Daily BriefsTMT/Internet

TMT: Hang Seng Tech Index, 51 Job Inc Adr, TSMC, Bukalapak, SKonec Entertainment, Tata Consultancy Svcs, Bitcoin and more

In today’s briefing:

  • A Share Fizzle – HK Tech Bullish Base
  • 51job’s Lowered Privatisation Bid
  • TSMC – Exceptional as Usual
  • Bukalapak: Still Overvalued & Former CEO’s Ownership Is an Overhang
  • Skonec Entertainment IPO Valuation Analysis
  • Earnings Update | TCS: Reports Decent Earnings
  • Crypto: A Demographic Based Investment Thesis

A Share Fizzle – HK Tech Bullish Base

By Thomas Schroeder

  • A share pop a flash in the pan and still shows heavy price action as the bull wedge matures into late January.
  • HSI is meeting the fresh short target zone near 24,700 with a minor new low in store for late January.
  • HK tech is making strides to bottom as RSI divergence matures but still needs some final strokes for a higher conviction base.

51job’s Lowered Privatisation Bid

By Arun George

  • The consortium’s updated transaction has lowered the offer price -27.6% to $57.25 in cash per ADS, a 24.92% premium to the last trading price (11 January 2022).
  • The combination of the dramatically lower price, spurious justification for lowering the price and the shares recently trading higher than the revised price is unlikely to win over minorities.
  • Meeting the two-thirds shareholder approval threshold is likely a challenge due to the need to convince around 27% of disinterested shareholders to vote in favour of the transaction. 

TSMC – Exceptional as Usual

By Mio Kato

  • TSMC posted results at or above the top end of its guidance ranges for 4Q21 at the revenue, GPM and OPM levels. 
  • Guidance for 1Q22 was also punchy with the midpoint of revenue guidance 6.0% above consensus and mid to high 20s revenue growth guidance for the year. 
  • We still suspect however that momentum could actually accelerate through the year.

Bukalapak: Still Overvalued & Former CEO’s Ownership Is an Overhang

By Oshadhi Kumarasiri

  • With the penetration rate as high as 42%, Mitra could be fast running out of room for growth.
  • Consensus seems to be overestimating Bukalapak (BUKA IJ)’s 2021 and 2022 revenue by 22% and 40% respectively.
  • At 6.0x consensus FY+2 revenue, Bukalapak is still expensive compared to the peer average of 4.3x.

Skonec Entertainment IPO Valuation Analysis

By Douglas Kim

  • We expect a wide price range ranging from 18,001 won to 39,939 won for Skonec Entertainment IPO, which is much higher than the high end of IPO price range.
  • We estimate Skonec to generate sales of 6.0 billion won in 2021 (up 27.6% YoY) and 13.9 billion won in 2022 (up 132% YoY). 
  • Skonec Entertainment’s main business is VR-based content production. It has also been providing metaverse VR game business through VR platforms such as Oculus and PlayStation.

Earnings Update | TCS: Reports Decent Earnings

By Ankit Agrawal, CFA

  • TCS reported a healthy revenue growth of 15.4% YoY in constant currency (CC) terms. Operating margins contracted by -60bp to 25%, due to supply-side challenges. 
  • LTM attrition for TCS was 15.4%, best in the industry. However, on an absolute basis, it is high and TCS is continuously working on stabilizing it.  
  • Growth has been broad-based across sectors and the demand outlook remains robust on the back of strong spends by corporates on digital transformation and adoption of cloud.

Crypto: A Demographic Based Investment Thesis

By Josh Du

  • It’s commonly known that investment theses are the most powerful when demographic trends are on your side. Crypto adoption may enjoy the same tailwind as internet adoption
  • We analyze the fact that the younger segment of the population has evolved to be early adopters of crypto and blockchain technology, which protends strong future growth
  • We argue that the young are embracing crypto because it is a much easier game to play and win for those who do not benefit as traditional asset owners 

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