In today’s briefing:
- JD.com (JD): Plunged Following Indexes, But 4Q21 Result Worth Buying
- Capcom – Street Fighter 6 and ExoPrimal Strengthen Pipeline
- Li Ning (2331): SWF Exclusion
- Square Enix – Four Games at State of Play Show Depth of Content
- Crowdstrike FY4Q22: (Bear) Case Adjourned
- Koei Tecmo – Some Nice Signs But Downside Risks Need To Be Priced In First
- Close the Gap: Korean Pref Vs. Common Shares Post New South Korean President Yoon Suk-Yeol
- GCEH: Almost Online, Initiating with Buy
- Recent IPO Insights: Gitlab
- RJH: 4Q21 Earnings Grew YoY but Drop QoQ
JD.com (JD): Plunged Following Indexes, But 4Q21 Result Worth Buying
- Revenue grew rapidly by 23% in 4Q21 and we believe revenue will grow by 18% in 2022.
- We are not concerned about the zero net margin, because operating cash flows were still strong in 2021.
- We believe the stock has a price target of US$73, which is 18% over last closing price.
Capcom – Street Fighter 6 and ExoPrimal Strengthen Pipeline
- Following on from a recent Street Fighter 6 reveal, Capcom announced new IP Exoprimal at today’s Sony State of Play.
- The two announcements strengthen Capcom’s pipeline for FY23 and FY24 although leaks had already revealed the likely launch timing of SF6.
- Exoprimal is new news, however, and provides a glimpse into Capcom’s strategic thinking.
Li Ning (2331): SWF Exclusion
- Norges Bank excludes Li Ning (2331 HK) from its list due to poor labor practices/human rights issues.
- Today’s share price could be a telltale sign of the near-term prospect, down when the majority are up.
- Will the other international shareholders follow suit on dumping the shares because of the human rights abuse? Potentially yes.
Square Enix – Four Games at State of Play Show Depth of Content
- Square Enix had four of the twelve titles featured at today’s Sony State of Play.
- While none of the titles was one of they IPs for Square Enix they demonstrate the depth of IP possessed.
- In addition, the trailers point to Square Enix’s domestic development studios maintaining high quality standards even for smaller titles.
Crowdstrike FY4Q22: (Bear) Case Adjourned
- Crowdstrike printed a superb quarter, continues to beat and raise despite overblown competitive concerns with new disclosures around non-endpoint ARR shows this becoming a true platform.
- Revenue growth (+63%), Margin expansion (+570bps) and FCF generation (46% FCF margins) shows best in class rule of 40 SaaS metric.
- Next catalyst is Analyst Day in April, expect LT targets to get increased.
Koei Tecmo – Some Nice Signs But Downside Risks Need To Be Priced In First
- Koei Tecmo appears to have made some strides in improving the quality of Stranger of Paradise: Final Fantasy Origins.
- This bodes well for the future of its business effectively reskinning its in-house titles with popular outside IPs.
- This makes us more interested in the name but we are still waiting for the shoe to drop on investment income.
Close the Gap: Korean Pref Vs. Common Shares Post New South Korean President Yoon Suk-Yeol
- We highlight the closing of the pricing gaps between the Korean common and pref shares, which is likely to be accelerated by the free market promoting new Korean President Yoon.
- These measures include strengthening investor protection in the event of a spin-off of a new business listing, incorporating compulsory tender offers, and improving short selling systems and foreign exchange operations.
- We believe these measures to emphasize on the free markets are likely to improve minority shareholder rights and the gaps between the common and preferred shares could narrow further.
GCEH: Almost Online, Initiating with Buy
- We are initiating coverage of Global Clean Energy Holdings (GCEH) with a Buy Rating and $7.55 target.
- GCEH is in the final stages of turning a crude oil refinery into a renewable fuel refinery utilizing camelina as its primary feedstock.
- GCEH has also obtained a product offtake and purchase agreement with Exxon Mobil (XOM) for nearly all of the production from its under-construction refinery, scheduled for commercial production in 2022
Recent IPO Insights: Gitlab
- Gitlab is down 61% since its IPO and trades at 16x forward sales, now reasonable for years of 40% like growth expected.
- At $6B valuation, would make an attractive acquisition candidate for Google/Amazon or some of the growing DevSecOps players like Datadog.
- Dynamic TAM with long runway ahead, very underpenetrated, strong secular tailwinds.
RJH: 4Q21 Earnings Grew YoY but Drop QoQ
- Maintain HOLD rating with a TP of Bt33.50, based on 19.14xPE’22E,which is pegged to -1SD of 3-years trading mean.Despite drastic drop in 22E profit, its strategic location, combined with undemanding
- Its 4Q21 net profit was at Bt283m (+96%YoY, -42%QoQ), given weak QoQ revenue growth, and margin contraction due to lowered Covid-19 related contribution.
- RJH’s 2021 earnings was at Bt1.01bn, implying +145% YoY, mainly attributed to higher contribution from Covid-related services.
Related tickers: JD.com Inc (ADR) (JD.O), Capcom Co Ltd (9697.T), Li Ning (2331.HK), Square Enix Holdings (9684.T), Crowdstrike Holdings Inc (CRWD.O), Koei Tecmo Holdings (3635.T), Hyundai Motor Co (005385.KS), Rajthanee Hospital (RJH.BK)
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