In today’s briefing:
- Sea Ltd (SE US) – Firing Profitability On All Segments
- Fuji Soft (9749 JP): KKR Bumps to JPY9,451 as Bain Left High and Dry
- (Mostly) Asia-Pac M&A: Agro Kanesho, Nishimoto, Chita Kogyo, Macromill, Silk Logistics, Avarga, MAHB
- [Tencent (700 HK, BUY, TP HK$518) TP Change]: C3Q24 Review: Performance In-Line with Catalysts
- China A50 ETFs Rebalance Preview: One Change to Close Out the Year
- Pony AI IPO Pricing: The Bottom Of a Range Looks Reasonable After WeRide’s Mixed Debut
- Fabrinet – Fabrinet: An Insight Into Its Automotive & Industrial Innovation & Other Major Drivers
- HubSpot Inc.: An Insight Into Its Seat-Based Pricing Model Transition & Other Major Drivers
- Lattice Semiconductor Corporation: Its Efforts Towards Traction in AI & Data Center Markets Paying Off? – Major Drivers
- Match Group Inc.: An Analysis Of Its Product Innovation & Ecosystem Health & Other Major Drivers
Sea Ltd (SE US) – Firing Profitability On All Segments
- In 3Q2024, Sea Ltd demonstrated its ability to turn a profit at Shopee, whilst booking strong growth, with sales & marketing kept well in check and active users increasing substantially.
- E-Commerce registered higher take rates, through higher commissions, more paid advertising, and increasing levels of self-fulfilment through SPX Express, whilst Digital Financial Services saw a rapid acceleration in loan growth.
- Digital Entertainment was back on form with strong growth in bookings, active users, ARPU, and adjusted EBITDA. Management remains confident about 4Q2024 and the outlook for 2025.
Fuji Soft (9749 JP): KKR Bumps to JPY9,451 as Bain Left High and Dry
- KKR & Co (KKR US) has secured the Fuji Soft Inc (9749 JP) Board’s unanimous support by bumping its second tender offer to JPY9,451, a JPY1 premium to Bain’s JPY9,450 offer.
- The Board is claiming a “fiduciary duty” win as it has secured a higher offer from KKR but paradoxically signalling that it will not negotiate a bump from Bain.
- Bain will likely walk rather than try to win the Board’s support by revising terms. At the last close, the gross spread to KKR’s offer is 3.7%.
(Mostly) Asia-Pac M&A: Agro Kanesho, Nishimoto, Chita Kogyo, Macromill, Silk Logistics, Avarga, MAHB
- I tally 48 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
- Six new deals this week! TOs for Agro Kanesho (4955 JP), Nishimoto (9260 JP), Chita Kogyo (5993 JP), Macromill (3978 JP). Also Silk Logistics (SLH AU) and Avarga (AVARGA SP).
- Key updates took place on: Pacific Smiles (PSQ AU), ASMPT (522 HK), Nec Networks & System Integr (1973 JP), Seven & I (3382 JP), and Malaysia Airports Holdings (MAHB MK).
[Tencent (700 HK, BUY, TP HK$518) TP Change]: C3Q24 Review: Performance In-Line with Catalysts
- Tencent reported C3Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, 11% vs. our estimates and in-line, in-line, 18% vs. consensus.
- The bright spot is fintech transaction volume grew 10% YoY showing gain in market share, which coupled with rebound in consumption since October should rive recovery.
- We raise TP by 2% to HK$518. Tencent is still our TOP PICK in an uncertain geopolitical environment with an upswing fundamental story.
China A50 ETFs Rebalance Preview: One Change to Close Out the Year
- The December review will use closing prices from 18 November to determine the list of stocks that will be included into and excluded from the ETFs.
- As of the close on 15 November, we see NAURA Technology Group (002371 CH) replacing Huaneng Lancang River Hydropow (600025 CH) in the ETFs.
- NAURA Technology has doubled in price this year, while Huaneng Lancang has corrected from its highs and could be deleted from the ETF in just one quarter.
Pony AI IPO Pricing: The Bottom Of a Range Looks Reasonable After WeRide’s Mixed Debut
- Pony AI, a China’s robotaxi operator and self-driving technology company, plans to raise up to $360M in upcoming IPO and concurrent private placements.
- Pony AI is expected to IPO next week. The company’s amended F-1 puts the price range per ADS at $11.00-$13.00, implying a market cap of ~$4.2B at the midpoint.
- I believe Pony AI may price its IPO at the bottom of a range after WeRide’s mixed debut. IPO valuation suggests a drop from last round valuation of ~$8.5B.
Fabrinet – Fabrinet: An Insight Into Its Automotive & Industrial Innovation & Other Major Drivers
- Fabrinet’s first-quarter results for fiscal year 2025 reveal both promising growth and challenges.
- With a revenue of $804 million, the company surpassed the upper end of its guidance range, representing a 17% year-over-year increase and a 7% sequential rise from the previous quarter.
- This growth was driven by significant performances in its major operating segments, particularly in optical communications.
HubSpot Inc.: An Insight Into Its Seat-Based Pricing Model Transition & Other Major Drivers
- In the most recent financial results, HubSpot, Inc. reported several positives and negatives that are important for investors to consider when evaluating the company’s investment potential.
- On the positive side, HubSpot achieved a 20% year-over-year revenue growth in constant currency, demonstrating robust financial performance.
- The company’s operating margin grew by over 200 basis points, reaching 19%, showcasing a strong emphasis on operational efficiency.
Lattice Semiconductor Corporation: Its Efforts Towards Traction in AI & Data Center Markets Paying Off? – Major Drivers
- Lattice Semiconductor provided a detailed overview of its financial performance and strategic outlook for the third quarter of 2024.
- The company’s results were generally in line with internal expectations, marking distinct progress in specific segments despite facing notable industry-wide headwinds.
- Revenue for the quarter was reported at $127.1 million, maintaining alignment with previously provided guidance.
Match Group Inc.: An Analysis Of Its Product Innovation & Ecosystem Health & Other Major Drivers
- Match Group, a leading company in the online dating industry, has presented mixed results in their third-quarter financial performance for 2024.
- The results reflect both opportunities and challenges across different brands within the company’s portfolio, particularly in flagship products such as Tinder and Hinge.On the positive side, Match Group continues to see strong momentum with Hinge, which has delivered impressive user growth and revenue achievements.
- Hinge reported a 36% year-over-year increase in direct revenue, supported by a 21% rise in users willing to pay for the app, and a 12% increase in Revenue Per Payer (RPP).
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