In today’s briefing:
- Mahindra & Mahindra (MM IN) | The Bookings Fallacy
- Softbank Group – A Surplus of VC Cash Could Re-Energize Vision Fund’s Investment Pace
- Angelalign Technology (6699 HK): 1H22 Profit Drops As Challenging Operating Environment Continued
- Long Idea: Warner Music’s New CEO Could Prove a Catalyst
- SKYX Platforms Inc. – Investment Thesis
- Jupiter Wellness – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 09/22
- XPER: Unlocking Value Thru Separation
- Angelalign Technology (6699.HK) 22H1 – Still “Bubble” in Valuation; The Era of High Margin Is Over
- Mill City Ventures III
- Air China (753 HK): Can It Sustain the Outperformance?
Mahindra & Mahindra (MM IN) | The Bookings Fallacy
- We challenge Mahindra & Mahindra (MM IN) ‘s narrative of strong demand and booking pipeline (140k+ open bookings, excl Scorpio N as of Q1 FY23)
- There is a possibility of a monthly booking rate of 10.3k for XUV700 and 5K per month for Thar being overstated.
- With increasing competition (MSIL + Toyota), cancellations will increase leading to even lower waiting periods and a reduced booking pipeline.
Softbank Group – A Surplus of VC Cash Could Re-Energize Vision Fund’s Investment Pace
- News reports indicate venture capital firms are sitting in cash reserves 2x normal levels and that needs to be put to work
- We expected a narrowing of public v private valuation levels was needed for Softbank to pivot from recent defensive but competition for deals may be more relevant
- Access to investment capital is easier after settling of Alibaba-linked derivative contracts and Softbank has showed as recently as 2020 asset sales that it can lever up quickly
Angelalign Technology (6699 HK): 1H22 Profit Drops As Challenging Operating Environment Continued
- Angelalign Technology (6699 HK) has reported muted H1 2022 results, which were negatively impacted by the resurgence of the COVID-19 pandemic in China and the corresponding restrictions.
- Revenue from core business of clear aligner treatment grew just 3% y/y. However, lower ASP and higher cost of sales, pulled down the gross profit margin by 930bps to 60.2%.
- Thus far in H2 2022, China has imposed lockdowns in multiple major cities. With the uncertainty over the duration of COVID, no immediate respite is seen in Angelalign’s business.
Long Idea: Warner Music’s New CEO Could Prove a Catalyst
- Warner Music hired YouTube’s Chief Business Officer Robert Kyncl as its new CEO, an impressive executive well positioned to expand music monetization to newer frontiers.
- The stock has roundtripped its $25 June 2020 IPO price after doubling.
- There is a compelling “comping the comp” catalyst path for 2023, as streaming revenues reaccelerate, and Kyncl renegotiates static licensing deals with Peloton, Tiktok, etc.
SKYX Platforms Inc. – Investment Thesis
- This is our first report on SKYX Platforms and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
- Another important fact about SKYX Platforms is that the company’s management comprises several former GE and NEC employees which is a big positive.
- We believe that there is a good chance the company’s offerings may become universally accepted in the years to come.
Jupiter Wellness – Investment Thesis, Key Drivers, Financial & Price Forecasts, DCF Valuation 09/22
- This is our first report on Jupiter Wellness and we look to provide a detailed account of the various drivers that will be responsible for the company’s growth in the coming years.
- With all of these developments, a stock priced at 63 cents appears to be highly affordable and supports our positive outlook.
- Overall, we believe that Jupiter has phenomenal growth prospects and is an excellent investment prospect.
XPER: Unlocking Value Thru Separation
- XPER held an investor day to highlight the two businesses XPER would separate into on October 1, 2022.
- The expectation is the two companies operating separately would be able to grow faster without worries over customer relationship to the other segment.
- Xperi has been the underpinning of our investment thesis due to the investments the Company has made in different products and customer engagements.
Angelalign Technology (6699.HK) 22H1 – Still “Bubble” in Valuation; The Era of High Margin Is Over
- Due to declining performance, lack of core competitiveness and increasing competition, the market has to re-examine the growth potential and outlook of Angelalign.The era of high margin is fading away.
- Angelalign’s low-price strategy is easily hit by similar products with lower prices. Once its price loses advantage, it will directly lead to a rapid and substantial decline in overall performance.
- Due to its worse-than-expected 2022H1 performance and economic downturn, we lowered our 2022 forecast of Angelalign. Angelalign shouldn’t be valued that much higher than Align Technology, expecting more downside ahead.
Mill City Ventures III
- This is our first report on Mill City Ventures III and we look to provide a detailed account of the various industries that the company operates in and the key macro-economic factors.
- Given its current size, Mill City Ventures III is exempt from many of the regulatory restrictions that apply to other traditional lenders or institutional rivals.
- Overall, we believe that Mill City Ventures III has phenomenal growth prospects and is an excellent investment prospect.
Air China (753 HK): Can It Sustain the Outperformance?
- Despite record losses in 2Q22, share price of Air China Ltd (H) (753 HK) has rallied 14% YTD, outperformed the 23.9% decline in HSCEI and its Chinese peers.
- Air China’s stub value has returned to pre-pandemic level, but is primarily driven by the A-share. Cathay Pacific (293 HK) recovery is an important catalyst for narrowing H-A share discount.
- News flow over the next 12 months, mostly related to further relaxation of quarantine requirements, will be positive. The surge in demand should support elevated passenger yield.
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