Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Bottom-Up

<p>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. </p><p>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 <em>and</em> 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".</p><p>So how will the suits play out? </p><p>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. </p><p>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. </p>

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

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.

<p>As we approach the meat of earnings season this week, we give our take on which tech stocks its worth taking earnings risk on. Yea, we still like Amazon. But Google may be poised for the most explosive earnings reaction. </p>

As we approach the meat of earnings season this week, we give our take on which tech stocks its worth taking earnings risk on. Yea, we still like Amazon. But Google may be poised for the most explosive earnings reaction. 

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<p>As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike's user conference.</p>
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<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>
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As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike's user conference.




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 10/16/​​​​2020

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

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<a href="https://www.smartkarma.com/entities/yalla-group-ltd" target="_blank" data-smartkarma-citation="entities:29286:1" rel="noopener">Yalla Group Ltd (YALA US)</a> is the largest voice-centric social networking and entertainment platform in the Middle East and North Africa (MENA) region with about 12.5m monthly active users. The company filed for an IPO on the on New York Stock Exchange under the symbol "YALA" and intends to raise about $130-167m via a primary offering of 18.6m Yalla Group ADS at $7-9 per ADS- each ADS represents one Class A ordinary share.</li>
<li>One of the existing shareholders, Orchid Asia has already expressed interest in purchasing up to U$30 million of the ADS offered in the IPO.</li>
<li>An overallotment option, if exercised, could increase the IPO by $19.5-25.1m.</li>
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Yalla Group Ltd (YALA US) is the largest voice-centric social networking and entertainment platform in the Middle East and North Africa (MENA) region with about 12.5m monthly active users. The company filed for an IPO on the on New York Stock Exchange under the symbol "YALA" and intends to raise about $130-167m via a primary offering of 18.6m Yalla Group ADS at $7-9 per ADS- each ADS represents one Class A ordinary share.
One of the existing shareholders, Orchid Asia has already expressed interest in purchasing up to U$30 million of the ADS offered in the IPO.
An overallotment option, if exercised, could increase the IPO by $19.5-25.1m.


IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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.

<div><p><a href="https://www.smartkarma.com/entities/yalla-group-ltd" target="_blank" data-smartkarma-citation="entities:29286:1" rel="noopener">Yalla Group Ltd (YALA US)</a> is the largest voice-centric social networking and entertainment platform in MENA as measured by revenue in 2019, according to Frost &amp; Sullivan. Yalla has launched its IPO at a price range of $7.00-9.00 per ADS. Existing shareholder, Orchid Asia, has indicated an interest in purchasing up to $30 million of the ADSs in the offering. Yalla will raise net proceeds of $135.4 million at the mid-point of the IPO price range. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/yalla-group-ipo-initiation-eat-pray-chat" target="_blank" rel="noopener">our initiation note</a>, we stated that Yalla has appealing fundamentals as it offers breakneck revenue growth with high margins and strong cash generation. Overall, we would be inclined to participate in the IPO at the proposed price range.</p></div></div></div>

Yalla Group Ltd (YALA US) is the largest voice-centric social networking and entertainment platform in MENA as measured by revenue in 2019, according to Frost &amp; Sullivan. Yalla has launched its IPO at a price range of $7.00-9.00 per ADS. Existing shareholder, Orchid Asia, has indicated an interest in purchasing up to $30 million of the ADSs in the offering. Yalla will raise net proceeds of $135.4 million at the mid-point of the IPO price range. In our initiation note, we stated that Yalla has appealing fundamentals as it offers breakneck revenue growth with high margins and strong cash generation. Overall, we would be inclined to participate in the IPO at the proposed price range.

United States

Snap Inc. provides technology and social media services. The Company develops mobile camera application products and services that allow users to send and receive photos, drawings, text, and videos. Snap serves customers worldwide.

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Snap (SNAP US)

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

3Q20 Best Bets: Mega Cap Wins

Some top of mind thinking about large cap TMT earnings heading into the thick of the meat grinder which is earnings season. We like secular...

Aaron Gabin

TMT Weekly: 3 Things that Stood Out The Week of 10/16/2020

Datapoints supportive of upside to earnings for Microsoft and Snapchat this past week, plus an ever expanding TAM justifies Crowdstrike's valuation.

Aaron Gabin

Yalla Group IPO Valuation

Yalla Group Ltd (YALA US) is the largest voice-centric social networking and entertainment platform in the Middle East and North Africa (MENA)...

Oshadhi Kumarasiri

Yalla Group IPO: Valuation Insights

Chindata (CD US) is a data centre operator which is backed by Bain Capital (57.17% shareholder), APG Strategic Real Estate Pool/Dutch pension...

Arun George

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52-week Range

Market Cap (USDm)

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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

3Q20 Best Bets: Mega Cap Wins

Some top of mind thinking about large cap TMT earnings heading into the thick of the meat grinder which is earnings season. We like secular...

Aaron Gabin

TMT Weekly: 3 Things that Stood Out The Week of 10/16/​​​​2020

Datapoints supportive of upside to earnings for Microsoft and Snapchat this past week, plus an ever expanding TAM justifies Crowdstrike's valuation.

Aaron Gabin

Yalla Group IPO Valuation

Yalla Group Ltd (YALA US) is the largest voice-centric social networking and entertainment platform in the Middle East and North Africa (MENA)...

Oshadhi Kumarasiri

Yalla Group IPO: Valuation Insights

Chindata (CD US) is a data centre operator which is backed by Bain Capital (57.17% shareholder), APG Strategic Real Estate Pool/Dutch pension...

Arun George

TMT Weekly: 3 Things that Stood Out The Week of 10/16/2020