Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>This is our first report on sensor technology player, Allegro MicroSystems.</li><li>Sales in these strategic growth areas made up 56% of total sales, indicating a successful strategy execution focused on these specific sectors.</li><li>The company's automotive revenues grew 31% year-over-year, with the electrification of vehicles and Advanced Driver Assistance Systems adoption being the main growth drivers.</li></ul>

This is our first report on sensor technology player, Allegro MicroSystems.Sales in these strategic growth areas made up 56% of total sales, indicating a successful strategy execution focused on these specific sectors.The company's automotive revenues grew 31% year-over-year, with the electrification of vehicles and Advanced Driver Assistance Systems adoption being the main growth drivers.

Allegro MicroSystems: Initiation of Coverage - How Its Strategic Focus is Electrifying the Future of Transportation - Major Drivers

Japan Specialist

Mark Chadwick

<ul>
<li>Sanken benefits from the structural growth in EVs, which should underpin revenue growth and margin accretion. </li>
<li>DCF valuation suggests the stock is slightly undervalued. However, better-than-expected revenue trends could easily drive significant upside. </li>
<li>Almost 30% of shares are held by activist investors - there is an attractive 57% upside to a SOTP valuation that could be realised over time.</li>
</ul>


Sanken benefits from the structural growth in EVs, which should underpin revenue growth and margin accretion. 
DCF valuation suggests the stock is slightly undervalued. However, better-than-expected revenue trends could easily drive significant upside. 
Almost 30% of shares are held by activist investors - there is an attractive 57% upside to a SOTP valuation that could be realised over time.


Sanken (6707)| Attractive for Activists and Growth Investors

Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Thematic (Sector/Industry)

<ul><li>This earnings season, Industrial semiconductor demand has been the biggest incremental softening in end market demand. That’s not surprising. </li><li>I have been talking about the FIFO (First-In, First-Out) cycle, and the only two remaining segments that have not had a meaningful correction are Industrial and Automotive.</li><li>We are now seeing the beginning of Industrial weakening.</li></ul>

This earnings season, Industrial semiconductor demand has been the biggest incremental softening in end market demand. That’s not surprising. I have been talking about the FIFO (First-In, First-Out) cycle, and the only two remaining segments that have not had a meaningful correction are Industrial and Automotive.We are now seeing the beginning of Industrial weakening.

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

A month ago, known active (and occasional activist and concentrated investor) Effissimo Capital Management announced an unsolicited partial Tender Offer to purchase 4,834,343 shares of <a href="https://www.smartkarma.com/entities/sanken-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:6073:1" rel="noopener">Sanken Electric (6707 JP)</a> to take it from 9.97% to 30.00% at ¥5210/share. The announcement was deliberately couched in terms to make it seem friendly. Effissimo is not going for negative control, or seeking to interfere with management in any way. They say they just want more stock. The shares, which had recently traded from the area of the Tender Offer Price down to sub-¥4500/share, immediately bounced, trading 10% through terms on the first full day of trading after going limit up on Day 1.<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/192/998/original/Screenshot+2021-03-09+at+3.51.32+PM.png?1615276314" class="editor-image img-responsive" data-smartkarma-image-id="192998"></figure></section>Since then, <a href="https://www.smartkarma.com/entities/allegro-microsystems" target="_blank" data-smartkarma-citation="entities:29707:1" rel="noopener">Allegro MicroSystems (ALGM US)</a> shares - Sanken's 52% subsidiary which it listed in November (and the key value driver for Sanken Electric), have fallen nearly 20% from just under US$31/share on 8 Feb the day after the announcement to US$25.14 yesterday.And Sanken itself has fallen back down to ¥5300/share, ~1.7% above the Tender Offer Price.In my first insight on the deal, I did not address "the stub trade" (Sanken's holding in Allegro, which was originally Sanken North America) and where I thought it should trade - as such - in the insight because frankly, it's difficult. The future is tough to predict. Below is a brief look at the parameters and the modalities.

A month ago, known active (and occasional activist and concentrated investor) Effissimo Capital Management announced an unsolicited partial Tender Offer to purchase 4,834,343 shares of Sanken Electric (6707 JP) to take it from 9.97% to 30.00% at ¥5210/share. The announcement was deliberately couched in terms to make it seem friendly. Effissimo is not going for negative control, or seeking to interfere with management in any way. They say they just want more stock. The shares, which had recently traded from the area of the Tender Offer Price down to sub-¥4500/share, immediately bounced, trading 10% through terms on the first full day of trading after going limit up on Day 1.Since then, Allegro MicroSystems (ALGM US) shares - Sanken's 52% subsidiary which it listed in November (and the key value driver for Sanken Electric), have fallen nearly 20% from just under US$31/share on 8 Feb the day after the announcement to US$25.14 yesterday.And Sanken itself has fallen back down to ¥5300/share, ~1.7% above the Tender Offer Price.In my first insight on the deal, I did not address "the stub trade" (Sanken's holding in Allegro, which was originally Sanken North America) and where I thought it should trade - as such - in the insight because frankly, it's difficult. The future is tough to predict. Below is a brief look at the parameters and the modalities.

Effissimo, Sanken, and Allegro - Thinking About the Future

Japan

Allegro Microsystems, Inc. develops advanced semiconductor devices. The Company provides power and sensing solutions for motion control. Allegro Microsystems serves customers worldwide.

Allegro MicroSystems (ALGM US)

Allegro MicroSystems: Initiation of Coverage - How Its Strategic Focus is Electrifying the Future of Transportation - Major Drivers

This is our first report on sensor technology player, Allegro MicroSystems. Sales in these strategic growth areas made up 56% of total sales,...

Baptista Research

Sanken (6707)| Attractive for Activists and Growth Investors

Sanken is an attractive investment for activists and growth investors alike. There is an attractive 57% upside to a SOTP valuation that could be...

Mark Chadwick

Semiconductor Cycles: Industrial and EVs

Plus my new taxonomy of cycles! Where I think each end market is in the cycle. This earnings season, Industrial semiconductor demand has been the...

Fabricated Knowledge

Effissimo, Sanken, and Allegro - Thinking About the Future

Effissimo launched a partial tender for Sanken (6707) and it went through terms as people noted the "stub trade" for Allegro Microsystems. It's...

Travis Lundy