In today’s briefing:
- Asian Equities: Southbound Monthly – June Acceleration; Old Getting Sold, Dividends the New Darling
- Taiwan Dual-Listings Monitor: Spreads Near Record Highs After U.S. Market Holiday
- Figma IPO Preview: Fast-Growing Disruptor In The Design Software Market
- ASML Downgrades, Semi Production Equipment Demand
- Capgemini–WNS: A Strategic AI Play with Risk-Arb Clarity and Optionality
- Protean EGov: Navigating the PAN 2.0 Headwind and Charting a Diversified Future
- Figma IPO Valuation Analysis: Premium Multiple Is Deserved, High Growth and Rule of 60 Story
- Taiwan Tech Weekly: US Targets Malaysia & Thailand; Wind Power Fuels Taiwan’s AI Infrastructure Push
- AKA: Snapping the Store: Evolving & Advancing; Reiterate Buy, $30 Price Target
Asian Equities: Southbound Monthly – June Acceleration; Old Getting Sold, Dividends the New Darling
- The US$10.23bn net inflow through the Southbound Stock Connect in June marked a near-doubling from the May slump (US$5.85 bn), though it’s still lower than the 15-month average (US$12.1 bn).
- Investors bought high dividend yield SOEs heavily (e.g. China Construction Bank), and sold Tencent, Xiaomi, Alibaba. Healthcare companies – Innovent Biologics and CSPC Pharma were bought, underscoring investors’ defensive stance.
- Investors’ dividend yield fascination seems unabated. Some technology stocks (Tencent) do not seem overbought. Despite large buying, EV and ecommerce heavyweights (Meituan) are declining. Investors’ appetite in them could slump.
Taiwan Dual-Listings Monitor: Spreads Near Record Highs After U.S. Market Holiday
- TSMC: +26.3% Premium; Near Record High After U.S. 4th of July Holiday
- UMC: +4.7% Premium; One of the Highest Levels in History — Short
- ASE: +4.6% Premium; Wait for More Extreme Level Before Going Long or Short
Figma IPO Preview: Fast-Growing Disruptor In The Design Software Market
- Figma Inc., a VC-backed collaborative design software maker, filed for long-awaited IPO. Morgan Stanley and Goldman Sachs are the lead bankers on the offering.
- The San Francisco-based company was valued at $12.5B in a 2024 tender offer. Figma is well-positioned with a strong brand among designers and a growing footprint in enterprise segment.
- With strong financial profile and network effects, driven by large scale and efficient GTM strategy, the company remains the leader in collaborative design software market.
ASML Downgrades, Semi Production Equipment Demand
- ASML has been underperforming for 18 months. Recent downgrades are a delayed recognition of reality. ASML’s management goals for 2030 (10% revenue growth Cagr) are ok (plausible)
- But growth is slowing fast in 2H25-1H26. Growth should re-accelerate in 2H26 as the impact of China and Mature node lower spending, multiple delays (Intel, Samsung) is fading away.
- The stock is getting cheaper, but lacks catalysts for another 2-3 quarters. Trading at 25x forward PEx, that’s reasonable given the firm’s intrinsic qualities.
Capgemini–WNS: A Strategic AI Play with Risk-Arb Clarity and Optionality
- Capgemini to acquire WNS for $76.50 per share in cash; deal implies a 28% premium to VWAP and aims to create a global leader in AI-powered intelligent operations.
- WNS traded at a discount to peers pre-offer; Capgemini expects meaningful synergies (~$8.63/share NPV), justifying the 16x P/E takeout. No termination fee is disclosed publicly.
- Interloper risk is modest; deal certainty is high. With a 3.83% gross spread (pre-market) and 8.15% annualized return, the arbitrage setup is attractive barring regulatory or shareholder surprises.
Protean EGov: Navigating the PAN 2.0 Headwind and Charting a Diversified Future
- Protean’s exclusion from the PAN 2.0 project raises concerns about potential long-term revenue loss, especially as tax services contribute significantly to its current business.
- Protean’s strategic diversification into pension services, digital identity solutions, and international markets positions it well for long-term growth, reducing reliance on tax services.
- With INR800 crore in cash reserves and zero debt, Protean is financially resilient, allowing it to invest in new growth areas, making it attractive for long-term investors despite short-term volatility.
Figma IPO Valuation Analysis: Premium Multiple Is Deserved, High Growth and Rule of 60 Story
- Figma Inc. is planning to go public in the second half of July. The amount the company intends to raise is not yet disclosed, but it’s likely to exceed $1B.
- I like Figma’s high growth, rule of 60 story, cash flow generation and solid balance sheet. They are profitable and still growing 40%+ YoY while doing $800M+ in LTM revenue.
- I believe Figma’s premium multiple is justified given its best-in-class metrics, top-tier VC investors and Adobe’s attempt to acquire the design software maker for ~$20B in 2022.
Taiwan Tech Weekly: US Targets Malaysia & Thailand; Wind Power Fuels Taiwan’s AI Infrastructure Push
- US Eyes New AI Chip Restrictions on Malaysia and Thailand
- Chip and AI Boom Driving Taiwan’s Offshore Wind Expansion — Local Stocks to Watch
- China Set to Become World’s Largest Semiconductor Foundry Hub by 2030 — But One Needs to Consider Leading Edge Capacity vs. Mature Capacity
AKA: Snapping the Store: Evolving & Advancing; Reiterate Buy, $30 Price Target
- We are reiterating our Buy rating, projections and $30 price target for A.k.A. Brands after visiting Princess Polly stores in California and the Culture Kings flagship in Las Vegas.
- We believe overall momentum in the brand has remained strong, with continued high demand and the Princess Polly customer quickly snapping up impressive fashion items at full prices.
- The theme for Princess Polly remains expansion, from the opening of the newest store (in Glendale), to adding the potential to display 20%+ more units, increasing the level of newness even further and tying offerings close to their debut on the website.
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