In today’s briefing:
- Disaster As VTOs Cancelled Under DTAC/True Merger
- Alibaba (BABA US): Fighting Back
- Add Meituan on Rumors of Social Benefit Payments
- Grab (GRAB US) – Shifting Down a Gear for A Steep Ascent
- Link Admin (LNK AU) Sets in Motion a Strategy to Realise Underlying Value
- Kuaishou: Domestic Business Turns Profitable for the First Time
- Oracle Corporation (ORCL US): TSS Recommendation Closed After One Week (-4.5%)
- Broadridge Financial Solutions Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
- BlackLine Inc.: Initiation of Coverage – Customer Attractiveness Scoring & Other Drivers
- Without Disclosure and Ensuring Transparency, the Black Box on Compensation Will Increase
Disaster As VTOs Cancelled Under DTAC/True Merger
- “The conditions precedent to the VTO have not been satisfied within one year from 22 November 2021 … the parties have declined to carry out the VTO.“
- This statement was lifted from Telenor’s (the major shareholder of Total Access Communication (DTAC TB)) brief announcement. Telenor/CP Group aim to complete the transaction within the first quarter of 2023
- This appears a cop-out on behalf of both Tender Offerors (Telenor & CP Group), who probably could have pushed for an extension. And why weren’t the scrip terms addressed?
Alibaba (BABA US): Fighting Back
- Ownership in Alibaba Group Holdings is on the rise among active Greater China managers.
- Stock price below $100 a catalyst for active Greater China managers to buy back in, with Invesco, JP Morgan and E Fund among those opening positions
- Alibaba remains well behind both TSMC and Tencent on an average weight basis and is the 2nd largest underweight in the Greater China region.
Add Meituan on Rumors of Social Benefit Payments
- Meituan’s recent price decline was partly due to the rumors about the social benefit payments.
- First, rumors are unverified statements. There was no such meeting at all.
- Second, the social benefit payment impact is probably controllable. I think the recent price decline provides a chance of adding on the stock.
Grab (GRAB US) – Shifting Down a Gear for A Steep Ascent
- Grab‘s recent results reflect a change of pace in terms of moving along the path to profitability with a more disciplined approach to incentives and a focus on cost controls.
- Deliveries segment adjusted EBITDA turned positive for the first time, 3Qs ahead of previous guidance, and food 2Qs ahead of guidance both of which are positives.
- A continuing drag will likely continue to come from expenses related to the buildout of its three digibanks. Grab‘s headline EBITDA is not forecast to be positive until 2025.
Link Admin (LNK AU) Sets in Motion a Strategy to Realise Underlying Value
- The EGM to approve the PEXA Group (PXA AU) distribution of Link Administration (LNK AU)’s remaining 38.49% stake is on 23 December. Shareholders get one PEXA share per 7.52 Link shares.
- This marks the latest move to unlock the underlying value by pursuing a breakup strategy. Discussions continue on DND’s acquisition of the CM and the BCM business for A$1.27 billion.
- Our base-case SoTP value is A$4.42 per share, which is 28% above the last close. If you haven’t been turned off by the Link saga, it is worth a look.
Kuaishou: Domestic Business Turns Profitable for the First Time
- Kuaishou Technology (1024 HK) reported 3Q2022 results. Revenue grew 12.9% YoY to RMB23.1bn (vs consensus RMB22.6bn) while reported operating losses declined to RMB2.6bn (vs consensus RMB3.1bn) from RMB3.1bn in 3Q2021.
- The company’s domestic business made an operating profit for the first time while there has been significant reduction in operating losses from the overseas business
- Kuaishou’s share price moved up 7% during today’s trade following its earnings announcement and we think there is further upside to the company’s current share price.
Oracle Corporation (ORCL US): TSS Recommendation Closed After One Week (-4.5%)
- The development of TSS has been a life’s work. We anticipate a high win / loss ratio and accept than not every recommendation will be profitable.
- On 15 November we determined that extreme ST momentum failure would likely deliver a 4.0% to 5.5% decline in ORCL US in 1-2 weeks.
- ORCL US failed to deliver, declining only 0.6% before closing 1 week later, on 22 November, 4.5% above our recommendation entry level. This recommendation is now closed.
Broadridge Financial Solutions Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
- Broadridge Financial Solutions is a well-known investor communications and technology-driven solutions provider for the financial services industry.
- The company has had a decent financial performance in recent times and has seen a continuous expansion in investor positions, notwithstanding the market downturn.
- Given their forward testing capabilities, Broadridge is confident of seeing steady growth in investor positions in the coming year.
BlackLine Inc.: Initiation of Coverage – Customer Attractiveness Scoring & Other Drivers
- This is our first report on BlackLine, the renowned cloud-based solutions provider for accounting and financial management operations.
- The company delivered solid financial results in the last quarter and managed an all-around beat with good growth in revenue.
- Moreover, continued free cash flow and margin improvement were seen due to further disciplined expense management and operating efficiencies.
Without Disclosure and Ensuring Transparency, the Black Box on Compensation Will Increase
- Progress on ESG initiatives should be evaluated objectively. With insufficient transparency and disclosure of compensation, there is concern that incorporating ESG factors into compensation will further increase uncertainty.
- Leadership is required for management to seek the evolution of essential initiatives so that ESG efforts don’t fall into “numbers matching” and not be intimidated by temporary setbacks or modifications.
- There are the following unresolved issues: non-disclosure of individual director compensation, bias toward fixed compensation, opaque compensation formulas, and ensuring the independence of the Compensation Committee.
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