In today’s briefing:
- AAPL and MSFT Support Breaks that Would Implode the US Cycle
- Appier – Explosive US Growth
- FB: “Planning to Slow the Pace of Our Investments” In the Metaverse.
- Delhivery IPO: Peer Comparison and Valuation
- Coupang: Four Major Factors to Drive Higher Profit Margins in 2022
- Aristotle Capital Management Global Equity 1Q 2022 Commentary
- Mindtree-LTI: Merger Announced to Form India’s 5th Largest IT Services Player
- Palantir 1Q22 Earnings: War Supposedly Good for Business?
- Canon (7751) – Buyback Looks Small But Shareholder Structure Matters
- Hon Hai (2317.TT): 1Q22 Preview/2Q22 Outlook- For 2022, It Could Be the Lowest Revenue in 2Q22.
AAPL and MSFT Support Breaks that Would Implode the US Cycle
- Apple and Microsoft are pressing on pivotal supports that would weigh on the US equity cycle after the April 26 red flag for defensives and resource stocks to sell off.
- Mounting to break AAPL and MSFT key supports at 150 and 270 that would inflection the SPX cycle further given the SPX is flirting with a key break below 4,100/4,030.
- AAPL and MSFT support breaks target AAPL 120 and MSFT 220.
Appier – Explosive US Growth
- When we reviewed Appier’s 2021 results we rambled on about the US for about half of our note discussing explosive growth potential.
- We said that while Appier touted a >50% QoQ growth rate in the US we suspected it was actually closer to 100%.
- In 1Q it accelerated to >180% QoQ growth prompting the sell side to go all surprised Pikachu.
FB: “Planning to Slow the Pace of Our Investments” In the Metaverse.
- Meta Platforms surprised investors in Q1 but not because the quarter was outstanding. Rather, it wasn’t as bad as some had assumed.
- In an unusual turn of events, Zuckerberg’s earnings call appearance resulted in whispering sweet nothings into investors’ ears
- However great that might be, the quarter provided no conclusive update on the loss of signal from Apple’s iOS updates, with management offering on-platform messaging/commerce as a potential sidestep
Delhivery IPO: Peer Comparison and Valuation
- Delhivery (1058656D IN) IPO will run from 11-13th May. The company plans to raise INR52.35bn (US$680m) through the issuance of a mix of new shares and OFS by existing shareholders.
- At the indicative IPO price range of INR462-487 per share, Delhivery will have a market capitalisation of INR334.7-352.8bn and a post-money EV of INR294.8-312.9bn.
- Delhivery plans to use the IPO proceeds for funding organic growth initiatives such as building scale and expanding network infrastructure as well as for funding inorganic growth.
Coupang: Four Major Factors to Drive Higher Profit Margins in 2022
- We have been Bearish on Coupang since 12 May 2021. Now we are turning Positive since we believe the valuations have become a lot more attractive.
- We highlight four major factors that could result in higher profit margins for Coupang in 2022 including competitors exiting early dawn service, lower COVID and EATS related costs.
- Our base case valuation of Coupang is implied market cap of $24.9 billion and target price of $14.1 per share, representing 32% upside from current levels.
Aristotle Capital Management Global Equity 1Q 2022 Commentary
- For the first quarter of 2022, Aristotle Capital’s Global Equity Composite posted a total U.S.
- dollar return of -9.19% gross of fees (-9.28% net of fees) The company is an independent/employee-owned investment management organization that specializes in equity and fixed income portfolio management.
Mindtree-LTI: Merger Announced to Form India’s 5th Largest IT Services Player
- On 6th May 2022, Larsen & Toubro (LT IN)‘s publicly-listed subsidiaries Mindtree Ltd (MTCL IN) and Larsen & Toubro Infotech (LTI IN) announced plans to merge.
- I discussed this situation previously in Mindtree-LTI: A Potential US$20bn+ Indian Tech Merger; Mindtree Could Outperform LTI when the ratio was 0.66, expecting a scrip ratio north of 0.70.
- Below is a closer look at the details of the transaction and the outlook for the combined entity.
Palantir 1Q22 Earnings: War Supposedly Good for Business?
- Revenue growth ex-SPAC decelerated to 19% this quarter, 11% below consensus.
- 1Q22 20% operating margins vs. consensus 27% margins as the company invests to reaccelerate growth in 2H from rising government contracts due to war.
- Alex Karp warns that nuclear war in Ukraine is being dramatically underestimated.
Canon (7751) – Buyback Looks Small But Shareholder Structure Matters
- Canon Inc (7751 JP) on Monday announced a share buyback programme.
- It isn’t very big. But it bears consideration because of other things going on.
- Shareholder structure is of much more importance than many investors appreciate. Here even more so.
Hon Hai (2317.TT): 1Q22 Preview/2Q22 Outlook- For 2022, It Could Be the Lowest Revenue in 2Q22.
- Hon Hai’s revenue was NT$1,408bn in 1Q22. We expect the OPM and EPS would be ~2.2% and ~NT$2.18 in 1Q22.
- It’s a gradually increase for end-product shipment in 2021, but we think it might be followed by a slower season in 2Q22.
- Hon Hai’s target is to address the profit in 2022. For 2022, we believe it could be the lowest revenue in 2Q22.
Before it’s here, it’s on Smartkarma