In today’s briefing:
- China ADRs Delisting – Tide Is Turning with CSRC Showing Signs of a Compromise
- Softbank Group – Early Read on Q4 Portfolio Performance
- Fujitsu (6702 JP): At Risk of Short-Term Profit Taking
- SK Square: NAV Post IPOs of SK Shieldus/OneStore and a Major Investment in ARM Holdings?
- JCET (600584.CH): The Demand Was Strong in 2021, but 1Q22 Should Be a Seasonal Decline.
- OnlyFans is Stuck Between a Rock and a Hard Place
China ADRs Delisting – Tide Is Turning with CSRC Showing Signs of a Compromise
- On 2nd Apr 2022, CSRC put out a draft for public comments on the revision of certain provisions which would allow easier access by overseas regulators to China ADRs audits.
- On 8th Mar 2022, Securities Exchange Commission (SEC) had added five China ADR names to its provisional list of issuers under HFCAA, which set the clock ticking for their delisting.
- In this note, we’ll talk about the latest developments and its implications.
Softbank Group – Early Read on Q4 Portfolio Performance
- Vision Fund’s public portfolio dropped $18.6bn (-24%) in Q4. China concerns grabbed headlines but it was Asian names (Coupang, Grab) that drove losses
- Public investments held at the parent level fell 41% (-$1.3bn), led by SoFi (-$862mn), Lemonade (-$189mn) and THG (-$147mn)
- We expect that Softbank will also need to write down private investments although it is not clear just how far private valuations have tracked public changes
Fujitsu (6702 JP): At Risk of Short-Term Profit Taking
- The shares have rebounded by nearly 30% since the 1st of February. Consolidation seems likely while waiting for evidence that management’s sales and profit targets can be met.
- As Japan’s No. 1 IT services company, Fujitsu should benefit from the ongoing digitalization of Japan’s public and private sectors, the roll-out of 5G and the development of 6G.
- Risks for investors include the weakening yen and economic slowdown. A history of IT system failures also raises a red flag.
SK Square: NAV Post IPOs of SK Shieldus/OneStore and a Major Investment in ARM Holdings?
- Our updated NAV valuation of SK Square suggests an implied price of 82,167 won per share, which represents a 46% upside from current levels.
- For SK Shieldus and OneStore, we took the mid-points of the IPO price ranges and applied SK Square’s post IPO ownership stakes, respectively.
- SK Square’s CEO Park Jung-Ho announced that the SK Group is interested in investing in Arm Holdings. SK Group is well positioned to participate in the investment of ARM Holdings.
JCET (600584.CH): The Demand Was Strong in 2021, but 1Q22 Should Be a Seasonal Decline.
- JCET has reported 2021 annual results, and there was RMB$8.59bn/9.5% of revenue/NM percentage in 4Q21. JCET 2021 grew 6.0% QoQ and 11.5% YoY respectively.
- Despite US-China trade war, the revenue from US clients are taking 50.2% in 2021, which is growing 23% from 2020 to 2021.
- Given the 5G and China Automotive are developing actively, we believe these two applications shall be keeping the energetic momentum.
OnlyFans is Stuck Between a Rock and a Hard Place
- Reports emerged in the past week that social media & content creation platform OnlyFans was holding talks with prospective SPACs for a potential deal.
- Despite numerous attempts at fundraising in the past, investors remain skeptical about the adult-oriented nature of the content shared on the platform
- The company is in a delicate position, needing banks & payment providers to process payments while relying on explicit content to drive future avenues of growth
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