In today’s briefing:
- Hoya (7741) – Record Revenues/Earnings, a Small Buyback, but Nikkei 225 Flows May Dominate
- CK Group Wants to Sell Its Stake in AMTD Group
- MicroStrategy (MSTR US): Saylor Mirrors Bitcoin’s Fall
- Softbank Corp (Buy) – Q1 22 Results Reaction: Largely In-Line with Reduced Expectations
- PhonePe Tearsheet – India’s SuperApp Ambition
- Bukalapak (BUKA IJ) – Onwards and Upwards on Higher Take Rates
- Xiaomi, China Unicom, and Bank Of China
- Better Than Expected 2Q22 Results, Cloud Growth of 139% YoY, FY22 Revenue Guidance Moves Higher
- Breaking Growth Short Candidates: Shopify, Snowflake, Intuitive Surgical, ServiceNow
Hoya (7741) – Record Revenues/Earnings, a Small Buyback, but Nikkei 225 Flows May Dominate
- Hoya Corp (7741 JP) today announced great Q1 earnings and a bullish above-consensus revenue forecast for this fiscal year. It also announced a small share buyback.
- However, the dominant factor in flows near-term will be pre-positioning for a possible Nikkei 225 inclusion in September. That is what will push the stock around. In or not.
- Hoya has recently outperformed a Peer Basket despite forward expected EPS and EBIT not seeing relative improvement. That suggests some relative risk if it doesn’t get selected for Nikkei 225.
CK Group Wants to Sell Its Stake in AMTD Group
- AMTD Digital’s stock price has started to sink and now there are news that the Cheung Kong (CK) Group (HK) wants to sell its stake in AMTD Group Co.
- The discussion of the CK Group disposing its stake in AMTD Group altogether is likely to further negatively impact AMTD Digital’s share price.
- Li Ka-Shing and his family probably want to distance themselves from all the unnecessary media attention given to AMTD Digital (HKD US) and AMTD Idea Group (AMTD US).
MicroStrategy (MSTR US): Saylor Mirrors Bitcoin’s Fall
- Microstrategy Inc (MSTR US)‘s Michael Saylor will now assume the new role of Executive Chairman and Phong Le, MSTR’s President, will serve as the company’s new CEO.
- As Executive Chairman, Saylor will focus more on MSTR’s bitcoin acquisition strategy and related bitcoin advocacy initiatives.
- With one of the most bullish and influential players in the industry now focusing on crypto, this should be considered bullish, according to some media reports. That’s a desperate takeaway.
Softbank Corp (Buy) – Q1 22 Results Reaction: Largely In-Line with Reduced Expectations
- Softbank Corp (9434 JP) results were weak as expected as mobile price reductions carved into the consumer revenue base
- Management released some further details on PayPay including a revenue number that implies continued improvement in take rates and plans to carve out a new segment for financial services
- Both KDDI and Softbank net adds were weaker sequentially v Q4 which bodes well for NTT and possibly Rakuten
PhonePe Tearsheet – India’s SuperApp Ambition
- Phonepe Pvt Ltd (1732974D IN) runs a digital payment and technology App in India and is currently the leader in terms of UPI transactions processed.
- Our channel feedback suggests the possible disruption from initiatives like ONDC to be positive for payment apps like PhonePe, with the possible acceleration towards the SuperApp Journey.
- Revenues are always growing, and so are losses. With ONDC, there is a possibility this may change faster than anticipated and hence warrants close attention.
Bukalapak (BUKA IJ) – Onwards and Upwards on Higher Take Rates
- Bukalapak‘s recent 1Q2022 results provided further evidence that the company is moving along the road to profitability with growth in TPV being outpaced significantly by revenue growth.
- The company saw very significant improvements in take-rates for its marketplace and Mitra businesses plus a better contribution margin and we expect this to continue into the 3Q.
- Bukalapak (BUKA IJ) looks cheap, especially when considering its stake in Allo Bank Indonesia and its IDR20tn cash pile, which means you are paying only US$50m for its core businesses.
Xiaomi, China Unicom, and Bank Of China
- The Hong Kong Indices have been much weaker than Taiwan & China due to liquidity and open capital account.
- It is a canary for global indices and should be analyzed accordingly.
- There is no change in views of real estate and technology sector stocks mentioned in previous updates on Hang Seng constituents.
Better Than Expected 2Q22 Results, Cloud Growth of 139% YoY, FY22 Revenue Guidance Moves Higher
- Confluent (CFLT US) reported solid 2Q22 results, and most metrics were above sell-side expectations, including subscription revenue, gross margins, and operating margins.
- We are impressed with Confluent Cloud’s revenue growth of +139% y/y and strong subscription gross margins. Management raised FY22 revenue and profitability guidance.
- Our price target of $28 is slightly below the current share price. However, we see room for further multiple expansion due to revenue acceleration above consensus.
Breaking Growth Short Candidates: Shopify, Snowflake, Intuitive Surgical, ServiceNow
- This model looks for slowing growth, margin declines, sales and/or earnings disappointments, troubling working capital trends, poor estimate trends or lowered guidance, among other characteristics.
- The key judgement is whether a slowdown is temporary or the beginning of a trend. These shorts tend to have high valuations and betas. Multiple compression accelerates the stock’s decline.
- Today we are flagging: Shopify, Snowflake, Intuitive Surgical, and ServiceNow
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
