Daily BriefsTMT/Internet

TMT: Coocon Corp, Nintendo Co Ltd, Xiaomi Corp, Electrocomponents PLC, Safie, Kuaishou Technology, NCSOFT Corp and more

In today’s briefing:

  • KOSDAQ150 Index Rebalance: Pullback Done; Buy Adds & Sell Deletes
  • Nintendo – Time to Start Buying Again if You Are a Long-Term Investor
  • Xiaomi 3Q2021: Chip Shortage Hits Smartphone Shipments; Apple Reclaims No.2 Position
  • FTSE100/FTSE250 Index Rebalance Preview: Trading Places
  • Safie – Overreaction to Specific Distributor Issue
  • Kuaishou 3Q2021: ARPPU and User Growth Point to Recovery in Live Streaming Earnings
  • NCSoft – Minnows Attract Sharks and Sharks Attract Whales

KOSDAQ150 Index Rebalance: Pullback Done; Buy Adds & Sell Deletes

By Brian Freitas

  • There are 15 inclusions and 15 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the next rebalance to be implemented at the close on 9 December.
  • The inclusions were expected but there are a few surprises among the deletions as the Information Technology sector was spared at the expense of the Health Care sector.
  • Over the last couple of months, the inclusions have given up their early gains versus the deletions. With the announcement made, the inclusions could outperform over the next few weeks.

Nintendo – Time to Start Buying Again if You Are a Long-Term Investor

By Mio Kato

  • We have been skittish to turn genuinely bullish on Nintendo since early July. 
  • While we have called the stock oversold several times since then we did not feel it was ready to really begin a strong rally. 
  • We are still not certain it is, but valuations are cheap enough that we are more focused on what could be a spectacular pipeline for 2022 than on downside risks.

Xiaomi 3Q2021: Chip Shortage Hits Smartphone Shipments; Apple Reclaims No.2 Position

By Shifara Samsudeen, ACMA, CGMA

  • Xiaomi’s revenue grew 8.2% YoY to RMB78.1bn (vs consensus RMB88.7bn) while reported OP decreased 59.2% YoY to RMB2.7bn (vs consensus RMB5.7bn) in 3Q2021. However, adjusted OP increased 45.4% YoY.
  • Revenue from smartphones increased only 0.5% YoY due to a 5.8% YoY decrease in smartphone shipments that were affected due to the ongoing chip shortage.
  • Xiaomi has provided an update on its EV initiative where it has currently built a team of over 500 and expects to launch mass production of smart EVs in 1H2024.

FTSE100/FTSE250 Index Rebalance Preview: Trading Places

By Brian Freitas

  • At the December rebalance, Electrocomponents and Dechra Pharma could replace Johnson Matthey and Darktrade in the FTSE 100 Index, while there could be three changes to the FTSE 250 Index.
  • The changes will be based on prices from 30 November, the announcement of the changes will take place on 1 December and implemented at the close on 17 December.
  • There will be a large impact on the inclusions to the indices and on stocks that are migrating upward. The impact on the deletions and downward migrations is much smaller.

Safie – Overreaction to Specific Distributor Issue

By Mio Kato

  • Safie has fallen almost 20% since announcing results despite revising up revenue guidance by 3.8%. 
  • This is due to revelations that a lone distribution partner had been heavily incentivising the sale of its cameras and return rates had been climbing. 
  • While this does cast a shadow on previous growth trends a careful analysis suggests that it is not a grave concern.

Kuaishou 3Q2021: ARPPU and User Growth Point to Recovery in Live Streaming Earnings

By Shifara Samsudeen, ACMA, CGMA

  • Kuaishou’s 3Q2021 revenues grew 33.4% YoY to RMB20.5bn (vs consensus RMB20bn) while operating losses for the quarter widened to 36.1% of revenues vs 9.0% in 3Q2020.
  • Live streaming revenues for the quarter decreased 3.0% YoY to RMB7.7bn, however, it has increased 7.4% sequentially after seeing QoQ declines over the last 6 quarters.
  • Online marketing services reported another quarter of strong growth with revenues increasing 76.5% YoY to RMB11.0bn. However, we have observed that the growth is decelerating.

NCSoft – Minnows Attract Sharks and Sharks Attract Whales

By Ken S. Kim

  • NCSoft moved on the following positives from their call – 1) NFT game in 2022 and 2 success of Lineage W thus far
  • One thing problematic was the concentration bet by one whale
  • Has the worst passed for NCsoft? The monetization of Lineage W will be key

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