Mostly Borrowed Ideas Deep Dives, MBI Deep Dives

MBI Deep Dives

Mostly Borrowed Ideas Deep Dives

MBI is the abbreviation for “Mostly Borrowed Ideas”. Why “Mostly Borrowed Ideas?” As a generalist, I do not have a background in any particular sector. I enjoy navigating across industries, businesses, and countries to learn, understand, and connect the dots. In any case, most ideas and innovations are incremental in nature. Very few of us are smart enough to come up with truly original or groundbreaking ideas. I am Abdullah Al-Rezwan. I was born and brought up in Bangladesh. I went to University of Dhaka for my undergrad and majored in Finance. After working three and half years in Equity Research (Sell-side) covering Financial Sector in Bangladesh, I left Bangladesh to pursue my MBA in the US. I graduated within top 10% of the class from Cornell University's two-year MBA program and worked on the buy-side following my graduation. During my time at Cornell, I won two stock pitch competitions and also became finalists in four other competitions. I thoroughly enjoyed my stint as a generalist in the US large cap team at Madison Investments and covered a wide range of companies from UnitedHealth to Amazon and Boeing before US immigration reality paused my career in investment management. As my work authorization expired, I moved to Canada in January, 2021. Then in early 2022, I was able to return to the US.

Equity Bottom-Up

<ul><li>3P, subscription, and AWS grew by mid to high teen while ad segment increased by 20%+</li><li>The mix-shift from product to services in Amazon continues as services mix increased from ~40% in 2018 to ~60% in 2023.</li><li>Let’s start more segment level discussion with AWS.</li></ul>

3P, subscription, and AWS grew by mid to high teen while ad segment increased by 20%+The mix-shift from product to services in Amazon continues as services mix increased from ~40% in 2018 to ~60% in 2023.Let’s start more segment level discussion with AWS.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Amazon announced (2 May HKT) 1Q25 results: revenue was US$155.7bn, up 8.6% YoY (1Q24: 12.5%), inline with both our forecast and Bloomberg consensus estimate, and total operating profit was US$18.4bn, up 20% YoY, 2/5% better than our estimates/consensus, mainly driven by OPM margin beat in AWS segment, thanks to ongoing operating efficiency improvement.</li><li>Management guided for US$159.0-164.0bn revenue for 2Q25E (consensus: US$161.4bn), implying 7-11% YoY growth, and US$13.0-17.5bn operating profit (consensus: US$17.8bn) after accounting for regular impact from step-up in share-based compensation annually, and additional Project Kuiper related expenses to be booked.</li><li>We lower 2025-2027E revenue/OP forecast by 0.5- 0.8%/3.2-5.1% to factor in additional Kuiper expenses, and our target price is lowered by 8% to US$247.0 (was US$268.0), based on 18.3x EV/EBITDA (was 18.5x), inline with the two-year trading average. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

Amazon announced (2 May HKT) 1Q25 results: revenue was US$155.7bn, up 8.6% YoY (1Q24: 12.5%), inline with both our forecast and Bloomberg consensus estimate, and total operating profit was US$18.4bn, up 20% YoY, 2/5% better than our estimates/consensus, mainly driven by OPM margin beat in AWS segment, thanks to ongoing operating efficiency improvement.Management guided for US$159.0-164.0bn revenue for 2Q25E (consensus: US$161.4bn), implying 7-11% YoY growth, and US$13.0-17.5bn operating profit (consensus: US$17.8bn) after accounting for regular impact from step-up in share-based compensation annually, and additional Project Kuiper related expenses to be booked.We lower 2025-2027E revenue/OP forecast by 0.5- 0.8%/3.2-5.1% to factor in additional Kuiper expenses, and our target price is lowered by 8% to US$247.0 (was US$268.0), based on 18.3x EV/EBITDA (was 18.5x), inline with the two-year trading average. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Amazon (AMZN US) - 1Q earnings beat; pace of earnings growth to enter a healthy stage

<ul><li>While Amazon’s 3P business usually grows faster than 1P, both 1P and 3P retail business grew at similar rate in 1Q’25.</li><li>Ads revenue continued its momentum at 19% growth YoY which was higher than both Google and Meta.</li><li>After growing at ~19% YoY for the last three consecutive quarters, AWS growth decelerated this quarter to 17%.</li></ul>

While Amazon’s 3P business usually grows faster than 1P, both 1P and 3P retail business grew at similar rate in 1Q’25.Ads revenue continued its momentum at 19% growth YoY which was higher than both Google and Meta.After growing at ~19% YoY for the last three consecutive quarters, AWS growth decelerated this quarter to 17%.

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>Constituent changes to the <a href="https://www.smartkarma.com/entities/s-p-500-index" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 INDEX (SPX INDEX)</a>, S&amp;P Midcap400 Index and S&amp;P SmallCap600 Index for the March rebalance will be announced after market close on Friday.</li>
<li>There will also be capping changes for the Select Sector indices that will result in a round-trip trade of US$13.1bn. Constituent changes will add to that flow.</li>
<li>The largest inflows will be in <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com</a>, <a href="https://www.smartkarma.com/entities/tesla-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla</a>, <a href="https://www.smartkarma.com/entities/microsoft-corp" target="_blank" data-smartkarma-citation="entities:15273:1" rel="noopener">Microsoft</a>, <a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" data-smartkarma-citation="entities:5891:1" rel="noopener">NVIDIA</a>, <a href="https://www.smartkarma.com/entities/alphabet-inc" target="_blank" data-smartkarma-citation="entities:33361:1" rel="noopener">Alphabet (GOOGL US)</a> and <a href="https://www.smartkarma.com/entities/electronic-arts-inc" target="_blank" data-smartkarma-citation="entities:1179:1" rel="noopener">Electronic Arts</a>. Largest outflows are from <a href="https://www.smartkarma.com/entities/broadcom-inc" target="_blank" data-smartkarma-citation="entities:998:1" rel="noopener">Broadcom</a>, <a href="https://www.smartkarma.com/entities/meta-platforms-inc-class-a-facebook" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Meta Platforms</a>, <a href="https://www.smartkarma.com/entities/linde-plc" target="_blank" data-smartkarma-citation="entities:35233:1" rel="noopener">Linde</a>, <a href="https://www.smartkarma.com/entities/mcdonald-s-corp" target="_blank" data-smartkarma-citation="entities:1425:1" rel="noopener">Mcdonald's Corp</a> and <a href="https://www.smartkarma.com/entities/take-two-interactive-software-inc" target="_blank" data-smartkarma-citation="entities:14948:1" rel="noopener">Take Two Interactive</a>.</li>
</ul>


Constituent changes to the S&amp;P 500 INDEX (SPX INDEX), S&amp;P Midcap400 Index and S&amp;P SmallCap600 Index for the March rebalance will be announced after market close on Friday.
There will also be capping changes for the Select Sector indices that will result in a round-trip trade of US$13.1bn. Constituent changes will add to that flow.
The largest inflows will be in Amazon.com, Tesla, Microsoft, NVIDIA, Alphabet (GOOGL US) and Electronic Arts. Largest outflows are from Broadcom, Meta Platforms, Linde, Mcdonald's Corp and Take Two Interactive.


Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade

United States

Amazon.com, Inc. is an online retailer that offers a wide range of products. The Company's products include books, music, videotapes, computers, electronics, home and garden, and numerous other products.  Amazon offers personalized shopping services, Web-based credit card payment, and direct shipping to customers.

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Amazon (AMZN US)

Amazon 2Q'23 Earnings Update

3P, subscription, and AWS grew by mid to high teen while ad segment increased by 20%+ The mix-shift from product to services in Amazon continues

MBI Deep Dives

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Amazon (AMZN US) - 1Q earnings beat; pace of earnings growth to enter a healthy stage

We are looking for 18% YoY growth in OP in 2025E aided by optimization in cost to serve and improvement in scale effect, which we believe could be...

CMB International

Amazon 1Q'25 Update

While Amazon’s 3P business usually grows faster than 1P, both 1P and 3P retail business grew at similar rate in 1Q’25. Ads revenue continued its...

MBI Deep Dives

Select Sector Indices and S&P Equal Weight Rebalance Preview: Capping Changes & US$13bn Trade

Capping changes for the Select Sector indices will result in a round-trip trade of US$13bn. Constituent changes will be announced after market...

Brian Freitas

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