TMT: LINE Corp, Ant Financial, Synnex Thailand and more

In today’s briefing:

  • LINE (3938) – This Is Not the Kitchen Sink You Are Looking For
  • Ant Group IPO First Look: Swarming to Market
  • SYNEX: Expect Earnings to Grow YoY in 2020 but Has Mostly Priced In

LINE (3938) – This Is Not the Kitchen Sink You Are Looking For

By Travis Lundy

Since writing my two insights describing how I thought betting on a LINE bump was not the best trade out there in Bump-Land, I have received no small amount of pushback by investors who are long the bump trade. 

My response?   That’s what makes a market. 

Today, LINE Corp (3938 JP) announced its Q2 earnings, showing both a normal operating loss and additional extraordinary losses from write-downs. That will not encourage some and I expect there may be some accusations of LINE kitchen-sinking their earnings before a Special Committee (and this has its own issues) decides to revisit the fair price valuation through a re-valuation and an updated Fairness Opinion. 

For those worried about that, I offer the following:

More discussion below.

Previous insights related to this situation and the names involved are listed below.

Relevant Insights


About Cashless Payments

13 Mar 2019 Michael Causton  Loyalty Points In Japan: More Loyalty, More Points and the Conduit to Cashless Payments 
2 Apr 2019 Mio Kato, CFA  Mercari: Why Mercari Is Likely to Be a Winner in the Cashless Wars 
28 Jun 2019 Supun Walpola  Paying with PayPay: A Deep Dive into Yahoo! Japan’s Mobile Payment Business 
6 Jan 2020 Michael Causton  Lawson and KDDI Join Forces in Cashless Payments War 
24 Jan 2020 Michael Causton  Mercari – Merpay Acquisition of Origami Pay Continues Cashless Consolidation 
15 Feb 2020 Michael Causton  Japan Payment Wars: NTT Docomo and Merpay/Origami to Attempt Catch up with PayPay and Rakuten 
20 Mar 2020 Michael Causton  Some Resistance to Cashless Payments in Japan 
28 Apr 2020 Michael Causton  Z Holdings and Yamato Create Fulfilment Service for All to Rival Rakuten and Amazon 
29 July 2020 Supun Walpola  Z Holdings [Alt Data]: PayPay Mall and PayPay Flea Market Continue to Disappoint 

About This Deal

14 Nov 2019Travis Lundy Z and LINE, Sitting in a Tree… M.E.R.G.I.N… G…? 
18 Nov 2019Travis Lundy LINE and Z, Sitting in a Tree… M.E.R.G.I.N.G! And a Tender Offer! 
26 Dec 2019Travis LundyNEW Deal for LINE (A Lot Like the Old Deal)
6 July 2020Travis Lundy Market Is Pricing a LINE Bump – Should It? 
22 July 2020travis Lundy A LINE Bump – The Other Argument Against 

Ant Group IPO First Look: Swarming to Market

By Arun George

Ant Financial (1051260D CH)/Ant Group is a technology company that provides digital payment services and digital financial services to consumers and small and micro businesses (SMBs) in China and across the world. Ant said last week it would pursue a simultaneous dual-listing in Hong Kong and on the Shanghai stock exchange’s STAR board. The Hong Kong share sale alone could raise about $10 billion at a $200 billion valuation, according to press reports. 

In this note, we take a first look at Ant and run through its history, industry and operating segments. We then take a closer look at the rumoured $200 billion valuation in the context of Ant’s financial performance. Based on available disclosure, our estimates and peer group multiples, the $200 billion valuation is justifiable, in our view.  

SYNEX: Expect Earnings to Grow YoY in 2020 but Has Mostly Priced In

By Research Group at Country Group Securities

We expect SYNEX earnings to grow 15%YoY in 2020E amid negative environment in overall spending induced by global widespread of coronavirus. This driven by huge IT product purchase fueled by Work-from-home buyers and  the company’s strategy that moving toward high-margin IOT related devices. However, we downgrade rating for SYNEX to HOLD as near-term positive factors were mostly priced after share price surged 48%MTD and 93% since our latest update on 8th May to trade at 17.2xPE’20E (+1 S.D. 5-year average), the last time seen in October 2018.

• Anticipating PC market recovery in 3Q20 onwards
• Shifting product mix toward high margin segment
• Maintain earnings growth forecast to grow 17%CAGR in 2020-22E

We downgrade SYNEX with HOLD rating and rollover target price to Bt10.10 (Previous TP Bt8.40) derived from 12.9xPE’21E, information and technology sector. The company still offer high dividend yield at 5% and still will be one of the first benefit takers from 5G network launch in late 2020.

Before it’s here, it’s on Smartkarma