In today’s briefing:
- Softbank Group – Accelerated Buyback in October Drove Share Price Surge
- TOPIX Inclusion: Socionext (6526 JP) – Momentum Is Fading, Exit Now.
- NTT Q2 Results and a New Buyback
- Singtel Holds The Key To Gulf Energy’s Takeunder For Thaicom
- Nintendo (7974) | No Christmas Present This Year
- NTT (Buy) – Q2 22 Results Reaction: Expanded Buyback Is Second Largest Ever
- A Pair Trade Between SK Telecom & LG Uplus
- EQD | SPX Vs NDX : Could CPI Spark a Reversal of Tech Performance Versus the Broader Market?
- First Solar Inc: Major Drivers
- Pinterest Inc: New Marketing Campaign & Other Developments
Softbank Group – Accelerated Buyback in October Drove Share Price Surge
- Softbank Group (9984 JP) massively ramped up share buybacks in October driving a 31% increase in the share price
- Average Daily Volume (ADV) was 28% higher in October and 46% higher for the last half of the month. October buyback volumes were the second highest for a month ever
- Whether Softbank announces additional buyback plans likely depends on the timing of the ARM IPO and that partly depends on Q2 performance
TOPIX Inclusion: Socionext (6526 JP) – Momentum Is Fading, Exit Now.
- Japan-Based System-On-Chip designer and IP purveyor Socionext (6526 JP) was listed in the “Prime” section of the Tokyo Stock Exchange (TSE) on 12th October 2022.
- When a company gets listed in the Prime section, it subsequently gets included in the TOPIX Index requiring TOPIX-tracking funds to purchase the stock during an Inclusion Event.
- Usually, this presents interesting trading opportunities to generate sharp market-neutral returns in the space of few trading days. Below is a look at the details for Socionext’s TOPIX Inclusion Event.
NTT Q2 Results and a New Buyback
- NTT (Nippon Telegraph & Telephone) (9432 JP) announced Q2 results today during market hours. The stock had been trading up 1.1% on the day, but fell 1% in 5 minutes.
- It then spent the rest of the day grinding higher to end just higher than just before results.
- NTT announced another buyback – this one on-market. It is only a little bit of a surprise.
Singtel Holds The Key To Gulf Energy’s Takeunder For Thaicom
- In April 2021, Gulf Energy (GULF TB)‘s surprising VTO for Intouch (INTUCH TB) was conditional, inter alia, on a waiver NOT to make a downstream offer for Thaicom (THCOM TB).
- Now Gulf has announced an intention to acquire Intouch’s 41.13% stake in Thaicom for Bt 9.92/share, a 19.3% discount last close, the completion of which triggers an MTO.
- The acquisition of shares from Intouch requires approval from Intouch shareholders. Gulf, with 46.44% of shares out, is required to abstain.
Nintendo (7974) | No Christmas Present This Year
- The share price is roughly flat since we turned Bearish on Nintendo citing concerns that the cycle had peaked
- Q2 results released today suggest that the hardware cycle has indeed peaked – Switch hardware guidance cut
- We see a lack of catalysts for the stock price over the next several months and remain bearish
NTT (Buy) – Q2 22 Results Reaction: Expanded Buyback Is Second Largest Ever
- Results were mostly positive with strong forex-boosted revenue growth and mobile outperformance
- An expansion of the buyback program helps sentiment as an additional Y150bn program takes FY22 buybacks to the highest single-year total since 2005
- Comments at the analyst meeting focused on underlying costs but management seems positive that it can manage with cost efficiencies
A Pair Trade Between SK Telecom & LG Uplus
- At current prices, we like a pair trade between SK Telecom (go long) and LG Uplus (go short).
- We believe the share price gap has widened too much in the past month in favor of LG Uplus and this gap is likely to close in the coming weeks.
- While LG Uplus tries to expand its non-telecom businesses, this may involve greater spending on marketing and promotions (as % of sales), which could be a drag on its earnings.
EQD | SPX Vs NDX : Could CPI Spark a Reversal of Tech Performance Versus the Broader Market?
- All eyes are on inflation data this week with CPI due out on Thursday
- Shorts in tech have been working but could be looking to take profits after big gains last week
- Use options for a cheap play on NDX outperformance over SPX
First Solar Inc: Major Drivers
- First Solar’s bull run was halted by a below par result in the last quarter as the company failed to meet Wall Street expectations with respect to revenues as well as earnings.
- The company’s manufacturing plants produced 2.4 gigawatts of modules in the third quarter and sold 2.8 gigawatts.
- Besides, their current fleet’s manufacturing performance metrics remain consistent, and plans for the third manufacturing plant in Ohio are still on track.
Pinterest Inc: New Marketing Campaign & Other Developments
- Pinterest’s performance as a stock has been fairly decent in what can be termed as a tumultuous environment for the technology industry.
- The company’s global MAUs of 445 million were higher than in Q3 2021 because it largely overcame the pandemic’s difficulties and increased user engagement.
- During the quarter, they collaborated with Merlin, BMG, Warner Music Group, and Warner Chappell Music to enhance the music experience on Pinterest.
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