In today’s briefing:
- MSCI May Index Rebalance Preview: Potential FIF Changes & Impact
- OneStore IPO Valuation Analysis
- One Store Pre-IPO – Track Record Has Been Strong, Questions Surround Its Choice of Peers
- Robinhood Markets, Inc. (HOOD): Sell Short
- Breaking Estimate Short Candidates: UiPath, EchoStar, Stitch Fix, First Solar
- Yaskawa – We Expect a Slight Miss and Tepid Guidance
- PC Partner (1263) 7.50 Buy Zone for New Chart Highs
MSCI May Index Rebalance Preview: Potential FIF Changes & Impact
- MSCI comprehensively evaluates the free float for stocks at the May SAIR. The changes will be announced on 12 May and implemented at the close on 31 May.
- We expect an increase in the FIF for some stocks. Largest inflows are expected on Tencent (700 HK), Kuaishou Technology (1024 HK), JD Health (6618 HK) and KakaoBank (323410 KS).
- There is reasonably large short interest on some of the stocks and there could be some short covering on stocks where there could be large passive inflows.
OneStore IPO Valuation Analysis
- Our base case valuation of OneStore is market cap of 1.3 trillion won and target price of 48,713 won per share (28% higher than the IPO mid-point price range).
- Our valuation of the company is based on P/S multiple of 4.8x (average of the peers) using our estimated sales of 269 billion won for the company in 2022.
- In our comparable companies valuation analysis, we have used the following four Korean companies as comps including Kakao Corp, Naver Corp (035420 KS), AfreecaTV (067160 KS), Kidari Studio (020120 KS).
One Store Pre-IPO – Track Record Has Been Strong, Questions Surround Its Choice of Peers
- ONE Store (ONE KS) is looking to raise up to US$228m in its upcoming Korean IPO.
- One Store is a mobile app market platform, formed by a cooperation between South Korea’s three telecom carriers, together with Naver Corp, an internet firm in South Korea.
- By cutting its commission take rate to attract developers, the firm has managed to turnaround its transaction volume in FY18, leading it to record consecutive quarters of growth.
Robinhood Markets, Inc. (HOOD): Sell Short
- HOOD’s performance indicators are deteriorating. Growth in funded accounts is not growing. Monthly average users are declining, and ARPU is falling. Margins remain negative and are declining.
- The company’s main sources of revenue are from transactions in speculative instruments. Options and crypto trading represent 80% of transaction revenue… in accounts that average $4,300 in size.
- Small scale and lack of diversification leave it disadvantaged. Further, it generates little fee income, such as asset management fees. It is nearly entirely reliant on payment for order flow.
Breaking Estimate Short Candidates: UiPath, EchoStar, Stitch Fix, First Solar
- This model uncovers companies facing recent sharp cuts in estimates. These shorts can have very disparate characteristics.
- The key judgement involves whether the negative revisions are temporary or if they are indications of ongoing weakness in the business.
- Breaking Estimates stocks often continue to decline after the cuts. This week we flag: UiPath, EchoStar, Stitch Fix, First Solar
Yaskawa – We Expect a Slight Miss and Tepid Guidance
- Yaskawa reports today and we expect earnings and guidance to both be on the weak side.
- The stock has been weak of late but we still lean towards the idea that there is a little downside risk remaining.
- The key question is whether the market attaches any credibility to consensus projections of 15% YoY OP growth next FY.
PC Partner (1263) 7.50 Buy Zone for New Chart Highs
- PC Partners has solid bull base line support to stage a fresh bull cycle. Old high support and key lows rest at the 7.50 level.
- RSI is due to rally off of the bull wedge breakout support. Buy volumes are constructive on strength with weak sell volume on recent weakness (underlying bullish).
- 12.50 and 14 bull targets with the later the hurdle to clear to open the way higher.
Before it’s here, it’s on Smartkarma
