Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The S&amp;P DJI Global Indices team <a href="https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20201211-1277389/1277389_tes15aircaivspindnkn4.pdf?force_download=true" target="_blank" rel="noopener">confirmed</a> Friday night that <a href="https://www.smartkarma.com/entities/tesla-motors-inc" target="_blank" data-smartkarma-citation="entities:20279:1" rel="noopener">Tesla Motors (TSLA US)</a> would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with <a href="https://www.smartkarma.com/entities/apartment-invt-mgmt-co-a" target="_blank" data-smartkarma-citation="entities:2193:1" rel="noopener">Apartment Invt &amp; Mgmt Co A (AIV US)</a> coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing <a href="https://www.smartkarma.com/entities/dunkin-brands-group-inc" target="_blank" data-smartkarma-citation="entities:15866:1" rel="noopener">Dunkin' Brands Group (DNKN US)</a> in the S&amp;P Midcap 400, and <a href="https://www.smartkarma.com/entities/occidental-petroleum-corp" target="_blank" data-smartkarma-citation="entities:17075:1" rel="noopener">Occidental Petroleum (OXY US)</a> coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

The S&amp;P DJI Global Indices team confirmed Friday night that Tesla Motors (TSLA US) would join the S&amp;P500 and the S&amp;P100 at the close of trading on 18 December, with Apartment Invt &amp; Mgmt Co A (AIV US) coming out of S&amp;P500 and its 14 December spin-out Apartment Income REIT replacing Dunkin' Brands Group (DNKN US) in the S&amp;P Midcap 400, and Occidental Petroleum (OXY US) coming out of the S&amp;P100 but staying in the S&amp;P500. When the S&amp;P announced on the 16th of November that Tesla would be joining the S&amp;P500 in December, it said the pro-forma inclusion weight would be ~1.01% (without measuring what would come out). S&amp;P also said that it would update the pro-forma inclusion weight and trading value impact when the Deletion was announced, but they did not. My calc suggests it is 1.47% as of Friday's close. And the two-way trading value based on the S&amp;P's original US$51bn number is, as of today, ~US$152bn.Which is a lot.The arithmetic, and an explanation of why it matters, follow.

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Bottom-Up

NY Attorney General Letitia James filed an anti-trust lawsuit against <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> which is co-sponsored by Federal Trade Commission and 46 US states. This is not dissimilar to historical legal anti-trust challenges to break up big companies such as Microsoft and AT&amp;T.  While we believe this is unlikely to be resolved soon, we believe Facebook and Big Tech have drawn bipartisan ire due to concerns about anti-competitive behaviour and the spread of disinformation. Our thoughts on the litigation as well as operational concerns are below the fold. 
Our previous research on US regulatory matters and Facebook can be found here
<a href="https://www.smartkarma.com/insights/us-congress-passes-bill-that-could-lead-to-the-delisting-of-chinese-companies-on-us-exchanges" target="_blank" data-smartkarma-citation="insights:46004" rel="noopener">US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges</a> 
<a href="https://www.smartkarma.com/insights/lvmh-tiffany-oh-bernie-not-like-this" target="_blank" data-smartkarma-citation="insights:43151" rel="noopener">LVMH-Tiffany: Oh Bernie, Not like This.</a> 
<a href="https://www.smartkarma.com/insights/facebook-4q-results-an-easy-beat-has-zuck-turned-the-tanker" target="_blank" data-smartkarma-citation="insights:27657" rel="noopener">Facebook 4Q Results: An Easy Beat - Has Zuck Turned the Tanker?</a> 
<a href="https://www.smartkarma.com/insights/facebook-3q-results-are-the-fangs-safe-for-now" target="_blank" data-smartkarma-citation="insights:25513" rel="noopener">Facebook 3Q Results: Are the FANGS Safe...for Now?</a>

NY Attorney General Letitia James filed an anti-trust lawsuit against Facebook Inc A (FB US) which is co-sponsored by Federal Trade Commission and 46 US states. This is not dissimilar to historical legal anti-trust challenges to break up big companies such as Microsoft and AT&amp;T.  While we believe this is unlikely to be resolved soon, we believe Facebook and Big Tech have drawn bipartisan ire due to concerns about anti-competitive behaviour and the spread of disinformation. Our thoughts on the litigation as well as operational concerns are below the fold. 
Our previous research on US regulatory matters and Facebook can be found here
US Congress Passes Bill that Could Lead to the Delisting of Chinese Companies on US Exchanges 
LVMH-Tiffany: Oh Bernie, Not like This. 
Facebook 4Q Results: An Easy Beat - Has Zuck Turned the Tanker? 
Facebook 3Q Results: Are the FANGS Safe...for Now? 

Facebook and Antitrust - The Beginning of the End for Big-Tech?

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

The US Federal Trade Commission (FTC) and almost four dozen US states and territories have filed antitrust suits against <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a>, seeking to force the social giant to divest its Instagram and Whatsapp functions. For the suits against FB to succeed, the plaintiffs must establish that FB a) enjoys monopoly power that it has used to stifle smaller rivals and that b) consumers have been harmed as a result. Proving that consumers have been harmed will likely prove especially, in our opinion. For its part, FB executives have made it clear they view efforts to break up the company as an "existential threat".So how will the suits play out? The US government's case appears to have bi-partisan and popular support, and FB has made it clear they intend to fight. We expect this case to move slowly, perhaps requiring years to resolve. A clear win for the US government is unlikely; a more likely outcome would be a settlement in which FB agrees to limit its expansion in certain areas and/or its commercial use of user data. Increased scrutiny of FB's practices and a potential settlement could slow FB's growth, but is this really a growth stock? In Q320, OP increased by just 12% on 22% revenue growth, and consensus estimates for 2021e call for similar growth. In our view, the suits represent a likely headache for FB, but not much more, and are thus unlikely to have much impact beyond the company, either.

The US Federal Trade Commission (FTC) and almost four dozen US states and territories have filed antitrust suits against Facebook Inc A (FB US), seeking to force the social giant to divest its Instagram and Whatsapp functions. For the suits against FB to succeed, the plaintiffs must establish that FB a) enjoys monopoly power that it has used to stifle smaller rivals and that b) consumers have been harmed as a result. Proving that consumers have been harmed will likely prove especially, in our opinion. For its part, FB executives have made it clear they view efforts to break up the company as an "existential threat".So how will the suits play out? The US government's case appears to have bi-partisan and popular support, and FB has made it clear they intend to fight. We expect this case to move slowly, perhaps requiring years to resolve. A clear win for the US government is unlikely; a more likely outcome would be a settlement in which FB agrees to limit its expansion in certain areas and/or its commercial use of user data. Increased scrutiny of FB's practices and a potential settlement could slow FB's growth, but is this really a growth stock? In Q320, OP increased by just 12% on 22% revenue growth, and consensus estimates for 2021e call for similar growth. In our view, the suits represent a likely headache for FB, but not much more, and are thus unlikely to have much impact beyond the company, either. 

US FTC & States' Suits Against Facebook Unlikely to Result in Breakup, but Could Slow Expansion

Quality-first, Business-perspective Strategy, Urbem (HK) Limited

Steven Chen

Quality-first, Business-perspective Strategy

<ul>
<li>Founder-led Technology One has the capability to earn superior returns on capital while expanding predictably and profitably alongside a massive runaway, in our opinion.</li>
<li>Although the share seems a bit elevated at the moment, we feel that the name should be worth following among long-term, quality-focused investors who can wait patiently.</li>
</ul>


Founder-led Technology One has the capability to earn superior returns on capital while expanding predictably and profitably alongside a massive runaway, in our opinion.
Although the share seems a bit elevated at the moment, we feel that the name should be worth following among long-term, quality-focused investors who can wait patiently.


Technology One: Our Top SaaS Pick From APAC

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.

Equity Capital Markets

Airbnb aims to raise around US$2.5bn in its US listing. Airbnb is a global short-stay offering platform. To put it simply, iIt connects hosts, who post available accommodation on Airbnb, with guests, who make bookings for the accommodation. It charges a fee for this service.As of 9M20, it had 4 million hosts in more than 220 countries and regions around the world. Since inception, its hosts have welcomed over 825m guest arrivals and have cumulatively earned over $110bn. In 2019, it had 54m active bookers worldwide, who booked 327m nights and experiences on Airbnb.Over 2017-19, the company reported steady growth in earnings led by an increase in the number of bookings. Its overall number of guests and hosts have been growing as well, with most metrics heading in the right direction. While COVID-19 did take a harsh toll on the company, its quarterly results paint a better picture as compared to its 9M20 numbers. Even during COVID, there have been certain pockets, like domestic and long stay travel which have continued to grow, thus, highlighting the company’s resilience. Having said that, Airbnb has failed to explain the reason for the downwards pressure on its 2019 margins. At the same time, the cohorts data highlights the ample other options available to its guests and the severe competition in the industry.

Airbnb aims to raise around US$2.5bn in its US listing. Airbnb is a global short-stay offering platform. To put it simply, iIt connects hosts, who post available accommodation on Airbnb, with guests, who make bookings for the accommodation. It charges a fee for this service.As of 9M20, it had 4 million hosts in more than 220 countries and regions around the world. Since inception, its hosts have welcomed over 825m guest arrivals and have cumulatively earned over $110bn. In 2019, it had 54m active bookers worldwide, who booked 327m nights and experiences on Airbnb.Over 2017-19, the company reported steady growth in earnings led by an increase in the number of bookings. Its overall number of guests and hosts have been growing as well, with most metrics heading in the right direction. While COVID-19 did take a harsh toll on the company, its quarterly results paint a better picture as compared to its 9M20 numbers. Even during COVID, there have been certain pockets, like domestic and long stay travel which have continued to grow, thus, highlighting the company’s resilience. Having said that, Airbnb has failed to explain the reason for the downwards pressure on its 2019 margins. At the same time, the cohorts data highlights the ample other options available to its guests and the severe competition in the industry. 

Airbnb IPO - Time for a Good Break - Even from the Share Lock-Up

United States

Microsoft Corporation operates as a software company. The Company offers applications, extra cloud storage, and advanced security solutions. Microsoft serves customers worldwide.

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Microsoft Corp (MSFT US)

Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

The TSLA S&P500 inclusion involves $150bn of direct flows and perhaps another $200-300bn indirect flows. It really is a MAMMOTH trade. And index...

Travis Lundy

Facebook and Antitrust - The Beginning of the End for Big-Tech?

NY Attorney General Letitia James filed an anti-trust lawsuit against Facebook Inc A (FB US) which is co-sponsored by Federal Trade Commission and...

Rickin Thakrar

US FTC & States' Suits Against Facebook Unlikely to Result in Breakup, but Could Slow Expansion

We believe the US government is unlikely to get a clear win against FB. A drawn-out trial may end in a settlement, but this could take two+ years....

Tracking Traffic

Technology One: Our Top SaaS Pick From APAC

Although the share seems a bit elevated at the moment, we feel that Technology One should be worth following among long-term, quality-focused...

Steven Chen

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Tesla Into S&P - Rebal Details, and Implications for Vol and Active Portfolio Reconstruction

The TSLA S&P500 inclusion involves $150bn of direct flows and perhaps another $200-300bn indirect flows. It really is a MAMMOTH trade. And index...

Travis Lundy

Facebook and Antitrust - The Beginning of the End for Big-Tech?

NY Attorney General Letitia James filed an anti-trust lawsuit against Facebook Inc A (FB US) which is co-sponsored by Federal Trade Commission and...

Rickin Thakrar

US FTC & States' Suits Against Facebook Unlikely to Result in Breakup, but Could Slow Expansion

We believe the US government is unlikely to get a clear win against FB. A drawn-out trial may end in a settlement, but this could take two+ years....

Tracking Traffic

Technology One: Our Top SaaS Pick From APAC

Although the share seems a bit elevated at the moment, we feel that Technology One should be worth following among long-term, quality-focused...

Steven Chen

Airbnb IPO - Time for a Good Break - Even from the Share Lock-Up

Airbnb aims to raise around US$2.5bn in its US listing. There is lots to like about the company, apart from it lack of lock-up on some shareholders.

Sumeet Singh