In today’s briefing:
- Sea Ltd – Just About Doomed
- KRX New Deal Index Rebalance: All Forecasts Right as KMW Soars and AfreecaTV Drops
- KRX K-New Deal Rebalancing: Official Results & Passive Flows
- JMDC Offering – Smaller Than It Looks
- DTAC/True Merger: NBTC Likely to Set Measures to Approve Merger
- Major Stock Swap Between Hyundai Motor Group and KT Corp
- Hong Kong CEO & Director Dealings – 1st Sept 2022: A8 New Media, China Fordoo
- Top Material IPO Preview
- Salesforce.com Inc: Code Builder Update & Other Drivers
- Workday Inc: Growing Customer Base
Sea Ltd – Just About Doomed
- It was reported yesterday that Sea Ltd (SE US)‘s e-commerce arm “Shopee” has begun rescinding job offers.
- Having burnt around $2.0bn during the first six months of 2022 pursuing e-commerce and fintech growth aspirations, this seems like an extreme measure to ensure the company’s survival.
- With the gaming profitability fading, we are starting to think that even the extreme cost-cutting could be insufficient to overturn Sea’s e-commerce and fintech cash burn.
KRX New Deal Index Rebalance: All Forecasts Right as KMW Soars and AfreecaTV Drops
- The KRX announced the changes to the KRX New Deal indices post market close on Friday. But the changes were not made public and are only available to subscribers.
- Intellian Technologies (189300) and Seojin System (178320) replace Danal (064260) and Kcp (060250) in the Internet Index, while KMW Co Ltd (032500 KS) replaces AfreecaTV (067160 KS) in BBIG.
- Since we published our last forecast on 21 July, KMW Co Ltd (032500 KS) is up 12% while AfreecaTV (067160 KS) has dropped 17%.
KRX K-New Deal Rebalancing: Official Results & Passive Flows
- KMW replaces AfreecaTV in BBIG. There is no constituent change for Battery and Bio. Seojin and Intellion replace NHN KCP and Danal in Internet. Nexon Games replaces Devsisters in Game.
- The effective date has been postponed to the 13th, and the ETF operators will conduct the rebalancing trading at the close tomorrow, the 8th.
- Regarding relative passive impact, KMW and AfreecaTV should receive the most attention, and this pattern is already appearing today.
JMDC Offering – Smaller Than It Looks
- In February 2022, Noritsu Koki (7744 JP) – longtime holder of JMDC Inc (4483 JP) – sold 2/3 of its holdings to Omron (6645). Omron made a US$1bn new bet.
- Shares fell after Q1 results, and then fell another 7% in 2 days after the company announced a primary offering for ¥22bn to international investors, ¥11bn to Omron.
- High PER but Fundamental Forecasts are up-and-to-the-right, and there is a surprising amount of flow mitigation from passive investor activity the next 3 months.
DTAC/True Merger: NBTC Likely to Set Measures to Approve Merger
- The Bangkok Post reports that the Thai regulator (NBTC) will propose ten remedial measures to approve the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger.
- The NBTC board is not expected to issue a final decision as it waits for an interpretation by the Council of State if it can approve or reject the merger.
- The current share price ratio is 9.511x vs the swap ratio of 10.221x. At last close, DTAC and True’s gross spread to the VTO price is 9.2% and 10.7%, respectively.
Major Stock Swap Between Hyundai Motor Group and KT Corp
- On 7 September, Hyundai Motor (005380 KS) announced a major stock swap with KT Corp (030200 KS).
- KT will exchange about 750 billion won (7.7%) of KT’s treasury stock for 445.6 billion won (1.04%) of Hyundai Motor shares and 300.3 billion won (1.46%) of Hyundai Mobis shares.
- This stock swap is likely to have a bigger positive impact on KT versus Hyundai Motor and Hyundai Mobis.
Hong Kong CEO & Director Dealings – 1st Sept 2022: A8 New Media, China Fordoo
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- These insights may also flag those companies where shares have been pledged, both recently and ongoing. Stocks mentioned include A8 New Media (800 HK) and China Fordoo Holdings (2399 HK).
Top Material IPO Preview
- Top Material is getting ready for an IPO in October in Korea. The IPO price range is from 27,000 won to 30,000 won.
- Established in 2012, Top Material’s main business is in system engineering. It also provides high performance electrode and cathode materials for the lithium ion based rechargeable batteries.
- Top Material had sales of 31.9 billion won (up 375% YoY) and operating profit of 4.8 billion won (up 930% YoY) in 2021.
Salesforce.com Inc: Code Builder Update & Other Drivers
- Salesforce has generated excellent revenue growth, profitability, and cash flows in its last result, surpassing Wall Street expectations on all counts despite operating in a challenging financial climate.
- With new clients like the U.S.
- Department of Veterans Affairs, Workday, and Uber, Service Cloud grew 14% year over year or 18% in constant currency.
Workday Inc: Growing Customer Base
- Workday delivered another all-around beat, outperforming market expectations with respect to its operating indicators, highlighting the ongoing significance of digital transformation for finance and HR.
- Along with the significant expansion of their core HCM and financial apps, Q2 saw remarkable momentum throughout their broader spectrum of solutions.
- Customers create apps with Extend customized for their specific use cases, potentially eliminating the need for additional specialized development tools.
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