Daily Brief TMT/Internet: Tokyo Stock Exchange Tokyo Price Index Topix, Tencent, Bilibili and more

In today’s briefing:

Share Buybacks In Japan – A 2023 Primer
ECM Weekly (20th August 2023) – Indigo, Vinfast, SBFC, Concord, Wuxi, NSDL, LianLian, Fedbank
[Bilibili(BILI US, SELL, TP US$12.3) Review]: E-Commerce Ads Aren’t Sufficient to Hide Other Issues

Share Buybacks In Japan – A 2023 Primer

The TSE and Government are pressuring low-PBR companies to DO SOMETHING to raise their PBR to >1.0x. The easiest way to do that is raise ROE.
Raising R requires customers “agree” (buying more, paying a higher price, etc). Lowering E means buying back shares or paying big special dividends. That’s easier for a company.
So buybacks have been increasing in number, and breadth, and to some degree in size. This insight describes the mechanics/details of how buybacks work in Japan.

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
The IPO space saw a few pops this week, some were somewhat justifiable in SBFC Finance Limited and Concord Biotech while one was reminisent of the 2020-21 frenzy, Vinfast.
In the placement space, the selldown for InterGlobe Aviation Ltd (INDIGO IN) materialised as expected but despite that the deal didn’t do much.

BILI reported 2Q23 top-line in-line and non-GAAP net profit 7% better than consensus. However, gaming revenue was weak, causing BILI to revise down its full-year revenue guidance.
We believe e-commerce ads could become a new near-term driving force, but the rapid growth of game-related ads might fade post-Q3.
Also, the significant consolidation of ACG games could affect BILI’s future game performance. We maintain our US$ 12.3 TP and SELL rating.

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