In today’s briefing:
- Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation
- JPX-Nikkei 400 2022 Rebal: Final Predictions
- End of Mandatory Lock-Up Periods for 40 Companies in Korea in July 2022
- Tencent Bear Case for New Lows
- Tencent: End of Another Quarter with No New Game Approval and Prosus Selling
- Bukalapak (BUKA IJ) – Track the Execution Not the Headlines
- HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
- Hang Seng Index Constituents 30th June 2022
- Pure Storage (PSTG): Market Leader Facing Commoditization of Its Products
Softbank Group – Expiration of SenseTime Lock-Up Has Lopped $1.5bn off the VF Valuation
- Just as the December quarter was flattered by the last minute IPO of SenseTime Group (20 HK), expiration of the lockup six months later has delivered a corresonding valuation hit
- Vision Fund is still up on that investment but the public portfolio is flirting with a $10bn loss for the quarter depending on how US shares trade later
- The discount has improved modestly to 49% from 51% but remains at the high end of the recent range as worries on tech valuations cast a long shadow
JPX-Nikkei 400 2022 Rebal: Final Predictions
- JPX-Nikkei 400 is composed of stocks listed on the Tokyo Stock Exchange selected based on multiple metrics relating to size, liquidity, financial performance, and corporate governance.
- The annual rebalance of the JPX-Nikkei 400 Index takes place in August every year and the cut-off date for the data used for this rebalance is the end of June.
- In this insight, we take a look at Quiddity’s final predictions for Potential ADDs/DELs for the August 2022 review.
End of Mandatory Lock-Up Periods for 40 Companies in Korea in July 2022
- We discuss end of the mandatory lock-up periods for 40 stocks in Korea in July 2022, among which 7 are in KOSPI and 33 are in KOSDAQ.
- These 40 stocks on average could be subject to further selling pressures in July and could underperform relative to the market.
- Among these 40 stocks, LG Energy Solution (373220 KS) and Heung A Shipping (003280 KS) could face further selling pressures in the coming weeks.
Tencent Bear Case for New Lows
- Tencent exhibits a compelling bear case in the form of triangle slated to break down to press on macro 310 support. A wave 5 new low near 280/263 is targeted.
- MACD turning down from macro resistance stand out as a compelling direction signal that aligns with the bearish triangle a-b-c bounce count.
- This new low would (terminal wave 5 cycle trough) represent a macro buy entry to challenge the 420 macro bull/bear line.
Tencent: End of Another Quarter with No New Game Approval and Prosus Selling
- Tencent’s share price is down 6.5% over the last five days as largest shareholder Prosus sais that it would sell down Tencent shares to fund the buyback of Prosus/Naspers shares.
- Though Chinese regulators removed the ban on new game approval in April this year, none of Tencent’s new game titles received approvals in over the last two months.
- Tencent’s 1Q2022 earnings were weak and we expect 2Q2022E earnings to further decelerate with resurgence of Covid cases in China alongside weak macroeconomy.
Bukalapak (BUKA IJ) – Track the Execution Not the Headlines
- Bukalapak (BUKA IJ) held its AGM this week, which effectively repeated the messages from its 1Q2022 results including guidance for FY2022 but there is more excitement beneath the headline numbers.
- One key metric tracked by management is the contribution margin, which is moving towards positive territory put take rates will improve for both Mitra and through its specialty store strategy.
- AlloFresh has launched and is testing the offline line efficiencies before being applied to Mitra partners and AlloBank has also started its digital journey. Bukalapak looks cheap.
HSCEI Index Rebalance: Bilibili Replaces Sunac Next Week
- Bilibili (9626 HK) will replace Sunac China Holdings (1918 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close of trading on 8 July.
- While Bilibili (9626 HK)‘s index inclusion is a surprise, the impact from passive fund trading is not a lot. Nothing much one can do on Sunac China Holdings (1918 HK).
- The Hang Seng China Enterprises Index (HSCEI INDEX) will drop 16.12 points at the close on 8 July. Something for traders to watch out for over the next week.
Hang Seng Index Constituents 30th June 2022
- Hong Kong Stocks are more excited than the mainland about cutting the Quarantine period from 14 to 7 days.
- The 25th Anniversary of the Hong Kong handover means more stability ahead of celebrations and trading dominated by position squaring.
- Only Xiaomi shows signs of a breakout. It broke the downtrend from August 2021 with the inside days in the last two trading sessions. It looks like it will test the breakout and cover it next week.
Pure Storage (PSTG): Market Leader Facing Commoditization of Its Products
- Enterprise storage hardware market faces numerous headwinds and increasing commoditization
- STaaS is cannibalistic, facing increasing competition, and decelerated in the MRQ
- Each of the last 2 quarters have seen some meaningful, non-recurring revenues lead to PSTG beating estimates
Before it’s here, it’s on Smartkarma
