In today’s briefing:
- Hong Kong: Where Have Shorts Increased & Decreased?
- Korea Holding Companies: Stub Tradable Names
- Tencent (700 HK): Layoff and Penalty Before 4Q21 Result
- GoTo IPO – Past Performance Hasn’t All Been Great
- Nintendo – Switch Pro Leaks And Implications For Developers
- Hollysys (HOLI US): Potential Suitors Didn’t Get The Memo
- GoTo Gojek Tokopedia IPO: Offering Details & Index Inclusion
- Tencent Met Our 320 Macro Long Entry Target
- Downgrading Technology To Underweight
- GoTo Gojek Tokopedia IPO Initiation: Island Shopping
Hong Kong: Where Have Shorts Increased & Decreased?
- Short notional in Hong Kong is HK$488bn and has been falling mainly as a result of a falling market. Short interest has increased substantially from end January.
- From 31 January to 4 March, the largest shorts have been built on Tencent, China Merchants Bank, AIA Group Ltd, Alibaba, JD.com, Meituan, Xiaomi, JD Health and Xinyi Solar.
- Over the same period, shorts have covered on COSCO Shipping Holdings, HKEX, Longfor Properties, China Construction Bank, Ping An Insurance, Yanzhou Coal Mining Company and HSBC Holdings.
Korea Holding Companies: Stub Tradable Names
- Korea has a total of 68 holding companies listed on KOSPI and KOSDAQ. We then have 14 holdcos with a high level of price cointegration with their respective listed subsidiaries.
- Three holding companies have sigma below zero on a 20D MA. Hanwha Corp is considered stub tradable as its share price relative to its subsidiaries was relatively flat.
- Four holdcos, including SK Square are over 70% NAV discount. Among them, SK Square is of the most interest as the price correlation with SK Hynix has been improving lately.
Tencent (700 HK): Layoff and Penalty Before 4Q21 Result
- Layoff rumors are spreading, which shadow two departments and 10% of Tencent’s employees.
- China Banking Regulatory Commission (CBRC) will fine Tencent for money laundering.
- Short video apps are taking time on site from Tencent’s WeChat app.
GoTo IPO – Past Performance Hasn’t All Been Great
- 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 talk about the company’s past performance.
Nintendo – Switch Pro Leaks And Implications For Developers
- Recent hacks into Nvidia have resulted in leaks that have got the rumour mills churning again for an upgrade to the Switch.
- Most details are similar to previous reporting by Bloomberg for the Switch Pro that was expected last year but failed to materialise.
- However, the recent leaks point to a bigger GPU upgrade that previously envisioned and that has implications…
Hollysys (HOLI US): Potential Suitors Didn’t Get The Memo
- Hollysys Automation (HOLI US) said in January it would suspend further evaluation of all unsolicited buyout proposals. Two proposals have reportedly since emerged.
- According to Bloomberg, the latest tilt is from Beijing Infrastructure, the state-owned operator of Beijing’s railway and subway.
- Separately, Hollysys reported FY21 net income of US$44.3mn, a decrease of 14.6% to FY20.
GoTo Gojek Tokopedia IPO: Offering Details & Index Inclusion
- GoTo (1379371D IJ) is offering 52bn shares in its IPO (plus a greenshoe of 7.8bn shares). The issue is being targeted at domestic investors and should list on 4 April.
- GoTo (1379371D IJ) will also look to list on an international exchange within the next two years by selling just over 8% of the company to those investors.
- Inclusion in domestic indices could take place in July, while inclusion in the MSCI and FTSE indices is expected in 2023 at the earliest.
Tencent Met Our 320 Macro Long Entry Target
- Our bear call on Tencent met the reverse target at 320 at macro support to go long with some choppy trade expected in coming weeks. Volume spikes to induce volatility.
- Hong Kong tech index also met the 3,500 rally support. 4,500 represents immediate resistance that will induce a rejection and pullback. Magnitude of this rise will need a give back.
- Tencent 390/400 is near resistance to sell (tactical short) and sets up the bigger buy in the lower range quadrant. 400 is the level to clear for bull traction.
Downgrading Technology To Underweight
- Our outlook remains bearish at the index level considering we have yet to see any developments that suggest a bottom is in.
- The S&P 500, Nasdaq 100 (QQQ), Russell 2000 (IWM), and Russell Micro Cap (IWC) indexes remain in downtrends.
- In today’s report we highlight attractive Groups and stocks within Materials, Manufacturing, Services, and Utilities: MA-14 Fertilizer, MF-15 Railroad Equipment & Products, SV-13 Construction & Engineering, Large-Cap, UT-04 Electric, Mid-Atlantic
GoTo Gojek Tokopedia IPO Initiation: Island Shopping
- GoTo (1379371D IJ) is the leading digital ecosystem in Southeast Asia. It seeking to raise up to $1.3 billion. Bookbuilding runs from 15 to 21 March.
- The fundamentals are mixed as the high growth is accompanied by ongoing losses and cash burn. A credible path to profitability is yet to be established.
- In an environment where growth-at-all costs tech firms and peers have materially sold-off and are out of favour, GoTo is not for the faint-hearted.
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