In today’s briefing:
- Sea Ltd – No Bringing Back to Life For Free Fire, Shopee’s Top Line Growth Could Disappear
- Elmo Software Confirms Takeover Interest from Various Parties
- ELMO Software (ELO AU): KKR Returns To The Well
- Lionheart Studio IPO: Still Same Inflated Valuation
- S&P BSE/Sensex Quiddity Leaderboard Dec 22: Adani Names with F&O Question Marks Still in the Race
- TikTok Dives Into Southeast Asia With E-Commerce Push
- Kaynes Technology Pre-IPO – Can’t Put a Finger on the Business
- Byju’s to Lay off 2,500 Employees, Consolidate Several Units
- Gartner Inc: Initiation of Coverage – Major Revenue Streams & Other Drivers
- Shippit Acquires Luwjistik to Ramp up Regional Expansion
Sea Ltd – No Bringing Back to Life For Free Fire, Shopee’s Top Line Growth Could Disappear
- Garena has introduced nine major updates to “Free Fire” since June last-year but none of them has managed to turn around the game’s declining trend and regain the lost users.
- With Sea Ltd (SE US) no longer capable of funding Shopee’s growth, we are expecting e-commerce to start losing its top-line growth potential from 4Q22.
- Even though we are predicting a lot of downside to Sea Ltd over the medium term, an okayish Q3 could see shares bouncing back from the bottom.
Elmo Software Confirms Takeover Interest from Various Parties
- Elmo Software (ELO AU) confirmed takeover interest from several parties, including Accel-KKR. Elmo previously disclosed on 14 June that it had discussions on a non-binding offer at A$6.10 per share.
- The previous talks ended because the bidder (Accel-KKR) could not progress to a binding offer due to changing tech valuations. Elmo has materially underperformed ASX SaaS peers since 14 June.
- The current conditions suggest a higher risk that the talks will fizzle out. Despite today’s 28% pop, the shares remain undemanding compared to peer multiples providing support to the shares.
ELMO Software (ELO AU): KKR Returns To The Well
- Cloud-Based solutions provider Elmo Software (ELO AU) has confirmed it has received multiple expressions of interest from various parties, including Accel-KKR.
- No agreement has been reached with any parties, no pricing mentioned, nor whether data room access has been afforded.
- Earlier this year ELMO held discussions with Accel-KKR in regard to a change of control proposal at $6.10/share. That figure is a stretch in this market.
Lionheart Studio IPO: Still Same Inflated Valuation
- Lionheart used the net profit from 3Q last year to 2Q this year. The Odin sales peaked in the third quarter of last year and are on a downward trend.
- The indicative price band reaches a P/E multiple of 22~32x reasonably projected earnings of ₩140B. NCsoft’s 12M forward PER stands at 14-15x. Krafton is only 12x.
- It is unclear whether the market will accept this price deception under current conditions. We should refrain from aggressively approaching it without a clear answer to the decline in sales.
S&P BSE/Sensex Quiddity Leaderboard Dec 22: Adani Names with F&O Question Marks Still in the Race
- In this insight, we take a look at the names leading the race to become ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
- The reference period for the trading data used for the index selection ends on 31st October 2022.
- At present, I see one change for SENSEX, three changes for BSE 100, and six changes for BSE 200.
TikTok Dives Into Southeast Asia With E-Commerce Push
- ByteDance’s TikTok is cranking up its e-commerce foray into Southeast Asia as the Chinese tech giant pushes to commercialize the popular short video app to create a new revenue stream.
- During the first half, TikTok launched e-commerce businesses in Thailand, Vietnam, Malaysia, the Philippines and Singapore, expanding its presence to all major markets in the region.
- TikTok has been operating online shopping services in Indonesia, Southeast Asia’s largest economy, since early 2021.
Kaynes Technology Pre-IPO – Can’t Put a Finger on the Business
- Kaynes Technology India (7575164Z IN) is looking to raise about US$125m in its upcoming India IPO.
- Kaynes Technology (KT) is an end-to-end and IoT solutions enabled integrated electronics manufacturing player, having capabilities across the entire spectrum of electronics system design and manufacturing (ESDM) services.
- Profitability accelerated post COVID-19 with margins expanding slightly. However, revenue growth might have been driven by the pandemic and there hasn’t been much operating data for us to work with.
Byju’s to Lay off 2,500 Employees, Consolidate Several Units
Byju’s, the global edtech behemoth based out of India, announced that it is laying off 5% or 2,500 of its total workforce as it restructures to achieve overall profitability by March 2023.
- The job cuts, which will be across the product, content, media, and technology teams, will be done in phases.
- The SoftBank-backed company said the move stems from the consolidation of its various K-10 businesses, namely Toppr, Meritnation, TutorVista, Scholar, and HashLearn, into one unit.
Gartner Inc: Initiation of Coverage – Major Revenue Streams & Other Drivers
- This is our first report on Gartner, one of the most well-known companies in the market research and IT advisory domain.
- The past quarter’s results for Gartner were quite strong, with double-digit growth in adjusted EPS, revenue, and contract value and the company delivered an all-around beat.
- The research revenue of the company has been consistently growing and the retention rate has been quite strong.
Shippit Acquires Luwjistik to Ramp up Regional Expansion
- Australian logistics tech platform Shippit announced that it had acquired its Southeast Asian (SEA) counterpart Luwjistik.
- This deal is Shippit’s second acquisition in 2022, after announcing the acquisition of leading Australian last mile technology firm Premonition in March.
- Shippit has been operating in SEA since 2020. Through the acquisition, it plans to double down on growth in the region, including in its enterprise customers, by leveraging Luwjistik’s technology, local relationships and expertise.
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