In today’s briefing:
- Sony – Great Opportunity
- Softbank – Hmmmmm…
- Alibaba (BABA): Don’t Be Pessimistic About E-Commerce, Especially Big Platforms
- Fujitsu General – A Second Hiccup
- Shin-Etsu – Buy for the PVC Business
- Nidec (6594): Catch a Falling Knife
- Adi Sarana Armada (ASSA IJ) – Crystalizing Used Car Value
- Intel 4Q21: Our Capex Is More Valuable than TSMC’s
- ServiceNow: The Platform of Platforms
- PLANB: Acquisition of New OOH Media Capacity Seems Worthwhile
Sony – Great Opportunity
- Following its 12.8% fall last Wednesday Sony is now getting hit for 7.7% today thanks to Jay Powell.
- This is an excellent opportunity to resize positions in our view as the long-term outlook remains excellent.
- We had been worried about potential volatility due to the name becoming consensus but since that has been realised we are back to being uber bulls here.
Softbank – Hmmmmm…
- Marcelo Claure is reportedly out, joining Katsunori Sago and Michael Ronen, Robert Townsend, Chad Fentress and Ziad Ojakli, Gary Ginsberg and Yuko Kawamoto.
- This is the highest profile resignation at Softbank since Nikesh Arora and continues the pattern of people reportedly in disputes with Rajeev Misra leaving the company.
- So does that 50% holdco discount offer any comfort here???
Alibaba (BABA): Don’t Be Pessimistic About E-Commerce, Especially Big Platforms
- Market Research expects that e-commerce will grow 15% and 13% in following two years.
- Big platforms, such as Alibaba and JD.com will still have advantage in the growth.
- The risk is that consumers care significantly more about product brand than platform reputation.
Fujitsu General – A Second Hiccup
- Fujitsu General’s 3QFY22 results saw solid revenues of ¥63.7bn (+20.3% YoY) but weak OP of just ¥35m (0.1% OPM).
- Cost inflation is a concern here but we are most concerned with the top line and we see few issues there which leaves us encouraged.
- There is also the possibility of a buyout offer from parent Fujitsu though we are concerned about any premium being too light.
Shin-Etsu – Buy for the PVC Business
- In our last note we posed the question of whether Shin-Etsu could join the ¥1trn OP club.
- The company’s upgrade of its guidance from ¥485bn to ¥675bn today suggests that in fact the answer is looking like a yes.
- While conditions for the wafer business remain strong it may be dragged down by tech negativity leading Shin-Etsu to rely on its phenomenal PVC business instead.
Nidec (6594): Catch a Falling Knife
- Operating profit declined in 3Q despite a 15% YoY increase in sales. FY Mar-22 profit guidance now looks too high.
- The Automotive division is suffering from the semiconductor shortage, high materials prices and the cost of ramping up EV motor production – which is scheduled to continue until 2025.
- But the share price has dropped 31% since the beginning of January. Long-term investors may now choose when to buy in.
Adi Sarana Armada (ASSA IJ) – Crystalizing Used Car Value
- Adi Sarana Armada (ASSA IJ) has successfully spun off its Auto trading subsidiary Autopedia Sukses Lestari (ASLC IJ) through an IPO reducing debt and raising capital to grow the business.
- Autopedia will focus on growing its online O2O business through Caroline, with a captive supply of used cars from its auction and car leasing businesses plus offline infrastructure in place.
- Adi Sarana Armada (ASSA IJ) also looks attractive for its logistics and last-mile business, which is close to profitability and now more than 50% of its revenues and growing fast.
Intel 4Q21: Our Capex Is More Valuable than TSMC’s
- Intel is promising is that it will advance five process nodes over the next four years, recapturing process leadership from TSMC by 2025, but significantly underspending TSMC in capex.
- Overearning in datacenter is unwinding, leading to lower profits…overearning in PCs will unwind in 2022, leading to lower profits.
- Lower profits and higher capex means less buybacks to support earnings growth.
ServiceNow: The Platform of Platforms
- Blowout 4Q21 results headlined by (adjusted) 38% subscription billings growth – unbelievable for a company this size.
- Generated a Rule of 75 Quarter (29% revenue growth + 46% FCF margins)
- Multi-Module adoption continues to ramp, large deal sizes continue to ramp. At 12x forward revenues…incredible entry point.
PLANB: Acquisition of New OOH Media Capacity Seems Worthwhile
- We believe PLANB’s acquisition of media business from AQUA PCL at total cost of Bt2.9bn will create value accretive for the company as it purchases at PE multiple of 16x-18x
- 2022 to be harvesting period after heavy CAPEX investment in the past two years ,which also included the largest deal on Aqua’s assets.
- Media revenue is expected to grow 35%CAGR in 2022-23E, driven by revenue recognition of new media capacity in digital, static segments (mainly from Aqua), and, retail media in 7-eleven stores.
Related tickers: Sony Corp (6758.T), Softbank Group (9984.T), Alibaba Group (BABA.N), Fujitsu General (6755.T), Shin Etsu Chemical (4063.T), Nidec Corp (6594.T), Adi Sarana Armada (ASSA.JK), Intel Corp (INTC.O), Servicenow Inc (NOW.N), Plan B Media (PLANB.BK)
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