Smartkarma Daily Briefs

ICHI reported 1Q22 net profit at Bt104m (-15%YoY, -22%QoQ). The 1Q22 result came out lower than our expectation.
Excluding one-time tax items of Bt24m,1Q22 norm profit was at Bt128m(+5.4%YoY). The YoY and QoQ drop in earnings mainly from a contraction in gross profit margin to 14.7% in 1Q22
We expect 2Q22 earnings to recover QoQ from high season quarter. Revised down 2022 earnings by 18% to 20% in 2022-23E to factor in rising cost.

Polen Global SMID Company Growth Q1 2022 Portfolio Manager Commentary

Polen Capital is a high-conviction growth investment manager.
Over the first quarter of 2022, Polen Global SMID Company Growth Composite Portfolio returned -22.37% gross and – 22.48% net of fees, respectively, versus the -6.41% return of the MSCI ACWI SMID Capitalization Index.

SHR: 1Q22 Results Indicate Rapid Recovery in 2022

We maintain BUY rating with TP Bt4.50 derived from 1x PBV’22E, to reflect better outlook post-COVID crisis.
The company reported 1Q22 net loss of Bt204m compared to net loss of Bt311m in 1Q21 and net loss of Bt70m in 4Q21, in-line with our expectation.
1Q22 EBITDA remained positive for 3-consecutive quarter at Bt256m compared to a negative EBITDA of Bt59m in 1Q21 due to strong recovery of overall hotel operation. However, EBITDA dropped 15%QoQ

Polen Global Emerging Markets Growth Q1 2022 Portfolio Manager Commentary

Polen Capital is a high-conviction growth investment manager.
Over the first quarter of 2022, the Polen Global Emerging Markets Growth Composite Portfolio returned -14.68% gross and – 14.96% net of fees.
The top relative and absolute detractors over the quarter included Yandex N.V.

CAS Investment Partners Q1 2022 Letter To Investors

During the three months ended March 31, 2022, Sosin Partners, LP reported a loss on a mark to market basis net of all fees, expenses, and performance allocations of 26.7%.
Since the end of March, we have continued to experience meaningful mark toMarket losses..

Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary

Polen Capital is a high-conviction growth investment manager.
Over the first quarter, Polen U.S.
Small Company Growth Composite Portfolio returned -21.98% gross and -22.18% net of fees, respectively, underperforming the -12.63% return of the Russell 2000 Growth Index.

Before it’s here, it’s on Smartkarma

May 14

Equity Bottom-Up: KDDI Corp, Yum China Holdings, Inc, Macy’s Inc, BASE Inc, Mitsubishi Heavy Industries, Ichitan Group, Wice Logistics, XP Inc, Internet Initiative Japan and more

By Smartkarma Daily Briefs | Daily Briefs, Equity Bottom-Up

In today’s briefing:

KDDI (Buy) Q4 21 Results Reaction: FY22 Profits Steady and Wide-Ranging Mid-Term Plan
Yum China (YUMC.US): COVID-19 Headwind Will Have More Impacts in Q2
KDDI (9433) Results OK, Forecasts OK, Buyback Even Better, But No Longer Cheap
Macy’s: Amid Global Uncertainties, a Special Situation in an Out of Favor Sector
Base Inc: Shoppers Return to Offline, More Downside Left
Mitsubishi Heavy (7011 JP) | Just Getting (Re)Started
ICHI: Disappointing 1Q22 Result Already in the Price
WICE: Earnings Still Continue to Expand in 2022 with Potential Upside
XP (XP US) – Less Demanding Valuations, but the Overhang Still Weighs
IIJ (Buy) – Q4 21 Results Reaction: Reliable Growth and Margin Expansion

KDDI (Buy) Q4 21 Results Reaction: FY22 Profits Steady and Wide-Ranging Mid-Term Plan

Guidance for modest growth in FY22 operating income is broadly in line with expectations and reassuring after a range of potential outcomes in reports from NTT and Softbank
The company has issued a mid-term plan with a positive message on growth from new businesses and in-line guidance for capex/shareholder returns but a lack of FY24 finanical targets
On balance, the message is positive as a stable business and rising shareholder returns makes KDDI an attractive option in a frothy market

Yum China (YUMC.US): COVID-19 Headwind Will Have More Impacts in Q2

By Roger Xie

Yum China Holdings, Inc (YUMC US) delivered a better-than-fear 1Q22 results helped by its strong execution. KFC delivered solid margins above expectations given its store format and take-out service.
China COVID outbreak is getting worst, we expect 3000 stores will cancel dine-in service in April (compared with 1700 stores in March). Yum China might have deeper loss in 2Q22.
We continue to think Yum China is the best-run restaurant chain in China. It has resilient business model to navigate through pandemic. Risk/reward is more compelling to own Yum China.

KDDI (9433) Results OK, Forecasts OK, Buyback Even Better, But No Longer Cheap

By Travis Lundy

KDDI reported earnings today, offering a near meaningless March 2022 results presentation slide deck, and an only slightly more meaningful new Mid-Term Plan.
The only clarity provided is on the bit which makes up about a third of future OP as the two-thirds (mobile telephony ARPU-related revenues) will see considerable pain this year.
The buyback is nice, but KDDI is no longer cheap, and may have relative upside only against Softbank Corp.

Macy’s: Amid Global Uncertainties, a Special Situation in an Out of Favor Sector

By Howard J Klein

Amid ghost malls of closed stores across the US, this reimagined middle class retail legacy operator has transformed itself and become a special situation buy at its price.
With 794 stores in all major cities, Macy’s can move smartly up as global pandemic pressures begin to ease and bearish macro events like the Ukraine war find resolution.
Current market cap does not reflect impressive transformation of its business model management has put in place that shows in FY 2021 and promises better in 2022.

Base Inc: Shoppers Return to Offline, More Downside Left

By Oshadhi Kumarasiri

BASE Inc (4477 JP) is up more than 27% today as the Mothers Index bounced back 4.5% following a steep sell-off during the last one-month period.
Nevertheless, results were disappointing on both the top line and the bottom line with Q1 revenue and operating loss of ¥2,512m (consensus ¥2,659m) and ¥272m (consensus ¥139.2m) respectively.
After disappointing the market with a guidance range that was significantly below consensus in 2021, Base Inc has withheld from providing 2022 guidance.

Mitsubishi Heavy (7011 JP) | Just Getting (Re)Started

By Mark Chadwick

MHI reported a strong 7% growth in the order backlog to ¥5,500 billion
MHI is a beneficiary of the global energy crisis, geared into gas turbine and nuclear supply chains
The stock is trading below book value (10 year average 1x) at a time when the core energy order book is as strong as ever

ICHI: Disappointing 1Q22 Result Already in the Price

ICHI reported 1Q22 net profit at Bt104m (-15%YoY, -22%QoQ). The 1Q22 result came out lower than our expectation.
Excluding one-time tax items of Bt24m,1Q22 norm profit was at Bt128m(+5.4%YoY). The YoY and QoQ drop in earnings mainly from a contraction in gross profit margin to 14.7% in 1Q22
We expect 2Q22 earnings to recover QoQ from high season quarter. Revised down 2022 earnings by 18% to 20% in 2022-23E to factor in rising cost.

WICE: Earnings Still Continue to Expand in 2022 with Potential Upside

Expect impact from an expected drop in sea freight rate (50% of WICE revenue link to this freight price) is likely to be offset by an increase in cross border
We have factored in impact from China border restriction and a gradual drop in sea-air freight,which we anticipated to normalize to pre-COVID-19 gradually.Our revenue forecast at Bt8.2bn is on conservative
WICE report 1Q22 net profit at Bt158m (+93%YoY and -13%QoQ). QoQ contraction from all-time high level in 4Q21 was due to a drop in air freight and cross border revenue

XP (XP US) – Less Demanding Valuations, but the Overhang Still Weighs

By Victor Galliano

Itaú Unibanco’s acquisition of an 11.36% stake in XP in April is no strategic move; it is a contractual obligation that remained, after the regulator blocked Itaú’s acquisition plans
This adds to the existing overhang in XP shares, given that fellow XP shareholder Itausa deems its 11.5% XP stake to be non-strategic, having already made disposals through block trades
We remain cautious on XP shares based on the disposal overhang and competitive pressures in Brazilian wealth management undermining XP’s fundamentals; near term, Itausa warrants monitoring on its NAV discount

IIJ (Buy) – Q4 21 Results Reaction: Reliable Growth and Margin Expansion

Q4 and FY22 guidance beat driven by growth in corporate DX demand and margin discipline
Company expects FY22 double-digit revenue growth as mobile headwinds fade and has re-set its mid-term profitability target. Implied FY23 OP is 28% higher than year-ago forecasts
Near-Term profitability beat ties in to shareholder returns and FY21 DPS has been raised to ¥48 from ¥46 with further growth in FY22. We remain at Buy.

Before it’s here, it’s on Smartkarma

May 14

Most Read: MR D.I.Y. Group, Tencent, Core Lithium Ltd, Cosmo Energy Holdings, SK Telecom and more

By Smartkarma Daily Briefs | Daily Briefs, Most Read

In today’s briefing:

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises
MSCI May 2022 Index Rebalance: Flow Due to FIF Changes
MSCI May 2022 Index Rebalance: Small Cap Changes and Flow
Cosmo Oil (5021) Shareholder Return Policy Is Bigger Than It Looks
Short-Term Reverse Flow Trading on SK Telecom

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises

For Asia Pacific, there are 48 adds/76 deletes across markets with the most changes in China and the highest net changes in Japan. We got 94% of the names right.
Surprise names are MR D.I.Y. Group, AU Small Finance Bank, Guangzhou Automobile Group, Yunnan Botanee Bio-Technology, Westports Holdings, Indocement Tunggal Prakarsa, DiDi Global and Yantai Eddie Precision Mac-A.
As expected, there are listing switches for Baidu (BIDU US), Bilibili Inc (BILI US), New Oriental Education (EDU US) and GDS Holdings (ADR) (GDS US).

MSCI May 2022 Index Rebalance: Flow Due to FIF Changes

There are quite a lot of stocks that have changes to their Foreign Inclusion Factor (FIF) at the May SAIR since MSCI comprehensively assesses the float for stocks.
The largest passive inflows will be on Tencent, Kuaishou Technology, JD Health, Macquarie Group, Shin Etsu Chemical, Recruit Holdings, Olympus Corp, Naver Corp and Sun Hung Kai Properties.
Changes to FIFs are tougher to forecast and not very widely tracked, so pre-positions are likely to be lower and the stocks with higher ADV to buy/sell should outperform/underperform.

MSCI May 2022 Index Rebalance: Small Cap Changes and Flow

MSCI has announced changes to the Small Cap Index. For Asia Pacific, there are 220 adds and 160 deletes. Most adds are in India, most deletes are in Japan.
Flows are not huge, but there is a big impact on a lot of stocks. Some of the stocks have moved today and there could be more.
There are a lot of stocks that crossover with changes on other indices and there will be same way flow on a lot of stocks over the next few weeks.

Cosmo Oil (5021) Shareholder Return Policy Is Bigger Than It Looks

By Travis Lundy

Cosmo Energy Holdings (5021 JP), subject of a selldown by its major shareholder (discussed here), then a large stake purchase by activist Murakami-san (discussed here) announced earnings and a buyback.
The buyback is large enough to matter to other shareholders.
The shareholder structure is interesting enough that investors need to pay attention to the possibilities.

Short-Term Reverse Flow Trading on SK Telecom

By Sanghyun Park

Heavy shorts came out in a short trading window. Usually, this is likely to be strategic trading by a few institutional investors, which causes PBS to set up loan transactions.
We should then consider the possibility that short positions betting on MSCI deletion will be sold back to the market by PBS who set up loan transactions after short-covering
SKT is likely to undergo a share price correction due to a short-term overhang, and we need to consider setting up a position aimed at this.

Before it’s here, it’s on Smartkarma

May 14

Thailand: Ichitan Group, Wice Logistics, Indorama Ventures, S Hotels & Resorts PCL and more

By Smartkarma Daily Briefs | Daily Briefs, Thailand

In today’s briefing:

ICHI: Disappointing 1Q22 Result Already in the Price
WICE: Earnings Still Continue to Expand in 2022 with Potential Upside
IVL: Solid PET Performance Drove 1Q22 Profit
SHR: 1Q22 Results Indicate Rapid Recovery in 2022

ICHI: Disappointing 1Q22 Result Already in the Price

ICHI reported 1Q22 net profit at Bt104m (-15%YoY, -22%QoQ). The 1Q22 result came out lower than our expectation.
Excluding one-time tax items of Bt24m,1Q22 norm profit was at Bt128m(+5.4%YoY). The YoY and QoQ drop in earnings mainly from a contraction in gross profit margin to 14.7% in 1Q22
We expect 2Q22 earnings to recover QoQ from high season quarter. Revised down 2022 earnings by 18% to 20% in 2022-23E to factor in rising cost.

WICE: Earnings Still Continue to Expand in 2022 with Potential Upside

Expect impact from an expected drop in sea freight rate (50% of WICE revenue link to this freight price) is likely to be offset by an increase in cross border
We have factored in impact from China border restriction and a gradual drop in sea-air freight,which we anticipated to normalize to pre-COVID-19 gradually.Our revenue forecast at Bt8.2bn is on conservative
WICE report 1Q22 net profit at Bt158m (+93%YoY and -13%QoQ). QoQ contraction from all-time high level in 4Q21 was due to a drop in air freight and cross border revenue

IVL: Solid PET Performance Drove 1Q22 Profit

IVL reported 1Q22 net profit of Bt14.1bn (+134% YoY, +161% QoQ), The result came out better than our expectation and beat the consensus by 95%.
Excluding onetime items, the recurring profit stood at Bt10.6bn (+175% YoY, +94% QoQ). The earnings growth was supported by record cPET performance, benefiting from tight supply demand environment.
The EBITDA margin also rose to a record high level of 15%, compared to 11% in 1Q21 and 4Q21.

SHR: 1Q22 Results Indicate Rapid Recovery in 2022

We maintain BUY rating with TP Bt4.50 derived from 1x PBV’22E, to reflect better outlook post-COVID crisis.
The company reported 1Q22 net loss of Bt204m compared to net loss of Bt311m in 1Q21 and net loss of Bt70m in 4Q21, in-line with our expectation.
1Q22 EBITDA remained positive for 3-consecutive quarter at Bt256m compared to a negative EBITDA of Bt59m in 1Q21 due to strong recovery of overall hotel operation. However, EBITDA dropped 15%QoQ

Before it’s here, it’s on Smartkarma

May 14

Industrials: Mitsubishi Heavy Industries, Wice Logistics, Bumble and more

By Smartkarma Daily Briefs | Daily Briefs, Industrials

In today’s briefing:

Mitsubishi Heavy (7011 JP) | Just Getting (Re)Started
WICE: Earnings Still Continue to Expand in 2022 with Potential Upside
Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary

Mitsubishi Heavy (7011 JP) | Just Getting (Re)Started

By Mark Chadwick

MHI reported a strong 7% growth in the order backlog to ¥5,500 billion
MHI is a beneficiary of the global energy crisis, geared into gas turbine and nuclear supply chains
The stock is trading below book value (10 year average 1x) at a time when the core energy order book is as strong as ever

WICE: Earnings Still Continue to Expand in 2022 with Potential Upside

Expect impact from an expected drop in sea freight rate (50% of WICE revenue link to this freight price) is likely to be offset by an increase in cross border
We have factored in impact from China border restriction and a gradual drop in sea-air freight,which we anticipated to normalize to pre-COVID-19 gradually.Our revenue forecast at Bt8.2bn is on conservative
WICE report 1Q22 net profit at Bt158m (+93%YoY and -13%QoQ). QoQ contraction from all-time high level in 4Q21 was due to a drop in air freight and cross border revenue

Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary

Polen Capital is a high-conviction growth investment manager.
Over the first quarter, Polen U.S.
Small Company Growth Composite Portfolio returned -21.98% gross and -22.18% net of fees, respectively, underperforming the -12.63% return of the Russell 2000 Growth Index.

Before it’s here, it’s on Smartkarma

May 13

South Korea: Bumhan Fuelcell, SK Telecom, Coupang and more

By Smartkarma Daily Briefs | Daily Briefs, South Korea

In today’s briefing:

Bumhan Fuelcell IPO Preview
MSCI Korea Standard: May SAIR Results
Coupang: Decelerating Revenue, Sporadic Profitability and Still Expensive

Bumhan Fuelcell IPO Preview

By Douglas Kim

Bumhan Fuel Cell is one of the leading players in the hydrogen fuel cell industry in Korea.
Amid very difficult capital markets, a Korean company called Bumhan Fuelcell is getting ready to complete its IPO in June 2022.
IPO price range is from 32,200 won to 40,000 won. The expected market cap after the IPO is from 288 billion won to 358 billion won.

MSCI Korea Standard: May SAIR Results

By Sanghyun Park

As expected, we have one addition, which is Hyundai Heavy Industries. But deletions are a bit surprising. The MSCI said that Korea has no deletion this time.
The MSCI decided to keep SK Telecom. However, even before the next IR, the possibility of special deletion due to foreign room exhaustion cannot be excluded.
The number of constituents in this SAIR increased by one more than the last IR, so Seegene and Green Cross got to stay in the Index.

Coupang: Decelerating Revenue, Sporadic Profitability and Still Expensive

By Oshadhi Kumarasiri

Coupang (CPNG US)’s 1Q22 results were mixed with revenue 2.5% below consensus but an operating loss of $205.7m was $94.3m lower than consensus through a 3% gross margin improvement.
The company’s comments on the gross margin outlook are a bit concerning and make us think that the improvement in Q1 was just a one-off.
Coupang is fundamentally expensive on EV/GMV+Retail Sales. With selling pressure from Softbank and a significant downside to revenue estimates, we remain Short Coupang.

Before it’s here, it’s on Smartkarma

May 13

Japan: Softbank Group, Tokyo Electron, Subaru Corp, NTT (Nippon Telegraph & Telephone), Nissan Motor, SUMCO Corp, Takeda Pharmaceutical, Olympus Corp and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Softbank – Not Pretty
Softbank Group Q4 21 Results Reaction: The Tech Winter Is Here
TEL – Margin Disappointment
Subaru – One Of The Better Weak Yen Plays
NTT (Buy) – Q4 21 Results Reaction: Steady as She Goes
Nissan – Significant Upside But Peers Are Better
Sumco – Still Underestimated
Morning Views Asia: Greenland Holdings Corp, Softbank Group
Takeda 4QFY22: Top Line Expands and Pipeline Development Progresses Despite OP Drop
Olympus (7733 JP) Q4FY22: Net Profit More Than Doubled; Record High Profit Projection for FY23

Softbank – Not Pretty

Softbank results were about as ugly as expected and the only major new information in our view was that they took a small (too small) write-down on their private holdings.
Masayoshi Son did Masayoshi Son things regaling investor with tales of “To the moon bro!” but offered little of substance to suggest a turnaround was near.
Ultimately we keep coming back to the question of where margin calls might be struck.

Softbank Group Q4 21 Results Reaction: The Tech Winter Is Here

Softbank reported record losses, as expected, including some writedowns in the private portfolio. That may not be enough to assuage concerns with valuations still in free fall
Management says tech’s day will come again and it is best to be more defensive for now, including a slower pace of investing, which we think is positive
Concern on weak tech and high leverage likely keep the discount in the mid-50s range. There was nothing today to signal an inflection is at hand

TEL – Margin Disappointment

TEL generated ¥169bn in OP in 4Q, well above consensus at ¥150bn and even our ¥160bn estimate.
The issue is that this was on ¥565bn in revenue, well above ourselves and consensus, due to ramping R&D and depreciation expenses.
Those expenses also meant that guidance of ¥716bn in OP was just barely above consensus at ¥692bn.

Subaru – One Of The Better Weak Yen Plays

Subaru 4QFY22 was relatively strong compared to previous quarters with revenue of ¥737bn (+4.4% vs. consensus) but material prices pushed OP down to ¥13.3bn (-48.6% vs. consensus).
The FY23 guidance was relatively weak at just ¥3,500bn in revenue (+4.5% vs. consensus) and OP guidance of ¥200bn (-1.0% vs. consensus).
However with the yen where it is we believe Subaru is on track for a return to double digit OPM and OP of ¥370-450bn.

NTT (Buy) – Q4 21 Results Reaction: Steady as She Goes

Q4 results and FY22 guidance are in line with expectations and management is confident it is on track to meet its FY23 ¥370 EPS commitment
Returns to shareholders modestly better than expected with a ¥400bn buyback and the possibility of a further dividend hike later in the year still on the table
We remain positive on NTT shares which trade at an attractive 10-11x EPS with further support from expanding shareholder returns

Nissan – Significant Upside But Peers Are Better

Nissan generated total revenue of ¥2,271bn (-12.0% vs. consensus) and OP of ¥56bn (+33.3% vs. consensus) in 4QFY22.
This enabled the company to hit ¥247bn in OP vs. our start of year projection of ¥250bn (when guidance was for breakeven).
Guidance looked superficially weak at ¥10trn in revenue (-0.4% vs. consensus) and ¥250bn in OP ¥250bn (-21.1% vs. consensus) but margin assumptions are silly and we expect ¥500bn in OP.

Sumco – Still Underestimated

By Shifara Samsudeen, ACMA, CGMA

Sumco 1Q revenues were on the strong side, 1.5% above consensus but OP beat by 9.9%.
As we have been flagging, consensus is underestimating operating leverage and that was before the weakening of the yen.
Revenue guidance for 2Q was 4.9% above consensus and OP 12.8% higher but we expect results to be an even larger beat.

Morning Views Asia: Greenland Holdings Corp, Softbank Group

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

Greenland Holdings Corp
Softbank Group

Takeda 4QFY22: Top Line Expands and Pipeline Development Progresses Despite OP Drop

Takeda Pharmaceutical (4502 JP) reported 4QFY03/2022 results yesterday. Reported revenue grew 13.4% YoY to JPY873.3bn (vs consensus JPY825.7bn) while the company reported operating losses of JPY1.7bn.
Revenue from Top 14 drugs grew 20.3% YoY, while revenue from top-seller Entyvio grew 15.0% YoY during the quarter. Excluding Entyvio, other top 13 drugs grew 23.3% during the period.
Takeda’s shares moved down 2.0% at the end of yesterday’s trading and down 3% during today’s trade as profit drop disappointed the market.

Olympus (7733 JP) Q4FY22: Net Profit More Than Doubled; Record High Profit Projection for FY23

By Tina Banerjee

Olympus Corp (7733 JP) reported strong double-digit revenue growth in Q4 on continued medical business recovery. Net profit has more than doubled and 40% ahead of consensus.
The company has achieved growth to above pre-pandemic level in FY22 and CAGR of >7% over last two years. Operating margin improved significantly to 19.3%.
Olympus is on track to achieve more than 20% operating margin in FY23. Management projected a record high net profit of ¥154 billion for FY23.

Before it’s here, it’s on Smartkarma

May 13

Equity Capital Markets: Bumhan Fuelcell and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Bumhan Fuelcell IPO Preview

Bumhan Fuelcell IPO Preview

By Douglas Kim

Bumhan Fuel Cell is one of the leading players in the hydrogen fuel cell industry in Korea.
Amid very difficult capital markets, a Korean company called Bumhan Fuelcell is getting ready to complete its IPO in June 2022.
IPO price range is from 32,200 won to 40,000 won. The expected market cap after the IPO is from 288 billion won to 358 billion won.

Before it’s here, it’s on Smartkarma

May 13

United States: Microstrategy Inc Cl A, Bitcoin, US Treasury (10 Yr Generic), Xperi, Texas Pacific Land Trust, Canoo Inc, Arlo Technologies Inc, Howard Hughes Corp, Apollo Global Management Inc, Avaya Holdings Corp and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

MicroStrategy (MSTR US): Money From Nothing Is Worth?
Bitcoin – The Floor Has Gone
How Are Fed’s Rate Hikes Impacting EM?
XPER: Streaming Free Cash Flow
TPL: Special Dividend While Production Re-Ramps
EV SPACs are Facing a Reality Check
ARLO: Prepping for Acceleration
HHC: Generating Cash & Share Repurchases
Apollo Global (APO)
AVYA: Burning Thru Cash, Sell

MicroStrategy (MSTR US): Money From Nothing Is Worth?

By David Blennerhassett

MicroStrategy Inc Cl A (MSTR US) is now trading at a ~26% discount to NAV as the bitcoin barbeque continues.
Bitcoin is down ~40% YTD. If it falls another 24%, this will trigger a margin call on one of its loans.
Should bitcoin decline to US$17.5k, MSTR’s crypto bet falls short of its debt obligation; debt that its software ops are not sufficiently profitable enough to service.

Bitcoin – The Floor Has Gone

By Shyam Devani

The break below 28k is a major development today opening the way for further losses
The 200 week moving average target is already in sight at 21,763
Below there, an extended target would be 19,511 – the major level from Dec 2017

How Are Fed’s Rate Hikes Impacting EM?

By Gautam Jain, PhD, CFA

Notwithstanding the economic uncertainties, with the Fed’s path better defined now than a few weeks ago, I expect the volatility of rates to peak in the coming weeks.
Uncertainty around the Fed’s rate hikes has been spilling over to the monetary policy paths of EM countries even though many of them have been raising rates since last year.
If the US rates volatility falls as I expect, then it will be supportive of the short ends of EM rate curves in Latin American and Central European countries.

XPER: Streaming Free Cash Flow

XPER reported first quarter results setting the path for the Company to generate approximately $200 million in free cash flow in 2022
The outperformance on the revenue line resulted in XPER exceeding our non-GAAP net income and EPS estimates
During the first quarter of 2022, XPER renewed a license with a virtual multichannel video programming distributor (“MVPD”)

TPL: Special Dividend While Production Re-Ramps

TPL reported a decrease in daily production in the first quarter as energy producers had difficulty sourcing adequate amounts of sand
The lower daily production resulted in TPL reporting lower than expected revenue and earnings in the first quarter than we were expecting
The delay in production rates should not alter TPL’s stock trajectory as earnings should bounce with daily production ramping again.

EV SPACs are Facing a Reality Check

By subSPAC

EV Startup Canoo confirmed this week what most market participants had been anticipating for months.
Management at Canoo warned investors that it might not have enough cash to ramp up operations and make it to the start of production.
Canoo isn’t the only one who has issued a going concern warning over the last few months.

ARLO: Prepping for Acceleration

ARLO continued to grow the number of paid subscribers as consumers see the benefits of having an alert for their installed security cameras
ARLO reported a positive net income for the second straight quarter just as the firm is getting ready to launch a new brand awareness campaign in 2H22
ARLO reiterated its plans to increase marketing expense in the second half of 2022 to accelerate growth in 2023

HHC: Generating Cash & Share Repurchases

HHC reported first quarter results slightly higher than expected with the Company providing greater depth about how the business is adjusting to an environment with higher interest rates
The number of homes on the market within the metro regions HHC is present in is below demand. Population growth should allow for continued sell through of residential homes
As more operating assets come online and stabilize, HHC would see an improvement in both FFO and NOI

Apollo Global (APO)

By Enlightened Capital

APO is a top 5 alternative asset manager globally with $513bn of AUM as of 1Q22.
APO’s AUM is diversified across 73% of AUM in Yield strategies, 17% in Equity strategies, and 10% in Hybrid strategies.
APO recently acquired the remaining 65% of Athene (ATH), for $10.4bn (6x ’22 EPS), adding ~$200bn of insurance liabilities to APO’s balance sheet including fixed indexed annuities, fixed annuities, group annuities, and funding agreements.

AVYA: Burning Thru Cash, Sell

AVYA has exhausted investor patience in the Company’s quest to transform into a subscription revenue business
Liquidity overtaking the conversation from ARR could have bigger impact to the stock price as investors try to assess the timing of when AVYA could generate free cash flow
AVYA reported fiscal second quarter revenue of $716 million below the Company’s guidance and our $739 million estimate

Before it’s here, it’s on Smartkarma

May 13

Event-Driven: MR D.I.Y. Group, Link Net, Microstrategy Inc Cl A, Tabcorp Ltd, SK Telecom and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises
Link Net (LINK IJ): Axiata To Vote On The 26 May. Timeline Intact
MicroStrategy (MSTR US): Money From Nothing Is Worth?
Tabcorp’s Demerger Approved Paving the Way to Unlock Value
MSCI Korea Standard: May SAIR Results

MSCI May 2022 Index Rebalance: In-Line With a Few Surprises

For Asia Pacific, there are 48 adds/76 deletes across markets with the most changes in China and the highest net changes in Japan. We got 94% of the names right.
Surprise names are MR D.I.Y. Group, AU Small Finance Bank, Guangzhou Automobile Group, Yunnan Botanee Bio-Technology, Westports Holdings, Indocement Tunggal Prakarsa, DiDi Global and Yantai Eddie Precision Mac-A.
As expected, there are listing switches for Baidu (BIDU US), Bilibili Inc (BILI US), New Oriental Education (EDU US) and GDS Holdings (ADR) (GDS US).

Link Net (LINK IJ): Axiata To Vote On The 26 May. Timeline Intact

By David Blennerhassett

Axiata Group (AXIATA MK) has convened an EGM on the 26 May to vote on its proposed acquisition of Indonesian broadband play Link Net (LINK IJ).
The vote, which for all intent and purposes is a rubber stamp, is one of the SPA conditions to acquire 66.03% of LINK.
Trading at a gross/annualised spread of 7.1%/22.3%. Get involved here.

MicroStrategy (MSTR US): Money From Nothing Is Worth?

By David Blennerhassett

MicroStrategy Inc Cl A (MSTR US) is now trading at a ~26% discount to NAV as the bitcoin barbeque continues.
Bitcoin is down ~40% YTD. If it falls another 24%, this will trigger a margin call on one of its loans.
Should bitcoin decline to US$17.5k, MSTR’s crypto bet falls short of its debt obligation; debt that its software ops are not sufficiently profitable enough to service.

Tabcorp’s Demerger Approved Paving the Way to Unlock Value

By Arun George

Tabcorp Ltd (TAH AU)’s demerger to create two standalone companies listed on the ASX, The Lottery Corporation and New Tabcorp, was approved today.
Subject to the scheme approved by the Court, the Lottery Corporation will trade on a deferred settlement basis on 24 May and a normal settlement basis on 2 June.
Peer derating due to the market sell-off results in a lower SoTP valuation of A$5.62 per share, which is still a 13% upside to the last close.

MSCI Korea Standard: May SAIR Results

By Sanghyun Park

As expected, we have one addition, which is Hyundai Heavy Industries. But deletions are a bit surprising. The MSCI said that Korea has no deletion this time.
The MSCI decided to keep SK Telecom. However, even before the next IR, the possibility of special deletion due to foreign room exhaustion cannot be excluded.
The number of constituents in this SAIR increased by one more than the last IR, so Seegene and Green Cross got to stay in the Index.

Before it’s here, it’s on Smartkarma