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 mobile game developer, Playtika Holding Corp's fourth-quarter 2023 earnings showcased a resilient execution of its strategy amidst revenue headwinds and market challenges.</li>
<li>It successfully managed to surpass its guidance for both revenue and credit adjusted EBITDA. The company marked 2023 as an efficiency-driven year, with a transformation strategy focusing on speed and decision-making.</li>
<li>Despite several challenges on the revenue front, Playtika identified some bright spots such as growth in the casual games segment, which expanded 5.5% YoY, driven by growth in June's Journey.</li>
</ul>


This is our first report on mobile game developer, Playtika Holding Corp's fourth-quarter 2023 earnings showcased a resilient execution of its strategy amidst revenue headwinds and market challenges.
It successfully managed to surpass its guidance for both revenue and credit adjusted EBITDA. The company marked 2023 as an efficiency-driven year, with a transformation strategy focusing on speed and decision-making.
Despite several challenges on the revenue front, Playtika identified some bright spots such as growth in the casual games segment, which expanded 5.5% YoY, driven by growth in June's Journey.


Playtika Holding Corp: Will The Direct-To-Consumer Platform Expansion Be A Game Changer?

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.

<div><p>In between earnings seasons, we are trying to catch up on the flurry of TMT IPOs over the past few months that have caught our eye. Why AppLovin? As we talk about often, we are interested in unique business models, and AppLovin qualifies. Its choice to build up its own mobile game portfolio as a means of turbocharging the value of its software is highly differentiated. We've been tracking winners and losers from Apple's privacy changes this year and think a growing mobile app ecosystem with proprietary 1st party data is very interesting. Valuation seems reasonable. We will continue to track this one on the long side.</p></div><div><div><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></div></div>

In between earnings seasons, we are trying to catch up on the flurry of TMT IPOs over the past few months that have caught our eye. Why AppLovin? As we talk about often, we are interested in unique business models, and AppLovin qualifies. Its choice to build up its own mobile game portfolio as a means of turbocharging the value of its software is highly differentiated. We've been tracking winners and losers from Apple's privacy changes this year and think a growing mobile app ecosystem with proprietary 1st party data is very interesting. Valuation seems reasonable. We will continue to track this one on the long side.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.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

International Games System / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/international-games-system-co-ltd" target="_blank" data-smartkarma-citation="entities:3486:1" rel="noopener">International Games System (3293 TT)</a> (IGS) is one of the leading social online gaming companies in Taiwan. IGS's core products include social casino games, casual games, and arcade games.</p><p>Despite risks including declining sales of Arcade Games and potential regulatory risks associated with social casino online games, we believe many investors will focus on the positives and continue to add to their positions of this undervalued stock. </p><p>Key catalysts of the company are as follows:</p><ul>
<li><strong>Tremendous growth in online/mobile social casino &amp; casual games</strong></li>
<li><strong>Strong sales growth in Jan-Apr 2021 </strong></li>
<li><strong>Improving profit margins</strong></li>
<li><strong>High dividend payout</strong></li>
</ul>

International Games System (3293 TT) (IGS) is one of the leading social online gaming companies in Taiwan. IGS's core products include social casino games, casual games, and arcade games.Despite risks including declining sales of Arcade Games and potential regulatory risks associated with social casino online games, we believe many investors will focus on the positives and continue to add to their positions of this undervalued stock. Key catalysts of the company are as follows:
Tremendous growth in online/mobile social casino &amp; casual games
Strong sales growth in Jan-Apr 2021 
Improving profit margins
High dividend payout


International Games System: An Undervalued Online Social Gaming Stock in Taiwan

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Sega with better reputation and deeper pockets than Playtika, announces a €9.25/share recommended cash offer; 63% premium to Playtika's announcement; it represents 2.1x EV/Fwd Revenue, 12.3x EV/Fwd EBITDA, 21.6x Fwd P/E.</li>
<li>Acceptance condition is over 90%, and irrevocables are 49.1%, so 80.4% of the float is needed, which is high. I value Rovio using DCF (9% WACC, 1.5% perpetuity growth rate).</li>
<li>My fair value base case estimate is €8.80/share (€9.45/bull case). I thus update my TP to €9.25. Spread is 0.59%/1.22% (gross/annualised), which is not massive. </li>
</ul>


Sega with better reputation and deeper pockets than Playtika, announces a €9.25/share recommended cash offer; 63% premium to Playtika's announcement; it represents 2.1x EV/Fwd Revenue, 12.3x EV/Fwd EBITDA, 21.6x Fwd P/E.
Acceptance condition is over 90%, and irrevocables are 49.1%, so 80.4% of the float is needed, which is high. I value Rovio using DCF (9% WACC, 1.5% perpetuity growth rate).
My fair value base case estimate is €8.80/share (€9.45/bull case). I thus update my TP to €9.25. Spread is 0.59%/1.22% (gross/annualised), which is not massive. 


Sega Sammy Holdings/Rovio Entertainment: Agreed Offer

<ul>
<li>On 22 March, Playtika said those preliminary discussions had ended. The shares had nevertheless traded at a wide spread to the offer because of doubts an offer would finally materialise.</li>
<li>The offer was pitched below the IPO price and at lower multiples than other recent deals. My DCF-based valuation is €8.80 (16% upside without considering any offer premium).</li>
<li>Due to the strategic importance of Angry Birds, one of the best and most enduring names in mobile gaming, Rovio remains a target. I'd be long at current share price.</li>
</ul>


On 22 March, Playtika said those preliminary discussions had ended. The shares had nevertheless traded at a wide spread to the offer because of doubts an offer would finally materialise.
The offer was pitched below the IPO price and at lower multiples than other recent deals. My DCF-based valuation is €8.80 (16% upside without considering any offer premium).
Due to the strategic importance of Angry Birds, one of the best and most enduring names in mobile gaming, Rovio remains a target. I'd be long at current share price.


Value in Rovio Beyond Playtika's Failed Offer

Israel

Playtika Holding Corp. operates as a digital entertainment company. The Company specializes in the development and publication of free to play mobile games. Playtika Holding serves customers worldwide.

Playtika Holding Corp (PLTK US)

Playtika Holding Corp: Will The Direct-To-Consumer Platform Expansion Be A Game Changer?

This is our first report on mobile game developer, Playtika Holding Corp's fourth-quarter 2023 earnings showcased a resilient execution of its...

Baptista Research

Recent IPO Insights: AppLovin

AppLovin's choice to build up its own mobile game portfolio as a means of turbocharging the value of its software is highly differentiated. A...

Aaron Gabin

Sega Sammy Holdings/Rovio Entertainment: Agreed Offer

Sega with better reputation and deeper pockets than Playtika, announces a €9.25/share recommended cash offer (€1.48/option); 63% premium to...

Jesus Rodriguez Aguilar

Value in Rovio Beyond Playtika's Failed Offer

The Board of Rovio confirmed that preliminary discussions with Playtika had ended and that it continued its strategic review, including preliminary...

Jesus Rodriguez Aguilar

Playtika Holding Corp: Will The Direct-To-Consumer Platform Expansion Be A Game Changer?

This is our first report on mobile game developer, Playtika Holding Corp's fourth-quarter 2023 earnings showcased a resilient execution of its...

Baptista Research

Recent IPO Insights: AppLovin

AppLovin's choice to build up its own mobile game portfolio as a means of turbocharging the value of its software is highly differentiated. A...

Aaron Gabin

International Games System: An Undervalued Online Social Gaming Stock in Taiwan

International Games System (3293 TT) is high growth, social games provider in Taiwan that we believe is undervalued versus leading global social...

Douglas Kim

Sega Sammy Holdings/Rovio Entertainment: Agreed Offer

Sega with better reputation and deeper pockets than Playtika, announces a €9.25/share recommended cash offer (€1.48/option); 63% premium to...

Jesus Rodriguez Aguilar

Value in Rovio Beyond Playtika's Failed Offer

The Board of Rovio confirmed that preliminary discussions with Playtika had ended and that it continued its strategic review, including preliminary...

Jesus Rodriguez Aguilar