In today’s briefing:
- Softbank (9984 JP) – This Time, It’s Chime
- Taiwan Dual-Listings – TSMC Premium Continues to Decline, ChipMOS ADR Discount Widens
- US CHIPS Act: Long Intel Vs. Short TSMC or UMC?
- XL Axiata (EXCL IJ) – Following the Road to Convergence Fuelled by Data
- Snowflake FY2Q23 Earnings: High in the Hierarchy of Needs
- Paycom Software: The Beti Upside
Softbank (9984 JP) – This Time, It’s Chime
- US fintech Chime, another high-profile fintech in Softbank’s Vision Fund 2 portfolio, sees its secondary market valuation in the private market fall by nearly 50% on a year-to-date basis
- Chime had been planning to IPO in 1H 2022, with its IPO valuation estimated at close to USD40bn; poor market conditions have led to the IPO being shelved
- Chime’s reduced valuation is another hit to Softbank’s portfolio, which has yet to feature a recent “down round”, and which we believe negatively impacts its Vision Fund 2 in particular
Taiwan Dual-Listings – TSMC Premium Continues to Decline, ChipMOS ADR Discount Widens
- TSMC’s ADR premium falls past the lower bound of its 3-year range
- All dual-listed Taiwan semiconductor companies have seen a decline in premiums or an increase in discounts.
- ChipMOS ADR’s discount to the company’s Taiwan listing widens further.
US CHIPS Act: Long Intel Vs. Short TSMC or UMC?
- Intel and Brookefield Asset Management recently announced that they intend to jointly invest US$30 billion into building Intel foundries in Arizona, leveraging on the US CHIPS Act.
- Although inflation and declining consumer demand continue to affect all chipmakers, U.S. strategic objectives and policies will set Intel on a new growth trajectory and competitive position in our view.
- A Long Intel/ Short Taiwan semiconductor strategy present a compelling opportunity. We prefer Long Intel vs. Short UMC, however, we expect Long Intel vs. Short TSMC to also be profitable.
XL Axiata (EXCL IJ) – Following the Road to Convergence Fuelled by Data
- XL Axiata 2Q2022 results reflected a better pricing environment and the success of its focus on high-quality service, with the highest data speeds, leading to higher subs and ARPUs.
- The company continues to migrate its subscribers to 4G, and build out its 4G BTS whilst shutting down its 3G towers, which should be positive for the quality of service.
- XL Axiata (EXCL IJ) should be seen as the leader in providing converged services in Indonesia, with the acquisition of Link Net accelerating its lead, which will boost long-term profitability.
Snowflake FY2Q23 Earnings: High in the Hierarchy of Needs
- Product revenues beat consensus by 7% and EBIT margins by 5%, while full year guidance was and margins were raised ~2% ahead of consensus.
- Fears of a consumption model driven slowdown (like Datadog) did not play out, and cRPO growth actually accelerated QoQ to 81%.
- Data sharing is picking up with larger customers, with 65% of $1M+ customers utilizing stable edges.
Paycom Software: The Beti Upside
- Paycom Software continues to witness a strong demand for automation of management of human capital and self-service payroll with more companies embracing its various solutions, especially Beti.
- The success to attract new business wins as well as robust demand for employee-focused easy-to-use solutions, drives the company’s revenue growth.
- We provide the stock of Paycom Software with a ‘Hold’ rating with a revision in the target price.
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