In today’s briefing:
- Sea Ltd: Game Over
- Alibaba (BABA US): What Is Next After Strong Rally?
- Samsung Electronics 1P Pushed to a Substantial Diversion (Below -2σ) Today
- Broadcom Inc: New Test Solutions With Rohde & Schwarz & Other Drivers
- Juniper Networks: Agreement With Powerco & Other Developments
- GoDaddy Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)
- SunPower Corporation: Partnership With General Motors & Other Drivers
Sea Ltd: Game Over
- We don’t see a way for Sea Ltd (SE US)’s e-commerce business to turn profitable in the next few years.
- For the moment, the Digital-Entertainment segment is capable of absorbing most of e-commerce losses, but we are expecting the segment profitability to fall 70% to $135m per-quarter over the-next two-years.
- Once that happens, we think it will be game over for Sea Ltd.
Alibaba (BABA US): What Is Next After Strong Rally?
- Bullish sentiments doubled BABA share price post 20th Party congress, as investors look beyond a soft December quarter and focus on re-opening prospects and flashing regulatory green lights.
- Expect single-Digit GMV growth, more disciplined OPEX and hence margin recovery to generate RMB180 billion non-GAAP net profit for BABA by FY25. Materializing fundamental recovery will support continued re-rating.
- That said, we also see headwinds to multiple expansion and expect 18-20x PER (among lowest in sector) for FY25, implying 21%/28% compounded annual return over FY23-25.
Samsung Electronics 1P Pushed to a Substantial Diversion (Below -2σ) Today
- SamE PREF’s relative underperformance compared to ORD has been getting a bit worse lately. And finally, today, it went down below -2.0σ on a 20-day moving average.
- This much diversion is the first in recent months, and the pref discount is close to last year’s peak. The dividend yield difference is also the widest in recent years.
- The current diversion appears to be a byproduct of the SamE overbuying amid the recent market rally, and we should expect a quick reversion.
Broadcom Inc: New Test Solutions With Rohde & Schwarz & Other Drivers
- Broadcom delivered a strong result in the last quarter with revenues growing 21% year-on-year, surpassing Wall Street expectations.
- This growth was driven by the company’s strong partnerships and increased R&D investments that enabled accelerated adoption of its new-generation technologies.
- In the quarter, semiconductor solution revenue and infrastructure software revenue grew.
Juniper Networks: Agreement With Powerco & Other Developments
- Juniper’s stock has seen good upward momentum with its results around the corner.
- The company had delivered better-than-expected results in the last quarter with its total revenues as well as earnings exceeding Wall Street expectations.
- The cloud business of Juniper also delivered solid quarterly result with revenue growth.
GoDaddy Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)
- GoDaddy delivered a mixed set of results for the last quarter.
- However, it did manage an earnings beat which was largely a result of the robust consumer retention.
- This quarter, GoDaddy launched free SSL on almost all innovative web hosting plans in its major markets.
SunPower Corporation: Partnership With General Motors & Other Drivers
- SunPower delivered an all-around beat in the last quarter as the value of the company’s storage and solar systems continues to rise with the rise in utility rates.
- Consumer demand in the quarter continues to be quite strong and it added 23,1000 new customers this quarter which displays a persistent level of robust consumer demand for residential solar, particularly SunPower.
- We provide the stock of SunPower with an ‘Outperform’ rating and a revision in the target price.
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