Daily BriefsTMT/Internet

TMT: Koei Tecmo Holdings, Alibaba Group, Hyundai Motor Co, Sumo Logic Inc and more

In today’s briefing:

  • MSCI Japan Index Rebalance Nov20: No Surprises with 5 Adds, 21 Deletes
  • Alibaba: 2Q Positives Are Hard to Ignore
  • Korea M&A Spotlight: Hyundai Motor In Talks to Acquire Boston Dynamics from Softbank
  • Sumo Logic. One of the Most Undervalued Unicorns in Our SaaS/Cloud Coverage Universe


Alibaba: 2Q Positives Are Hard to Ignore

By Supun Walpola

We feel that the market has not been as enthusiastic as it should be about Alibaba Group (BABA US)’s 2Q FY03/21 financial results. While this cautious response could have been due to Ant Group (6688 HK)’s failed IPO earlier in the month, we believe Alibaba’s 2Q positives are too hard to ignore. With marketplace business revenue growth decelerating at a much slower rate than before, and non-marketplace retail and cloud businesses moving closer to making profits, we believe it is a good time to have long exposure to Alibaba, regardless of how Ant’s IPO eventually plays out.


Korea M&A Spotlight: Hyundai Motor In Talks to Acquire Boston Dynamics from Softbank

By Douglas Kim

According to Bloomberg, Hyundai Motor Co (005380 KS) is in discussions to purchase Boston Dynamics. Although the exact terms are yet to be finalized, the local media mentioned that the purchase price could fetch nearly $1 billion for the control of Boston Dynamics, which is best known for one of the most advanced robotic systems in the world including BigDog and the humanoid Atlas.

If the deal is successfully completed, we think that the market would view this deal positively on Hyundai Motor. Keep in mind that this M&A deal could potentially fall apart due to many issues including price.  


Sumo Logic. One of the Most Undervalued Unicorns in Our SaaS/Cloud Coverage Universe

By Andrei Zakharov

Sumo Logic set IPO price at $22 per share and successfully raised ~$340 million from the sale of 14.8 million shares of common stock in September. Underwriters have exercised in full their option to purchase ~2.2 million shares at IPO price. Moreover, entities affiliated with Tiger Global Management have agreed to purchase ~1.8 million shares at IPO price too. Therefore, we believe IPO was oversubscribed and Sumo could sell shares to investors at above the initial price range. Despite this fact, shares of Sumo Logic closed at ~$27 a share and climbed 22% on its first trading day.

However, rally was shortlived and later Sumo Logic shares fell ~37% from all time-high and could find the bottom near $17 a share. Investors were disappointed by slowing revenue growth rates next year, high cash burn rates and increased customer churn for customers with ARR<$100K.


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