9% improvement from the previous year, supporting a strengthened adjusted EBITDA margin of 43%.
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