Daily BriefsTMT/Internet

TMT: Mercari Inc, Tether, Qingdao Ainnovation Technology Group Co Ltd, Akm Industrial, Hcl Technologies, Money Forward and more

In today’s briefing:

  • Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months
  • Crypto Weekly: Will Hong Kong Be the Macau of Crypto?
  • AInnovation Technology IPO Initiation: Code Amber
  • AKM Industrial’s Privatisation Bid
  • HSIE Results Daily: HCL Technologies
  • Money Forward (3934) – Solid, Not Spectacular

Mercari (4385) Applying for TSE Prime Means TOPIX Inclusion in 4-5 Months

By Travis Lundy

  • Mercari was expected to announce at some point that it would attempt to transfer to TSE Prime. They have now announced. 
  • This will end up being a BIG TOPIX inclusion in May or June. 
  • And the changes to the TOPIX Free Float Weight Methodology will mean it is bigger than it would have been under the old regime (despite unchanged FFW).

Crypto Weekly: Will Hong Kong Be the Macau of Crypto?

By Josh Du

  • HKMA released a discussion paper on the regulation of stablecoins in Hong Kong which seems to suggest a divergence in regulatory approach towards crypto from China’s current stance
  • China has historically allowed banned activities from the mainland to operate in a controlled environment such as gaming in Macau
  • We explore the potential that HK is the perfect firewalled environment where crypto could be allowed to develop without contagion for the rest of China

AInnovation Technology IPO Initiation: Code Amber

By Arun George

  • AInnovation Technology (AIT HK) is a fast-growing enterprise AI solutions provider in China. It is set to launch an HKEx IPO to raise up to US$157 million.  
  • The fundamentals are mixed as diverging growth profiles of key segments, low market share and cash burn are accompanied by a narrowing loss margin. 
  • Overall, we believe the negatives outweigh the positives and we would give the IPO a pass. 

AKM Industrial’s Privatisation Bid

By Arun George

  • Akm Industrial (1639 HK) announced a privatisation offer from Alpha Luck and AKM Meadville at HK$1.82 per scheme share, a 14.47% premium to last full trading day price of HK$1.59. 
  • The key pre-condition is several regulatory approvals which be forthcoming as Alpha Luck is indirectly 100% owned by the SASAC. 
  • The key condition is the scheme approved by at least 75% disinterested shareholders (<10% disinterested shareholders rejection). We think the offer price is reasonable and the scheme will pass. 

HSIE Results Daily: HCL Technologies

By HDFC Securities

We maintain our BUY rating with a target price of INR 1,485, valuing the HCLT stock at 22x Mar-24E EPS, factoring in +13/14% CAGRs in revenue/EPS over FY21-24E HCL Technologies: We maintain BUY on HCL Tech (HCLT), supported by strong growth in services (+5.3% QoQ CC) and recovery in P&P (+24.5% QoQ CC). The services growth was led by ER&D but the ~200 bps decline in margin was higher than peers. Key attributes that support our growth outlook are: (1) growth momentum in ER&D services (+8.3 QoQ CC), supported by digital engineering and IoT services; (2) robust TCV of USD 2.14bn (+64% YoY growth), led by eight large deals in services and product; and (3) strong fresher hiring, which will continue in FY23E.

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Money Forward (3934) – Solid, Not Spectacular

By Mark Chadwick

  • Money Forward reported full year results post close on Friday. The stock will react negatively…probably.  
  • The stock is down 45% from its 52-week high, along with most high growth SaaS stocks 
  • The fundamentals, earnings and growth remain intact, but valuations are unlikely to recover as excess liquidity drains out of the market.  One for patient LT investors

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