In today’s briefing:
- HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included
- Crypto Weekly – Web 3 and Selfie Monetization
- Kospi Index: How Bad?
- NDX Low Due This Week – 15,500 the Level to Mend the Damage
- CLFD: Dropping Coverage, 32% Return in 4 Days
- Liquidity Risk Short Candidates: HashiCorp, Fluence Energy, Rivian Auto, Domo Inc.
- SIS: New Business Segments Will Drive Growth In Earnings and Price
- Upstart: 73% Down – Here Are 5 Factors Driving The Stock Down
- Mastek Ltd: Deal Wins to Drive Momentum
- SYNEX: 4Q21 Net Profit Will Be an All-Time High
HSCI Index Rebalance and Stock Connect: Plenty of New Listings Should Be Included
- The review period for the March review of the HSCI ended on 31 December. There are a lot of new listings that should be included in the index.
- SenseTime is a high probability inclusion to the index, though it will only be added to Stock Connect in July once it completes 6 months and 20 trading days.
- Xpeng and Li Auto will be added to Stock Connect in Feb/March if they pass the velocity test. We see Li Auto as failing the test, while Xpeng is close.
Crypto Weekly – Web 3 and Selfie Monetization
- Crypto continues to drawdown due to tightening, however, the industry continues to grow with several large VC fund raises underway such as a16z’s $4.5 billion dollar fund
- Web 3 is a hot topic and we explore how several entrepreneurial individuals have monetized their selfies for millions
- We also explore LooksRare’s potential to disrupt Opensea and their potential 2022 public listing
Kospi Index: How Bad?
- The fresh break today to new trend lows on the Kospi Index forces one to identify potential supports & targets
- The chart warns of at least a test of the January 2018 high at 2,607 which is almost 6.5% below current levels
- The more concerning target is the 200 week moving average at 2,448 – some 12% lower
NDX Low Due This Week – 15,500 the Level to Mend the Damage
- NDX break below trendline and price support at 15,300 did open Pandora’s box and was touted as a key risk driver for a global sell off into late January.
- NDX 14,300/100 low zone to kick off a recovery rise in February. We prefer the DJI near 34k and SPX near 4,350. Late January cycle low timeline in focus.
- NDX underside of broken trendline at 15,500 is the level to re take to mend the technical damage – a tall order at this stage.
CLFD: Dropping Coverage, 32% Return in 4 Days
- We are electing to close out our Sell Rating on Clearfield (CLFD) after an unprecedented market response to our initiation.
- In less than 4 trading days, CLFD’s stock has declined by approximately 32.3 percent
- We see less of a reason to maintain coverage when the market has priced in for the business risks we had originally highlighted.
Liquidity Risk Short Candidates: HashiCorp, Fluence Energy, Rivian Auto, Domo Inc.
- Liquidity shorts can be great short candidates. The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements.
- Liquidity shorts have built-in catalysts, have moderate to higher betas, and can have strong down moves if a crisis develops. They can go bankrupt, pushing the stock price near zero.
- HashiCorp Inc (HCP), Fluence Energy (FLNC), Rivian Auto (RIVN), Domo Inc (DOMO)
SIS: New Business Segments Will Drive Growth In Earnings and Price
- Maintain BUY rating with a new TP of Bt50 (+10% from last TP) based on 19.7xPE’22 (+2.5SD historical 5-Year PE) due to positive prospects from new cloud and cybersecurity segments
- We rerate PE target to 19.7xPE’22 from 18.1xPE’22 to factor in upside from change in market valuations. While SIS trades at 16.2xPE’22,SYNEX and COM7 trade at an average of 35.5xPE’22
- •Expect earnings to grow 28% YoY in 22E, off the backs of new high-margin and high-demand cloud and cybersecurity segments.
Upstart: 73% Down – Here Are 5 Factors Driving The Stock Down
- Upstart is down 73% from its all-time highs after delivering a robust earnings report that saw revenue grow over 200%.
- There are 5 key factors that will likely continue to drag down the stock as the Nasdaq continues its downtrend.
- The big question for investors is to rigorously evaluate if Upstart is providing investors with excellent value right now for a company that is growing over 200% and highly profitable
Mastek Ltd: Deal Wins to Drive Momentum
- Mastek Ltd (Mastek) offers data, apps, cloud services to public & private enterprise in the UK, US, Middle East, Asia Pacific and India
- The company’s recent acquisition of Evosys has enabled Mastek to provide end-to-end solutions and improves margins from ~14% to 21%
- We now assign BUY rating to the stock (from HOLD earlier). We value Mastek at Rs 3,360 i.e. 26x P/E on FY24E EPS
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SYNEX: 4Q21 Net Profit Will Be an All-Time High
- We maintain HOLD rating with a TP of Bt28.40 derived from 27.0xPE’22E, (+2S.D. ten-year average). We believe that the company’s strong expected growth in 22E is largely priced in.
- We expect 4Q21 net profit to be Bt218mn (+12%QoQ), which is the company’s all time-high. All-time high revenue of Bt10.5bn (+19%QoQ),will be driven by strong sales of new Apple products
- Positive earnings growth in 2022,driven by sales in gaming devices and equipment, which are high-margin products. Gaming equipment sales come from partnerships with major gaming-related companies like Nintendo, Sony (Playstation),Razer.
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