In today’s briefing:
- Nomura Research Placement – Has Sold Before, Deal Might Be More Reflective on the Parent’s Results
- Potential MSCI Upweights in May: Kuaishou, JD Health, Akeso
- Tencent Music (TME): 4Q21, Revenue Down for First Time
- UMS Holdings: Excellent Results in 2021 & Valuation Has Become More Attractive After Recent Sell-Off
- Xiaomi (1810 HK): 4Q21, Growth Rate Bounced Up, as High End Strategy Worked
- Capcom – The Prospects for Street Fighter 6
- TME 4Q Results: Earnings Continue to Weaken
Nomura Research Placement – Has Sold Before, Deal Might Be More Reflective on the Parent’s Results
- Nomura Holdings is looking to raise around US$486m via selling 2.5% of Nomura Research.
- This is not the first sale by Nomura and hence, might not come as a complete surprise.
- In this note, we will run the deal through our ECM framework and talk about the recent updates.
Potential MSCI Upweights in May: Kuaishou, JD Health, Akeso
- We see a potential increase in the FIF for Kuaishou Technology (1024 HK), JD Health (6618 HK) and Akeso Biopharma Inc (9926 HK) at the MSCI May SAIR.
- The increase in FIF will require passive funds to buy 79.45m shares of Kuaishou (1024 HK), 57.35m shares of JD Health (6618 HK) and 15.32m shares of Akeso (9926 HK).
- Short interest has started to inch higher on Kuaishou, while short interest is rising sharply on JD Health and Akeso.
Tencent Music (TME): 4Q21, Revenue Down for First Time
- In 4Q21, TME’s revenue decreased YoY for the first time since its IPO.
- We do not believe the music rise will cover the social entertainment decline in 2022.
- Either, we do not believe social entertainment will recover based on its operating data.
UMS Holdings: Excellent Results in 2021 & Valuation Has Become More Attractive After Recent Sell-Off
- UMS Holdings’ stock price has been oversold in the past several weeks. It posted excellent results in 4Q 2021 and its valuations have become more attractive.
- If the global semiconductor cycle undergoes a major downtrend, UMS Holdings would not be immune from such downturn and the company is likely to experience lower sales and profit growth.
- We believe that UMS Holdings has 20% to 40%+ upside from current levels over the next one year, based on historical valuation multiples in the past three years.
Xiaomi (1810 HK): 4Q21, Growth Rate Bounced Up, as High End Strategy Worked
- The growth rate of total revenue bounced up and all business lines grew strongly in 4Q21.
- Smartphone revenue grew more rapidly than smartphone shipment, as the high-end strategy worked.
- We set an upside of 56% and a price target of HK$21 for the year end 2021.
Capcom – The Prospects for Street Fighter 6
- A month ago Capcom announced Street Fighter 6 with a small trailer featuring no actual gameplay footage.
- Given the somewhat haphazard launch of Street Fighter 5 expectations for the title are likely to be moderate.
- However, there has been much progress since the launch of Street Fighter 5 and there are some promising signs to consider.
TME 4Q Results: Earnings Continue to Weaken
- TME reported 4Q2021 results on Monday. Revenue for the quarter decreased 8.7% YoY to RMB7.61bn (vs consensus RMB7.66bn) and reported OP decreased 47.3% YoY to RMB682m (vs consensus RMB1.3bn).
- Revenue from Online music services grew single digit (4%) for the first time while revenue from Social Entertainment services dropped further during the quarter.
- TME expects its revenues to decline in 2022 as it expects the social entertainment services business to remain under pressure due to competition and regulatory pressure.
Before it’s here, it’s on Smartkarma
