In today’s briefing:
- PropertyGuru/Bridgetown 2 SPAC Listing/Merger – Peers Are Down a Lot, as the Deal Nears Completion
- Link’s Offer Spread Risk/Reward
- Capcom – Street Fighter 6 and ExoPrimal Strengthen Pipeline
- Square Enix – Four Games at State of Play Show Depth of Content
- Crowdstrike FY4Q22: (Bear) Case Adjourned
- Koei Tecmo – Some Nice Signs But Downside Risks Need To Be Priced In First
- Recent IPO Insights: Gitlab
- Deep Dive: EPAM Systems (EPAM US)
PropertyGuru/Bridgetown 2 SPAC Listing/Merger – Peers Are Down a Lot, as the Deal Nears Completion
- PropertyGuru and Bridgetown 2 announced, on 23rd Jul 2021, that they have entered into a business combination agreement which will see PropertyGuru go public in the US.
- Both the companies will hold their respective EGMs next week and aim to complete the listing by 18th Mar 2022.
- We have looked at the company’s prior listing attempt, in Australia in 2019, and the current SPAC merger. In this note, we will talk about the recent updates.
Link’s Offer Spread Risk/Reward
- Link Administration Holdings (LNK AU)’s 1HFY22 results on 24 February stated that the Dye & Durham/DND’s privatisation scheme remains on track to complete in June/July.
- Key hurdles are ACCC clearance and the Woodford investigation. Key catalysts are the scheme booklet (in the coming weeks) and an agreement to sell BCM.
- We would be buyers up to A$5.2 per share (implies 70% deal probability). The gross and annualised spread for a 31 July implementation is 8.6% and 23.8%, respectively.
Capcom – Street Fighter 6 and ExoPrimal Strengthen Pipeline
- Following on from a recent Street Fighter 6 reveal, Capcom announced new IP Exoprimal at today’s Sony State of Play.
- The two announcements strengthen Capcom’s pipeline for FY23 and FY24 although leaks had already revealed the likely launch timing of SF6.
- Exoprimal is new news, however, and provides a glimpse into Capcom’s strategic thinking.
Square Enix – Four Games at State of Play Show Depth of Content
- Square Enix had four of the twelve titles featured at today’s Sony State of Play.
- While none of the titles was one of they IPs for Square Enix they demonstrate the depth of IP possessed.
- In addition, the trailers point to Square Enix’s domestic development studios maintaining high quality standards even for smaller titles.
Crowdstrike FY4Q22: (Bear) Case Adjourned
- Crowdstrike printed a superb quarter, continues to beat and raise despite overblown competitive concerns with new disclosures around non-endpoint ARR shows this becoming a true platform.
- Revenue growth (+63%), Margin expansion (+570bps) and FCF generation (46% FCF margins) shows best in class rule of 40 SaaS metric.
- Next catalyst is Analyst Day in April, expect LT targets to get increased.
Koei Tecmo – Some Nice Signs But Downside Risks Need To Be Priced In First
- Koei Tecmo appears to have made some strides in improving the quality of Stranger of Paradise: Final Fantasy Origins.
- This bodes well for the future of its business effectively reskinning its in-house titles with popular outside IPs.
- This makes us more interested in the name but we are still waiting for the shoe to drop on investment income.
Recent IPO Insights: Gitlab
- Gitlab is down 61% since its IPO and trades at 16x forward sales, now reasonable for years of 40% like growth expected.
- At $6B valuation, would make an attractive acquisition candidate for Google/Amazon or some of the growing DevSecOps players like Datadog.
- Dynamic TAM with long runway ahead, very underpenetrated, strong secular tailwinds.
Deep Dive: EPAM Systems (EPAM US)
- EPAM is a high quality IT services provider that has been compounding earnings at a high rate for the last 10 years
- The stock is currently dislocated – down more than 70% as of the date of writing.
- EPAM’s delivery centers are distributed throughout the world but have a major presence in Ukraine, Belarus and Russia (clients are mostly based in the US and Europe).
Before it’s here, it’s on Smartkarma
