Daily BriefsTMT/Internet

TMT: SK Inc, Tencent, Cloud Village, Xiaomi Corp, Freshworks, Kuaishou Technology, ByteDance, Ferrotec Corp, Uniswap, Playtech Plc and more

In today’s briefing:

  • SK Inc Merger: KOSPI 200 Passive Impact at the Close on November 28
  • Riot Games – Arcane Topples Squid Game and Wave’s Virtual Justin Bieber
  • Cloud Village (NetEase Music) IPO: Valuation Insights
  • Xiaomi (1810 HK): 3Q21, Stagnant Smartphone Sales
  • Beyond 280 | Freshworks (FRSH US) – Conversation with an Industry Channel
  • Kuaishou (1024 HK): 3Q21, Growth Rates of Active Users Recovered Strongly
  • A Late Starter, ByteDance Begins to Accelerate Its Effort in Healthcare
  • Ferrotec Placement – Small Deal for Accretion that Will Take a While
  • Uniswap (UNI) Part 3 – The Investment Risks and How Anyone Can Generate Passive Income on Uniswap
  • More Suitors for Playtech

SK Inc Merger: KOSPI 200 Passive Impact at the Close on November 28

By Sanghyun Park

  • Attention is now being drawn on index rebalancing trading for SK Inc ahead of the trading suspension of SK Materials’ stocks, which begins on November 29.
  • The KRX will apply SK Inc’s increase in the number of shares on the start date of the trading suspension (November 29), not the new stock listing date (December 27).
  • Combining the above two, we should expect a passive inflow of about ₩14.4Bat the close on November 28, representing 0.30x 30-day ADTV.

Riot Games – Arcane Topples Squid Game and Wave’s Virtual Justin Bieber

By Mio Kato

  • Riot has been busy this month as its animated series Arcane based on League of Legends dethroned Squid Game’s long reign on Netflix.
  • It also assisted Wave in noticeably improving its virtual concerts, this time featuring Justin Bieber.
  • Thus, Riot could be Tencent’s best metaverse asset, but is it enough?

Cloud Village (NetEase Music) IPO: Valuation Insights

By Arun George


Xiaomi (1810 HK): 3Q21, Stagnant Smartphone Sales

By Ming Lu

  • Smartphone revenue stopped growing in 3Q21 and we believe the situation will continue in 2022.
  • We believe the margin is not a concern, as the company close its sales in rural area.
  • We believe the stock has a downside of 30% for the end of 2022.

Beyond 280 | Freshworks (FRSH US) – Conversation with an Industry Channel

By Pranav Bhavsar

  • In this “Beyond 280”, we speak to an Industry Channel with an objective to understand long term revenue growth potential for SaaS company like Freshworks (FRSH US)
  • We also discuss how one should look into early lock-up releases. (One of the reasons we believe for recent stock price pressure)
  • Based on our discussion, we believe the opportunity size and growth potential is intact, weakness on account of events like lock-up releases could be attractive entry points. 

Kuaishou (1024 HK): 3Q21, Growth Rates of Active Users Recovered Strongly

By Ming Lu

  • We believe Kuaishou (KS)’s loss was acceptable, as the rapid growth of active users are extremely valuable.
  • Online marketing revenue and e-commerce revenue increased dramatically and the declining rate of live streaming slowed down.
  • We believe the stock will have an upside of 36% for the end of 2022.

A Late Starter, ByteDance Begins to Accelerate Its Effort in Healthcare

By Immanuel Nama

  • ByteDance’s ambition in healthcare – According to EqualOcean data, ByteDance has invested in 56 companies in 2021 only
  • Expanding in adjacent fields – It is generally easier to invest in areas that are more compatible with a company’s core businesses.
  • Still, a long way to go – Online healthcare is a domain full of risks. 

Ferrotec Placement – Small Deal for Accretion that Will Take a While

By Zhen Zhou, Toh

  • Ferrotec Corp (6890 JP) is looking to raise about US$200m in its placement to fund its expansion and paydown debt.
  • The placement will be used to fund capital investment in a number of subsidiaries over a few stages. Hence, accretion will take time.
  • The deal scored well on our framework owing to its strong momentum, undemanding valuation and good track record.

Uniswap (UNI) Part 3 – The Investment Risks and How Anyone Can Generate Passive Income on Uniswap

By Josh Du

  • This is (final) part 3 of our deep dive, we explore the unique investment risks to consider when considering crypto projects
  • Why crypto today is like the railroad industry in the 1850s 
  • And how anyone can generate sizable passive income by providing liquidity on Uniswap

More Suitors for Playtech

By Jesus Rodriguez Aguilar

  • Since Playtech Plc (PTEC LN) started putting its house in order, it is receiving a lot of interest, in a sector that has attracted M&A activity in 2020 and 2021.
  • Assuming the potential offer is at an EV of £3 billion, the potential offer price would be c. 830p. Shares offer an 8.9% 22e FCF yield.
  • I have revised my valuation following interest in the company. Median implied EV/Fwd EBITDA TP is 841p, c.24% higher than offer from Aristocrat, in line with that suggested by Gopher.

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