Daily BriefsTMT/Internet

TMT: Tencent, Apple Inc, NetEase Inc, Demae-Can Co., Ltd., Kakao Corp, CE Info Systems (MapmyIndia) and more

In today’s briefing:

  • Tencent 410 as HSI Digs for a New Low
  • Not an Epic Ruling Against Apple
  • Epic Apple Esque Duel in China? or Nah?
  • Demae-Can’s Latest Offering Preserves The Potential for TOPIX Inclusion
  • Why Is the Korean FTC Investigating K-Cube Holdings? (Owned by Kakao Group Chairman Kim Beom-Soo)
  • CE Info Systems (MapmyIndia) Pre-IPO Tearsheet

Tencent 410 as HSI Digs for a New Low

By Thomas Schroeder

Tencent call to re test the 410-20 macro support in our August 25 insight. The ideal long set up faces regulatory headwinds but needs a washout low in the HSI and HK tech.

HSI short targets a potential triple low at 24,600 but a washout low to 24,000 is favored to set the stage for a short squeeze rise. If Tencent can hold 410 key support during this process, it sets the stage for a higher conviction long in Tencent (re test of the 410 buy support).

510 is near resistance and the short zone (500). Conviction rests with buying a macro support re test with policy headwinds into year end.

Below 400 opens the way lower to 330-20.


Not an Epic Ruling Against Apple

By Mio Kato

While the battle for payment systems between Epic and Apple will continue with Epic filing an appeal, the rather mild ruling against Apple has some interesting implications, as do the responses of both companies to the ruling. In the context of regulatory upheaval in the key gaming space in China and a slew of regulatory moves in other Asian countries such as Japan and South Korea, there is plenty worth mulling as new winners and losers could emerge.


Epic Apple Esque Duel in China? or Nah?

By Jason Yap, CFA

The Epic Apple duel has recently concluded its first inning. The latest US ruling disrupts Apple’s stranglehold over the App Store and consequently its cut of developer revenues but fell short of confirming that Apple operated as an illegal monopoly.  An Epic appeal is underway.  While a certain segment of the US population gushed with anger over Apple’s 30% cut of revenue charged to developers, elsewhere in China the situation is starkly different.

China app developers typically aim to secure all available distribution channels at all costs, which means simultaneous pre-launch conversations with multiple app store vendors.  The most popular apps often gain the most traction through push adverts on these app stores, or so the developers rationalise to themselves as they fork up to 50% commission fees to app stores and mobile carriers. By this measure, Apple seems almost benevolent!  But, why?

This article explores the App Store dynamic in China, which is dominated by Android smartphone manufacturers, and discusses whether an Epic Apple esque duel might unravel in China. 


Demae-Can’s Latest Offering Preserves The Potential for TOPIX Inclusion

By Janaghan Jeyakumar, CFA

Japan-based food delivery company Demae-Can Co., Ltd. (2484 JP) launched a follow-on equity offering after market-close today to raise capital for business expansion. 

In this offering the company will be issuing 55,436,400 new shares and selling 3,240,000 treasury shares out of which a total of 19,293,900 shares will be allocated to the public and 39,382,500 shares will be allocated for Z Holdings (4689 JP) and South-Korea based Naver Corp (035420 KS). Based on today’s closing price, the total size of this equity offering could be around ~¥105bn (US$950mn) and the portion allocated to public shareholders could be around ~¥35bn (US$315mn). However, the official announcement estimates the minimum size of the equity offering to be around ~¥80bn (US$726mn) and the above-mentioned allocation can change slightly depending on share price movement and public investor interest. 

There is a really interesting event angle here which should pique the interest of investors. 

More below.


Why Is the Korean FTC Investigating K-Cube Holdings? (Owned by Kakao Group Chairman Kim Beom-Soo)

By Douglas Kim

In this insight, we analyze why the Korean FTC is investigating K-Cube Holdings, which is 100% owned by the Kakao Group Chairman Kim Beom-Soo (born in 1966). It was reported on 13 September that the Korean Fair Trade Commission (FTC) may be taking sanctions against the Kakao Group Chairman Kim Beom-Soo, which comes after the Financial Services Commission (FSC) announced measures last week that unless Kakao Pay changes the way it currently provides its financial services, there could be further sanctions on the company.

Following this news, Kakao Corp (035720 KS)‘s share price fell another 4.2% today. Since the recent peak share price of 173,000 won on 24 June, Kakao Corp’s share price has declined 28%. 

In our view, the two biggest issues potentially facing K-Cube Holdings is the ‘separation of the industrial and financial capital’ (금산분리) as well as concerns about K-Cube Holdings that could be used to benefit the children of Kakao Group’s Chairman at the expense of the minority shareholders of Kakao Cop. 


CE Info Systems (MapmyIndia) Pre-IPO Tearsheet

By Clarence Chu

CE Info Systems (MapmyIndia) is looking to raise US$137m in its upcoming India IPO. The deal will be run by Axis Capital, JM Financial, Kotak and Dam Capital.

CE Info Systems is India’s leading provider of advanced digital maps, geospatial software and location-based IoT Technologies, as per Frost & Sullivan (F&S). As of 31 Mar 21, it’s digital maps cover 6.29m km of roads in India, and have serviced over 2,000 enterprise customers since its inception. Its services include digital maps as a service (MaaS), software as a service (SaaS) and platform as a service (PaaS). In FY21, it had over 500 customers on its MaaS, SaaS and PaaS platforms.


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