In today’s briefing:
- Toshiba Tec – All-Time Highs
- Crypto Weekly – Prices Going Up on Bad Headlines: What’s Happening?
- ADTRAN/ADVA Optical Networking: Additional Acceptance Period
- This $50 Billion SPAC Deal Has Several Red Flags
- Money Forward (3994): SaaS & Fintech Combined. Initiating Coverage with a Hold
- UI: Earnings Compression Before Price Inflation
- eClerx Services Limited: Strong Client Additions
Toshiba Tec – All-Time Highs
- Toshiba Tec is one of our favourite small caps in Japan with a strong fundamental story and upside event risks from the Toshiba soap opera.
- The name was up 14.3% today despite middling earnings released mid-day on its designation as non-core by parent Toshiba.
- That puts it at an all-time high and within a whisker of ¥5,000 with the event risk now clearly visible.
Crypto Weekly – Prices Going Up on Bad Headlines: What’s Happening?
- There are finally signs of stabilization as crypto price action is turning positive, despite the negative headlines that we’ve witnessed over the past weeks. We investigate the events below.
- Negative Event One – Convicted felon 0xSifu held control over USD800mn of Wonderland user treasury
- Negative Event Two – A bridge protocol, Wormhole, suffered the second-largest Defi hack and lost $320mn
ADTRAN/ADVA Optical Networking: Additional Acceptance Period
- Adtran lowered the minimum acceptance threshold from 70% to 60%; the condition was thus fulfilled by the end of the initial acceptance period. Additional acceptance period runs until 14 February.
- The consummation of the offer continues to be subject to closing conditions not yet fulfilled, especially foreign direct investment approval in Germany.
- A 15% increase in the ADVA share price since the threshold condition was fulfilled has caused the spread to become negative (-3.4%). If you were already long, recommendation is tender.
This $50 Billion SPAC Deal Has Several Red Flags
- The SPAC market has been down and out in 2022, with few high-quality deals.
- However, things appear to be changing, with rumours surfacing that three SPACs are fighting to take the words largest EdTech startup public.
- If the company makes a debut at a $50 billion valuation, there will be very little room for error, leaving room for far more downside than upside.
Money Forward (3994): SaaS & Fintech Combined. Initiating Coverage with a Hold
We initiate coverage of Money Forward, Inc. (3994, Money Forward, the company) with a target price of 5,650 yen and a Hold rating.
We forecast sales of 20.6bn yen for FY11/22 (+32.1% YoY) and 26.4bn yen for FY11/23 (+27.7% YoY)
Our target price is based on a target EV/Sales multiple of 10.5x for FY11/23
UI: Earnings Compression Before Price Inflation
- UI continues to face supply chain challenges in meeting demand. Ubiquiti reported fiscal second quarter (December) results missing our estimates while inventory continued to increase
- First, service provider revenue declined further after what we thought was a depressed level in the September quarter. Second, freight expenses caused gross margin to decline faster
- Even though enterprise revenue rose sequentially in the quarter, it was not enough to offset the erosion in service provider revenue
eClerx Services Limited: Strong Client Additions
- eClerx Services (eClerx) provides business process management, automation and analytics services.
- It caters to financial services, communications, retail, media, manufacturing, travel and technology companies
- We continue to remain positive and retain our BUY rating on the stock Target Price and Valuation: We value eClerx at Rs 3,000 i.e. 20x P/E on FY24E EPS.
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