In today’s briefing:
- Softbank Group – China Bounce Erases a Week of Losses
- Astra International (ASII IJ) – A Glimpse into the Future
- Rakuten Group (Neutral) – Bank IPO a Step Towards Unlocking Fintech but Mobile Worries Remain
- LINE Gift: The Next Stage
- Liquidity Risk Short Candidates: Rivian, Nikola, ChargePoint, Domo & Enviva
- Meituan (3690 HK): Authorities Turned Friendly to Internet Companies, Upgrade to Buy
- Elimination of Purchase Limits at Duty Free Shops in Korea
- Will Cisco Make A Bid For HashiCorp As Valuation Fell By Half From The IPO Price?
Softbank Group – China Bounce Erases a Week of Losses
- Softbank is a $23bn winner on the China bounce as Alibaba (+37% over 2 days, $18bn) and Vision Fund (+$4.8bn) recovered from selling pressure over the last week
- Improving sentiment aside the discount remains above 50% and the rebound appears to be more about correcting excess selling than a change in market outlook
- We remain wary of Chinese exposure in the near-term on political, regulatory and economic risks although the worst appears to be over for now
Astra International (ASII IJ) – A Glimpse into the Future
- Astra International (ASII IJ) held an informative post-results analyst briefing that provided a glimpse into its future plans, with capex set to double in 2022 with a war chest ready.
- Other than investing in expanding existing businesses and in areas such as EVs, Astra also has a pipeline of deals related to the growing digital ecosystem in Indonesia.
- Astra International (ASII IJ) is a proxy for the recovery in Indonesia’s economy through cars, motorbikes, and commodities but has an emerging digital and sustainability edge plus reasonable valuations.
Rakuten Group (Neutral) – Bank IPO a Step Towards Unlocking Fintech but Mobile Worries Remain
- The pending IPO of Rakuten Bank could be worth ¥380bn (2x book) and boosts appreciation of a fintech business we think is worth ¥1,400/share
- That is well above the current share price reflecting the valuation drag of an expensive mobile segment, which is expected to hit peak losses in Q1 22
- We expect mobile break-even will take longer than expected and downside here offsets fintech excitement – we remain at Neutral
LINE Gift: The Next Stage
- LINE Gift has doubled its user base to 20 million in a year, and added merchants like Seven Eleven, but isn’t content with this.
- It has only just integrated with Zozo and Yahoo Shopping and expects these new partners, as well as new TV ad campaigns, to deliver a major increase in user numbers.
- The collaboration with Z Holdings’ through Yahoo Shopping and Zozo shows the potential for leveraging the groups’ huge user base.
Liquidity Risk Short Candidates: Rivian, Nikola, ChargePoint, Domo & Enviva
- Liquidity shorts can be great short candidates. The key characteristic is that the company may not be viable, economically, given their cash flows and cash requirements.
- Liquidity shorts have built-in catalysts, have moderate to higher betas, and can have strong down moves if a crisis develops. They can go bankrupt, pushing the stock price near zero.
- Today we are flagging Rivian, Nikola, ChargePoint, Domo & Enviva.
Meituan (3690 HK): Authorities Turned Friendly to Internet Companies, Upgrade to Buy
- Central Financial Working Committee turned friendly to overseas listed internet Companies.
- We believe Meituan will be free from the pressure of anti-monopoly rules.
- Meituan stock has fallen significantly and we upgrade it to BUY.
Elimination of Purchase Limits at Duty Free Shops in Korea
- Starting 18 March, the current $5,000 purchase limit at the domestic duty free shops will be abolished for the locals.
- The removal of the $5,000 purchase limit at duty free shops in Korea should encourage purchase of luxury women’s apparel, bags, and cosmetics.
- The removal of the purchase limit should help the major duty free operators in Korea including Hotel Shilla (008770 KS) and Shinsegae (004170 KS).
Will Cisco Make A Bid For HashiCorp As Valuation Fell By Half From The IPO Price?
- Shares of HashiCorp (HCP US) , a leading VC-backed infrastructure automation company, fell ~50% below the IPO price of $80.00 per share.
- HashiCorp (HCP US) is a multi-product company that helps to accelerate cloud adoption. The company reported total revenue of $321M in FY’22 ended Jan-22, up 51% year-over-year.
- According to public sources, Cisco Systems (CSCO US) has already approached HashiCorp with an acquisition offer in 2019. However, both Cisco and HashiCorp declined to comment on rumors.
Related tickers: Softbank Group (9984.T), Astra International (ASII.JK), Rakuten Inc (4755.T), LINE Corp (3938.T), Nikola Corp (NKLA.O), Meituan (3690.HK), Hotel Shilla (008770.KS)
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