In today’s briefing:
- Aristocrat/Playtech: Deal Uncertainty but the Shares Are Inexpensive
- Koei Tecmo – Nice on the Surface But We Are Worried
- SK Hynix: New Total Shareholder Return Policy
- Coforge Ltd: Outlook Remains Strong
- Kuaishou: Livestreaming E-Commerce Expands and Losses to Narrow; Further Upside Seems Likely
- Pick of the Week – Infosys
- Birlasoft Ltd: Strong Deal Pipeline Provides Visibility
- Result Update:Coforge: Results Below Expectations; Outlook Remains Healthy
Aristocrat/Playtech: Deal Uncertainty but the Shares Are Inexpensive
- Court and EGM meetings are scheduled 2 February. Aristocrat is the only suitor remaining. Some investors in Playtech who anticipated a bidding war aren’t too keen to support the deal.
- The Board threatens with a break-up and auction of both Snaitech and the B2B white label software division. Analysts believe that the business is worth more than the current offer.
- Reiterate long PTEC LN, TP 680/share (Aristocrat offer), with the potential upside risk of a sweetened offer to placate some investors, or a break-up.
Koei Tecmo – Nice on the Surface But We Are Worried
- Koei Tecmo delivered strong results with revenue of ¥18.1bn and OP of ¥10.7bn comfortably beating consensus of ¥16.2bn and ¥5.7bn respectively.
- OP guidance was raised from an absurdly conservative ¥24.5bn to a still conservative ¥31.5bn, below consensus at ¥33.6bn.
- While these results look broadly positive we are concerned that the recent sell off may continue.
SK Hynix: New Total Shareholder Return Policy
- Overall, we have a positive view of SK Hynix’s new dividends and total shareholder return policy.
- We estimate SK Hynix’s dividend yield could be 1.3% in 2022 and 1.5% in 2023. We estimate its total shareholder returns could be 3.3% in 2022 and 5.4% in 2023.
- However, this is based on the consensus free cash flow estimates and also there is uncertainty in the timing of potential share buybacks from 2022 to 2024.
Coforge Ltd: Outlook Remains Strong
- Coforge offers system integration, apps & BPO services to BFSI, travel & healthcare verticals.
- Revenues and PAT grew at a CAGR of ~12% each over the past five years
- Target Price and Valuation: We value Coforge at Rs 5870 i.e. 30x P/E on FY24E EPS
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Kuaishou: Livestreaming E-Commerce Expands and Losses to Narrow; Further Upside Seems Likely
- Kuaishou’s share price has climbed more than 20.0% YTD as the company has increased its focus on e-commerce while also narrowing down its costs.
- The company opened its e-commerce store to local merchants in China including food delivery, healthcare, hospitality and entertainment ticketing.
- According to news media outlets, the e-commerce GMV hit RMB650bn (US$102bn) in 2021 from RMB381bn in 2020. This figure is expected to go up to RMB900bn in 2022E.
Pick of the Week – Infosys
- Infosys is India’s second-largest provider of consulting and IT services to clients across the globe
- It is also among the fastest-growing IT services organization in the world and leader in the offshore services space
- The company provides business consulting, application development and maintenance, and engineering services to 1,738 active clients
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Birlasoft Ltd: Strong Deal Pipeline Provides Visibility
- Birlasoft Ltd (Birlasoft) has strength in non-ERP digital businesses like CRM, B & data analytics, app development & enterprise solution.
- The company caters to manufacturing, BFSI, energy & utility and lifescience
- Target Price and Valuation: We value Birlasoft at Rs 540 i.e. 23x P/E on FY24E EPS
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Result Update:Coforge: Results Below Expectations; Outlook Remains Healthy
- Coforge Ltd (Coforge) Q3FY22 results stood below our expectations. The company’s revenue grew by 4.2% QoQ in CC terms to Rs 1,658 C
- Operating profits were reported at Rs 323 Cr, exhibiting a growth of 8.8% QoQ and operating margins witnessed a marginal growth of 90bps QoQ and stood at 19.5%
- We recommend a BUY rating on the stock and assign a 28x P/E multiple to its FY24E earnings of Rs 177.8/share which gives a TP of Rs 5,060 /share. TP implies an upside of 15% from CMP.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
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