TMT: Mercari Inc, Microstrategy Inc Cl A, Nintendo Co Ltd, Xiaomi Corp, Nikkei 225, IndiaMart, A10 Networks, Tech Mahindra, Info Edge India and more

• 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.

• Microstrategy Inc(MSTR US) reported a net loss of $90mn or $8.43/share in the fourth quarter, missing consensus estimates for a profit of US$0.89/share.
• The loss is predominantly due to the inclusion of impairment losses of US$146.6mn on its Bitcoin holdings, negating the $110.5mn in gross profit from the software ops.
• MicroStrategy remains a bet on Bitcoin. Yet almost any alternate cryptocurrency security appears a better bet, if that is your bent.

• 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.

• Xiaomi has an ambitious goal to surpass Samsung to become the #1 smartphone brand in the world (shipment basis) by 2024.
• We believe Xiaomi is less like the “Apple of China” and more like the “Costco of smartphones”. We explore the key aspects of this business model, including services monetization and an ecosystem strategy leveraging an “investment + incubation” model.
• Most investors seems to understand Xiaomi’s market share growth story, but may yet be underappreciating its monetization potential

• The nasty “squeeze” up in the Nikkei 225 has so far stalled within the zone of resistance at 27,293-27,629
• A move back below 26,954 would add to the bearish bias seen overall
• Medium to long term supports and target area comes in closer to 24,500

Our next Webinar features an actionable, counter-consensus look into IndiaMart (INMART IN) from experienced Insight Providers Pranav Bhavsar and Nitin Mangal of India Independent Insight. While the stock is well-owned, forensic accounting and investigative due diligence from our Insight Providers suggests that risks are grossly under-appreciated. Join our session to get the full scoop.

The webinar will be hosted on Wednesday, 23 February 2022, 17:00 SGT/HKT.

Pranav Bhavsar is the Founder of ASA Capital Management, focusing on research on consumer themes and companies operating in India or global companies that have significant exposure to India or the Indian economy.

Nitin Mangal is a SEBI registered Research Analyst with more than 10 years of experience in Indian equities. He is Pioneer of Corporate Governance and Accounting Research in Indian Market and has successfully developed a product for Institutional Investors named as “Analysis Beyond Consensus” during his association with Edelweiss Securities Ltd, Mumbai. 

• 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.

• 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

CME segment drives growth

• About the stock: Info Edge provides internet based service delivery like recruitment services (Naukri), real estate (99 acres), Jeevansaathi and Shiksha.
• Quasi play on Indian start up like Zomato, PolicyBazaar, Shoekonect, Ustra, Gramophone and job market, matrimony services & real estate market
• Prudent capital allocation and recruitment business EBITDA margin >50%