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Information Technology Archives | Page 6 of 18 | Smartkarma

TMT: NCSOFT Corp, Xiaomi Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • NCsoft: A Strong Turnaround Play in Korean Game Sector
  • Weekly Wrap – 20 May 2022

NCsoft: A Strong Turnaround Play in Korean Game Sector

By Douglas Kim

  • Amid recent market carnage, one of the strong turnaround stocks in Korea is NCSOFT Corp (036570 KS) which is down 54% from its highs in February 2021.
  • Three major reasons why NCsoft’s share price will turnaround include attractive valuations, better control of labor costs, and strong pipeline of new games. 
  • Short sale value/market cap ratio for NCsoft has declined materially in the past several weeks, reflecting increased optimism in the company’s future prospects. 

Weekly Wrap – 20 May 2022

By Charles Macgregor

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

  1. China Jinmao Holdings
  2. Guangzhou R&F Properties
  3. Sunac China Holdings
  4. Greenland Hong Kong Holdings
  5. Evergrande

and more…


Before it’s here, it’s on Smartkarma

TMT: Seiko Epson, Tencent, Grab, Xiaomi Corp, Safie and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Epson (6724) – A Big Buyback Amid Benign Backdrop
  • Tencent Short Poses Risk of 320 Break
  • Grab 1Q2022: On a Path to Recovery but Still Has a Long Way To Go
  • Xiaomi (1810 HK): 1Q22, Revenue Down Due to Weak Smartphone Market, 26% Downside
  • Safie – Cost Overshoot Could Drive This Lower But…
  • Shanghai/Shenzhen Southbound Connect: Weekly Moves (20 May 2022)
  • Morning Views Asia: Xiaomi Corp

Epson (6724) – A Big Buyback Amid Benign Backdrop

By Travis Lundy

  • Seiko Epson (6724 JP) announces the first special div for the 2023 Nikkei 225 dividend futures.
  • And it also announces a VERY big buyback. The headlines say 9.5%. The reality is more like 4.0-4.4%, but that is still going to be 15-20% of Real World Float. 
  • Given mildly positive backdrop, a net cash position, low multiples, and lack of major Real World Float active investor, this could go up.

Tencent Short Poses Risk of 320 Break

By Thomas Schroeder

  • Tencent bear/short call from 395 remains valid with risk we pierce the 310-320 support. Bear triangulation stands out as the key bear driver.
  • Flat/Triangulation in price and the RSI rising wedge is a set up for a major new chart low.
  • This wave 4 triangle will be followed by a hard wave 5 decline into a terminal low this summer.

Grab 1Q2022: On a Path to Recovery but Still Has a Long Way To Go

By Shifara Samsudeen, ACMA, CGMA

  • Grab (GRAB US) reported 1Q2022 results. IFRS revenue increased 6% YoY to $228m (vs consensus $142m) and negative adjusted EBITDA of $287m ( consensus $291m) compared to $111m in 1Q2021.
  • The company’s deliveries biz saw a strong recovery in revenues post disappointing performance in 4Q2021 and the acquisition of Jaya Grocers partially contributed to this growth.
  • Grab’s Mobilities biz has not yet recovered to pre-pandemic levels due to Omicron-related restrictions in the first two months of the quarter, but set to benefit from recovery in travel.

Xiaomi (1810 HK): 1Q22, Revenue Down Due to Weak Smartphone Market, 26% Downside

By Ming Lu

  • In 1Q22, Xiaomi’s revenue decreased by 5% YoY in 1Q22 and the main business, smartphone, decreased by 11% YoY.
  • Both global and domestic markets shrank and the competitor “Honor” came back.
  • We conclude a downside of 26% and price target of HK$8.10.

Safie – Cost Overshoot Could Drive This Lower But…

By Mio Kato

  • Safie’s 1Q results disappointed the market as revenue came in 5% lower than the average of two consensus estimates and R&D expense surged. 
  • Nevertheless, 1Q should be the worst quarter of the year as downside from the specific distributor issue is now quantifiable and the stock is now on 2.5x 2022 EV/Sales. 
  • Valuations are already highly compelling and if the sentiment driven sell off continues we would be looking for 5-10x returns over a 3-4 year timeframe.

Shanghai/Shenzhen Southbound Connect: Weekly Moves (20 May 2022)

By David Blennerhassett

  • Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry. 
  • Overall, the total value increased US$12.5bn in the past week, with Shanghai accounting for US$5.7bn and Shenzhen US$6.8bn. Tencent (700 HK) is the dominant holding across both programs
  • Glory Sun Financial Group Limited (1282 HK) saw the biggest upward movement as the chairman sold to pay off debt. China South City (1668 HK) was reduced by both programs. 

Morning Views Asia: Xiaomi Corp

By Charles Macgregor

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.


Before it’s here, it’s on Smartkarma

TMT: GoTo, Sea Ltd, Tencent, Square Enix Holdings, LG Energy Solution, Novatek Microelectronics Corp, Trunomi, IdentityMind and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • GoTo Gojek Tokopedia: Turning Tide with Index Inclusion?
  • Sea Ltd (SE US) – Reading the Positive Signals
  • Tencent (700 HK): 1Q22, Zero Growth, But Will Recover for New Policies, Upgrade to Buy
  • Tencent 1Q2022– Weaker than Expected
  • Sea Ltd: In Rough Seas
  • Square Enix – Bounce Suggests Market Was Far Too Pessimistic
  • A Pair Trade Between LG Chem & LG Energy Solution
  • Novatek (3034.TT): 2Q22 Revenue Declined 2~5.5% QoQ, but the Stock Price Could Be Reacted Earlier.
  • Trunomi: Consent and Data Rights Platform Which Doesn’t Store Customer Data
  • IdentityMind: AML and KYC for Fintech

GoTo Gojek Tokopedia: Turning Tide with Index Inclusion?

By Brian Freitas

  • GoTo (GOTO IJ) completes 20 trading days today. Based on the average price over the period and the last close, the stock meets the Fast Entry criteria for IDX30/LQ45/IDX80 inclusion.
  • Using a free float of 66%, we estimate passive trackers buying 5.42bn shares (US$74m) of GoTo (GOTO IJ). Announcement could come in a few days with implementation at month-end. 
  • With the real float close to 4%, passive trackers will need to buy 11.6% of the real float and the stock could move higher in the short-term.

Sea Ltd (SE US) – Reading the Positive Signals

By Angus Mackintosh

  • Sea Ltd released a solid set of 1Q2022 results, with very strong YoY growth in e-commerce GAAP revenues, and a predictable softening of gaming revenues given greater mobility in 1Q2022. 
  • A key highlight was improving profitability with the adjusted EBITDA loss per order falling 70% in South-East Asia and Taiwan. Management also signalled that gaming revenues started stabilising end 1Q2022.
  • Sea Ltd (SE US) saw a strong rally post these results given guidance was maintained albeit with a wider range. Sea Ltd is now trading at a discount to peers.

Tencent (700 HK): 1Q22, Zero Growth, But Will Recover for New Policies, Upgrade to Buy

By Ming Lu

  • Authorities encourage platform economy and restarted approving the licenses for new games.
  • Fintech just met a high comparison base in 1Q21 and we believe the growth rate will rise.
  • We believe the stock has an upside of 39% for the year end 2022.

Tencent 1Q2022– Weaker than Expected

By Shifara Samsudeen, ACMA, CGMA

  • Tencent (700 HK) reported 1Q2022 results today. Revenue grew 0.1% YoY to RMB135.5bn (vs consensus RMB140.7bn) while reported OP decreased 34% YoY to RMB37.2bn (vs consensus RMB37.3bn).
  • Adjusted OP was down 36% YoY to RMB22.3bn while adjusted OPM declined to 39.2% from 56.1% in the same period a year ago.
  • Tencent’s 1Q2022 revenues were below our estimates of RMB144.3bn which was mainly due to significant drop in Fintech and business services revenues.

Sea Ltd: In Rough Seas

By Oshadhi Kumarasiri

  • Sea’s share price rose 14% yesterday after beating consensus revenue by 1.4%, but this seems unwarranted as Sea lowered the lower-end of the e-commerce revenue guidance by $400m to $8.5bn.
  • Nonetheless, most of this price reaction could be short covering as Sea Ltd (SE US)’s results were rather disappointing on multiple fronts.
  • With Free Fire faltering fast, we think Sea could get washed back to rough seas before reaching calm waters.  

Square Enix – Bounce Suggests Market Was Far Too Pessimistic

By Mio Kato

  • Square Enix results were mildly above consensus (by 2.4% at the revenue line and 3.4% at the OP line). 
  • The company did not provide guidance on account of the pending transfer of its overseas development studios. 
  • However, we expect the sale to lift a significant burden from the bottom line enabling significant YoY OP growth.

A Pair Trade Between LG Chem & LG Energy Solution

By Douglas Kim

  • We believe there is an attractive pair trade of going long on LG Chem and going short on LG Energy Solution at current levels. 
  • Main reasons why we like this pair trade include large shares that could be sold after 6 months lockup for LGES, LG Chem’s attractive valuation, and shift to value stocks.
  • In the past one month, LG Energy Solution is down 5.3% whereas LG Chem is up 2.4%. We believe this gap could widen in the next several months. 

Novatek (3034.TT): 2Q22 Revenue Declined 2~5.5% QoQ, but the Stock Price Could Be Reacted Earlier.

By Patrick Liao

  • Novatek reached NT$36.5bn, 50.7% and NT$18.3 for revenue, GM and ESP respectively. 
  • Its revenue and GM would be NT$34.5~35.8bn and 46~49% range in 2Q22, which revenue was declined 2~5.5% QoQ and increase 1.2~4.7% YoY.
  • There are hopes for China 618-shopping Festival, US back-to-school and China double 11 shopping Festival, etc.

Trunomi: Consent and Data Rights Platform Which Doesn’t Store Customer Data

By Shifara Samsudeen, ACMA, CGMA

  • Trunomi (1314065D BH) is a customer consent and data rights management platform whose unique ability is proving compliance to various data protection regulations without seeing or storing customer data.
  • The introduction of the EU GDPR was one of the company’s key drivers and many countries are now introducing similar data protection regulations.  
  • A number of growing technologies such as Smart technologies and ad-tech would act as further drivers.

IdentityMind: AML and KYC for Fintech

By Shifara Samsudeen, ACMA, CGMA

  • IdentityMind (1254693D US) has a SaaS platform which builds regulatory technologies for fintech companies, crypto trading platforms and ICOs.
  • Fraud is prevalent in the ICO market and the rise of regulations increasing demand for KYC/AML services will drive the company’s future growth.
  • IdentityMind was acquired by Acuant (an identity verification company) in April 2020, for an undisclosed amount.

Before it’s here, it’s on Smartkarma

TMT: Faith Inc, Semiconductor Manufacturing International Corp (SMIC), Tencent Music, Affirm Holdings, Money Forward and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Ya Gotta Have Faith (4295). Or Not. Chance for Someone To Get A Big Position in a Net Cash Co
  • SMIC (981.HK): The Overall Demand Situation Is Growing Up in 2022.
  • TME – Miss on Revenue and Margins; Earnings Continue to Remain Under Pressure
  • Affirm Raises Outlook For FY 2022: No Changes In Bullish Narrative
  • Money Forward (3994): Large Additional Investment in Indonesian SaaS Company

Ya Gotta Have Faith (4295). Or Not. Chance for Someone To Get A Big Position in a Net Cash Co

By Travis Lundy

  • Faith Inc (4295 JP) is a very smallcap contents management and platform business. As a business, one could give it a miss forever, but it is cash-rich. 
  • The company is doing a very large buyback, and for someone who decided they’d be interested, there is a large block for sale. 
  • The thing is… one would have to act quickly and aggressively.

SMIC (981.HK): The Overall Demand Situation Is Growing Up in 2022.

By Patrick Liao

  • SMIC reported revenue/GM were US$1,869/40% for revenue/GM in 1Q22 respectively. The revenue matched to our expectation, but the GM was exceeding ~8% versus guidance.
  • The outlook is a little bit lower than our expectation for revenue/GM to be US$1860-1,897/37-39% in 2Q22 guidance.
  • The overall demand situation is growing up although inflation, Russia-Ukraine war, and other factors may affect. 

TME – Miss on Revenue and Margins; Earnings Continue to Remain Under Pressure

By Shifara Samsudeen, ACMA, CGMA

  • Tencent Music (TME US) reported 1Q2022 results today. Revenue declined 15% YoY to RMB6.64bn (vs consensus RMB6.69n) while reported OP dropped 35.7% YoY to RMB749m (vs consensus RMB817m).
  • Revenue from Online music services declined YoY for the first time since 2017 while revenue from Social Entertainment services further declined during the quarter.
  • We expect TME’s earnings to remain under pressure with increased competition and regulatory restrictions on livestreaming sector.

Affirm Raises Outlook For FY 2022: No Changes In Bullish Narrative

By Andrei Zakharov

  • Fintech unicorn could report strong earnings results for FY Q3 2022. Total revenue increased by 54% year-over-year, and net loss narrowed to ~$55M for the reporting period.
  • Affirm Holdings (AFRM US)  closed a $500M revolving ABS deal and added $2.5B in new funding capacity from various partners. Total funding capacity was ~$9B, marking a 55% YoY increase.  
  • Sovereign wealth fund GIC Singapore acquired ~$126 million worth of Affirm Holdings (AFRM US)  shares in April at an average of $33.00 per share.

Money Forward (3994): Large Additional Investment in Indonesian SaaS Company

By Mita Securities

  • The company has made multiple investments in Mekari since its first investment in 2018
  • This investment is a large one, equivalent to approximately 6.2bn yen. We understand that the largest investment the company has made in the past was approximately 3.4bn yen in Smartcamp (a consolidated subsidiary).
  • The company’s balance sheet at the end of 1Q FY11/22 showed 5.4bn yen in investment securities and 4.8bn yen in goodwill

Before it’s here, it’s on Smartkarma

TMT: Sea Ltd, KMW Co Ltd, freee, Inari Amertron and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Sea Ltd: More Downside Risk at Earnings
  • KRX New Deal Index Rebalance Preview: Buying on KMW; Selling on AfreecaTV
  • Freee: Strong User Growth and Improvement in Profitability; Shares Are a Lot Cheaper
  • Inari Amertron (INAR.KL) – 3 Qfy22: Business As Usual

Sea Ltd: More Downside Risk at Earnings

By Oshadhi Kumarasiri

  • Sea Ltd (SE US) reports 1Q22 results tomorrow and we expect results to follow the overall sector’s trend of weak revenue growth but lower losses.
  • Consensus 1Q22 revenue expectation was lowered in the last three months but there’s still a bit more downside due to Free Fire’s struggles.
  • The biggest risk is the remaining three quarters of 2022 and the next year as consensus revenue seems too bullish with estimates of 42% revenue CAGR through 2021-23.

KRX New Deal Index Rebalance Preview: Buying on KMW; Selling on AfreecaTV

By Brian Freitas


Freee: Strong User Growth and Improvement in Profitability; Shares Are a Lot Cheaper

By Shifara Samsudeen, ACMA, CGMA

  • freee (4478 JP)  reported 3QFY06/2022 results on Friday. Revenue grew 35.7% YoY to JPY3.65bn (vs consensus JPY3.63bn) driven by strong growth in paying users.
  • Operating losses declined to 18.5% of revenues during the quarter from 24.0% in the same period a year ago.
  • The company’s shares moved up by about 9% at the end of Friday’s close following its earnings announcement.

Inari Amertron (INAR.KL) – 3 Qfy22: Business As Usual

By Maybank Research

  • Generic segment positively surprised; maintain BUY
  • Results within expectations
  • Key takeaways from 3QFY22 results
  • Resilient but not immune to downside risks

Inari posted another set of strong results for 9MFY22, supported by steady growth for its RF/Opto products, and a surprise beat by its Generic segment. In line with our recent moderation of the sector’s valuation pegs (given the Fed’s aggressive monetary tightening), we lower Inari’s to 28x FY23E PER, at +0.5SD to the LT mean (from 32x FY23 PER, at +1SD). Our TP is also lowered to MYR3.50 (-11%), but we maintain our BUY call/forecasts for now. Inari remains our top M’sian OSAT pick, premised upon its (i) RF division’s sustained resilience, (ii) proven mgmt team, and (iii) solid fundamentals (net cash pile of c.MYR2b, or 53 sen/share).


Before it’s here, it’s on Smartkarma

TMT: Capcom Co Ltd, Link Administration Holdings, Coinbase, Globalwafers, Phison Electronics, King Yuan Electronics Co, Ltd., Tech Mahindra, Extreme Networks, Coforge and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • A Word on The Capcom (9697) Buyback
  • Merger Arb Mondays (16 May) – Link Admin, Infomedia, VNET, Alliance Aviation, Ramsay, Link Net
  • Coinbase Q1’22: A Deeper Look Into the Operating Expenses
  • GlobalWafers (6488.TT): Not Settling Disturbing Reasons, but We Presume Stock Price Could Rebound.
  • Phison (8299.TT): 2Q22 Could Expect a Slightly Growth QoQ
  • KYEC (2449.TT): It Could Reach ~10% QoQ Growth in 2Q22 Because Some Orders Were Delayed in 1Q22.
  • Tech Mahindra – Margin Pressure Higher; Reduce Target Multiple on Vulnerability
  • Extreme Networks
  • Coforge Ltd (COFORGE) – Strong Results; Outlook Remains Healthy

A Word on The Capcom (9697) Buyback

By Travis Lundy

  • On Friday 13 May, two days after earnings, Capcom Co Ltd (9697 JP) announced a share buyback via Tender Offer from its CEO. 
  • The Announcement talks about how buying the shares back “contributes to the improvement of capital efficiency such as earnings per share (EPS) and return on equity (ROE) of the Company.”
  • Then another company announcement erases 99% of that accretion, and money out the door. ROE goes up because cash goes out, and pro-forma EPS rises from ¥161.59 to ¥161.61. Whoopee!

Merger Arb Mondays (16 May) – Link Admin, Infomedia, VNET, Alliance Aviation, Ramsay, Link Net

By Arun George


Coinbase Q1’22: A Deeper Look Into the Operating Expenses

By Alec Tseung

  • Coinbase reported its first net loss since listing, as warned by the management before, due to both declining trading/transaction revenue and a continued increase in operating expenses.
  • Besides the impairment charges, the increase in Q1’22 operating expenses was mainly because of the headcount growth as Coinbase plans to further expand its business offerings this year.
  • Coinbase’s earnings for the year will unlikely improve as the company sticks to the plan to make 2022 an investment year regardless of the downturns in the broader crypto markets. 

GlobalWafers (6488.TT): Not Settling Disturbing Reasons, but We Presume Stock Price Could Rebound.

By Patrick Liao

  • Its revenue, GM and NM were NT$16.3bn, 42.6% and 36.1% in 1Q22. 
  • GlobalWafer experienced their China Suzhou subsidiary, SST, suspended production during April 2~27 by local government’s COVID-19 control measure, but it had resumed production.
  • The stock dividend is NT$16 in 2022, which is 58.7% payout ratio from 2021 earnings. The payment date is to be 2022/08/05.

Phison (8299.TT): 2Q22 Could Expect a Slightly Growth QoQ

By Patrick Liao

  • Phison reached to NT$17.1bn, 32%, 14% and NT$10.49 for revenue, GM, NM and the Diluted EPS in 1Q22.
  • We estimate it could be a slight positive growth in 2022, which could reach NT$18.1bn/32.5% for revenue/GM respectively.
  • Phison and its competitors shall continuously strive in Flash card and the related business.

KYEC (2449.TT): It Could Reach ~10% QoQ Growth in 2Q22 Because Some Orders Were Delayed in 1Q22.

By Patrick Liao

  • KYEC reached revenue, GM, OPM and Diluted EPS of NT$8,984mn, 35.8%, 25.6% and NT$1.47 respectively in 1Q22.
  • KYEC could reach to ~10% revenue QoQ growth in 2Q22 because of some orders delayed in Suzhou for COVID-19 controlling measure in 1Q22.
  • The mainland China smartphone is not strong in 2Q22, but the smartphone chipset testing demand could still be the largest demand in KYEC. 

Tech Mahindra – Margin Pressure Higher; Reduce Target Multiple on Vulnerability

By Nirmal Bang

  • Need to see how 5G spending holds up in a stagflationary environment: 5G related demand is one of the reasons why we and the street have been bullish on TML.
  • While we are at the beginning of the 5G spend cycle (which could play out over a longer time compared to the 4G cycle, according to industry), we think the spends may be a bit cyclically constrained in 2HFY23 and in FY24 before they recover eventually – quite similar to how we expect the digital spends to behave.
  • However, unlike in Digital, we believe that TML has a better right to win in the this area because of its long-standing relationships has with >150 Telcos, to which it has likely added a lot of value over the years.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Extreme Networks

By Turtles all the way down

  • What I try to look for is the holy Trifecta of value investing: Revenue growth, margin expansion and multiple expansion.
  • I think this stock has got all three of them. I think the company has reached an inflection point in the past few years in terms of product and service offering with SaaS revenue of $100m and growing 50% YoY.
  • Overall service and subscription revenue being 30% of revenue, up from 24% 3 years ago. With an overall very sticky revenue base with high switching costs. 

Coforge Ltd (COFORGE) – Strong Results; Outlook Remains Healthy

By Axis Direct

  • Encouraging growth across verticles – On the vertical front, the BFS vertical exhibited a robust growth of 3% QoQ.
  • Outlook & Valuation – Coforge has a robust business structure coupled with multiple long-term contracts spread across verticals which will help it generate sustainable growth momentum moving ahead.
  • We recommend a BUY rating on the stock and assign a 24x P/E multiple to its FY24E earnings of Rs 177.8/share which gives a TP of Rs 4,200 /share.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.


Before it’s here, it’s on Smartkarma

TMT: Tata Elxsi Ltd, Infomedia Ltd, Maxell Ltd, Nintendo Co Ltd, NCSOFT Corp, Silergy Corp, Digital Turbine, Apple Inc, Accenture Plc Cl A and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: MSCI STD/SC, FTSE AW/AC, EPRA, MVIS, TW50, Mindtree/L&T, AMFI
  • Infomedia (IFM AU): TA Associates/Viburnum Funds Proposal
  • Hitachi Maxell (6810 JP) – Very Big On-Market Buyback
  • Last Week in Event SPACE:  NTT, Link Admin, AGL, Mindtree/Larsen & Toubro, Sihuan Pharma
  • Top 20 Best Performers in the Korean Stock Market (Week of 13 May)
  • Silergy (6415.TT): 1Q22 Review-Clients Are Asking to Solve Supply Shortage and Even to Add Prices.
  • Infomedia Receives a A$1.70 Per Share Offer from TA Associates and Viburnum
  • Greenhaven Road Capital Q1 2022 Letter
  • Polen Focus Growth Q1 2022 Portfolio Manager Commentary
  • Polen Global Growth Q1 2022 Portfolio Manager Commentary

Index Rebalance & ETF Flow Recap: MSCI STD/SC, FTSE AW/AC, EPRA, MVIS, TW50, Mindtree/L&T, AMFI

By Brian Freitas

  • MSCI announced the changes to the Standard and Small Cap Indexes, along with FIF/NOS changes as part of the May SAIR. Plenty of flows in Asia Pacific.
  • Announcement of changes to the FTSE AW/AC, HSI INDEX, HSCEI INDEX, HSTECH INDEX and SENSEX INDEX will be made after market close on Friday.
  • There were inflows into Taiwan, Australia and Hong Kong focused ETFs, while there were redemptions from China and Korea focused ETFs.

Infomedia (IFM AU): TA Associates/Viburnum Funds Proposal

By David Blennerhassett

  • Online auto parts and service provider Infomedia Ltd (IFM AU) has received a non-binding proposal  – by way of a Scheme – from TA Associates and Viburnum Funds. 
  • The Offer price is A$1.70/share, a 32.8% premium to last close. 
  • Via a tie-in with Viburnum, TA disclosed a 14.46% interest.  IFM said it is also in preliminary discussions with other interested parties. 

Hitachi Maxell (6810 JP) – Very Big On-Market Buyback

By Travis Lundy

  • Maxell Ltd (6810 JP) has been restructuring itself and the cost-cutting and rationalising of sales efforts and regions has led to post-relisting record OP.
  • But another (non-cash) write-off this past year has led to the third year of net losses in a row.
  • The company has, however, taken its actual cashflows and turned them into a large buyback

Last Week in Event SPACE:  NTT, Link Admin, AGL, Mindtree/Larsen & Toubro, Sihuan Pharma

By David Blennerhassett

  • The NTT (9432 JP) / NTT Data (9613 JP) transaction is a little complicated, but the end goal appears, like before, to push operating control below holdcos on the chain. 
  • Both Link Administration (LNK AU) and Dye & Durham tanked over the unfortunate timing of an ACCC delay and MAC disconnect – before a price recovery to close the week.
  • MCB says the AGL Energy Ltd (AGL AU) de-merger plan is bad, and now analysts say it is “underwhelming.” Duh.  But the alternative? Underwhelming too, but less independent.

Top 20 Best Performers in the Korean Stock Market (Week of 13 May)

By Douglas Kim

  • This is the second weekly series on the “Top 20 Best Performers in the Korean Stock Market Adjusted for Trading Value & Mkt Cap.” 
  • Starting this weekly, we include stocks in both KOSPI and KOSDAQ. All the stocks in KOSPI and KOSDAQ are ranked, adjusted for market cap and trading value. 
  • Among the top 20 performers, NCSoft, Hyundai Motor, Kia Motors, Dohwa Engineering, DB Hitek, SK Telecom, and KT Corp were included. 

Silergy (6415.TT): 1Q22 Review-Clients Are Asking to Solve Supply Shortage and Even to Add Prices.

By Patrick Liao

  • The 1Q22 revenue/GM/OPM was US$215mn/55%/36% respectively, with revenue growing 50% YoY and -2.6% QoQ. Silergy considers its own business will grow quarter by quarter in 2022.
  • Silergy expects to see ~3% revenue contribution for Automotive in 2022, which means it should grow over 3% by the end of 2022.
  • Silergy’s order visibility is extended from 3 quarters to over 6~8 quarters now. Meanwhile, Silergy aims to split the share to let more retail investors to hold their shares.    

Infomedia Receives a A$1.70 Per Share Offer from TA Associates and Viburnum

By Arun George

  • TA Associates and Viburnum Funds’ non-binding indicative privatisation proposal is A$1.70 per Infomedia Ltd (IFM AU) share in cash, a 32.8% premium to the last close.
  • The timing of the bid looks opportunistic in the context of the shares hitting a 3-year low on 9 May. Viburnum with a 14.5% stake is the largest shareholder.
  • The Board notes expressions of interest from other parties. TA and Viburnum’s bid is the catalyst for other bidders to show their hands.  

Greenhaven Road Capital Q1 2022 Letter

By Fund Newsletters

  • Greenhaven Road Capital Partners Fund returned approximately -26.5% net in the first quarter.
  • The three big factors that currently appear to be dominating investors’ focus are rising interest rates/inflation, rising oil prices, and war in Ukraine.

Polen Focus Growth Q1 2022 Portfolio Manager Commentary

By Fund Newsletters

  • Polen Capital is a high-conviction growth investment manager.
  • During the first quarter of 2022, the Polen Focus Growth Composite Portfolio returned -13.39% and -12.56% gross and net of fees.

Polen Global Growth Q1 2022 Portfolio Manager Commentary

By Fund Newsletters

  • Polen Capital is a high-conviction growth investment manager.
  • We scour the globe in search of the highest quality, sustainable companies to invest in.
  • Aon, Visa, and Mastercard were the top absolute performers during the quarter.

Before it’s here, it’s on Smartkarma

TMT: Tencent, Link Administration Holdings, BASE Inc, Nexon, Shufti Pro, Blackline Inc, Sift Science, Hummingbird Technologies, Bumble, Cochlear Ltd Unspon Adr and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • MSCI May 2022 Index Rebalance: Flow Due to FIF Changes
  • Link Risk/Reward Benefits with the Messaging from DND’s Earnings Call
  • Base Inc: Shoppers Return to Offline, More Downside Left
  • Japan Emerging as Leadership; Actionable Themes: Japan and Defensives
  • Shufti Pro: Identity Verification Using AI
  • Polen Global SMID Company Growth Q1 2022 Portfolio Manager Commentary
  • Sift: Machine Learning to Prevent Fraud
  • Hummingbird: A Modern RegTech Platform Not Requiring an Integration
  • Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary
  • Polen International Small Company Growth Q1 2022 Portfolio Manager Commentary

MSCI May 2022 Index Rebalance: Flow Due to FIF Changes

By Brian Freitas


Link Risk/Reward Benefits with the Messaging from DND’s Earnings Call

By Arun George

  • DND’s 3QFY22 last night continued to suggest DND’s commitment to complete the Link Administration Holdings (LNK AU) acquisition.
  • DND management’s messaging in the call downplayed the MAC risk of a contract renewal but shifted incrementally more bearish on the ACCC review, in our view.
  • The risk-reward calculus is now incrementally more positive. The gross spread is wide at 24.4% with the “deal-break” valuation of A$4.18 (-5% below the last close) limiting downside risk.

Base Inc: Shoppers Return to Offline, More Downside Left

By Oshadhi Kumarasiri

  • BASE Inc (4477 JP) is up more than 27% today as the Mothers Index bounced back 4.5% following a steep sell-off during the last one-month period.
  • Nevertheless, results were disappointing on both the top line and the bottom line with Q1 revenue and operating loss of ¥2,512m (consensus ¥2,659m) and ¥272m (consensus ¥139.2m) respectively.
  • After disappointing the market with a guidance range that was significantly below consensus in 2021, Base Inc has withheld from providing 2022 guidance.

Japan Emerging as Leadership; Actionable Themes: Japan and Defensives

By Joe Jasper

  • Downtrends remain intact for Japan’s TOPIX/Nikkei 225, Hong Kong’s Hang Seng, Europe’s EURO STOXX50, Germany’s DAX, China (MCHI-US), and all the MSCI global indexes (ACWI, ACWI ex-US, EM, and EAFE).
  • The majority of these indexes are in well-defined downtrends; that means when the downtrends eventually reverse, it will be clear and we will be ready to buy/turn bullish.
  • Relative strength on Japan’s TOPIX is reversing topside a 4.5-year downtrend, signaling Japan is emerging as leadership. We highlight buy opportunities in Japan and also in defensive Sectors

Shufti Pro: Identity Verification Using AI

By Shifara Samsudeen, ACMA, CGMA

  • Shufti Pro (1988739D LN) provides AI-based identification verification solutions offering real-time global identity verification for KYC/AML and KYB compliance.
  • In 2020, the company grew its revenue by over 100% due to strong adoption skills and flexibility allowing to capture the growth in demand due to the COVID-19 pandemic.
  • While flexibility helps Shufti Pro stand out from competitors, global expansions, growth in identity fraud and a number of strong partnerships would drive company revenues over the medium-term.

Polen Global SMID Company Growth Q1 2022 Portfolio Manager Commentary

By Fund Newsletters

  • Polen Capital is a high-conviction growth investment manager.
  • Over the first quarter of 2022, Polen Global SMID Company Growth Composite Portfolio returned -22.37% gross and – 22.48% net of fees, respectively, versus the -6.41% return of the MSCI ACWI SMID Capitalization Index.

Sift: Machine Learning to Prevent Fraud

By Shifara Samsudeen, ACMA, CGMA

  • Sift Science (0747031D US) uses machine learning to help companies with detecting fraud, fake accounts and money laundering.  
  • The company’s business is claimed to have tripled since 2018.
  • The growth of internet crime and increasing account takeover fraud will act as drivers for the company.

Hummingbird: A Modern RegTech Platform Not Requiring an Integration

By Shifara Samsudeen, ACMA, CGMA

  • Hummingbird Technologies (1681343D LN) allows companies without easy access to IT or engineering resources carry out anti-money laundering practices.
  • Unmet demand in the AML market, strong partnerships and expansion to new markets are expected to act as key drivers.  
  • The company claims to allow clients reduce investigation and reporting times by 70-90%.

Polen U.S. Small Company Growth Q1 2022 Portfolio Manager Commentary

By Fund Newsletters

  • Polen Capital is a high-conviction growth investment manager.
  • Over the first quarter, Polen U.S.
  • Small Company Growth Composite Portfolio returned -21.98% gross and -22.18% net of fees, respectively, underperforming the -12.63% return of the Russell 2000 Growth Index.

Polen International Small Company Growth Q1 2022 Portfolio Manager Commentary

By Fund Newsletters

  • Polen Capital is a high-conviction growth investment manager.
  • Over the first quarter of 2022, Polen International Small Company Growth Composite Portfolio returned -22.48% gross and – 22.73% net of fees, respectively, versus the -6.

Before it’s here, it’s on Smartkarma

TMT: Softbank Group, Tokyo Electron, Microstrategy Inc Cl A, SUMCO Corp, Xperi, Arlo Technologies Inc, Ubiquiti Inc., Avaya Holdings Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Softbank Group Q4 21 Results Reaction: The Tech Winter Is Here
  • TEL – Margin Disappointment
  • MicroStrategy (MSTR US): Money From Nothing Is Worth?
  • Sumco – Still Underestimated
  • XPER: Streaming Free Cash Flow
  • ARLO: Prepping for Acceleration
  • UI: Shrinking Float Thru Buybacks
  • AVYA: Burning Thru Cash, Sell

Softbank Group Q4 21 Results Reaction: The Tech Winter Is Here

By Kirk Boodry

  • Softbank reported record losses, as expected, including some writedowns in the private portfolio. That may not be enough to assuage concerns with valuations still in free fall
  • Management says tech’s day will come again and it is best to be more defensive for now, including a slower pace of investing, which we think is positive
  • Concern on weak tech and high leverage likely keep the discount in the mid-50s range.  There was nothing today to signal an inflection is at hand

TEL – Margin Disappointment

By Mio Kato

  • TEL generated ¥169bn in OP in 4Q, well above consensus at ¥150bn and even our ¥160bn estimate. 
  • The issue is that this was on ¥565bn in revenue, well above ourselves and consensus, due to ramping R&D and depreciation expenses. 
  • Those expenses also meant that guidance of ¥716bn in OP was just barely above consensus at ¥692bn.

MicroStrategy (MSTR US): Money From Nothing Is Worth?

By David Blennerhassett

  • MicroStrategy Inc Cl A (MSTR US) is now trading at a ~26% discount to NAV as the bitcoin barbeque continues.  
  • Bitcoin is down ~40% YTD. If it falls another 24%, this will trigger a margin call on one of its loans.
  • Should bitcoin decline to US$17.5k, MSTR’s crypto bet falls short of its debt obligation; debt that its software ops are not sufficiently profitable enough to service. 

Sumco – Still Underestimated

By Mio Kato

  • Sumco 1Q revenues were on the strong side, 1.5% above consensus but OP beat by 9.9%. 
  • As we have been flagging, consensus is underestimating operating leverage and that was before the weakening of the yen. 
  • Revenue guidance for 2Q was 4.9% above consensus and OP 12.8% higher but we expect results to be an even larger beat.

XPER: Streaming Free Cash Flow

By Hamed Khorsand

  • XPER reported first quarter results setting the path for the Company to generate approximately $200 million in free cash flow in 2022
  • The outperformance on the revenue line resulted in XPER exceeding our non-GAAP net income and EPS estimates
  • During the first quarter of 2022, XPER renewed a license with a virtual multichannel video programming distributor (“MVPD”)

ARLO: Prepping for Acceleration

By Hamed Khorsand

  • ARLO continued to grow the number of paid subscribers as consumers see the benefits of having an alert for their installed security cameras
  • ARLO reported a positive net income for the second straight quarter just as the firm is getting ready to launch a new brand awareness campaign in 2H22
  • ARLO reiterated its plans to increase marketing expense in the second half of 2022 to accelerate growth in 2023

UI: Shrinking Float Thru Buybacks

By Hamed Khorsand

  • The supply chain issues that became an obstacle for Ubiquiti (UI) have yet to abate. Ubiquiti missed fiscal third quarter (March) estimates with a meaningful decline in service provider revenue
  • The Company burned through inventory in the quarter and used its cash flow to aggressively repurchase shares
  • Ubiquiti’s foray into services should broaden the revenue stream and improve cash flow, but it could be another few quarters before this becomes a needle moving endeavor

AVYA: Burning Thru Cash, Sell

By Hamed Khorsand

  • AVYA has exhausted investor patience in the Company’s quest to transform into a subscription revenue business
  • Liquidity overtaking the conversation from ARR could have bigger impact to the stock price as investors try to assess the timing of when AVYA could generate free cash flow
  • AVYA reported fiscal second quarter revenue of $716 million below the Company’s guidance and our $739 million estimate

Before it’s here, it’s on Smartkarma

TMT: Link Administration Holdings, Ricoh Company Ltd, Taiwan Semiconductor Sp Adr, Capcom Co Ltd, Semiconductor Manufacturing International Corp (SMIC), Coupang, Chainalysis, Ayasdi, Forter and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Now Link Admin Takes A Bath – Time To Buy
  • Link’s Shares Collapse as Worries of Buyer’s Remorse Sets In
  • Ricoh (7752) Buyback – Big, But Not. But Not Small.
  • TSMC (TSM.US; 2330.TT): Further Wafer Price Raise About 6% from the Beginning of 2023
  • Capcom – Can They Keep Suppressing Profit?
  • SMIC (981.HK): 2Q22 Preview- We Estimate Around 5% Growth Could Be the Case
  • Coupang 1Q 2022 Earnings: Beats Consensus Earnings Estimates (A High Conviction Turnaround Play)
  • Chainalysis: Blockchain Service Capturing Crypto Crime
  • AyasdiAI: Exposing Financial Crime Using Topology
  • Forter: New Products and Strong Partnerships Driving Growth for Fraud Solutions

Now Link Admin Takes A Bath – Time To Buy

By David Blennerhassett

  • Link Administration Holdings (LNK AU) cratered this morning ahead of a pause in trading. 
  • Link said it is unaware of the reason for the decline; however, the unfortunate timing of the ACCC delay and the MAC disconnect between Offeror and Target are not helping. 
  • Break price fair value has emerged. Separately, Link is coming up “cheap” versus its holding in PEXA Group (PXA AU).

Link’s Shares Collapse as Worries of Buyer’s Remorse Sets In

By Arun George

  • Link Administration Holdings (LNK AU) claims to be not aware of any reason for today’s -15% share collapse. The market seems nervy that DND will exhibit buyer’s remorse. 
  • The scheme consideration is now 2.6x DND’s market cap. The ACCC delayed review and the contract renewal MAC clause could be DND’s get-out-of-jail-free card for a lower price/walk-away. 
  • Our “deal-break” SoTP valuation suggests a valuation of A$4.24 per share, which is broadly in line with the last close price. The next catalyst is DND’s results tomorrow.

Ricoh (7752) Buyback – Big, But Not. But Not Small.

By Travis Lundy

  • Ricoh Company Ltd (7752 JP) announced earnings disappointed, but guidance is above forecast as some Q4 business was pushed back.
  • The company also announced a buyback. The headline at 7.5% of shares out is big. Reality is lower. 
  • This sets up a somewhat complex dynamic of flows in near space and far space, and relative to peers. But we look at it anyway.

TSMC (TSM.US; 2330.TT): Further Wafer Price Raise About 6% from the Beginning of 2023

By Patrick Liao

  • TSMC decided to notify clients that it will raise wafer price about 6% from the beginning of 2023.
  • It’s believed the Fabless company’s margin could be raised too much, which is considered to be abnormal.
  • There are too many factors influencing the market right now, like the inflation, geopolitical confrontation,  Russia-Ukraine war, supply-chain risks, and etc.

Capcom – Can They Keep Suppressing Profit?

By Mio Kato

  • Capcom results were previously flagged with a late guidance upgrade and so were unsurprising. 
  • Guidance was a touch above consensus at both the revenue and OP levels but look somewhat conservative even on assumed unit volumes. 
  • But we think there is significant upside to unit volumes and Capcom’s biggest challenge will be to hold down profit so they can generate double digit growth the year after.

SMIC (981.HK): 2Q22 Preview- We Estimate Around 5% Growth Could Be the Case

By Patrick Liao

  • We think SMIC is likely to reach the high-end of 1Q22 guidance, which was US$6,259~6,368mn/36~38% respectively.
  • We thick SMIC is likely to reach ~US$6,680mn/39% for revenue/GM respectively in 2Q22.
  • SMIC cannot have the EUV machine because of the Wassenaar Arrangement. Therefore, SMIC has to optimize its operation and to expand 28nm and above technologies.

Coupang 1Q 2022 Earnings: Beats Consensus Earnings Estimates (A High Conviction Turnaround Play)

By Douglas Kim

  • Coupang reported better than expected results in 1Q 2022. Coupang had operating loss of $205.7 million in 1Q 2022, which was 31% better than consensus. 
  • This is a High Conviction turnaround story marked by significant improvement in profit margins. The company’s gross profit increased by an impressive 42% YoY. 
  • Given Coupang’s excellent earnings in 1Q 2022, the tide has turned on Coupang and there is likely to be improving positive sentiment on this stock in the next several weeks.

Chainalysis: Blockchain Service Capturing Crypto Crime

By Shifara Samsudeen, ACMA, CGMA

  • Chainalysis (1316611D US) is a leading blockchain data platform which helps carry out investigations into illicit crypto activity and hence prevent crypto crime.
  • Around 2/3rd of Chainalysis’ revenue comes from government agencies and the company is said to have generated around US$ 10m from Federal Organisations since inception.
  • There are now several growth drivers including a fast-rising level of crypto crime, growing cryptocurrency market and implementation of cryptocurrency regulations among others.

AyasdiAI: Exposing Financial Crime Using Topology

By Shifara Samsudeen, ACMA, CGMA

  • Ayasdi (0343503Z US) is somewhat unique in it using a mathematical framework – topology, to analyse data sets and detect financial crime and fraud.
  • The company follows a quote-pricing model, but pricing is generally considered less expensive than the industry average.  
  • The growth of financial crime and the bioinformatics industry alongside improved recognition for the company can be expected to drive future revenues.

Forter: New Products and Strong Partnerships Driving Growth for Fraud Solutions

By Shifara Samsudeen, ACMA, CGMA

  • Forter (1397978D LN) uses machine learning to detect fraud and approve online transactions in real-time.
  • With the surge in online shopping with COVID-19, the amount of online fraud increased, allowing Forter to experience strong revenue growth.
  • New product innovations and a number of strong partnerships will continue to drive the company forward.

Before it’s here, it’s on Smartkarma