Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<p>On Friday after market-close, Tokyo-based cloud integration company <a href="https://www.smartkarma.com/entities/serverworks-co-ltd" target="_blank" data-smartkarma-citation="entities:31045:1" rel="noopener">Serverworks (4434 JP)</a> announced (<a href="https://ssl4.eir-parts.net/doc/4434/tdnet/1918006/00.pdf" target="_blank" rel="noopener">J-only</a>) they had received approval to move from the MOTHERS Section to the First Section of the Tokyo Stock Exchange as of 15th January 2021.</p><p>TSE1 reassignment triggers inclusion into the TOPIX Index and the Inclusion Event can be expected to be at the close of trading 25th February 2021.</p><p>Serverworks provides Amazon Web Services (AWS) based cloud integration services to corporate clients in Japan. They help companies transition from conventional on-premise information systems where companies own and operate their own information equipment and software to cloud-based solutions where a third party service provider (<a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> in the case of AWS) invests in equipment and software and charges users typically on a pay-as-you-go basis depending on the level of usage.  </p><p>In this insight, we take a look at the Index Inclusion Parameters and the Fundamentals of the company to evaluate the upside potential of the TOPIX Inclusion Event. </p>

On Friday after market-close, Tokyo-based cloud integration company Serverworks (4434 JP) announced (J-only) they had received approval to move from the MOTHERS Section to the First Section of the Tokyo Stock Exchange as of 15th January 2021.TSE1 reassignment triggers inclusion into the TOPIX Index and the Inclusion Event can be expected to be at the close of trading 25th February 2021.Serverworks provides Amazon Web Services (AWS) based cloud integration services to corporate clients in Japan. They help companies transition from conventional on-premise information systems where companies own and operate their own information equipment and software to cloud-based solutions where a third party service provider (Amazon.com Inc (AMZN US) in the case of AWS) invests in equipment and software and charges users typically on a pay-as-you-go basis depending on the level of usage.  In this insight, we take a look at the Index Inclusion Parameters and the Fundamentals of the company to evaluate the upside potential of the TOPIX Inclusion Event. 

TOPIX Inclusion: Serverworks (4434 JP):  Clouds in a BLUE Sky

TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

<p>Three things caught our eye this first week of 2021: eBay, Amazon, and the spectrum auction.</p><p></p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

Three things caught our eye this first week of 2021: eBay, Amazon, and the spectrum auction.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

TMT Weekly: 3 Things that Stood Out The Week of 1/8/2021

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Private Capital Markets

<div class="content-highlight"><p><strong>According to <a href="https://www.bloomberg.com/news/articles/2021-01-06/softbank-s-son-is-poised-for-another-ipo-windfall-in-2021" target="_blank" rel="noopener">Bloomberg, </a>it reported that Coupang, the largest e-commerce company in Korea, is getting ready to complete its IPO as soon as 2Q 2021.</strong> The estimated valuation of Coupang could be at least $30 billion. Softbank invested $2.7 billion in Coupang and <a href="https://biz.chosun.com/site/data/html_dir/2021/01/07/2021010702121.html?utm_source=naver&amp;utm_medium=original&amp;utm_campaign=biz" target="_blank" rel="noopener">Softbank (Vision Fund)</a> currently has a 37% stake in the company. If Mr. Market is willing to place a $30 billion valuation on Coupang, Softbank would reap a cool $8 billion+ gain on its investments in Coupang.</p></div>

According to Bloomberg, it reported that Coupang, the largest e-commerce company in Korea, is getting ready to complete its IPO as soon as 2Q 2021. The estimated valuation of Coupang could be at least $30 billion. Softbank invested $2.7 billion in Coupang and Softbank (Vision Fund) currently has a 37% stake in the company. If Mr. Market is willing to place a $30 billion valuation on Coupang, Softbank would reap a cool $8 billion+ gain on its investments in Coupang.

Initial Thoughts on the Coupang IPO & Impact on SK Telecom (11st) Vs. Naver

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p><a href="https://www.smartkarma.com/entities/starhub-ltd" target="_blank" data-smartkarma-citation="entities:119:1" rel="noopener">Starhub Ltd (STH SP)</a> pay-TV has been the problem child alongside the Mobile segment due to overcrowded space, led to a higher churn in the number of subscribers coupled with a lower ARPU, followed by a decline in the share price. <a href="https://www.smartkarma.com/entities/the-walt-disney-co" target="_blank" data-smartkarma-citation="entities:15439:1" rel="noopener">The Walt Disney Co (DIS US)</a> + coming to Singapore will cause a further decline in the Pay-TV ARPU. </p><p>Starhub's Enterprise Business which recently has gained momentum and for the first time in almost 3 years, its revenue contribution almost equaled Mobile's. As a result, the revenue in Q3 2020 went up 2% compared to the average of 1H 2020. </p><div class="content-highlight"><p>After underperforming Singtel by 20% for the past 3 years, it is now maybe the time for Starhub to play catch up with the Enterprise Business finally is taking off. With a 3.6% higher yield than Singtel, Starhub sounds like a bargain. </p></div><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/625/original/image_25922309421608537778217.png?1608537778" class="editor-image img-responsive" data-smartkarma-image-id="179625"></figure><div class="content-remarks"><p>source: Capital IQ</p></div>

Starhub Ltd (STH SP) pay-TV has been the problem child alongside the Mobile segment due to overcrowded space, led to a higher churn in the number of subscribers coupled with a lower ARPU, followed by a decline in the share price. The Walt Disney Co (DIS US) + coming to Singapore will cause a further decline in the Pay-TV ARPU. Starhub's Enterprise Business which recently has gained momentum and for the first time in almost 3 years, its revenue contribution almost equaled Mobile's. As a result, the revenue in Q3 2020 went up 2% compared to the average of 1H 2020. After underperforming Singtel by 20% for the past 3 years, it is now maybe the time for Starhub to play catch up with the Enterprise Business finally is taking off. With a 3.6% higher yield than Singtel, Starhub sounds like a bargain. source: Capital IQ

Starhub (STH): Disney Is Coming but Enterprise Is Gaining Momentum

<p>Sheesh! The media pays attention to the faux antitrust lawsuits that have been sprouting the past month against the tech platforms…none of which will actually alter the respective competitive positions for Amazon, Google, Facebook, and Apple.</p><p>However, Apple’s once delayed but now imminent rollout of “opt-in” for ad-tracking seems to be an actual near term threat for Facebook given Facebook’s vociferous responses over the past week or two. Or is it?</p><div class="content-highlight"><p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p></div>

Sheesh! The media pays attention to the faux antitrust lawsuits that have been sprouting the past month against the tech platforms…none of which will actually alter the respective competitive positions for Amazon, Google, Facebook, and Apple.However, Apple’s once delayed but now imminent rollout of “opt-in” for ad-tracking seems to be an actual near term threat for Facebook given Facebook’s vociferous responses over the past week or two. Or is it?Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

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)

TOPIX Inclusion: Serverworks (4434 JP): Clouds in a BLUE Sky

Serverworks (4434) is in a high-growth business, but not one without rivals, which are far cheaper. Joining the TSE is a positive, but it is well...

Janaghan Jeyakumar, CFA

TMT Weekly: 3 Things that Stood Out The Week of 1/8/2021

This week we highlight eBay's new tool to drive online advertising adoption, Amazon's further foray into logistics, and the $90B spent in the...

Aaron Gabin

Initial Thoughts on the Coupang IPO & Impact on SK Telecom (11st) Vs. Naver

According to Bloomberg, it reported that Coupang is getting ready to complete its IPO as soon as 2Q 2021. The estimated valuation of Coupang could...

Douglas Kim

Starhub (STH): Disney Is Coming but Enterprise Is Gaining Momentum

Starhub's Enterprise Business finally is taking off, almost equal to the Mobile. With a 3.6% higher yield than Singtel, Starhub sounds like a bargain.

Henry Soediarko

Facebook: Apple Threat Fact or Fiction?

Facebook has been complaining publicly the past two weeks about how Apple's impending privacy restrictions will hurt small businesses. We doubt it...

Aaron Gabin

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