TMT/Internet

Prosus (PRX NA) shares have nose-dived in light of its exposure to Russia via its classified ads business Avito, and social media operator, VK Group. This move appears overdone.
Preceding my comments on Prosus, are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Grab 4Q2021: Heavy Spending on Customer and Driver Incentives Hurts Earnings

Grab (GRAB US) reported 4Q2021 results yesterday (before market). IFRS revenue decreased 44.29% YoY to $122m (vs consensus $219m) compared to $219m in the same quarter a year ago.
Adjusted EBITDA (loss) for the quarter was -$305m (vs consensus -$206m) compared to -$102m a year ago as the company heavily spent on incentives to attract and retain drivers.
Grab’s shares have lost almost 40.0% during intra-day trading as its growth story did not bode well with the investors.

Snowflake 4Q22 Earnings: What a Buying Opportunity

By Aaron Gabin

Snowflake dropped another monster quarterly result, with product revenues growing 102%, with rising margins and FCF generation.
The 30% after hours drop was insane due to a misunderstanding of revenue guidance.
An incredible entry point for those who wanted to buy Snowflake but were waiting for it to return to the low $200s

Renesas – Synergies Outperform and Some Potentially Bad News for Arm

By Mio Kato

Renesas’ investor day today focused on providing more details on existing themes such as the progress of synergies from Dialog.
The strong overall growth outlook and progress offering integrated solutions was also emphasised.
However, what we found most interesting was some of their commentary on RISC-V developments.

MediaTek (2454.TT): We Expect High-End 5G Smartphone Chipset Will Aim at 10-14% Shipment in 2022.

We expect MediaTek Dimensity 8000/8100 and 9000 are targeting shipment of ~30-40mn and 5-10mn sets respectively, which means high-end 5G smartphone chipset will aim at 10-14% 5G shipment in 2022.
We consider the inventory argument raised for China smartphone could be a kind of fake issue.
In 5G era, the PMIC is about 2~3 times of 4G in size with the mature nodes.

Bilibili (BILI): 4Q21, Slow Than Expected, But Many Positive Signals

The paying user base continued growing in 4Q21 and has space to grow further.
Game revenue recovered for the second quarter, as the games launched last year began to earn money.
BILI’s advertising revenue grew significantly faster than the market size of Chinese online advertising.

Before it’s here, it’s on Smartkarma

Mar 03

TMT: Sea Ltd, 51 Job Inc Adr, Gigabyte Technology, Samsung Electronics, King Yuan Electronics Co, Ltd., Hana Microelectronics, Mindtree Ltd, Arlo Technologies Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Sea Ltd: Something to Think About if You Are Starting to Lean Towards the Bullish Side
51job’s Improved $61 Offer Gets the Board Onside
The Current Huge Gap of VGA Card Demand over Supply May Reverse in 2H22/2023
Will Samsung Follow Apple and Be Forced to Stop Selling Smartphones in Russia Due to FDPR Rule?
KYEC (2449.TT): A Slow 1Q22 Is Likely to Occur, Which Could Present an Entry Point.
HANA: 2022 Net Profit to Grow Despite Additional Costs
Mindtree: Robust Multi-Pronged Strategy To Capitalize On Healthy Demand
ARLO: Accelerating Growth Story, PT to $15

Sea Ltd: Something to Think About if You Are Starting to Lean Towards the Bullish Side

By Oshadhi Kumarasiri

Sea Ltd (SE US)’s outperformance ended abruptly yesterday following the 4Q21 earnings release with the share price giving away 2/3rd of the gains made during the last five days.
The company’s share price rallied around 30% in the last week of February, alongside rallying markets following a steep correction leading up to the Ukraine crisis.
With the fundamentals continuing to deteriorate and interest rates expected to continue trending upwards, we expect Sea to continue its downtrend until its valuation multiples reach the pre-pandemic low level.

51job’s Improved $61 Offer Gets the Board Onside

By Arun George

The consortium has improved the offer price by 6.6% to $61.00 in cash per ADS. The consortium represents 54.9% of the voting rights.
The Board intends to recommend shareholders vote in favour of the transaction. The transaction is expected to close during the first half of 2022.
The combination of the improved offer price and the tech shares sell-off improves the chance of meeting the two-thirds shareholder approval threshold. At last close, the gross spread is 7.0%.

The Current Huge Gap of VGA Card Demand over Supply May Reverse in 2H22/2023

By Henry King

1H22 is likely the peak for VGA card. Our checks with VGA card makers indicate VGA card price fell in January/February and likely to continue for the rest of 2022.
Potential supply surge, demand decline, and price drop will all lead VGA market to trend south in 2H22.
VGA makers will be negatively impacted in 2H22. Gigabyte may be hit the most whereas Asustek may hit the least. Nvidia should also be hit at a certain degree.

Will Samsung Follow Apple and Be Forced to Stop Selling Smartphones in Russia Due to FDPR Rule?

On 2 March, it was reported in numerous media that Apple Inc will stop all product sales in Russia. This is a measure in response to Russia’s invasion of Ukraine.
The US-led Foreign Direct Product Rule (FDPR) regulation may force a more stringent sanction that could force Samsung to stop selling smartphones in Russia.
Despite these concerns about FDPR, the decision as to whether to totally block Samsung’s smartphone sales to Russia has not been finalized.

KYEC (2449.TT): A Slow 1Q22 Is Likely to Occur, Which Could Present an Entry Point.

By Pi Securities PCL, Thailand

It is usually the low season in the 1st quarter, and we expect the revenue/GM is about NT$8.55bn/25.5% in 1Q22 respectively.
KYEC’s main clients are MediaTek, NVDA, XLNX and etc., and some demands in Automotive also rising up quickly.
In real terms, the shareholder might receive the same dividend amount of about NT$2.5+ for 2021. We think it likely targets a 5% dividend yield.

HANA: 2022 Net Profit to Grow Despite Additional Costs

Analyst meeting came out with negative tone. The company’s Korean SiC segment will continue to incur costs throughout 2022.However, the 45% tumble in share price since Nov’21 factored in negative
We expect 22E core profit will remain flat YoY at Bt2.3bn. Additional costs and microchip shortages will offset the growth from capacity expansion.
Bleak outlook until 3Q22. Additional costs will drag core earnings until 3Q22. Current share prices are cheap and provide opportunity for share accumulation.

Mindtree: Robust Multi-Pronged Strategy To Capitalize On Healthy Demand

By Axis Direct

Mindtree has a focused strategy to capitalize on the demand scenario. The company intends to focus on five verticals
The management also has a strong focus on developing expertise in four service lines including Customer Success, Data Intelligence, Cloud, and Enterprises IT
We recommend a BUY on the stock and assign 38x P/E multiple to its FY24E earnings of Rs 140.2/share to arrive at a TP of Rs 5,310/share, implying an upside potential of 39% from the CMP

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ARLO: Accelerating Growth Story, PT to $15

By Hamed Khorsand

ARLO has proven its service business model can be profitable and is now planning to invest more in growth initiatives to drive market share gains to add paid subscribers faster
The faster than expected pace has given ARLO the means to strategically invest in its business to accelerate its service revenue.
Looking ahead to the end of 2022, ARLO could be on the cusp of nearly 2 million paid subscribers before realizing the benefits of the increased marketing

Before it’s here, it’s on Smartkarma

Mar 02

TMT: Nexon, Carousell, Bitcoin, Trend Micro Inc, Horizon Robotics, Money Forward, Mindtree Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Nexon – Founder Kim Jung-Ju Passes, Raises Question if Nexon Deal Is Back In Play
Carousell Tearsheet – Singapore’s Resale Unicorn
Quick Post: Russia’s Capital Outflow into Crypto
Japan Cybersecurity: Frequent and Sophisticated Cyber-Attacks Drive Demand
The Passing of Nexon Founder KJJ & Controlling Stake Sale Event 2.0
Horizon Robotics – Riding on Partnerships and a Strong List of Backers
Money Forward (3994): Announced Upward Revision of 1Q Guidance
Investor meet reinforces strong demand visibility

Nexon – Founder Kim Jung-Ju Passes, Raises Question if Nexon Deal Is Back In Play

By Travis Lundy

The founder and former chairman and CEO of Nexon (3659 JP) passed away according to both Nexon and his holding company NXC. Both announced it late afternoon 1 March.
NXC – the near-parent (47+% stake) of Nexon tried to sell Nexon/NXC in H1 2019 to no avail. Since then, profits have rebounded somewhat, and investments have multiplied.
The estate may wish to sell Nexon shares, or its entire stake, at some point near-term.

Carousell Tearsheet – Singapore’s Resale Unicorn

By Clarence Chu

Carousell is a Singapore based platform serving the C2C and B2C marketplace for purchase and resale of second hand goods.
In its latest funding round in Sept 2021, the company raised US$100m at a valuation of US$1.1bn. As per Crunchbase, Carousell has raised just over US$280m since inception.
Carousell is expected to list in the US via a SPAC Merger with L Catterton Asia Acquisition.

Quick Post: Russia’s Capital Outflow into Crypto

By Josh Du

The Ruble has collapsed due to sanctions placed on Russia for the invasion of Ukraine
Onchain metrics signals sizable assets moving from Russia into crypto to potentially avoid sanctions or to salvage Ruble denominated assets
BTC/RUBLE is now up significantly since the war has started

Japan Cybersecurity: Frequent and Sophisticated Cyber-Attacks Drive Demand

The demand for cybersecurity products and services has been expanding in Japan amidst an increase in frequent and sophisticated cyber-attacks in the country.
Due to shortage of in-house IT professionals with knowledge on cyber security, there has been growing demand for outsourced managed security services in Japan.
We have identified Trend Micro Inc (4704 JP) as our top pick in the Japanese cyber security market as there is further potential for top line and margins to expand.

The Passing of Nexon Founder KJJ & Controlling Stake Sale Event 2.0

By Sanghyun Park

We should pay the most attention to what choices and decisions the bereaved family will make concerning the stakes and management rights of the deceased in NXC.
This opens the possibility that the KJJ’s stake sale event in 2019 will happen again in the foreseeable future.
Under these circumstances, there is a possibility that short-term momentum trading aimed at tender offers to minority shareholders following the sale of Nexon’s major shareholder stake will surge.

Horizon Robotics – Riding on Partnerships and a Strong List of Backers

By Clarence Chu

Horizon Robotics is an artificial intelligence chips developer for automobiles, specifically smart vehicles, and robots.
Its latest Series C funding round in late 2020-early 2021, raised a combined total of US$900m, led by Great Wall Motors, Hillhouse, Baillie Gifford, CATL, CPE, Yunfeng Capital and others.
There were news reports doing the rounds that the firm had aimed to look at a potential US listing, in a deal that could raise up to US$1bn.

Money Forward (3994): Announced Upward Revision of 1Q Guidance

By Mita Securities

Upward revision of sales and profit guidance. A mix of good and bad news
The company raised its sales guidance by 350m yen and raised its EBITDA and OP guidance by 800m yen.
The upward revision of sales guidance is due to 1) higher recurring and non-recurring revenue in the Business domain and 2) higher non-recurring revenue in the Finance domain

Investor meet reinforces strong demand visibility

By Motilal Oswal

We attended MTCL’s annual investor meet, where the management reiterated its strong demand outlook and detailed the six strategic levers for FY23. It sees scope for continued performance in their 4x4x4 strategy and investments required to boost long-term.
.

Before it’s here, it’s on Smartkarma

Mar 01

TMT: Money Forward, ByteDance, Activision Blizzard, Sezzle Inc, Tencent, Grab, Pine Labs, Phison Electronics, Arqit Quantum, Infosys Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)
Bytedance Tearsheet – Doesn’t Need Much of an Introduction
MergerTalk: Microsoft/Activision Blizzard-Why We Think This Transaction May Not Be Such A Gamble
Zip To Merge With BNPL Rival Sezzle
Tencent (700 HK): Besieged Game Business
Grab Earnings Preview: Recovery Ahead
Pine Labs Tearsheet – Driving a PoS Payment Revolution
Phison (8299.TT): Insistence in NAND Flash Technology
The Battle Between Quantum Supremacy and Encryption
Pick of the Week – Infosys Ltd.

TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)

By Janaghan Jeyakumar, CFA

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting opportunities for a basket trade.

Bytedance Tearsheet – Doesn’t Need Much of an Introduction

Bytedance doesn’t need a whole lot of introduction as it runs one of the most popular global apps, TikTok, and one of the largest domestic apps in China, Douyin.
The company undertook a funding round in Dec 2020, which valued the company at around US$180bn. Its valuation has touched US$425 bn in June 2021 in private market transactions.
Rumours about listing have been doing the rounds since as far back as 2019. Although there are no confirmed listing plans.

MergerTalk: Microsoft/Activision Blizzard-Why We Think This Transaction May Not Be Such A Gamble

By Robert Sassoon

Microsoft’s all cash acquisition of video game publisher Activision Blizzard is the biggest in the former’s history and the largest ever transaction in the video gaming sector.
While intense regulatory scrutiny of the deal is expected, the arguments favoring high odds for eventual deal approval are reasonable.
We believe the 17% merger spread offers the prospect of double-digits annualized return over the next 12 to 18 months.

Zip To Merge With BNPL Rival Sezzle

Zip (Z1P AU) is offering 0.98 Zip shares for every Sezzle (SZL AU) share, a 22% premium to last close. Zip is raising $148.7mn to fund the deal.
Sezzle is incorporated in Delaware, therefore the merger is subject to those takeover rules, not ASX rules.
Zip reported a $214.3mn today. As Quinlan Associates put it, the Asia Pacific BNPL industry is more like “Buy Now, Pray Later”.

Tencent (700 HK): Besieged Game Business

Short video has been taking time on site from game players.
Main games are shrinking, but the authorities have not been granting license to new games.
The authorities also banned Chinese players from playing with overseas game players.

Grab Earnings Preview: Recovery Ahead

Grab (GRAB US) is currently trading at US$5.80 per share, more than 50.0% below its IPO price of US$13.06 per share.
The company’s mobility business was severely impacted due to the pandemic and has not yet recovered to pre-pandemic levels. Grab is reporting 4Q2021E results on Thursday (03rd March).
As most of the countries in the SEA region opens up economies with Omicron-related fears fading, we expect gradual recovery in mobility business which should help re-rate Grab’s shares upwards.

Pine Labs Tearsheet – Driving a PoS Payment Revolution

Pine Labs is a leading merchant commerce platform. It provides a merchant platform and software for point of sales machines.
Its Feb 22 round was said to have been done at a rumored valuation of over US$5bn.
In Jan 2022, the company filed confidentially for an initial public offering worth $500m with the US Securities and Exchange Commission.

Phison (8299.TT): Insistence in NAND Flash Technology

We estimate Phison could reach NT$14.1bn sales and GM 25% outlook in 1Q22.
For 2022, it stars with a good beginning for 5~10% NAND price lifted, and Phison’s insistence on NAND Flash controller technology and allied with AMD.
Phison would maintain its solid dividend policy and it’s 80% in the past. It was ~NT$63 EPS in 2021.

The Battle Between Quantum Supremacy and Encryption

By subSPAC

The recent invasion of Ukraine by Russia was preceded by a wave of cyberattacks that took down the country’s Websites, Wiped Data, and Blocked Access to Key Communication Tools.
Cryptography and Encryption standards that are currently used industry-wide can be easily brute-forced by quantum computers
Arqit aims to combat the rise in quantum computing by offering a quantum encryption platform as a service.

Pick of the Week – Infosys Ltd.

By Edelweiss

Infosys is India’s second-largest provider of consulting and IT services to clients across the globe
It is also among the fastest-growing IT services organization in the world and leader in the offshore services space having pioneered the Global Delivery Model
The company provides business consulting, application development and maintenance, and engineering services to 1,738 active clients

Before it’s here, it’s on Smartkarma

Feb 28

TMT: Douzone Bizon and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

KRX K-New Deal Rebalancing: Latest Weight/Flow Update & LG Chem’s Complete Deletion

KRX K-New Deal Rebalancing: Latest Weight/Flow Update & LG Chem’s Complete Deletion

By Sanghyun Park

The biggest story should be LG Chem’s complete deletion from the entire indexes. It’s been said locally that KRX finally decided to remove LG Chem from the battery index.
AfreecaTV and Douzone Bizon will have the largest passive impacts, +1.72x and -3.89x ADTVs. The Chunbo and SoulBrain combo also seems in a sweet spot for a quick long/short setup.
LG Energy’s inflow should be at least 0.33x ADTV. Yes, LG Chem’s outflow deserves special attention. The combined impact is 0.6x ADTV, enough to make a splash on the price.

Before it’s here, it’s on Smartkarma

Feb 27

TMT: SenseTime Group, Samsung Electronics, LINE Corp, KnowBe4, Razer Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Index Rebalance & ETF Flow Recap: FTSE AW/AC, FTSE CH50/A50/TW50, KS200, NIFTY, STAR50, Russia
The Conundrum for Samsung – What to Do Foundry?
LINE Gift up 330% in 2021
KnowBe4: Hidden Gem Growth Stock In the Cybersecurity Space
Asia-Pac Weekly Risk Arb Summary: CIMIC, AGL, Razer, Z Energy, G J Steel, Mapletree North Asia

Index Rebalance & ETF Flow Recap: FTSE AW/AC, FTSE CH50/A50/TW50, KS200, NIFTY, STAR50, Russia

By Brian Freitas

Changes to the FTSE All-World/All-Cap were announced over the previous weekend, NIFTY was announced Thursday and STAR50 on Friday. LG Energy’s inclusion to the KOSPI200 was also announced.
21 February was the review cutoff for the March rebalance of the FTSE China 50, FTSE China A50, STI, FTSE TWSE Taiwan 50 and the FTSE EPRA Nareit.
On Friday, FTSE announced that two of the previously announced inclusions would not be added, while there would be 10 new additions to the All-World/All-Cap indices.

The Conundrum for Samsung – What to Do Foundry?

By Ken S. Kim

Samsung Electronics (005930 KS) goal to be the #1 semi player in the world in danger
An internal business audit being performed which is an indication of what to do with strategy
TSMC (2330 TT) has always been the benchmark; does the focus change ?

LINE Gift up 330% in 2021

By Michael Causton

LINE Gift is fast becoming the most popular way to send gifts of all kinds, even traditional gifts sent at mid-year and New Year.
This is good news for Z Holdings (4689 JP) and Softbank, as well as LINE, as the gifting platform acts as a unifying point for their disparate e-commerce platforms.
Although the corporate gift market is in decline, personal gift giving remains a growth market, offering further upside.

KnowBe4: Hidden Gem Growth Stock In the Cybersecurity Space

By Andrei Zakharov

KnowBe4 (KNBE US) is the world’s largest security awareness training platform, teaching people how to recognize bad phishing, bad social engineering scenarios and report to management.
The most notable ransomware attacks began with social engineering, and social engineering has remained a top threat for the last five years, according to a report released by Verizon.
We like the company’s cash generating SaaS model, strong balance sheet, and multi-product approach targeting SMBs and the enterprise market worldwide.

Asia-Pac Weekly Risk Arb Summary: CIMIC, AGL, Razer, Z Energy, G J Steel, Mapletree North Asia

There are currently 42 – mostly firm – transactions currently being discussed and analysed on Smartkarma.
Two new deals this week: Hochtief AG (HOT GR) for CIMIC Group Ltd (CIM AU); Brookfield Asset Management (BAM US) for AGL Energy Ltd (AGL AU).
Key updates took place for: Razer (1337 HK), Apollo Tourism (ATL AU), Aventus (AVN AU), Z Energy (ZEL NZ), G J Steel (GJS TB), and Mapletree North Asia Commercial (MAGIC SP).

Before it’s here, it’s on Smartkarma

Feb 26

TMT: AEM, Canva, Softbank Group, Avast PLC, GoTo, Samsung SDI, Mindtree Ltd, Xperi and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

AEM Holdings: 2H21 Revenue Acceleration to Continue into FY22. Fair Value Maintained at 8 SGD
Canva Tearsheet – The US$40bn Startup that You Have Probably Not Heard Of
Softbank Group – Alibaba Remains the Key Share Price Driver as VF Diversification Stalls
NortonLifeLock/Avast: Deal Progress & Spreads
GoTo Tearsheet – Accounts for 2% of Indonesia’s Economy
FnGuide Samsung Group Index Rebalancing Preview
Mindtree: Robust Multi-Pronged Strategy To Capitalize On Healthy Demand
Investor meet reinforces strong demand visibility
XPER: Growth Year on Track

AEM Holdings: 2H21 Revenue Acceleration to Continue into FY22. Fair Value Maintained at 8 SGD

By Nicolas Van Broekhoven

AEM (AEM SP) released record 2H21 results which indicate Intel Corp (INTC US) ramp continues as expected. Management expects more of the same in FY22.
Intel Corp (INTC US) has a variety of issues but it will spend massive amounts of cash to keep up with rivals. AEM (AEM SP) remains a major beneficiary.
Fair value unchanged at 8 SGD, or 78% upside from current 4.5 SGD share price.

Canva Tearsheet – The US$40bn Startup that You Have Probably Not Heard Of

Canva is an Australia based online design and publishing tool with a mission to empower everyone in the world to design anything and publish anywhere.
In Sep 2021, Canva raised US$200m and announced a valuation of US$40bn. The round was led by T. Rowe Price.
It hasn’t announced any plans for listing, but its soaring valuation and involvement of late stage funds means that listing is likely to be in the next year or two

Softbank Group – Alibaba Remains the Key Share Price Driver as VF Diversification Stalls

By Kirk Boodry

Softbank Group (9984 JP) shares have fallen 46% since 31 March v a 52% decline for Alibaba Group (9988 HK) with little daylight between the two since August
That reflects fading influence from Vision Fund which is shed $12bn in value Q4 to date and c. $30bn this fiscal year.
The discount remains in the 50% range as tailwinds from the share buyback depend on a successful IPO of ARM, where the magnitude and timing remain uncertain

NortonLifeLock/Avast: Deal Progress & Spreads

By Jesus Rodriguez Aguilar

On 24 February, the Spanish antitrust regulator, the National Markets and Competition Commission (CNMC) approved the proposed merger.
All Regulatory Conditions have now been satisfied, other than approval by the UK’s CMA. The deal advances to completion but the Effective Date has been pushed to 4 April 2022.
As of now, the majority cash option ($7.61 + 0.0302 NortonLifeLock shares/Avast share) should be preferred vs. the majority stock option. The spread on the majority cash option is 1.4%.

GoTo Tearsheet – Accounts for 2% of Indonesia’s Economy

GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
GoTo raised more than US$1.3bn in its pre-IPO funding which was reported in November 2021, see here. Valuation was said to be between US$28.5-30.0bn.
The company had already announced that it would look to undertake a dual listing in Indonesia and the US.

FnGuide Samsung Group Index Rebalancing Preview

By Sanghyun Park

FnGuide Samsung Group has the most AUM among locally themed indexes. As of last Friday’s closing price, AUM is ₩1.52T.
The share price movements of Samsung Group affiliates basically show high cointegration. Therefore, a small differential impact on the flow significantly affects the short-term price direction of these stocks.
So, we should consider a long/short setup on a swing trading window. Particularly, we need to focus on the first two trading days, when the rebalancing impact is relatively significant.

Mindtree: Robust Multi-Pronged Strategy To Capitalize On Healthy Demand

By Axis Direct

Mindtree has a focused strategy to capitalize on the demand scenario. The company intends to focus on five verticals
The management also has a strong focus on developing expertise in four service lines including Customer Success, Data Intelligence, Cloud, and Enterprises IT
We recommend a BUY on the stock and assign 38x P/E multiple to its FY24E earnings of Rs 140.2/share to arrive at a TP of Rs 5,310/share, implying an upside potential of 39% from the CMP.

Investor meet reinforces strong demand visibility

By Motilal Oswal

We attended MTCL’s annual investor meet, where the management reiterated its strong demand outlook and detailed the six strategic levers for FY23. It sees scope for continued performance in their 4x4x4 strategy and investments required to boost long-term.
.

XPER: Growth Year on Track

By Hamed Khorsand

XPER is setting the course for revenue growth after reporting fourth quarter 2021 results. Aiding the process to revenue growth is an increase in baseline IP license revenue for 2022
XPER disclosed it has signed a hybrid bonding IP licensing agreement with Micron Technologies (MU)
XPER is broadening its presence in the automobile space. During the fourth quarter earnings call, XPER disclosed Toyota Motor (TM) will include HDRadio in all its car models

Before it’s here, it’s on Smartkarma

Feb 25

TMT: Alibaba Group, BYJU’S, Playtech Plc, NetEase Inc, LG Energy Solution, Intel Corp, Fazz Financial, Paytm and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Alibaba (BABA): 3Q22, Transforming Missions Going Under Slow Quarter
Byju’s Tearsheet – India’s Largest Edtech Company
Playtech (PTEC LN): A Nuanced Flutter
NetEase (NTES): 4Q21, Better than Expectation
LG Energy Solution: End of the One Month Lock Up Period & More Selling Likely Ahead
Intel Analyst Day: Still a Top (Funding) Short
YC-Backed Fazz Financial Eyes Series C Funding
Optimising and monetising user funnel to drive customer lifetime value

Alibaba (BABA): 3Q22, Transforming Missions Going Under Slow Quarter

BABA’s app, SDTao, has been taking active users from Pinduoduo.
We believe BABA’s physical store chain, Freshippo, will go public.
We believe BABA will stop investing in unprofitable Ele.me as it underperforms Meituan.

Byju’s Tearsheet – India’s Largest Edtech Company

Byju’s (Byju) is the largest edtech company in India. It offers online and offline courses.
As per media reports, its latest funding round on Nov 21 was done at a valuation of US$21bn.
Byju is rumored to be in talks with Churchill Capital VII SPAC to go public in the US.

Playtech (PTEC LN): A Nuanced Flutter

On the 2 February, Playtech Plc (PTEC LN)‘s shareholders voted down Aristocrat Leisure (ALL AU)‘s £2.1 billion Offer.
The Offer failed after Playtech was unable to engage with a block of Asia-based investors who owned ~28% of the company.
As a developer of online casino games, Playtech is an obvious target. Reportedly its second-largest investor and two Playtech CEOs – former and current – are piecing together a deal.

NetEase (NTES): 4Q21, Better than Expectation

Revenue grew strongly due to the new game, Harry Potter.
We believe NTES has confidence in the growth of cloud music.
We believe the stock has an upside of 32% for the year end 2022.

LG Energy Solution: End of the One Month Lock Up Period & More Selling Likely Ahead

In this insight, we discuss the end of the one month lock up period and more block selling ahead by major investors for LG Energy Solution in the weeks ahead.
There are 1.75 million shares under the one month lock-up period, representing 0.7% of outstanding shares.
At current price of 416,500 won, we believe there is an additional 11% downside risk to LG Energy Solution shares over the next 3-6 months (using the base case valuation).

Intel Analyst Day: Still a Top (Funding) Short

By Aaron Gabin

Intel’s Analyst Day last week set forth unhittable revenue growth targets
Capex and Gross Margin guidance make no sense…Intel should’ve reset gross margin expectations…why it is still a good short.
Neutral (meaning 0) FCF through 2025 is a BS…if Western governments don’t cover capex, FCF will be negative, potentially hitting the dividend since buybacks are eliminated for the near future.

YC-Backed Fazz Financial Eyes Series C Funding

By Tech in Asia

Fazz Financial Group is looking to raise a series C funding round this year, and it has already drawn the interest of several “top-tier US tech investors.”
The Southeast Asian fintech firm also said that its monthly revenue jumped 2x to US$2.6 million in December 2021
Its monthly transactions also hit over US$800 million, a threefold increase from the same period the previous year.

Optimising and monetising user funnel to drive customer lifetime value

By ICICI Securities Limited

One 97 Communications’ (OCL or Paytm used interchangeably in the report) two-sided digital ecosystem of 64.4mn average monthly transacting users (MTUs) (as at Dec’21) from >350mn consumer base and over 24.9mn merchants is core to its unit economics.
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Before it’s here, it’s on Smartkarma

Feb 24

TMT: Sea Ltd, ASM Pacific Technology, LG Electronics, Delhivery, Indra Sistemas Sa and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

SEA 110/102 Buy Zone
ASMP (522.HK): 4Q21 Results/ 1Q22 Outlook- It’s a Record Q1 at the Mid-Point of Guidance.
LG Electronics: Impact of Restructuring the Solar Panel Business
Delhivery IPO: A Bumpy Delivery
SEPI to Raise Stake in Indra

SEA 110/102 Buy Zone

By Thomas Schroeder

SEA has undergone a severe decline but is showing some light at the end of the falling wedge tunnel with physical support approaching near the 110/102 zone.
RSI compelling bull divergence stands out as the upside energy driver. Align a buy entry with noted support at the 20-25 level that should nail down divergence.
170 is our initial recovery target if the 100 level holds.

ASMP (522.HK): 4Q21 Results/ 1Q22 Outlook- It’s a Record Q1 at the Mid-Point of Guidance.

The 4Q21 revenue is HK$6.2bn (US$796.3mn), a 43.9% increase YoY. GM 41.3% is a 1,051bps increase YoY.
Some memory market customers, like Samsung and Hynix, are adopting ASMP’s mainstream wire bond and advanced packaging tools for high volume manufacturing requirements.
Full year 2021 dividend per share of HK$3.90, a 44.4% YoY increase.

LG Electronics: Impact of Restructuring the Solar Panel Business

On 23 February, LG Electronics announced that it will exit the solar panel business due to lack of competitiveness as it has been losing money in this business.
This restructuring will have a positive impact on LG Electronics. We applaud its strategy of focusing on what it does best and exiting businesses where it is not competitive.
Assuming operating loss of 80 billion won and a 9% cost of capital, this would result in perpetuity value losses of 889 billion won.

Delhivery IPO: A Bumpy Delivery

Delhivery (1058656D IN) is a fully integrated logistics player in India. The company’s application for a listing has been approved by the regulators.
The company plans to raise US$650m through issuing new shares while existing shareholders will offer US$3120m worth of shares at the IPO.
The company plans to use proceeds from the IPO for funding growth (both organic as well as inorganic growth through acquisitions and strategic initiatives) and for other general corporate purposes.

SEPI to Raise Stake in Indra

By Jesus Rodriguez Aguilar

SEPI will increase its stake in Indra Sistemas Sa (IDR SM) by 9.25% (22.2 days of trading volume) up to 28%, which should have a positive impact on the share price.
Indra has dropped 9.4% on market fears that the Government might interfere in the company’s strategy. Nevertheless, this in my view, provides an entry point.
My DCF valuation of Indra is €12.12/share, which implies 44% upside. I believe share purchases should act as a short-term catalyst for the share price.

Before it’s here, it’s on Smartkarma

Feb 23

TMT: Razer Inc, Noritsu Koki, JMDC Inc, Meituan, LG Energy Solution, Hoya Corp, KPIT Technologies, Robinhood Markets, Employment Hero and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Razer Inc (1337 HK): Pre-Conditions Done
Noritsu Koki (7744) – PAAAAYDAAAAY!
JMDC (4483 JP) – A Change of Ownership, and Future Path
Meituan: New Regulation on Food Delivery Commission to Slowdown Growth and Delay Profits
KOSPI 200: LG Energy Solution Inclusion and Dongwon F&B Exclusion
Razer’s Offer Spread Risk/Reward – Pre-Conditions Fulfilled
Hoya – We Are Increasingly Confident About a Semi Capex Decline
KPIT Tech: Earnings and Growth Visibility Remain Strong
Breaking Estimates Short Candidates: Robinhood Mkts, Seagen, Zimmer Biomet, Cerence
Employment Hero Nets $130m, Buys Australian HR Tech Firm

Razer Inc (1337 HK): Pre-Conditions Done

Razer Inc (1337 HK) has announced the remaining pre-conditions have now been fulfilled.
The next step is the Scheme vote, which may be held in early May, with possible completion in early June.
Despite SAMR approval last month, this transaction continues to trade wide to terms on concerns retail investors will disrupt the headcount test.

Noritsu Koki (7744) – PAAAAYDAAAAY!

By Travis Lundy

Noritsu Koki (7744 JP) just sold two-thirds of its stake in subsidiary JMDC Inc (4483 JP) to Omron Corp (6645 JP) for ¥112bn – pretty good for a ¥61bn marketcap.
This is the payday for those who have been long NK as a proxy for JMDC and possibly short JMDC against it. Now the shape of the company is different.
A closer look at the pro-forma financial profile is warranted. It’s a lot of money. BUT… if you look today and buy today you do NOT get the special div!

JMDC (4483 JP) – A Change of Ownership, and Future Path

By Travis Lundy

JMDC Inc (4483 JP) or formerly Japan Medical Device Corp was incubated then IPOed by Noritsu Koki (7744 JP). Noritsu Koki is now selling two-thirds of its stake to OMRON.
OMRON’s heft should help JMDC grow better with larger clients. That’s the bet OMRON is making too.
The sale by Noritsu Koki reduces potential overhang from a share sale which heretofore had been a possibility.

Meituan: New Regulation on Food Delivery Commission to Slowdown Growth and Delay Profits

Meituan (3690 HK) share price is down more than 20.0% from Thursday’s close following announcement on new regulations for food delivery platforms.
New regulation states that food delivery platforms should further reduce the service fee charged from restaurants to lower operating costs for food and beverage businesses.
Meituan’s food delivery business makes about 88% of its revenues from commissions while the remainder comes from online marketing services.

KOSPI 200: LG Energy Solution Inclusion and Dongwon F&B Exclusion

On 22 February, the KRX announced that LG Energy Solution (373220 KS) will be included in numerous local indices including KOSPI 200, KOSPI 100, and KRX 100 effective 3/11/2022.
This has been widely expected by the market. Due to the inclusion in KOSPI 200, investors will be able to short LG Energy Solution starting 11 March.
Once Dongwon F&B is excluded from the KOSPI 200 index, this could be a key buying opportunity on this stock, given the company’s solid fundamentals.

Razer’s Offer Spread Risk/Reward – Pre-Conditions Fulfilled

By Arun George

Razer Inc (1337 HK) announced that all the pre-conditions were fulfilled. The scheme document will be released after the FY21 results (scheduled on or before 17 March).
The headcount test is a key challenge. While the deal’s success benefits from the de-rating of technology shares, it is also undermined by Logitech International SA (LOGN SW)’s strong 3Q.
The shares are broadly fairly valued at last close both on a SoTP and deal probability basis. We would be buyers up to HK$2.5 per share (implies 65% deal probability).

Hoya – We Are Increasingly Confident About a Semi Capex Decline

By Mio Kato

We spoke to Hoya today to understand market trends in both the semi and healthcare areas.
Overall, business conditions remain strong although momentum appears stronger for the Life Care segment.
More pertinently, we interpret some of the commentary on the semi capex side as suggesting some downside risk to overall spend.

KPIT Tech: Earnings and Growth Visibility Remain Strong

By Ankit Agrawal, CFA

Despite the elevated valuation, KPIT remains a high conviction idea for us as we see potential for 21%+ earnings CAGR over the next decade.
Given the strong growth visibility, KPIT can sustain its current elevated valuation of 12x P/B and thus an investment in it can offer 21%+ CAGR over the next decade.
Even if its exit valuations were to decline by 1/3rd at the end of the decade, it can still offer 16%+ CAGR.

Breaking Estimates Short Candidates: Robinhood Mkts, Seagen, Zimmer Biomet, Cerence

By Eric Fernandez, CFA

This model uncovers companies facing recent sharp cuts in estimates. These shorts can have very disparate characteristics.
The key judgement involves whether the negative revisions are temporary or if they are indications of ongoing weakness in the business.
Breaking Estimates stocks often continue to decline after the cuts. This week we flag Robinhood Mkts, Seagen, Zimmer Biomet, Cerence

Employment Hero Nets $130m, Buys Australian HR Tech Firm

By Tech in Asia

Employment Hero, an Australia-based human resources tech platform, has raised US$130 million
With this round, the startup’s valuation has nearly reached unicorn status at AU$1.25 billion (US$901.5 million).
Employment Hero helps businesses manage their workforce through the changing nature of work by helping teams stay connected through fully integrated HR solutions.

Before it’s here, it’s on Smartkarma