Information Technology Archives | Smartkarma

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• Our base case valuation of WCP is EV of 2.4 trillion won, implied market cap of 3.0 trillion won and target price of 87,805 won per share. 
• Given the lack of upside relative to the IPO price range (80,000 won to 100,000 won), we would PASS on this IPO deal.
• We forecast the company to generate revenue of 229.1 billion won (up 23.5% YoY) in 2022. We estimate operating margin of 14.8% in 2022, lower than 21.8% in 2021.

• Q1 OP +8%, but core OP (pre-adjustments) fell 18% YoY on significant decline in profitability 
• Bulls may point to the surprising strength in orders, but the boost from China re-opening and weaker yen are not reflective of the underlying outlook
• We think Yaskawa will be hard-pressed to make full year guidance of ¥72b. Stay bearish for now

• Shift reported 3QFY08/2022 results yesterday. Revenue grew 36.1% YoY to JPY17.1bn (vs consensus JPY18.3bn) while OP grew 25.7% to JPY1.3bn (vs consensus JPY1.54bn).
• Revenue from the largest segment Enterprise market grew 35.3% while enterprise segment grew 47.5% YoY during the quarter.
• According to Shift, the application of revenue recognition standard has lowered revenues and OP. The drop in OPM was due to heavy SG&A expenses as a result of hiring.

• The FTSE TWSE Taiwan Dividend+ Index is an index of stocks with the highest dividend yields in the universe of the FTSE TWSE Taiwan 50 and Mid-Cap 100 Indices.
• According to our estimates, the historical average return for index rebalance trades seems to be extremely attractive and the potential volume impact can be significant too.
• We feel this is one of the most interesting esoteric indices in the Asia-Pacific region for index rebalance trades.

• Dye & Durham (D&D) has bumped its offer for Link Administration (LNK AU) to $4.57/share after its prior revised $4.30/share bid was rejected. 
• Link shareholders may also receive an additional A$0.13 from the sale of the Banking and Credit Management (BCM) business under the latest offer.
• Link said it will consider the proposal and continue to engage with D&D.

• Dye & Durham/DND has bumped its lowered offer by 6.3% to A$4.57 per share. The Link Administration (LNK AU) Board has postponed the 13 July scheme meeting to facilitate discussions. 
• DND’s “sweetened” A$4.57 base consideration plus the potential BCM consideration of A$0.13 totals exactly A$4.70 per share. This suggests that Board is aiming for a A$4.70 base consideration.  
• DND is clearly interested in Link. Bridging the 2.8% price gap between the buyer’s and seller’s price aspirations is not onerous and suggests a deal can get done.

• Vltava is a global equity investment fund. Our objective is to achieve long-term capital growth of the assets under management while investing primarily into stocks of publicly traded companies.
• Today, inflation is higher by multiples, it is completely out of control, and, as so often happens, the market is again teaching a lesson to those endeavoring to vanquish it.
• Oil companies are today essentially being pilloried for extracting oil at all, meanwhile banks are refusing to finance the needed investments.

• Vision Fund head Rajeev Misra will step down from Vision Fund 2 to take a new gig managing money for Midde Eastern partners. His VF1 role is unchanged for now
• Structurally, this does not change very much as Son-san has always been the decision maker on investments and we never considered Misra as a candidate for succession
• After surviving $47bn in public equity losses over the last year, it surprisingly looks like Misra’s departure is voluntary

• WCP is getting ready for an IPO in Korea in August. This is expected to be one of the largest IPOs in Korea post LG Energy Solution (373220 KS).
• The IPO price range is from 80,000 won to 100,000 won. The IPO base deal size is from $560 million to $700 million.
• WCP is a leading maker of separators which are key materials used in EV batteries.

• Although LG Chem may not sell additional stake in LGES this year, over the next 2-3 years, there is a high probability of LG Chem selling some stake in LGES.
• On 27 July 2022, 86% stake of LG Energy Solution could be sold, of which 81.8% is owned by LG Chem and the remaining 4.2% is owned by institutional investors/others.
• LGES’s market share in the global rechargeable battery usage declined significantly from May 2021 to May 2022, due to recent EV disruption at Tesla’s Shanghai plant and rise of BYD.

• HPSP (403870 KS) announced its IPO book building results. The IPO price has been determined at 25,000 won, which is at the high end of the IPO price range.
• There were 1,577 institutions that were involved in the IPO survey and the demand ratio was 1,511 to 1. The IPO offering amount is 75 billion won.
• Our base case valuation of HPSP is target price of 38,228 won per share, which represents 53% higher than the high end of the IPO price range of 25,000 won.

• Nvidia lost nearly 35% of its value in a matter of months, when the broader market fell by less than 15% during the same period.
• The company’s share price might not recover to its 2021 highs anytime soon, according to the company’s report.
• About ten months ago I took a deep dive into NVIDIA’s (NASDAQ:NVDA) share price and laid out my thesis on why investors should be less concerned about the company’s business fundamentals and laser focused on its momentum exposure.

• XPER is accelerating its presence within connected TVs with the acquisition of Vewd Software
• Vewd Software is a middleware developer that has been installed in more than 450 million connected TVs and devices.
• The synergistic value of Vewd could be revealed to shareholders in the next 12 to 18 months when XPER begins to monetize Vewd’s install base

• We maintain our BUY rating and TP of Bt419 based on based on 51.7xPE’22E. Business update meeting last Friday came with positive news on improving shortage situation by 4Q22 
• 2Q22E earnings to decline QoQ: We believe that 2Q22E net profit will be at Bt2.7bn (+61% YoY, -4% QoQ).
• We expect 2Q22E sales to be at Bt24bn (+15%YoY, -4% QoQ). QoQ decline is mainly due to lockdown issues in China and longer holidays during 2Q22.

• AI software company SenseTime’s share price dropped more than 50% over the last one week with the expiry of lock-up period as pre-investors of the company took some profits.  
• The company was placed in an investment blacklist by the US government prior to the IPO which forced to launch the IPO without investors from the US.
• The company also priced the IPO at the bottom of the price range and despite all of this, shares quickly went up to HK$8.20 from IPO price of US$3.85.

• It is time to throw off the old valuation models. Fujifilm is no longer a dusty old camera maker
• The healthcare business is already the biggest earnings driver and with aggressive capex…. 
• Fujifilm will become the biggest biopharma contract manufacturing company in the world. Valuations don’t reflect that. 

• The price review period for the FTSE All-World/All-Cap September 2022 SAIR ended on 30 June. The changes are expected to be announced on 19 August and implemented on 16 September.
• For Asia ex-Japan ex-China, we see 7 inclusions to All-World, 58 inclusions to All-Cap, 9 migrations from All-Cap to All-World, 5 migrations from All-World to All-Cap, and 20 deletions.
• There are quite a few names in Australia that could have same way flows from the S&P/ASX 200 and S&P/ASX 300 Index trackers on the same day as the FTSE trackers.

• The GPIF reported its annual investment results for the FY to March 2022 last Friday. The investment report makes for interesting reading.
• The GPIF made 5.42% but alpha was negative 6bp vs time-weighted and money-weighted benchmarks.
• The re-allocations amongst asset classes now means more money tracks TOPIX, and it means active managers have their work cut out for them going forward.

• Alibaba CEO’s article appeared on a government journal, which can be a positive signal to non-state-owned companies.
• Prosus sells shareholdings in Tencent and JD.com to repurchase its own shares.
• Tencent is trying to use game technologies in other fields.

• Citing the Australian Competition and Consumer Commission’s concerns and challenging markets,  Dye & Durham (D&D) reduced its Offer price for Link Administration (LNK AU) to $4.30/share, down from $5.50/share.
• Link has now announced it “does not believe it is able to recommend” the revised Offer.
• That tentative rejection, and the fact it remains in discussion with D&D, suggest a board-backed price is probably somewhere between the original bid price and the reduced Offer terms. 

• The Link Administration (LNK AU) Board will not recommend Dye & Durham/DND’s proposed lower offer of A$4.30 per share due to shareholder feedback, the underlying value and alternative options.
• The statement suggests that the Board is willing to consider a lower but improved offer. Acquiring Link at a lower valuation through its attractive financing package continues to motivate DND.
• A price of A$4.70, which is the middle of the buyer’s and seller’s valuations will get a deal done. Downside risk is low as shares trade close to low-end valuation.   

• Last autumn, Advantage Partners launched an MBO on Pipedo HD Inc (3919 JP) where an activist/y presence threatened to be able to block it. Partway through, shares popped.
• The MBO was unsuccessful. Now they are back, at the same price, and now they have arranged a side deal with the activist-y holder. So now it is stitched up. 
• There could easily be people unhappy with the structure of this deal, especially as book value is up 16%, and projected cashflows 8-10% higher than last time. 

• The Nikkei reported today that the GPIF would be investing in a startup fund for the first time. 
• The move is significant more for its signalling effect than the actual size of the investment which will do little to address the startup funding shortage in Japan. 
• Nevertheless it is important as it marks a change in direction and while it may go quietly unnoticed now, the follow-through is likely to be moderate but consistent and lasting.

• Kakao Entertainment is one of the biggest entertainment companies in Korea. The company has a strong IP for webtoons, web novels, music, drama, movies, and other digital contents.
• Kakao Entertainment is a company that was formed from a merger of Kakao Page and Kakao M in March 2021. 
• Kakao Corp (035720 KS) is the largest shareholder of Kakao Entertainment, followed by Anchor Equity Partners, and Tencent.

• Zigbang is a leading property search platform in Korea. Zigbang’s strategy is to capitalize on the digitalization of living space, real estate transactions and smart home devices. 
• In January 2022, Zigbang agreed to acquire Samsung SDS’ home internet of things (IoT) unit for about $85 million to further penetrate the smart home industry.
• In late June 2022, Zigbang received 100 billion won in investment from IMM Investment, KDB Bank, and Hana Financial Investment, valuing the company at 2.5 trillion won.

• Z HD’s stock has been heavily sold with other tech stocks amid a rising interest rate environment
• However, we believe that the 3 core business segments are all performing strongly and will continue to gain share
• Using global comps, we believe that Z HD has more than 100% upside and is the top pick in the online space in Japan

• The price review period for the FTSE All-World/All-Cap September 2022 SAIR ended on 30 June. The changes are expected to be announced on 19 August and implemented on 19 September.
• There are a lot of potential inclusions to the indices for China -some changes are a result of stocks being included in Northbound Stock Connect.
• Gcl Poly Energy Holdings Limited (3800 HK) is the largest potential inclusion (in terms of passive flow) in the index following resumption of trading in November 2021.

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand and Chinese ADRs.
• The highest spreads are Sezzle Inc (SZL AU), Link Administration (LNK AU), 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Ramsay Health Care (RHC AU), Australian Unity Office Fund.
• The lowest gross spreads are Hwa Hong Corp (HWAH SP), Irongate Group (IAP AU), Giordano International (709 HK), Uniti Group Ltd (UWL AU), Excelpoint Technology (EXLP SP).

• 30 June was the review cutoff date for the next rebalance of the FTSE All-World/All-Cap Index, HSI INDEX, HSCEI INDEX, HSTECH INDEX, HSCI Index, PCOMP INDEX and the LQ-45 Index.
• Bilibili (9626 HK) replaces Sunac China Holdings (1918 HK) in the Hang Seng China Enterprises Index (HSCEI INDEX) at the close of trading on 8 July.
• There were big inflows to iShares MSCI China (ETF) (MCHI US) during the week while the largest outflow was from the Tracker Fund of Hong Kong Ltd (2800 HK). 

• Viva Republica (Toss) is one of the biggest fintech companies in Korea. Toss provides bundled fintech services including payments, banking, securities, and insurance. 
• In late June 2022, Viva Republica reported that it received Series G funding with 500 billion won in new investments, valuing the company at 9.0 trillion won or more.
• From 2018 to 2021, the company’s sales increased by 142% CAGR. Operating margin improved significantly from -97.2% in 2019 to -18.6% in 2020 but worsened slightly to -23% in 2021. 

• Dunamu operates Upbit which is the largest cryptocurrency exchange in Korea. As of April 2022, Upbit had more than 70% market share in the cryptocurrency trading market in Korea.
• Dunamu’s sales surged by 1996% to 3.7 trillion won in 2021 and operating profit surged from 86.6 billion won in 2020 to 3.3 trillion won in 2021.
• In January 2022, Dunamu was last valued Dunamu at nearly 15 trillion won. However, due to major decline in crypto prices in 2022, Dunamu’s valuation has declined significantly. 

• Prosus (PRX NA) selling its JD.com (9618 HK) shares was expected. The beginning of an open-ended share repurchase programme of Prosus and Naspers (NPN SJ) shares was a welcome surprise.
• Dye & Durham has reduced its Offer price for Link Administration (LNK AU) to $4.30/share, down from $5.50/share. It still may get board support.
• A 40-45% discount is about the narrowest Bank of Kyoto (8369 JP) should get to. For that, there is probably 15-20% upside. But like all holdco trades, trade the range.

• Yanolja is the largest travel app in Korea and it is also considered to be the second largest property management software provider in the world after Oracle.
• In July 2021, Softbank Group Corp’s Vision Fund II agreed to invest $1.7 billion in Yanolja, for a 25% stake in the company.
• Yanoljia is a well known app for booking hotels in Korea. The company’s business model has expanded to providing property management software products and services.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• There was a marked pickup in IPO activity with a number of smaller deals, along with two large deals being launched.
• There were no major placements last week. In addition, Prosus single handedly took out two prospective large placements.

• Prosus (PRX NA)’s announced open-ended share repurchase programme, funded by on-market sale of its Tencent shares, is a significant positive catalyst to reduce its discount to NAV.
• Continued operating losses will likely require funding through capital events, in the form of either asset sales or debt issuance.
• Cash flow requirements and continued concerns around capital allocation should limit the reduction in the discount to NAV.

• Kurly is the number one player in Korea focusing on e-commerce of fresh foods. Kurly’s most recent valuation was about 4 trillion won in December 2021.
• Coupang is trading at P/S and P/GP multiples of 1.2x and 7.4x (2021), respectively. Using these valuation multiples, Kurly’s valuation would be from 1.9 trillion won to 2.2 trillion won.
• These valuations would represent nearly half of the 4 trillion won in private market valuation it received in December 2021.

• Vision Fund’s public portfolio lost $10bn in Q1 marking the third time in four quarters that valuation losses were in the tens of billions
• Global tech weaness remains the main challenge as portfolio losses are matched with concerns on the private portfolio, especially ARM
• And worries about ARM also feed into leverage concerns as Softbank’s QoQ decline in reported LTV was driven by an ARM upgrade.  Meanwhile, CDS prices are near all-time highs

• Qualtrics International (XM US)  is the largest XM provider and pioneer in Experience Management. The company was founded in 2002 by Ryan Smith, Jared Smith, and their dad, Scott Smith.
• In 2018, SAP acquired Qualtrics for ~$8B in an all-cash deal, one of the largest-ever acquisitions of a SaaS company.
• We view Qualtrics International (XM US)  as well-positioned to continue to take market share with additional growth drivers such as new products and international expansion.