Latest News from the World’s Leading Innovators

Granite Bay Capital

An innovation focussed investment company

Granite Bay Capital is an innovation focussed investment company with a deep focus on the companies at the leading edge of innovation across major themes such as AI, ubiquitous computing, sustainability, automation and longevity.

Thematic (Sector/Industry)

Headline Developments: We can now modify DNA inside of a human body (in vivo), thanks to some groundbreaking work announced this week by Intellia Therapeutics (NTLA) which saw the company’s share price surge 55%.  What this means is that we can now send precision therapeutics (based on CRISPR technology) to “seek and destroy” problematic genes.

Headline Developments: We can now modify DNA inside of a human body (in vivo), thanks to some groundbreaking work announced this week by Intellia Therapeutics (NTLA) which saw the company’s share price surge 55%.  What this means is that we can now send precision therapeutics (based on CRISPR technology) to “seek and destroy” problematic genes.

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

Equity Bottom-Up

Last Friday, the company announced a profit alert with revenue grew 60% and NPAT RMB 1.8 billion or 163% higher YoY citing improvement in operating margin. This could come not only from a discipline operating expenses management but also an improved product mix; margin from online sales is higher than from retail. There will be some sellers today to book some profit from yesterday's gain but long-term investors should hold on to this as the nationalistic pattern may last longer than the first half of 2021 especially when the US is still making taking a hard stand on the Xinjiang issue, now moving from the cotton to solar panel, therefore, driving a higher revenue to <a href="https://www.smartkarma.com/entities/li-ning-co-ltd" target="_blank" data-smartkarma-citation="entities:6047:1" rel="noopener">Li Ning Co Ltd (2331 HK)</a> .<div class="content-highlight">Li Ning's valuation and share price may sound expensive but the appeal of an online focus business with higher profitability and leaner capital structure compared to its peers warrant some premium. </div>

Last Friday, the company announced a profit alert with revenue grew 60% and NPAT RMB 1.8 billion or 163% higher YoY citing improvement in operating margin. This could come not only from a discipline operating expenses management but also an improved product mix; margin from online sales is higher than from retail. There will be some sellers today to book some profit from yesterday's gain but long-term investors should hold on to this as the nationalistic pattern may last longer than the first half of 2021 especially when the US is still making taking a hard stand on the Xinjiang issue, now moving from the cotton to solar panel, therefore, driving a higher revenue to Li Ning Co Ltd (2331 HK) .Li Ning's valuation and share price may sound expensive but the appeal of an online focus business with higher profitability and leaner capital structure compared to its peers warrant some premium. 

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*Major US Merchant Deal: Tencent Holding’s (700.HK) [Tencent] Afterpay Touch's (APT.AU) [Afterpay] recently announced that it is further expanding its Buy Now, Pay Later (BNPL) model to several major high profile US merchants in order to boost sales and margins. Afterpay is now allowing all US users to shop at 13 retailers by October 2021 - ahead of the holiday shopping season; and*Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment over the past ten months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology BNPL company is paying dividends to Tencent in numerous other ways.

*Major US Merchant Deal: Tencent Holding’s (700.HK) [Tencent] Afterpay Touch's (APT.AU) [Afterpay] recently announced that it is further expanding its Buy Now, Pay Later (BNPL) model to several major high profile US merchants in order to boost sales and margins. Afterpay is now allowing all US users to shop at 13 retailers by October 2021 - ahead of the holiday shopping season; and*Tencent’s Midas Touch: Tencent continues to hit it out of the park with its Afterpay stake. In addition to its superb return on investment over the past ten months since the stake announcement - -even after giving back some of its gains, this alliance with Australia’s premier financial technology BNPL company is paying dividends to Tencent in numerous other ways. 

Tencent Holdings – Digging In Their Heals

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
Back on the 27 July, Chinese search-engine <a href="https://www.smartkarma.com/entities/sogou-inc" target="_blank" data-smartkarma-citation="entities:25996:1" rel="noopener">Sogou Inc (SOGO US)</a>, majority-owned by <a href="https://www.smartkarma.com/entities/sohu-com-ltd" target="_blank" data-smartkarma-citation="entities:22853:1" rel="noopener">Sohu.com Inc (SOHU US)</a>  and <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115257193&amp;type=PDF&amp;symbol=SOGO&amp;companyName=Sogou+Inc.+American+Depositary+Shares+each+representing+one+Class+A&amp;formType=6-K&amp;dateFiled=2020-09-29&amp;CK=1713947" target="_blank" rel="noopener">entered</a> into a definitive agreement for a "Going-Private Transaction" at US$9/share.
Additionally, Sohu entered into a SPA with Tencent concerning its stake in Sogou, which would result in Tencent holding not less than 90% of the voting power in Sogou. Therefore the Merger would be a short-form merger - there is no vote. Dissenting rights will, however, now be afforded following the Grand Court of  Cayman Islands ruling handed down on the 28 January this year and discussed in <a href="https://skr.ma/H7E1t" target="_blank" rel="noopener">Changyou (CYOU US): Short-Form Merger Dissent Now Permitted</a>. Sohu's privatisation of Changyou competed on the 17 April.
</div><div>
The deal appeared to be a lock, until Sogou's 1 December <a href="http://app.quotemedia.com/data/downloadFiling?webmasterId=101533&amp;ref=115473750&amp;type=PDF&amp;symbol=SOGO&amp;companyName=Sogou+Inc.+American+Depositary+Shares+each+representing+one+Class+A&amp;formType=SC+13E3%2FA&amp;dateFiled=2020-12-01&amp;CK=1713947" target="_blank" rel="noopener">SEC filing</a>, wherein the termination date for the SPA was pushed out to 31 July, from 29 March previously, to allow clearance from the PRC regulatory authorities, specifically State Administration for Market Regulation or SAMR.
What seemed an ample extension at the time now appears less assured as SAMR bears down on the tech sector. 
This muddies when (and potentially if) the merger goes through. Plus the knock-on effect to Sohu which would pocket ~US$1.2bn under the merger compared to its current maker cap of ~US$0.7bn.
But Tencent is unlikely to walk - not at this Offer price. 
</div><div>More below the fold.</div>


Back on the 27 July, Chinese search-engine Sogou Inc (SOGO US), majority-owned by Sohu.com Inc (SOHU US)  and Tencent Holdings (700 HK), entered into a definitive agreement for a "Going-Private Transaction" at US$9/share.
Additionally, Sohu entered into a SPA with Tencent concerning its stake in Sogou, which would result in Tencent holding not less than 90% of the voting power in Sogou. Therefore the Merger would be a short-form merger - there is no vote. Dissenting rights will, however, now be afforded following the Grand Court of  Cayman Islands ruling handed down on the 28 January this year and discussed in Changyou (CYOU US): Short-Form Merger Dissent Now Permitted. Sohu's privatisation of Changyou competed on the 17 April.

The deal appeared to be a lock, until Sogou's 1 December SEC filing, wherein the termination date for the SPA was pushed out to 31 July, from 29 March previously, to allow clearance from the PRC regulatory authorities, specifically State Administration for Market Regulation or SAMR.
What seemed an ample extension at the time now appears less assured as SAMR bears down on the tech sector. 
This muddies when (and potentially if) the merger goes through. Plus the knock-on effect to Sohu which would pocket ~US$1.2bn under the merger compared to its current maker cap of ~US$0.7bn.
But Tencent is unlikely to walk - not at this Offer price. 
More below the fold.

Sohu/Sogou: Persuasive Situation Amid Ongoing Antitrust Investigations

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

Anta Sports Products / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/anta-sports-products-ltd" target="_blank" data-smartkarma-citation="entities:10261:1" rel="noopener">Anta Sports Products (2020 HK)</a>'s Chairman aims to raise around US$1.5bn via selling a 3.3% stake in the company. In this note, we will run the deal through our framework and talk about deal dynamics. We have covered one of the earlier placements in the stock in 2017, <a href="https://www.smartkarma.com/insights/anta-sports-raising-for-hopefully-a-good-acquisition-great-track-record-helps" target="_blank" rel="noopener">Anta Sports - Raising for Hopefully a Good Acquisition, Great Track Record Helps</a>.

Anta Sports Products (2020 HK)'s Chairman aims to raise around US$1.5bn via selling a 3.3% stake in the company. In this note, we will run the deal through our framework and talk about deal dynamics. We have covered one of the earlier placements in the stock in 2017, Anta Sports - Raising for Hopefully a Good Acquisition, Great Track Record Helps.

Anta Sports Placement - Has Been Doing Well but the Chairman Selling Will Be -Ve for Sentiment

United States

NIKE, Inc. designs, develops, and markets athletic footwear, apparel, equipment, and accessory products for men, women, and children. The Company sells its products worldwide to retail stores, through its own stores, subsidiaries, and distributors.

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Nike (NKE US)

Weekly Innovation Review (WIRE) #38

Headline Developments: We can now modify DNA inside of a human body (in vivo), thanks to some groundbreaking work announced this week

Granite Bay Capital

Li Ning (2331): Marching On

Li Ning's valuation and share price may sound expensive but the appeal of an online focus business with higher profitability and leaner capital...

Henry Soediarko

Tencent Holdings – Digging In Their Heals

TENCENT HOLDINGS: Tencent' s Afterpay recently announced a further expansion of its BNPL model to several major US merchants in order to boost...

Thomas J. Monaco

Sohu/Sogou: Persuasive Situation Amid Ongoing Antitrust Investigations

Trading at a gross spread of 7.5%. Even assuming another six months out from here to complete the deal, that looks compelling. I still like Sohu...

David Blennerhassett

Anta Sports Placement - Has Been Doing Well but the Chairman Selling Will Be -Ve for Sentiment

Anta Sports Products (2020 HK)'s Chairman aims to raise around US$1.5bn via selling a 3.3% stake in the company. In this note, we will run the deal...

Sumeet Singh

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