Author: Cornelio Ash

Cornelio Ash is a senior equity analyst and member of the U.S. Focus List and the Global Focus List Committees, which approves all equity recommendations for developed, emerging, and frontier markets. He is also a lead for the Technology sector and specializes in the Americas region. Cornelio joined the firm in 2005 and received his B.A. in Finance from California State University, Northridge. He holds a Series 65 securities license.

Tencent

Posted on by Cornelio Ash

Key points from this report:

 

  • The stock broke out of a 14-week flat base on above average volume. Buy.
  • Mobile gaming. Tencent derives ~30% of its revenue from mobile games. Two of the highest grossing games in the world, PUBG Mobile (including domestic version, Peacekeeper Elite) and Honor of Kings (including international version, Arena of Valor), are Tencent titles. In Q3, revenue from PUBG Mobile and Honor of Kings increased 28% and 65%, y/y, respectively.
  • Live streaming. Tencent is also a leader in China’s online game streaming market via its subsidiaries Douyu and Huya (combined market share of 80%). The two companies recently announced a $6B all-stock merger, which will increase Tencent’s voting share in the combined entity to 68%. Through the merger, Tencent will consolidate its position across the entire value chain: game publishing, esports and live streaming.
  • Fintech. Tencent’s fintech and business segment, which is its second-largest segment and contributes 26% of its top line, has grown more than 20% y/y in each of the past six quarters.
  • Q3 results due November 12.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: Armstrong World Inds (AWI), MSG Sports (MSGS), Cheniere Energy (LNG), Cboe Global Markets (CBOE), Henry Schein (HSIC), Sanmina (SANM), Dish Network Corp (DISH), Perspecta Inc (PRSP), Allegiant Travel Company (ALGT).

 

Developed: Kuraray (RK@N.JP; 3405 JP), Bureau Veritas (BVI.FR; BVI FP), Want Want China Holdings (WANT.HK; 151 HK), Yakult Honsha (YAHO.JP; 2267 JP), DCC (DCC.GB; DCC LN), Muenchener Ruck (MUV2X.DE; MUV2 GR), Nippon Shinyaku (JU@N.JP; 4516 JP), Atom (MOTA.JP; 7412 JP),  Elisa (ELIS.FI; ELISA FH).

 

Emerging: Lojas Americanas (LM4.BR; LAME4 BZ), Hiwin Technologies (HIW.TW; 2049 TT).

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.:  Axalta Coating Systems (AXTA), Automatic Data Processing (ADP), Koninklijke Philips (PHG), Wabtec (WAB), World Wrestling Entmnt (WWE), Choice Hotels (CHH), UGI (UGI), WEX (WEX), Encompass (EHC), Ross Stores (ROST), Sanmina (SANM), Dish Network (DISH), CDK Global (CDK).

 

Developed:  GBL New (GBLN.BE; GBLB BB), Bouygues (ENT.FR; EN FP), Aisin Seiki (ZQ@N.JP; 7259 JP), Galaxy Entertainment (PIPE.HK; 27 HK), Frap Jinmo (FRAP.HK; 817 HK), Astellas Pharma (YP@N.JP; 4503 JP), Sunny Optical (SOPT.HK; 2382 HK).

 

Emerging: Hitejinro (JCL.KR; 000080 KS), Ptt (PTTB.TH; PTT TB), Public Bank (PBOM.MY; PBK MK), CP All (CPSE.TH; CPALL TB), Phison Electronics (PHE.TW; 8299 TT).

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: W R Grace & Co (GRA), Armstrong World Inds (AWI), Service Corp Intl (SCI), Campbell Soup (CPB), Treehouse Foods (THS), U G I (UGI), W E X (WEX), Haemonetics (HAE), Arista Networks (ANET), Pure Storage (PSTG), ACM Research (ACMR), Perspecta (PRSP).

 

Developed: Orica (ORI.AU; ORI AU), Sekisui House (SE@N.JP;1928 JP), Frap Jinmo (FRAP.HK, 817 HK), Astellas Pharma (YP@N.JP; 4503 JP), Abc-Mart (ITCP.JP; 2670 JP), HelloFresh (HFGX.DE; HFG GR), Dialog Semiconductor (DLGX.DE; DLG GR), Aurizon (AZJ.AU; AZJ AU).

Splunk

Posted on by Cornelio Ash

Key points from this report:

 

  • The stock is breaking out from a seven-week flat base off support at the rising 10-WMA. Buy.
  • Q2 FY21: Strong cloud momentum, ARR, RPO, and booking are key metrics during transition phase. In Q2 FY21, total ARR increased 50% y/y to $1.93B, the seventh consecutive quarter of 50%+ growth. Of this, cloud ARR increased 89% y/y to $568M.
  • Total remaining performance obligations (RPO) increased 42% y/y to $1.75B. Out of which, current RPO stands at $1.02B (+37% y/y).
  • Q2 cloud bookings contributed 53% of total software bookings, up from 36% last year. Management is confident of reaching the FY23 cloud mix target of 60% by FY21.

SoftwareONE Holding

Posted on by Cornelio Ash

Key points from this report:

 

  • The stock is emerging out of a large cup-with-handle consolidation. Buy. Support is along the rising 21-DMA followed by the 50-DMA.
  • Synergies from Comparex. In January 2019, the company acquired Germany-based software, cloud, and IT solutions provider Comparex for CHF 353.6M.
  • Microsoft partnership. Microsoft’s software suite contributes 54% of gross profit, of which 62% is attributable to Azure, Office 365, and Dynamics 365.
  • Cloud Spend Management is a CHF 556B ($613B) untapped opportunity.
  • Low-cost operating model. SoftwareONE operates on a dynamic resource model, sharing resources across regions and performing standardized functions from low-cost locations

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: G A T X Corp (GATX), Adtalem Global Education (ATGE), J & J Snack Foods (JJSF), Essex Property Trust (ESS), Integra Lifesciences (IART), Itron (ITRI), Tabula Rasa Healthcare (TRHC).

 

Developed: Mmc Norilsk Nickel (MNOD.GB; MNOD LI), Skanska B (SKBF.SE; SKAB SS), Mowi (MHG.NO; MOWI NO), Hulic (HULI.JP; 3003 JP), Siemens Healthineers (SHLX.DE; SHL GR), Sunny Optical (SOPT.HK; 2382 HK), Telstra (TLS.AU; TLS AU), Aurizon Holdings (AZJ.AU; AZJ AU).

 

Emerging: Uni President Enterprises (PRE.TW; 1216 TT), Jumbo (BABY.GR; BELA GA), America Movil (AML.MX; AMXL MF).