Smartkarma Daily Briefs

Sony held the first of their two investor days yesterday presenting on the Game & Network Services, Music and Pictures segments.
While there was nothing especially new for those paying attention to the broad flow of news conditions for the content businesses remain strong.
What was interesting to us was the degree of collaboration with Kadokawa.

FTSE100/FTSE250 Index Rebalance Preview: Changes and Migrations

By Brian Freitas

At the June rebalance, Centrica PLC (CNA LN) and Unite Group (UTG LN) could replace Royal Mail PLC (RMG LN) and ITV PLC (ITV LN) in the UKX Index.
Apart from the migration between the FTSE 100 and FTSE 250 indices, there could be 5 adds and deletes to the FTSE 250 Index in June.
There are some close adds and the list could change from now to the review cutoff date on 31 May. These changes could be interesting from a trading perspective.

LG Energy Solution: Short-Term Flow Crunch & Block Deal Possibility

LG Energy Solution’s real-world free-float rate should be around 5%, or 12.3M shares. We will see two additional passive inflows with the real-world float this tight.
KOSPI 200 up-weight and FTSE June QIR New Entry’s combined inflow will be 0.6% of SO, enough for us to expect a short-term flow crunch.
Then, there will likely be a share let-go event (block deals) by LG Chem to lessen the tight float situation, just like what KSOE had done for HHI.

SAIC’s Unconditional Offer For Dongzheng

It’s now official – SAIC Motor (600104 CH) has made a possible unconditional mandatory cash Offer for Dongzheng Automotive Finance (2718 HK).
To recap: on the 19 May, SAIC acquired China Zhengtong Auto Services Hldg (1728 HK)‘s 71.04% stake in Dongzheng at a judicial auction. This triggers the mandatory Offer.
The new news from today’s announcement is that the Offer price was reduced to HK$1.243/share – presumably on account of moves in HKD vs. RMB. The Offer price is final.

Shanghai/Shenzhen Southbound Connect: Weekly Moves (27 May 2022)

Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
Overall, net inflow was ~US$1.1bn, split evenly (roughly) between Shanghai and Shenzhen.
The largest inflows were into China Mobile (941 HK) and CNOOC Ltd (883 HK). The largest outflows were in Kuaishou Technology (1024 HK) and BYD (1211 HK).

Before it’s here, it’s on Smartkarma

May 28

Macro: CX Daily: As Mass Covid Testing Becomes China’s New Normal and more

By Smartkarma Daily Briefs | Daily Briefs, Macro

In today’s briefing:

CX Daily: As Mass Covid Testing Becomes China’s New Normal, Debate Grows Over Who Pays
NPS Reduces Asset Allocations for Domestic Equities and Fixed Income

CX Daily: As Mass Covid Testing Becomes China’s New Normal, Debate Grows Over Who Pays

By Caixin Global

In Depth: As mass Covid testing becomes China’s new normal, debate grows over who pays.
Climate issues shouldn’t bear political labels, U.S. envoy says.
China’s premier puts greater emphasis on growth.

NPS Reduces Asset Allocations for Domestic Equities and Fixed Income

By Douglas Kim

NPS plans to reduce the proportion of domestic equities in the fund to 14% by 2027, down from 16.3% at end of 2022.
Although the proportion of domestic stocks will be reduced to 14% by 2027, total investment in domestic stocks is expected to rise by 27.1 trillion won to 192 trillion won.
The decline in asset allocations for for domestic bonds is much steeper (from 34.5% of total at end of 2022 to 22.9% at end of 2027).

Before it’s here, it’s on Smartkarma

May 27

United States: Netflix Inc, Axie Infinity, Apple Inc, Snowflake Inc, S&P 500, AXT Inc, Airbnb Inc, Activision Blizzard and more

By Smartkarma Daily Briefs | Daily Briefs, United States

In today’s briefing:

Tidefall Capital Management Q1 2022 Letter
Play-To-Earn Guild YGG Records 174% Player Increase in Q1
Wedgewood Partners Large Cap Focused Growth Fund Q1 2022 Client Letter
Snowflake 1Q22 Earnings: 2029 Looks Good
SPX 4,100 Resistance and 3,800 Tactical Buy Support
AXTI: A View Thru the Risks
Airbnb (ABNB) Breakdown
FPA U.S. Core Equity Fund Q1 2022 Commentary

Tidefall Capital Management Q1 2022 Letter

Tidefall is a concentrated, unconstrained investment fund that attempts to compound its capital at an attractive rate of return. Our investment advantage comes from our in-depth research, long-term time horizon and appreciation of biases.
With Netflix stock down by more than 50% since its high in November (and 10% below Reed Hastings’ $20m purchase in January) we re-entered the position in April.
We believe the current price of Netflix shares creates a compelling long term investment opportunity.

Play-To-Earn Guild YGG Records 174% Player Increase in Q1

By Tech in Asia

Philippines-based Yield Guild Games (YGG) has seen a spike in players for the first quarter of 2022, recording a 174% increase from Q4 2021.
YGG formed a total of 13 new partnerships in the first quarter, investing US$2.6 million in these tie-ups.
Of that amount, 63% went to nine play-to-earn games, 23% to gaming guilds, and 14% were targeted at platforms and infrastructure to support the P2E ecosystem.

Wedgewood Partners Large Cap Focused Growth Fund Q1 2022 Client Letter

Wedgewood Partners is a money manager founded in 1988 with the goal of providing investors with a superior approach to managing investment portfolios.
For the first quarter 2022, our Composite (net)i declined -10.6%.
We expect to be busy this year as all financial markets come to grips with the Federal Reserve’s unprecedented task of reigning in 40-year highs in inflation with two monetary tightening tools.

Snowflake 1Q22 Earnings: 2029 Looks Good

By Aaron Gabin

Ignore the slight macro weakness from consumer facing internet companies in April. It is irrelevant for the LT model.
Snowflake upped its LT (FY2029) targets: $10B in revenues, growing 30%, 78% product margins, 20% operating margins, and 25% adjusted FCF margins.
At 12x forward revenues, Snowflake’s valuation is…dare we say… cheap?

SPX 4,100 Resistance and 3,800 Tactical Buy Support

By Thomas Schroeder

SPX due for a fade below the key 4,100 barrier with 3,980 and 3,910 pivot supports. We have been and are bullish near the 3,800 level.
NDX is the short vehicle to test 11,500 and 11,200. More bullish near 11,000 support.
NDX and RTY failed to see equivalent strength (U/P) and underscores odds of new lows in both indexes toward macro buy supports.

AXTI: A View Thru the Risks

By Hamed Khorsand

The manufacturing exposure AXTI has in China has become an overhanging shadow on the shares even though the Company has managed to grow revenue sequentially for more than a year
AXTI’s manufacturing facilities are in proximity to Beijing, which is now under COVID-19 watch for lockdowns. So far, AXTI has not experienced any curtailment in manufacturing.
COVID-19 spreading in China has raised fears AXTI could suffer from forced shutdowns. There have been no reports of AXTI stopping manufacturing.

Airbnb (ABNB) Breakdown

By Equity Breakdown

One of the most anticipated IPO’s of the year is finally happening. This would represent the third-largest IPO of the year after Snowflake’s snowstorm and Bill Ackman’s Goliath-like SPAC.
Tonight we will breakdown Airbnb, (ABNB), a company that wants to revolutionize human connection through authenticity, community, and design.
Airbnb is a technology company that fosters a marketplace for home-sharing at a global scale.

FPA U.S. Core Equity Fund Q1 2022 Commentary

FPA is a Los Angeles-based institutional money management firm practicing a disciplined approach to value investing, prudently seeking superior long-term returns while maintaining a focus on capital preservation.
In the first quarter of 2022, the FPA U.S. Core Equity Fund, Inc.’s (“Fund”) performance was -12.25% (-12.01% before fees and expenses).
I believe secularly growing mid- to large-capitalization companies trading at compelling valuations will continue to be a favorable place to invest for the long-term—especially relative to U.S. Treasuries and other investment alternatives.

Before it’s here, it’s on Smartkarma

May 27

Equity Capital Markets: Oyo, Paradeep Phosphates and more

By Smartkarma Daily Briefs | Daily Briefs, ECM

In today’s briefing:

Oravel Stays (Oyo) Pre-IPO – The Positives – Network Effects Coupled with Industry Tailwinds
Paradeep Phosphates IPO Trading – Tepid Demand and Anchor Quality Isn’t the Greatest

Oravel Stays (Oyo) Pre-IPO – The Positives – Network Effects Coupled with Industry Tailwinds

By Clarence Chu

Oyo (1698548D IN) is looking to raise around US$700m in its upcoming India IPO. The IPO will consist of both a primary and secondary portion.
Oyo runs a digital platform that serves as a hotel and home aggregator between patrons, which include owners and lessors, and customers, such as travelers and guests booking for accommodation.
As of Mar 2021, Oyo had 157,344 storefronts across more than 35 countries listed on its platform.

Paradeep Phosphates IPO Trading – Tepid Demand and Anchor Quality Isn’t the Greatest

By Clarence Chu

Paradeep Phosphates raised around US$194m in its India IPO. The IPO consisted of a mix of primary and secondary shares.
Subscription for PP’s IPO had been tepid and previous deals with similar subscription rates had produced mixed performances upon debut.
Were the firm to trade towards its closer peers’ average, there is a 5% upside potential and -18.6% downside potential on the FY23E and FY24E EV/EBITDA front, respectively.

Before it’s here, it’s on Smartkarma

May 27

Japan: Renesas Electronics, Sony Corp, Tokyo Stock Exchange Tokyo Price Index Topix and more

By Smartkarma Daily Briefs | Daily Briefs, Japan

In today’s briefing:

Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough
Sony (6758 JP) | Master of the Metaverse
Sony – IR Day One and Kadokawa
About an Article on TSE Prime Market

Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

By Travis Lundy

The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.
It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review – twice a year rather than once.
More interestingly, they also change the “High Liquidity” definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.

Sony (6758 JP) | Master of the Metaverse

By Mark Chadwick

Sony’s hosted its 2022 Corporate Strategy Meeting last week. Our key takeaway is that SONY is shifting towards greater investment in Content, Creators, and Communities.
Sony recognizes that technology is changing the way that content is produced and consumed and is responding with new experiences and monetization models.
Sony will continue to benefit from the evolution of the internet as it becomes more social, immersive and financialized (otherwise known as the metaverse).

Sony – IR Day One and Kadokawa

Sony held the first of their two investor days yesterday presenting on the Game & Network Services, Music and Pictures segments.
While there was nothing especially new for those paying attention to the broad flow of news conditions for the content businesses remain strong.
What was interesting to us was the degree of collaboration with Kadokawa.

About an Article on TSE Prime Market

By Aki Matsumoto

I will discuss the Nikkei article that “companies that don’t meet the prime market listing criteria but remain in the prime market under transitional measures should increase their corporate value.”
It goes without saying that increasing corporate value is the way to increase market capitalization. However, whether the company’s methodology is reasonable in the “plan” should be fully discussed.
TSE should proceed with discussions to expand the market to high quality companies that will regain profitability and growth potential, without limiting it to companies to which transitional measures apply.

Before it’s here, it’s on Smartkarma

May 27

China: Tencent, Alibaba Group, Shenzhen Expressway Co H, Lenovo, Activision Blizzard and more

By Smartkarma Daily Briefs | China, Daily Briefs

In today’s briefing:

Hang Seng Index Constituents
Alibaba (9988 HK): Well Controlled Expense in 4Q22 and Forthcoming Turning Point in June, Buy
Shenzhen Expressway (548 HK): Cautiously Optimistic
Morning Views Asia: Adani Ports & Special Economic Zone, Bharti Airtel, Lenovo, Vedanta Resources
FPA U.S. Core Equity Fund Q1 2022 Commentary

Hang Seng Index Constituents

By Untying The Gordian Knot

The Hang Seng index constituents have moved away from just local Hong Kong shares to being dominated by China H and China-centric shares
Focusing on these constituents adds much value, especially with shifting liquidity away from US-listed ADS to HKEX listed shares.
It brings together a more diverse investor base ranging from local Hong Kong, mainland China and the rest of the world.

Alibaba (9988 HK): Well Controlled Expense in 4Q22 and Forthcoming Turning Point in June, Buy

By Ming Lu

Operating margin improved in 4Q22 due to well controlled expenses in minor businesses.
We believe the state council meeting will provide a turning point in June.
We set an upside of 31% and a price target at HK$106.

Shenzhen Expressway (548 HK): Cautiously Optimistic

By Osbert Tang, CFA

Shenzhen Expressway Co H (548 HK) guided that many drivers are presented for the rest of the year to support growth, after a 24% YoY decline in 1Q22 net profit.
Toll road business should benefit from organic growth and project completions, while clean energy and waste treatment businesses will experience astronomical growth from capacity acquisitions.
There exists room to leverage up for growth as liabilities-to-asset ratio is still 11pp below its tolerance level of 65%. Besides below-average PERs, FY22F yield of 10% is attractive too.

Morning Views Asia: Adani Ports & Special Economic Zone, Bharti Airtel, Lenovo, Vedanta Resources

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.

Adani Ports & Special Economic Zone
Bharti Airtel
Lenovo
Vedanta Resources

FPA U.S. Core Equity Fund Q1 2022 Commentary

FPA is a Los Angeles-based institutional money management firm practicing a disciplined approach to value investing, prudently seeking superior long-term returns while maintaining a focus on capital preservation.
In the first quarter of 2022, the FPA U.S. Core Equity Fund, Inc.’s (“Fund”) performance was -12.25% (-12.01% before fees and expenses).
I believe secularly growing mid- to large-capitalization companies trading at compelling valuations will continue to be a favorable place to invest for the long-term—especially relative to U.S. Treasuries and other investment alternatives.

Before it’s here, it’s on Smartkarma

May 27

Event-Driven: SK Telecom Co Ltd (Adr), Renesas Electronics, Yancoal Australia, Appen Ltd, Reliance Industries, Sony Corp, Siemens Gamesa Renewable Energy, S.A., LG Energy Solution and more

By Smartkarma Daily Briefs | Daily Briefs, Event-Driven

In today’s briefing:

SK Telecom: Clarifications over ADR Creation & Premium with Zero Foreign Room
Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough
Yancoal’s Unusual Low Bid from Yankuang Energy
Yancoal (YAL AU, 3668 HK): Potential Offer From Parent In H-Share CBs
Appen (APX AU): Telus’ Indicative Offer
Telus Revokes It’s A$9.50 Bid for Appen
NIFTY Indices: Quiddity Primer
Sony – IR Day One and Kadokawa
Siemens Energy/Siemens Gamesa: What Now?
LG Energy Solution: Short-Term Flow Crunch & Block Deal Possibility

SK Telecom: Clarifications over ADR Creation & Premium with Zero Foreign Room

The debating point is whether ADRs can be created from local underlying shares once the FOL is hit if the ADR issuance cap isn’t entirely burned.
The answer is Yes. ADRs can still be created. That is one of the exceptions that the Korea FSS allows for exceeding the foreign ownership limit.
This is why we saw a hefty premium on KT ADR when it reached and stayed at zero foreign room since 2015 AND an increase in ADRs through DR creation.

Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

By Travis Lundy

The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.
It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review – twice a year rather than once.
More interestingly, they also change the “High Liquidity” definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.

Yancoal’s Unusual Low Bid from Yankuang Energy

Yanzhou Coal Mining Company Limited H (1171 HK)/Yankuang, a 62.26% shareholder, aims to offer H Share convertible bonds for US$3.60 (HK$28.26 or A$5.07) per Yancoal Australia (YAL AU) share.
Yankuang’s implied offer price is -16.6% and -14.5% below the last close price on the ASX and HKEx, respectively. At first glance, the offer seems to be a non-starter.
Yankuang’s end game is likely to provide large shareholders with a liquidity event to hit the 90% compulsory acquisition threshold. This ploy could work subject to FIRB approval.

Yancoal (YAL AU, 3668 HK): Potential Offer From Parent In H-Share CBs

Yankuang Energy Group Company (1171 HK) is considering an Offer for dual-listed coal-miner Yancoal Australia (YAL AU / 3668 HK) via the issuance of H-share convertible bonds.
The potential consideration of US$3.60 (~A$5.07/~HK$28.26) per Yancoal share, in the form of H-Share CBs, compares to the last close A$6.08 and HK$33.05. Perhaps an attractive yield will be dangled.
Yankuang Energy has 62.26%. Cinda, Glencore, and China Shandong collectively hold 27.7%. You need all three to support the Offer terms, and then some, to force compulsory acquisition.

Appen (APX AU): Telus’ Indicative Offer

AI data service provider Appen (APX AU) has announced an unsolicited, conditional, and non-binding indicative proposal from Canada’s Telus International, by way of a Scheme of Arrangement, at A$9.50/share.
That’s around a 48% premium. Appen’s board is seeking an improvement in terms through offering a limited course of due diligence.
The Offer backs out an equity value of A$1.2bn, significantly down from Appen’s 2020 pandemic peak of A$5.4bn.

Telus Revokes It’s A$9.50 Bid for Appen

In response to media reports, Appen Ltd (APX AU) disclosed a non-binding indicative proposal from Telus International (TIXT US) at A$9.50, a 48.4% premium to the undisturbed price of A$6.40.
Appen also announced a weak trading update. The 1HFY22 EBITDA is expected to be materially lower than the comparable period due to the lower revenue and the ongoing investment.
Subsequently, Appen noted that Telus revoked its indicative proposal. No reason was given for the decision. Nevertheless, Appen’s depressed share price will continue to attract suitors.

NIFTY Indices: Quiddity Primer

By Janaghan Jeyakumar, CFA

The NIFTY Index Family has a series of broad equity indices that represents large, mid and small market capitalisation segments of the Indian public equity market.
The review of broad market indices will be done on a semi-annual basis and the changes will be implemented at the end of March and September every year.
In this insight, we take a look at the selection criteria and the historical price performance of past Rebalance Events.

Sony – IR Day One and Kadokawa

Sony held the first of their two investor days yesterday presenting on the Game & Network Services, Music and Pictures segments.
While there was nothing especially new for those paying attention to the broad flow of news conditions for the content businesses remain strong.
What was interesting to us was the degree of collaboration with Kadokawa.

Siemens Energy/Siemens Gamesa: What Now?

By Jesus Rodriguez Aguilar

Siemens Energy seems to have the backing of both BlackRock and Norges, and could then count on 72.55% of the votes vs. 75% approval at EGM needed for delisting.
The shares have seen high purchasing activity since the offer announcement (€158 million average turnover since Monday). Gross spread is 1.5%, 3.7% estimated annual return (assuming settlement on 24 October).
One could sell part of the shares if the share price rises above the offer price and await a possible sweetening, and tender the rest during the acceptance period.

LG Energy Solution: Short-Term Flow Crunch & Block Deal Possibility

LG Energy Solution’s real-world free-float rate should be around 5%, or 12.3M shares. We will see two additional passive inflows with the real-world float this tight.
KOSPI 200 up-weight and FTSE June QIR New Entry’s combined inflow will be 0.6% of SO, enough for us to expect a short-term flow crunch.
Then, there will likely be a share let-go event (block deals) by LG Chem to lessen the tight float situation, just like what KSOE had done for HHI.

Before it’s here, it’s on Smartkarma

May 27

Indonesia: Link Net and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Axiata Gains Approval for the Link Net MTO; Next up Is First Media’s EGM on 6 June

Axiata Gains Approval for the Link Net MTO; Next up Is First Media’s EGM on 6 June

The Axiata Group (AXIATA MK) EGM narrowly approved the ordinary resolution relating to the proposed acquisition of Link Net (LINK IJ) shares and the proposed MTO.
The next catalyst is the First Media (KBLV IJ)’s EGM to approve the transaction on 6 June. The proposed MTO at IDR4,800 per share is targeted to complete by 3Q.
BNM regulatory approval was received on 12 April. At the last close, the gross and annualised spread of the MTO price for a 3Q completion is 4.6% and 13.1%, respectively.

Before it’s here, it’s on Smartkarma

May 27

TMT: Renesas Electronics, Tencent, Appen Ltd, Mediatek Inc, Yanolja, Netflix Inc, Apple Inc, Snowflake Inc, Lenovo and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough
Hang Seng Index Constituents
Appen (APX AU): Telus’ Indicative Offer
Telus Revokes It’s A$9.50 Bid for Appen
MediaTek (2454.TT): The Smartphone Demand Could Further Decrease in 2022.
Launch Of Unlisted Korean Companies ETFs in 2023 & How Our Smartkarma Research Would Change
Tidefall Capital Management Q1 2022 Letter
Wedgewood Partners Large Cap Focused Growth Fund Q1 2022 Client Letter
Snowflake 1Q22 Earnings: 2029 Looks Good
Morning Views Asia: Adani Ports & Special Economic Zone, Bharti Airtel, Lenovo, Vedanta Resources

Nikkei 225 Methodology Change. Again. This Time Better But Still Not Good Enough

By Travis Lundy

The Nikkei Index Team has suggested a methodology change to the Nikkei 225 Average.
It involves capping stocks, creating a method for re-weighting once capped then stocks fall, and they recommend changing to a semi-annual Periodic Review – twice a year rather than once.
More interestingly, they also change the “High Liquidity” definition to be related to traded value not volume, which starts to favour higher-market cap stocks with more shares out.

Hang Seng Index Constituents

By Untying The Gordian Knot

The Hang Seng index constituents have moved away from just local Hong Kong shares to being dominated by China H and China-centric shares
Focusing on these constituents adds much value, especially with shifting liquidity away from US-listed ADS to HKEX listed shares.
It brings together a more diverse investor base ranging from local Hong Kong, mainland China and the rest of the world.

Appen (APX AU): Telus’ Indicative Offer

AI data service provider Appen (APX AU) has announced an unsolicited, conditional, and non-binding indicative proposal from Canada’s Telus International, by way of a Scheme of Arrangement, at A$9.50/share.
That’s around a 48% premium. Appen’s board is seeking an improvement in terms through offering a limited course of due diligence.
The Offer backs out an equity value of A$1.2bn, significantly down from Appen’s 2020 pandemic peak of A$5.4bn.

Telus Revokes It’s A$9.50 Bid for Appen

In response to media reports, Appen Ltd (APX AU) disclosed a non-binding indicative proposal from Telus International (TIXT US) at A$9.50, a 48.4% premium to the undisturbed price of A$6.40.
Appen also announced a weak trading update. The 1HFY22 EBITDA is expected to be materially lower than the comparable period due to the lower revenue and the ongoing investment.
Subsequently, Appen noted that Telus revoked its indicative proposal. No reason was given for the decision. Nevertheless, Appen’s depressed share price will continue to attract suitors.

MediaTek (2454.TT): The Smartphone Demand Could Further Decrease in 2022.

By Patrick Liao

MediaTek’s revised downward forecast for 650-680nm smartphone delivery in 1Q22 earnings conference, but we think that number could be revised down again by the end of July.
MediaTek announced new WiFi products, Filogic 880 and 380, in COMPUTEX2022 on May 24-27. Besides, MediaTek invests in new opportunities for AI in the US.
The mainland China fights fiercely against COVID-19 and stays at the Zero Policy.

Launch Of Unlisted Korean Companies ETFs in 2023 & How Our Smartkarma Research Would Change

By Douglas Kim

There is a strong possibility of the launch of corporate growth fund private companies ETFs in Korea in 2023.
Once government gives final approval to launch the unlisted Korean companies ETFs in 2023, there is likely to be much greater interest in investing and researching in private Korean companies.
Starting next year, there is a strong probability that we will spend a lot more time on researching and writing about these promising, private companies in Korea.

Tidefall Capital Management Q1 2022 Letter

Tidefall is a concentrated, unconstrained investment fund that attempts to compound its capital at an attractive rate of return. Our investment advantage comes from our in-depth research, long-term time horizon and appreciation of biases.
With Netflix stock down by more than 50% since its high in November (and 10% below Reed Hastings’ $20m purchase in January) we re-entered the position in April.
We believe the current price of Netflix shares creates a compelling long term investment opportunity.

Wedgewood Partners Large Cap Focused Growth Fund Q1 2022 Client Letter

Wedgewood Partners is a money manager founded in 1988 with the goal of providing investors with a superior approach to managing investment portfolios.
For the first quarter 2022, our Composite (net)i declined -10.6%.
We expect to be busy this year as all financial markets come to grips with the Federal Reserve’s unprecedented task of reigning in 40-year highs in inflation with two monetary tightening tools.

Snowflake 1Q22 Earnings: 2029 Looks Good

By Aaron Gabin

Ignore the slight macro weakness from consumer facing internet companies in April. It is irrelevant for the LT model.
Snowflake upped its LT (FY2029) targets: $10B in revenues, growing 30%, 78% product margins, 20% operating margins, and 25% adjusted FCF margins.
At 12x forward revenues, Snowflake’s valuation is…dare we say… cheap?

Morning Views Asia: Adani Ports & Special Economic Zone, Bharti Airtel, Lenovo, Vedanta Resources

By Charles Macgregor

Adani Ports & Special Economic Zone
Bharti Airtel
Lenovo
Vedanta Resources

Before it’s here, it’s on Smartkarma

May 27

Consumer: Sony Corp, Alibaba Group, LG Energy Solution, ITC Ltd, Netflix Inc, Hindustan Unilever, S Hotels & Resorts PCL, Minda Industries Ltd and more

By Smartkarma Daily Briefs | Consumer, Daily Briefs

In today’s briefing:

Sony (6758 JP) | Master of the Metaverse
Alibaba (9988 HK): Well Controlled Expense in 4Q22 and Forthcoming Turning Point in June, Buy
Sony – IR Day One and Kadokawa
LG Energy Solution: Short-Term Flow Crunch & Block Deal Possibility
ITC Ltd (ITC IN) | A Good Place to Hide
Tidefall Capital Management Q1 2022 Letter
Hindustan Unilever (HUVR IN) | The Right Priorities, but Ain’t Enough
SHR: Operations to Regain Momentum in 2H22
Minda Industries – EBITDA Tops Estimates; Outlook Remains Intact
Minda Industries: Robust Performance

Sony (6758 JP) | Master of the Metaverse

By Mark Chadwick

Sony’s hosted its 2022 Corporate Strategy Meeting last week. Our key takeaway is that SONY is shifting towards greater investment in Content, Creators, and Communities.
Sony recognizes that technology is changing the way that content is produced and consumed and is responding with new experiences and monetization models.
Sony will continue to benefit from the evolution of the internet as it becomes more social, immersive and financialized (otherwise known as the metaverse).

Alibaba (9988 HK): Well Controlled Expense in 4Q22 and Forthcoming Turning Point in June, Buy

By Ming Lu

Operating margin improved in 4Q22 due to well controlled expenses in minor businesses.
We believe the state council meeting will provide a turning point in June.
We set an upside of 31% and a price target at HK$106.

Sony – IR Day One and Kadokawa

Sony held the first of their two investor days yesterday presenting on the Game & Network Services, Music and Pictures segments.
While there was nothing especially new for those paying attention to the broad flow of news conditions for the content businesses remain strong.
What was interesting to us was the degree of collaboration with Kadokawa.

LG Energy Solution: Short-Term Flow Crunch & Block Deal Possibility

LG Energy Solution’s real-world free-float rate should be around 5%, or 12.3M shares. We will see two additional passive inflows with the real-world float this tight.
KOSPI 200 up-weight and FTSE June QIR New Entry’s combined inflow will be 0.6% of SO, enough for us to expect a short-term flow crunch.
Then, there will likely be a share let-go event (block deals) by LG Chem to lessen the tight float situation, just like what KSOE had done for HHI.

ITC Ltd (ITC IN) | A Good Place to Hide

By Pranav Bhavsar

ITC Ltd (ITC IN) ‘s core cigarette portfolio is relatively inelastic to the current commodity inflation. With the reopening of offices and social events, volumes are likely to trend higher.
A renewed focus on FMCG is likely to aid volumes for the non-cigarette segment.
Valuations are in favor and we see limited scope for de-rating if not re-rating.

Tidefall Capital Management Q1 2022 Letter

Tidefall is a concentrated, unconstrained investment fund that attempts to compound its capital at an attractive rate of return. Our investment advantage comes from our in-depth research, long-term time horizon and appreciation of biases.
With Netflix stock down by more than 50% since its high in November (and 10% below Reed Hastings’ $20m purchase in January) we re-entered the position in April.
We believe the current price of Netflix shares creates a compelling long term investment opportunity.

Hindustan Unilever (HUVR IN) | The Right Priorities, but Ain’t Enough

By Pranav Bhavsar

Hindustan Unilever (HUVR IN) is focusing on protecting its business model and market share, which is the key in such an operating environment.
Presence across multiple price points and playing a targeted game in target geographies will aid in maintaining steady-state growth.
Current valuations, lack of trigger for driving exponential volume growth and expected slowing pace of premiumisation warrant caution.

SHR: Operations to Regain Momentum in 2H22

By Pi Research

Analyst meeting came out with a positive tone regarding 2022 outlook.We maintain BUY rating while roll out the new 2023 TP of Bt4.8 (+7% from previous TP),pegged to 1x PBV’23E.
We expect its 2022 EBITDA to grow 4 times, in-line with management target with 61% growth in revenue backed by global tourism recovery.
UK portfolio will grow steady from a dull 1Q22 performance owing to low season and will ramp up to pre-Covid levels by the end of2022 while Maldives portfolio will enter

Minda Industries – EBITDA Tops Estimates; Outlook Remains Intact

By Emkay

EBITDA tops estimates: Revenue grew by 8% yoy to Rs24.2bn (est.: Rs23.7bn), slightly above estimates.

Order wins continued in Q4FY22: 1) Received orders for new generation switches for sunroof, cruise control, paddle and vehicle stability from PV OEM and export orders from an Italian 2W OEM;

Retain Buy with a TP of Rs1,135. MNDA is focusing on strengthening its own R&D capabilities and exploring tie-ups and acquisitions with a focus on PACE opportunities (Personalization, Autonomous, Connected and Electrification).

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Minda Industries: Robust Performance

By Axis Direct

Minda Industries Ltd. (MIL) reported a strong set of results (slightly ahead of our estimates) despite a tough operating environment.
MIL posted a robust revenue growth led by an increase in content per vehicle, addition of new customers and products, and growth across segments as well as due to the ramp-up of new order wins
We maintain our BUY rating with a revised target price of Rs 1,100/share (Rs 1,250 earlier), valuing the stock at 32x FY24E EPS, indicating an upside of 32% from the CMP.

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