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.

Twilio

Posted on by Cornelio Ash

Key points from this report:

 

  • The stock has pulled back into its pivot. Support is along the 21-DMA ($296), followed by $283. Add to positions as the stock regains its 21-DMA on volume.
  • Strong Q3 FY20 results: Reported EPS of $0.04 (+33% y/y), above estimates of ($0.04), and revenue of $448M (+52%y/y), well above expectations of $406.7M.
    • Strong metrics: Active customer accounts increased 21% y/y to 208,000. Net adds were 8K. Dollar-based net expansion rate increased to 137% (+500bps q/q).
  • Weak guidance: Q4 miss was mainly due to planned investments and hiring expenses pushed to Q4 from Q3. Expects EPS loss of $0.095 (compared with $0.04 a year ago), below estimates of ($0.01), operating loss of $12.5M (-316% y/y), below the street’s ($4.4M) and implying adjusted operating margin of -2.7% (-170bps y/y), and revenue of $452.5M (+37% y/y), above estimates of $431.6M
  • COVID-19 commentary: Management suggested the digital transformation to cloud based communications is being accelerated by six years due to the COVID tailwind.

Splunk

Posted on by Cornelio Ash

Key points from this report:

 

  • The stock is approaching a pivot of $219 from a seven-week cup consolidation. Support is at the 21-DMA ($204), followed by the 50-DMA ($198).
  • Splunk expects its total addressable market to expand to $114B by 2023 from $81B in 2020 (three-year CAGR of 12%).
    •  Includes four broad segments: ITOps (35% of total), security (21%), observability (21%), and platform (23%).
  • Reiterated FY23 goal: ARR growth of 40% in FY20-FY23, implying total ARR of $4.6B and OCF of +$1B.

Global Laggards

Posted on by Cornelio Ash

Highlighted Charts

 

U.S.: Acuity Brands (AYI), Discovery (DISCA), Marriott International (MAR), Hess (HES), C M E Group (CME), Becton Dickinson (BDX), Juniper Networks (JNPR), Amdocs (DOX).

 

Developed: South32 (S32.AU; S32 AU), Obayashi (OB@N.JP; 1802 JP), Shaw Communications (SJR/B.CA; SJR/B CN), Yakult Honsha (YAHO.JP; 2267JP), Allianz (XET) (ALVX.DE; ALV GR), Orpea (ORP.FR; ORPB EB), Toho Holdings (TOHP.JP; 8129 JP),  MTR (MTRC.HK; 66 HK).

 

Emerging: Korea Zinc (KRZ.KR; 010130 KS), MRF (MR.IN; MRF IN), Minerva On (MNV.BR; BEEF3 BZ), PTT (PTTB.TH; PTT TB), CP All (CPSE.TH; CPALL TB).

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).