In today’s briefing:
- Zhihu HK Secondary Listing Trading – Delivered the Correction but Still Set for the Worst Debut Yet
- CATL Sell-Off Wipes Out Billions of Dollars of Market Value
- Softbank Group – Strong Dollar Impact Boosts Buyback Math Although Debt May Rise Too
- MediaTek (2454.TT): 1Q22 Results/ 2Q22 Outlook- 2Q22 Growth Outlook Could Be near Mid-Single Digits
- TME – ByteDance’s Launch of Music Streaming App to Add Further Pressure on Earnings
- Larsen and Toubro Infotech: Strong FY23 Outlook, but Valuations Remain Rich
Zhihu HK Secondary Listing Trading – Delivered the Correction but Still Set for the Worst Debut Yet
- Zhihu Technology (ZH US) raised around US$106m via a dual primary listing in Hong Kong.
- Unlike all the prior dual primary/secondary listings which have been done via offering either only primary or a mix of primary+secondary shares, Zhihu’s offering will consist of only secondary shares.
- In this note, we’ll talk about the demand and trading dynamics.
CATL Sell-Off Wipes Out Billions of Dollars of Market Value
- Skyrocketing material costs shook the stock of Contemporary Amperex Technology Co. Ltd. (CATL) as investors wiped billions of dollars off the value of the world’s largest electric-vehicle battery manufacturer.
- Word circulated in the market that CATL is set to post net profit of less than 5 billion yuan for the first quarter, a sharp decline from the previous quarter.
- The company hasn’t issued detailed financials for the fourth quarter and all of 2021. An estimate issued in January put annual net profit between 14 billion yuan and 16.5 billion yuan.
Softbank Group – Strong Dollar Impact Boosts Buyback Math Although Debt May Rise Too
- The strong dollar has boosted Softbank’s predominantly dollar-linked asset value by 9% in yen terms (although reported net debt will also increase)
- Also relevant is a decrease in the dollar cost of its ¥1,000bn share repurchase which was $8.8bn when announced but costs less than $8bn at the current exchange rate.
- This has kept the share price up YTD and QTD despite weakness in the investment portfolio but tech weakness probably has more legs than dollar appreciation
MediaTek (2454.TT): 1Q22 Results/ 2Q22 Outlook- 2Q22 Growth Outlook Could Be near Mid-Single Digits
- Mediatek revenue was NTD$142.7bn in 1Q22, which was 32.1% YoY and 10.9% QoQ. It was higher than the prior high-end guidance of $NTD141.5bn.
- The 2nd quarter outlook could be slight growth of NTD$148.9bn/49.1% GM, which could be not much growth expected.
- The expectation of the 5G deployment could be a bit slower because of COVID-19 impact and slow down in China handset shipment.
TME – ByteDance’s Launch of Music Streaming App to Add Further Pressure on Earnings
- Several news media outlets report that ByteDance has launched a new music streaming service in China called Qishui Yinyue.
- Tencent Music (TME US) earnings have come under pressure with ending of exclusive music streaming licensing deals and increased regulatory pressure on its social entertainment biz.
- We expect TME’s 1Q2022E earnings to decline further with increased competition and drop in social entertainment.
Larsen and Toubro Infotech: Strong FY23 Outlook, but Valuations Remain Rich
- LTI reported a growth of 3.6% QoQ CC on a high base, below our estimate of 4.2%.
- Growth was broad-based across verticals and service lines.
- EBIT margin moderated by 60bp QoQ to 17.3% in 4QFY22 (inline) due to lower working days and revenue mix
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