In today’s briefing:
- Rakuten: Turning a Corner
- Deepak Nitrite: Forensic Analysis
- Rorze (6323) | Japan Small Cap Winner
- Softbank Group (9984 JP) 1Q 22 Results – Focus on Fintech and LatAm Holdings
- Samsung’s Lee Jae-Yong Receives Pardon & Get Out of Jail Card: A Signal of Major M&As by Samsung?
- Adobe Inc.: Creative Cloud Upside & Other Drivers
- Honeywell International Inc.: Competitive Advantages & Acquisition-Led Growth
- Progyny (PGNY US): Q2 Results Ahead of Expectations; 2022 Guidance Raised Second Time This Year
- Mastercard Inc.: New Set Of Collaborations & Other Key Drivers
- Monster Beverages: New Product Launches & Other Drivers
Rakuten: Turning a Corner
- The biggest drawback of Rakuten Inc (4755 JP)’s share price momentum over the last few years was its Mobile business’ losses.
- However, based on Rakuten’s projections, the Mobile business could get close to breaking even by Q4 2023.
- With narrowing Mobile losses and outperforming E-commerce and Fintech, we think it is unreasonable for Rakuten to trade at a 40% discount to the bottom-end of the long-term trend channel.
Deepak Nitrite: Forensic Analysis
- Deepak Nitrite (DN IN) has emerged as one of the key players in the chemical intermediate industry over the last few years.
- The company’s emergence saw a structural and more or less a positive change in the balance sheet health and overall scheme of operations.
- The green flags include strong balance sheet position and surging return ratios, while the red flags include poor cash transmission and margin losses lately.
Rorze (6323) | Japan Small Cap Winner
- We are Bullish on Rorze, a global leader in ultra-clean wafer substrate handling solutions.
- We believe that Rorze is well placed to monetise the long-term growth in semiconductor demand and WFE spend
- The stock has recently underperformed its peer group and valuations collapsed. We see almost 100% upside potential based on a 14x target multiple
Softbank Group (9984 JP) 1Q 22 Results – Focus on Fintech and LatAm Holdings
- Softbank Group’s fintech portfolio companies – and especially those in the largely Softbank-funded Vision Fund 2 – were a meaningful part of the group’s large loss in fiscal 1Q 2022
- However, Klarna and eToro “down rounds” – concluded in early July – do not seem to have been incorporated into June-end losses; the Vision Funds are absorbing the LatAm Fund
- Despite the public markets rebound, Softbank faces multiples challenges, and it is hard to find positives in the Alibaba derivatives contracts
Samsung’s Lee Jae-Yong Receives Pardon & Get Out of Jail Card: A Signal of Major M&As by Samsung?
- On 12 August, the South Korean government finally gave a presidential pardon to Samsung’s heir Lee Jae-Yong.
- With Lee Jae-Yong given the presidential pardon, there is an increasing likelihood that the Samsung Group could become more aggressive in making major global M&As in the next several years.
- Three major M&As that Samsung could make in the next several years include ARM, Infineon, and NXP Semiconductor.
Adobe Inc.: Creative Cloud Upside & Other Drivers
- Adobe has witnessed a particularly robust demand over Experience Cloud, Document Cloud, and Creative Cloud.
- Adobe is winning in its established business and is viewing significant momentum in innovative categories.
- During the quarter, it hiked prices for particular creative cloud subscriptions which helped the revenue growth.
Honeywell International Inc.: Competitive Advantages & Acquisition-Led Growth
- Honeywell has successfully maintained a particularly high level of resilience despite persistent supply chain restrictions, inflationary headwinds, and geopolitical upheaval.
- Despite the inflationary challenges, Honeywell continued with margin expansion and this helped the management surpass the earnings expectations of Wall Street.
- It is also increasing technology investments in sustainability through Honeywell Ventures and a classic example was the investment in Electric Hydrogen.
Progyny (PGNY US): Q2 Results Ahead of Expectations; 2022 Guidance Raised Second Time This Year
- Progyny Inc (PGNY US) announced strong Q2 results, with both revenue and EPS surpassing consensus as well as company guidance. Revenue and adjusted EBITDA margin reached to highest ever levels.
- The company has raised lower end of its 2022 revenue and adjusted EBITDA guidance second time in this year. Progyny is seeing continued strong employer demand for fertility solutions.
- Despite inflation and a potential softening in the economy, Progyny is seeing strong customer demand and is upbeat about new client acquisition for its upcoming selling season.
Mastercard Inc.: New Set Of Collaborations & Other Key Drivers
- Mastercard continued to bear the brunt of inflationary pressures since the start of 2022 but the company has definitely benefitted from the fact that travel-related spending and consumer spending have remained strong.
- Apple Pay Later has been recently announced by Apple which is using the Mastercard installments program.
- In the U.S., the company established a partnership agreements that extend its small, co-brand, credit, and debit business credit programs.
Monster Beverages: New Product Launches & Other Drivers
- Monster Beverages continues to witness a rise in the demand for its energy drinks and this helped the company surpass Wall Street expectations in terms of revenues.
- In the quarter, Monster experienced a significant rise in the cost of sales that resulted in a material reduction in gross profit.
- Among major updates, Monster Beverage has recently released its foremost malt beverage, alcoholic flavored under the Monster brand.
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