In today’s briefing:
- Shinko Electric (6967) Takeover: Initial Break/Gap Risk Analysis
- Sea Ltd: TikTok’s Tokopedia Deal and Lazada’s Financial Boost Raise Concerns
- Zozo-Owned Yutori IPO This Month
- Taiwan Dual-Listings Monitor: TSMC Premium at an Extreme; ASE Dropping Lower and Lower
- AMD. With FY23 Revenues Set to Fall ~4% YoY, Is The Party Over?
- Heroz (4382 JP) – Growing Evidence of Positive Transformation
- Ebay’s Qoo10 More than Doubles Users to 23 Million in 5 Years
- Soluna Holdings, Inc. – Soluna Positioned for Revenue/EBITDA Growth in 2024 as New Projects Ramp
Shinko Electric (6967) Takeover: Initial Break/Gap Risk Analysis
- The JIC Deal for Shinko Electric Industries (6967 JP) has been announced and is, as expected, trading wide.
- There is FUD. There are Flows. Just like JSR (4185). Some of that FUD can be explained by “gap risk” on deal break…. or can it? We look at risks.
- There’s more positioning risk than fundamental risk at this point. And the FUD and Flows have specific timing in this case which makes thing different than JSR. Worth thinking about.
Sea Ltd: TikTok’s Tokopedia Deal and Lazada’s Financial Boost Raise Concerns
- There have been several developments in the Southeast Asian e-commerce space over the past few days that we believe will have a negative impact on Sea (SE US)’s financial performance.
- A few days ago, TikTok, owned by ByteDance (1439927D CH), announced a $1.5bn investment in Tokopedia.
- Today, Nikkei reported that Alibaba (ADR) (BABA US) has infused an additional $634m into Lazada, its Southeast Asia e-commerce unit, to enhance its competitive position in the face of escalating competition.
Zozo-Owned Yutori IPO This Month
- Zozo may lead in online fashion malls but its customer base, while young, is getting older.
- In 2020, it acquired a majority stake in Yutori, a fledgling fashion mall targeting the young, which will now list this month.
- Yutori has grown sales to ¥2.47 billion since launching five years ago. As well as Japan, it sees a major opportunity across Asia given Japanese street fashion popularity there.
Taiwan Dual-Listings Monitor: TSMC Premium at an Extreme; ASE Dropping Lower and Lower
- TSMC: 10.4% Premium — Decent Level to Short the Spread At
- ASE: 6.2% Premium — Wait for 5% as the Level to Go Long the Spread
- UMC: Trading at 0.8% — Wait for 1.5% or Higher
AMD. With FY23 Revenues Set to Fall ~4% YoY, Is The Party Over?
- AMD’s resurgence against a dominant Intel saw the company grow annual revenues >4x between 2017 and 2022
- FY 2023 revenue is likely to be down roughly $1 billion or ~4% YoY.
- We expect a combination of renewed Data Center market share growth plus a grand entrance into the AI acceleration segment will restart the party all over again in 2024.
Heroz (4382 JP) – Growing Evidence of Positive Transformation
- Strong execution on multiple fronts – Q1-2 FY4/2024 results were ahead of expectations, with sales growth of 205.2% YoY and operating profit growth of 572.1% YoY.
- Whilst acquisitive growth was to be expected, HEROZ has also demonstrated 1) organic growth in its AI/DX Service with underlying sales growth of 14.6% YoY,
- 2) increased the proportion of recurring revenue to 62.4% of total sales and thereby continuing to improve earnings visibility
Ebay’s Qoo10 More than Doubles Users to 23 Million in 5 Years
- Qoo10 has been quietly growing its share of the Japanese e-commerce market.
- Despite relentless competition from the big 3, Qoo10 has managed to increase members from 10 million in 2018 to 23 million through event marketing and close attention to customer demands.
- While cosmetics and fashion are the current focus, Qoo10 is also strengthening other categories like food, stationery and electronics.
Soluna Holdings, Inc. – Soluna Positioned for Revenue/EBITDA Growth in 2024 as New Projects Ramp
- CEO John Belizaire joined WTR’s Tim Regan and Graham Mattison to talk about Soluna’s impressive business turnaround in 2023, including the projects that are online today and their growing adjusted EBITDA contributions.
- Belizaire also talked about new projects under development, incremental revenue sources, and the company’s recently announced AI pilot at Project Dorothy
- 2023 – the turnaround of Soluna. Belizaire talked about the transformation of the company in 2023, coming from the depths of the crypto winter and regulatory delays, to bringing the company’s flagship Project Dorothy online, securing partners at the project level, and then being selected for the 166-MW Project Kati.
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