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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
Before it’s here, it’s on Smartkarma
