In today’s briefing:
- Softbank Group – China Bounce Erases a Week of Losses
- Razer’s Offer Spread Risk/Reward – FY21 Results
- GoTo IPO – Valuation – Missed the Tide, Boat Won’t Rise
- LINE Gift: The Next Stage
- Meituan (3690 HK): Authorities Turned Friendly to Internet Companies, Upgrade to Buy
- Will Cisco Make A Bid For HashiCorp As Valuation Fell By Half From The IPO Price?
- Intuit: A Strategy Shift And High Momentum Exposure
Softbank Group – China Bounce Erases a Week of Losses
- Softbank is a $23bn winner on the China bounce as Alibaba (+37% over 2 days, $18bn) and Vision Fund (+$4.8bn) recovered from selling pressure over the last week
- Improving sentiment aside the discount remains above 50% and the rebound appears to be more about correcting excess selling than a change in market outlook
- We remain wary of Chinese exposure in the near-term on political, regulatory and economic risks although the worst appears to be over for now
Razer’s Offer Spread Risk/Reward – FY21 Results
- Razer Inc (1337 HK)‘s FY21 results beat consensus revenue by 8% but came below consensus EBIT by 3%, based on CapitalIQ data.
- The management did their best to dampen sentiment by pointing out slowing growth momentum and margin compression due to significant growth investments in 2022.
- We think that the results/outlook do little to increase the attractiveness of the offer. We would be buyers up to HK$2.5 per share (implies 65% deal probability).
GoTo IPO – Valuation – Missed the Tide, Boat Won’t Rise
- GoTo aims to raise around US$1.25bn from a local listing, which will mainly be targeted at domestic investors.
- GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
- In this note, we will talk about the company’s valuation.
LINE Gift: The Next Stage
- LINE Gift has doubled its user base to 20 million in a year, and added merchants like Seven Eleven, but isn’t content with this.
- It has only just integrated with Zozo and Yahoo Shopping and expects these new partners, as well as new TV ad campaigns, to deliver a major increase in user numbers.
- The collaboration with Z Holdings’ through Yahoo Shopping and Zozo shows the potential for leveraging the groups’ huge user base.
Meituan (3690 HK): Authorities Turned Friendly to Internet Companies, Upgrade to Buy
- Central Financial Working Committee turned friendly to overseas listed internet Companies.
- We believe Meituan will be free from the pressure of anti-monopoly rules.
- Meituan stock has fallen significantly and we upgrade it to BUY.
Will Cisco Make A Bid For HashiCorp As Valuation Fell By Half From The IPO Price?
- Shares of HashiCorp (HCP US) , a leading VC-backed infrastructure automation company, fell ~50% below the IPO price of $80.00 per share.
- HashiCorp (HCP US) is a multi-product company that helps to accelerate cloud adoption. The company reported total revenue of $321M in FY’22 ended Jan-22, up 51% year-over-year.
- According to public sources, Cisco Systems (CSCO US) has already approached HashiCorp with an acquisition offer in 2019. However, both Cisco and HashiCorp declined to comment on rumors.
Intuit: A Strategy Shift And High Momentum Exposure
- Intuit returned a negative 27% since I warned for pending risks for the share price back in November of last year.
- While most of that disappointing performance was due to market related risks, the company’s strategy seems to be changing rapidly.
- Shifting the focus from a pure organic-led growth to an M&A frenzy is a bad omen in the already richly priced software space.
Before it’s here, it’s on Smartkarma
