In today’s briefing:
- Cayman Islands: Headcount To Be Decapitated On 31 August
- Hong Kong CEO & Director Dealings – 1st August 2022
- Tencent/Netease: Increasing Pressure with Zero Approval in August Batch & Thoughts on Trading
- A Pair Trade Between Krafton & NCsoft (India’s Crackdown on Krafton’s BGMI)
- KT Corp: Close to Selling Its Subsidiary KT Submarine to LS Cable & System
- Minority Shareholders Go Activist on DB Hitek
- Amazon 2Q22: Delivering an Inflection Point
- Groww Tearsheet – Simplifying Investments and Savings
- Texas Instruments: New Semiconductor Plants & Other Developments
- Kingsoft Cloud: Thoughts on HK Dual Primary Listing
Cayman Islands: Headcount To Be Decapitated On 31 August
- The Companies (Amendment) Act 2021 of the Cayman Islands (Amendment Act), which will come into force on 31 August 2022, will abolish the current ‘headcount test’.
- Those companies incorporated in the Cayman Islands, and subject to a members’ Scheme of Arrangement, were previously required to satisfy the headcount test under section 86 of the Companies Act.
- This development clarifies previous uncertainty/ambiguity which could arise, with ‘take private’ deals of Cayman-incorporated, Hong Kong-listed companies, where a Scheme is the favoured privatisation path.
Hong Kong CEO & Director Dealings – 1st August 2022
- The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
- Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. However, such disclosures are by no means an absolute.
- These insights also flag those companies where shares have been pledged, both recently and ongoing.
Tencent/Netease: Increasing Pressure with Zero Approval in August Batch & Thoughts on Trading
- China just announced game approval for August batch. More games were approved in August compared to July and June.
- Pace of China game approval continued to pick up albeit at a much slower pace than pre-tightening.
- Both Tencent and Netease will be under increasing pressure as the duo continue to score zero in August, making it the fourth time with no games approved since resumption .
A Pair Trade Between Krafton & NCsoft (India’s Crackdown on Krafton’s BGMI)
- In the past several days, there have been numerous news accounts about the Indian government cracking down on Krafton’s Battlegrounds Mobile India (BGMI) game.
- We believe there are several reasons why Indian government is cracking down on BGMI including concerns about this game potentially leading to greater violence among children and ties to Tencent.
- At current valuation levels, we like a pair trade between Krafton (go short) and NCSOFT Corp (036570 KS) (go long).
KT Corp: Close to Selling Its Subsidiary KT Submarine to LS Cable & System
- Hankyung Business Daily reported today that KT Corp (030200 KS) is close to selling its 36.9% controlling stake in Kt Submarine (060370 KS) to LS Cable & System.
- Once the KT Submarine deal is completed, this could positively impact KT Corp’s dividends.
- KT Corp’s selling of its controlling stake in KT Submarine would fit along its restructuring plans to sell off some businesses that are considered non-core.
Minority Shareholders Go Activist on DB Hitek
- The minority shareholders of DB Hitek have started to go activist on the company. They are initially requesting the company to get access to its shareholder list.
- Many minority shareholders are suspicious that DB Inc may be trying to intentionally lower the share price of DB Hitek through a physical division split off.
- DB Hitek’s share price has declined nearly 48% since its 52 week highs in January 2022. The valuation multiples of the company have declined to more attractive levels.
Amazon 2Q22: Delivering an Inflection Point
- Profitability ready to kick in again as Amazon grows into the overbuilt warehouse capacity and headcount from the past few quarters. 3Q22’s guidance clearly conservative based on 2Q22’s outperformance.
- Revenue reacceleration beginning to play out. 2Q22’s 7% leading to 3Q22’s 15%, and back to the 20%s by 2023.
- AWS continues its indomitable run. $79B TTM revenues are growing 37% with 31% margins.
Groww Tearsheet – Simplifying Investments and Savings
- Groww (1573648D IN) is a wealth management and investment platform designed to simplify investing especially for first-time investors.
- Channel feedback indicates Groww’s simple UI, and lower cost/fees as the primary reasons for them investing via the platform.
- Revenues have seen a COVID-led sharp jump, and growth with low marketing expenses and operational profitability offer a compelling narrative.
Texas Instruments: New Semiconductor Plants & Other Developments
- Texas Instruments delivered its third consecutive all-around beat in the recent result with a reported revenue of $5.21 billion this quarter.
- Among major developments, Texas Instruments has recently broken the ground on the new semiconductor plants of 300-mm for water fabrication in Sherman, Texas.
- Texas Instruments has a strong balance sheet and the management continues investing in building capacity.
Kingsoft Cloud: Thoughts on HK Dual Primary Listing
- Kingsoft Cloud (KC US) is the largest independent cloud service provider in China in terms of revenue in 2021 and its clientele includes the likes of ByteDance and Xiaomi.
- KC is listed in NASDAQ and has filed for a dual primary listing on HKEx and has not disclosed the amount that it plans to raise from the stock issuance.
- We are broadly positive on the company’s growth prospects and discuss the details below.
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