Match Group

Key points:

 

  • Add to positions here as the stock breaks out from a stage-one consolidation base. The company reported Q3 results yesterday after market close. Revenue and adjusted EBITDA were above estimates, driven by non-Tinder revenue growth. Tinder net subscriber addition was ~400K q/q, compared with consensus of ~300K q/q. Q4 guidance was above estimates.
  • Between FY17 and FY19, revenue and EPS had a CAGR of 24.2% and 36.6%, respectively.
  • MTCH has classified its IAC business as discontinued operations, but historical EPS includes IAC, leading to a mediocre EPS Rank of 66.
  • Good technical ratings: RS Rating of 92 and A/D Rating of B+.
  • Institutional sponsorship increased to 1,199 funds (+23% q/q; +94% y/y) in September.

APAC Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia ex-Japan index broke out to new 52-week highs and is 1% below January 2018 highs. We recommend a patient approach as we continue to expect markets to remain volatile given U.S. elections, emerging COVID lockdowns, and a Fed meeting this week.
  • Two of 13 markets are in a Confirmed Uptrend (India and New Zealand), eight are in an Uptrend Under Pressure, and Indonesia, Thailand, and Singapore are in a Rally Attempt. The average number of distribution days rose to 4.1, compared with 3.4 last week. Distribution is at elevated levels.
  • The year-to-date performance spread between the MSCI Asia Pacific growth and value indices has widened. Over the last six months, value stocks have underperformed, with RS Ratings deteriorating more in stocks with high EPS Rank.
  • From May to August, strength within growth stocks has broadened to stocks with low EPS Ranks. This strength has remained stable since then. Median EPS estimates suggest stronger growth is expected in FY21 for stocks with EPS Rank of less than 60. This improvement in FY21 EPS might explain the strong improvement in RS Rating. Refer to page 7 and 8 for stocks near pivot and extended growth stocks.
  • Highlighted idea: Chailease (CLI.TW; 5871 TT).
  • Refer to page 9 for actionable Focus List ideas.

CoStar Group

  • We are reiterating our buy call on CoStar Group as shares break out of a 10-week double bottom base on good volume. Large underpenetrated addressable market for Apartments.com and Loopnet, strong traction seen after Ten-X acquisition, and international expansion are the key growth drivers.
  • Q3 results were ahead of expectations: CoStar reported EPS of $2.26 (-13% y/y) and revenue of $426M (+21% y/y), 9% and 2% ahead of street estimates, respectively.
  • Fundamental ratings: Composite Rating of 92, SMR Rating of A, and EPS Rank of 86.
  • Technical ratings: RS line is trending up, with an RS Rating of 87 and A/D Rating of B.

APAC Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia index remains in a consolidation. We expect volatility to increase ahead of the U.S. elections and as COVID cases rise globally. However, we remain mostly positive if the index consolidates above the 50-DMA.
  • Five of 13 markets are in a Confirmed Uptrend, five are in an Uptrend Under Pressure, and three are in a Rally Attempt. The average number of distribution days decreased to 3.6 from 3.7 last week.
  • We are seeing rotation out of the Health Care and Consumer Staple sectors. Refer to page 8 for a Sector Rotation Graph.
  • The Retail and Consumer Cyclical sectors are leading in the short to mid-term. Refer to page 9 for stocks near pivot from these sectors.
  • Highlighted Focus List ideas: Zhongsheng (ZSG.HK) and Poya International (POY.TW). Refer to pages 5 and 7 for annotated charts, respectively.
  • Refer to page 10 for Actionable Focus List ideas

Digital Subscription

Key points from this report:

 

  • Popularized by Amazon Prime, digital subscription services are becoming a normal part of our daily lives.
  • Subscription currently amounts to 5% of average annual expenditure of U.S. households. There is a limit on how much household income could be spent on discretionary subscription categories. However, we believe more can be allocated to subscription from non-discretionary such as food and transportation.
  • ARPU declined across most subscription services in the last three years.
  • Broadband, dating, and video streaming apps are the exception to this. Much of this decline is attributed to price competition to acquire market share.
  • Subscribers are growing across all services except pay TV. Over the next three years, video and music streaming subscribers are expected to grow 33% and 66%, respectively.
  • Approximately 21% of households with broadband have only pay TV, compared with 20% with only OTT. We expect a significant increase in households with only OTT services in the coming years as cord-cutting accelerates.
  • We estimate the average customer bill for pay TV is approximately $77 per month while broadband and OTT subscription costs around $57 and $13, respectively. Therefore, we believe this leaves more room for OTT ARPU to rise.
  • We expect music streaming ARPU to remain low in the mid-term as companies try to acquire paid users through promotions. In the longer term, subscription revenue will be supplemented by ad revenue as companies try to monetize various content, including podcasts.
  • We expect more bundled services to be introduced in the future to keep subscribers engaged and to contribute to a rise in ARPU.
  • Update on Focus List ideas:
    • Netflix (NFLX), Chegg (CHGG) – Hold positions, both are consolidating after Q3 results.
    • Charter (CHTR) – Add to positions above $618. It reports Q3 results on October 30.
    • Match (MTCH) – Add to positions above $123 pivot. It reports Q3 results on November 4.

APAC Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia is consolidating as the moving averages catch up. Over recent weeks, we have shifted or upgraded four markets to a Confirmed Uptrend while distribution days have declined.
  • Five of 13 markets are in a Confirmed Uptrend, five are in an Uptrend Under Pressure, two are in a Rally Attempt, and one is in a Downtrend.
  • Australia and New Zealand are the leading developed markets over the trailing month. Refer to page 6 for a one-month price comparison chart of APAC markets. Refer to pages 7 and 8 for an annotated chart of the ASX All Ordinaries index and the NZX All Ordinaries index.
  • Retail and Technology stocks are leading in Australia. Refer to page 12 for stocks from these sectors with strong O’Neil Ratings and Rankings.
  • New Zealand is a relatively small market. Notable stocks include Fisher & Paykel Healthcare (FPHZ.NZ), Ebos Group (EBOZ.NZ), Mainfreight (MAIN.NZ), and Infratil (IFTZ.NZ).
  • Highlighted Focus List ideas: Afterpay (APT.AU), Kogan Com (KGN.AU), and Pushpay Holdings (PAYZ.NZ). Refer to pages 9-11 for annotated charts.

APAC Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia ex Japan is at 52-week highs. We recommend a selective approach, focusing on allocating capital to markets in a Confirmed Uptrend and to leading stocks with rising relative strength. Distribution days have declined in recent weeks. This is encouraging for a sustained rally in our view.
  • Five of 13 markets are in a Confirmed Uptrend, five are in an Uptrend Under Pressure, and three are in a Rally Attempt. The average number of distribution days has declined to 3.4, compared with 4.2 last week.
  • In the short term, performance has rotated back into long-term leading sectors like Retail and Technology, led by the Retail-Internet and Computer-Tech Services industry groups. Refer to pages 9 and 10 for APAC stocks near pivot.
  • The broader Nikkei 500 is outperforming the Nikkei 225 by 8ppts year-to-date. Leading Nikkei 500 constituents have better O’Neil Rating and Rankings.

APAC Market Update

Key points from this report:

 

  • We upgraded Hong Kong to a Confirmed Uptrend from a Rally Attempt after it staged a day 10 follow-through day.
  • Over the past week, APAC markets have traded resilient as distribution days have expired. Furthermore, leading stocks have held support or are trending higher.
  • Hong Kong Focus List ideas breaking out or near pivot include:

APAC Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The MSCI Asia ex Japan retook its 21- and 50-DMA after briefly declining below the moving averages for a few sessions. We consider consolidation above key moving averages a constructive sign. We maintain a cautious approach as many major APAC markets remain under pressure. However, several leading stocks have held support, which is encouraging.
  • Yesterday, we shifted India to a Confirmed Uptrend from an Uptrend Under Pressure. Refer to page 8 for stocks near pivot in India.
  • The EEMA index continues to outperform the IPAC index since June, with the EEMA up 7.2% and the IPAC down 2.9%, year-to-date. Refer to page 7 for a price comparison chart of the EEMA and the IPAC. Leading emerging markets include India, South Korea, and Taiwan.
  • Despite underperformance of the Hang Seng index, many Hong Kong stocks continue to remain resilient. High RS Rating stocks have continued to gain despite weaker index performance. The Hang Seng index may not necessarily be an indicator of the underlying health of leading stocks. Refer to page 9 for a list of stocks with high RS Rating that are trading near pivot.
  • Highlighted Focus List idea: HDFC Bank (HFC.IN).

The Trade Desk

Key points from this report:

 

  • Buy TTD as it breaks out to new highs following a strong rebound from September lows on above average volume. The Trade Desk will benefit from the ongoing accelerated shift to CTV, which will result in more ad dollars transitioning to data-driven advertising.
  • Stellar fundamental profile: Composite Rating 96, EPS Rank 97, and SMR Rating A.
  • Strong technical ratings: RS line is at all-time highs, with an RS Rating of 97 and A/D Rating of B.
  • Comml Svcs-Advertising is among the top performing groups with an Industry Group Rank of 14 (1 being the best among 197 industry groups).
  • Institutional sponsorship has increased 40% y/y to 792 funds (all-time high) as of June.