In today’s briefing:
- Mercari – Margin Miss Not Beat
- Keppel DC REIT (KDCREIT SP) – Imminent Lifting of SG Data Centre Moratorium and Its Implications
- Facebook 4Q21: Trending on TikTok ‘How to Lose $200B in Market Cap’
- Nintendo – Solid Beat Should Confirm Early Nov Bottom
- BFI Finance Indonesia (BFIN IJ) – Taking the Digital High Road
- Softbank Corp (Buy) – Q3 21 Results Reaction: Weak Consumer Mobile but FY Targets in Sight
- Takeda: Key Drugs Continue Growth and Upgrade to Guidance; Pipeline Progress Despite Recent Setbacks
- Close Out the Pair Trade of KIH & MFG and Initiate a New Pair Trade Between KIH & Meritz Securities
- ATEN: Performing Ahead of Expectations
- Mercari – Don’t Panic Sell
Mercari – Margin Miss Not Beat
- We got this wrong, expecting a beat on margins in spite of weak GMV, whereas Mercari actually fell into the red for the first time in six quarters.
- The culprit is extremely aggressive promotional spend which looks to have hit all time highs in both Japan and the US.
- The shift to an investment stance is not in and of itself a bad thing but the growth relative to the spend is disappointing so far.
Keppel DC REIT (KDCREIT SP) – Imminent Lifting of SG Data Centre Moratorium and Its Implications
- Singapore government introduced a moratorium on new data centres in 2019
- As result, incumbent data centre REITs recalibrated their portfolio strategy including to pursue DPU and NAV growth through accretive overseas acquisitions
- In Q2 2022, the moratorium is expected to be lifted with conditional approvals for applicants that meet certain sustainability requirements. We discuss the implications for Keppel DC REIT (KDCREIT SP)
Facebook 4Q21: Trending on TikTok ‘How to Lose $200B in Market Cap’
- 5 Issues: Tough Comps, Supply Chain Disruptions, Reels MixShift, Apple IDFA, and TikTok…thats alot of issues
- TikTok is pressuring engagement and Google is taking Facebook’s advertising revenues.
- Strong management team with history of executing at a trough valuation provides a good entry point. But may make more sense to just buy Google.
Nintendo – Solid Beat Should Confirm Early Nov Bottom
- Nintendo posted an impressive top line for 3Q at ¥696bn in revenue vs. consensus at ¥641bn for an 8.6% beat.
- OP of ¥253bn beat consensus by 16.9% suggesting that sell side analysts do not understand Nintendo’s new profit structure.
- The stock has been resilient since bottoming in early November and we expect strong performance to continue.
BFI Finance Indonesia (BFIN IJ) – Taking the Digital High Road
- The confirmation that Jerry Ng, one of the major shareholders of Bank Jago will take a controlling stake in BFI Finance Indonesia should create a win-win combination.
- BFI Finance Indonesia brings best-in-class exposure to multi finance, whilst integration with Bank Jago and GoTo group should help it to accelerate the company’s digitalisation and boost growth.
- The company trades on 2.7x FY21E PBV with a forecast ROE of 14.7% for FY2021E and 18.5% in FY2023E but historically it has generated ROEs of 25% plus.
Softbank Corp (Buy) – Q3 21 Results Reaction: Weak Consumer Mobile but FY Targets in Sight
- Results were pretty much in line with expectations as growth from Z Holdings and Enterprise sales offset consumer mobile weakness.
- The company is slightly behind the pace needed to meet its full-year operating profit target but appears confident on meeting FY21 and FY22 commitments
- Management reports that cashless app PayPay generated ¥21bn in Q3 revenue as SME monetization kicked in
Takeda: Key Drugs Continue Growth and Upgrade to Guidance; Pipeline Progress Despite Recent Setbacks
- Takeda announced 3QFY03/2022 results today. Reported revenue grew 7.7% YoY to JPY901.3bn (vs consensus JPY850.5bn) and OP declined 18.6% YoY to JPY116.5bn (vs consensus JPY115.6bn) due to divestitures.
- Revenue from Top 14 key drugs grew 21.2% YoY, while revenue from top-seller Entyvio grew 24.2% YoY during the quarter.
- Takeda has upgraded its previous guidance for full-year FY03/2022. The company continues to progress with drug development. Two of its products were approved during the last 6-months.
Close Out the Pair Trade of KIH & MFG and Initiate a New Pair Trade Between KIH & Meritz Securities
- On 17 January 2022, we recommended going long on Korea Investment Holdings and going short on Meritz Financial Group.
- We would close out this pair trade as it has returned 12% (net gains), as of 3 February.
- We now see a better pair trade of going long Korea Investment Holdings & short Meritz Securities.
ATEN: Performing Ahead of Expectations
- ATEN reported fourth quarter results beating our estimates and held an investor day to layout the framework for the next few years.
- ATEN has continued to benefit from growing demand for security as network traffic has increased
- ATEN is forecasting Q1 and 2022 revenue to increase between 10 % and 12 %. ATEN forecasting gross margin of 78% to 80% leads us to raise our 2022 estimates
Mercari – Don’t Panic Sell
- Mercari opened down 11.7% and has now recovered to be down “only” 8.5%.
- While our impression of results yesterday was negative the intensity of the move is overdone in our view.
- We still believe that momentum is likely to be muted for a while but the current price is not unattractive.
Related tickers: Mercari Inc (4385.T), Keppel DC REIT (KEPE.SI), Meta Platforms (Facebook) (FB.O), Nintendo Co Ltd (7974.T), BFI Finance Indonesia (BFIN.JK), Takeda Pharmaceutical (4502.T), Meritz Securities (008560.KS), A10 Networks (ATEN.N), Mercari Inc (4385.T)
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