In today’s briefing:
- Sea Ltd (SE US) – Navigating Challenging Waters With Sails Set
- GOGOX IPO: Growth at All Costs
- US Small Caps Macro Buy Zone
- MSCI Korea August QIR Preview
- Japan Apparel Rethink: World Tries Diversification
Sea Ltd (SE US) – Navigating Challenging Waters With Sails Set
- There has been a recent press commentary about Sea Ltd laying off staff, which although unpleasant reflects management’s decisive and pragmatic decision-making style which is no bad thing.
- It is unclear how many staff are being laid off and where but it seems that Indonesia is not impacted in a big way and core markets continue to perform.
- We will not follow on the coattails of liquidity with a negative recommendation when what management is doing looks positive and Sea Ltd (SE US) is batting above its peers.
GOGOX IPO: Growth at All Costs
- GoGoX Holdings (GOGO HK) is a major online intra-city logistics platform in Asia. It has passed the listing hearing for an HKEx IPO to raise US$100-150 million.
- In GOGOX IPO Initiation: A Less than Perfect Delivery, we noted that as the losses are expected to persist over the next three years, we would avoid the IPO.
- In this note, we examine the PHIP for the 2021 results and recent developments. The fundamentals remain unattractive and we would give the IPO a pass.
US Small Caps Macro Buy Zone
- We continue to see US equity downside risk on the back of earnings estimates seeing further downgrades. Small caps are at/near some interesting macro support.
- RTY met key support to establish a perform position as the SPX finds a foothold into late June. Near term cycle date due early this week.
- June bottoming cycle into July ahead of a more bullish August that then runs into the dreaded weak September cycle.
MSCI Korea August QIR Preview
- Small Caps → Standard migrations do not seem to happen at all in this QIR. Similarly, there will likely be no deletion of the existing constituents.
- Among the Outside IMIs, Kakao Pay is the only one that has the possibility of inclusion. However, it also has uncertainty about the float rate in this QIR.
- For FOL stocks, the telcos are on the event-triggering borderline. In particular, SKT deserves attention. But its foreign room is now above 3%, so its deletion possibility is getting slimmer.
Japan Apparel Rethink: World Tries Diversification
- The outlook for big apparel remains uncertain; most executives are optimistic about a rebound in sales of premium apparel brands, they are also running around looking for ways to diversify.
- Despite years of closing stores and a recent re-listing, World Co Ltd (3612 JP) remains in uncertain territory as it tries to boost sales of key brands.
- More brands may need to close but the apparel firm is at least investing in new ventures, even if small scale.
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