This week, the "Freedom Finance" advises to look at the IPO of the Japanese company on the rapid exchange of messages, the shares of which can rise to 30-50% in the short term, on the basis of a comparative evaluation. "Centras Securities" gives advises on investment in nine most attractive companies at the international market.
Director of the Department of analytics at
JSC "Freedom Finance"
LINE: number 1 in Japan and Southeast Asia
Issuer: LINE Corporation
Exchange: NYSE / Tokyo Stock Exchange
The volume of the placement: 1 billion USD
Placed shares: 35 million units
Date: July 13,
Bid Date: July 14,
Assessment of IPO: 6,6 billion USD
Based on DCF: 8,0 billion USD
The range on the IPO: 26,5 - 31,5 USD
Evaluation per share: 38.4 USD
The Japanese company LINE, providing a mobile application for the exchange of messages, has a solid and growing customer base. It devised a number of ways to monetize the activity of its users and continues to move forward. Line Revenues increased from 6 to 120 billion yen in just 4 years. In September 2015 LINE-messages had the largest share of the total time spent on smart-phones in Japan, accounting for 10.4% of the total time spent in all mobile applications in the last month.
Three facts about LINE Corporation:
1. Asian leader. Since its launch in Japan in June 2011, LINE attracts users from all over the world. Today it is considered that the LINE is the leading mobile messaging app in Japan, Taiwan and Thailand in terms of number of users, it increases the number of users in other parts of Asia, including Indonesia, Hong Kong, Singapore, Malaysia and Myanmar. Revenues amounted to 120 billion yen in 2015.
2. The strategy of increase of monetization aims to growth of profit. In recent quarters the company has focused its efforts in the field of marketing in key countries, which are a part of the monetization strategy in markets where the company has achieved a leading position, which will lead to the MAU growth in four key countries - Japan, Taiwan, Thailand and Indonesia. The company plans to continue to focus on areas where there is a competitive advantage and efficient resource allocation.
3. Moderate growth potential, but the good sentiment in the industry for a comparative evaluation. Potential for growth within DCF model is relatively low ("upside" 23%), but if to view on evaluation by analogs, the potential can be much higher - up to 30-50% in the short term, on the basis of comparative evaluation.
analyst at Centras Securities
What is the best way to raise investment portfolio?
Today, the market is looking with worry at emerging markets.
According to Bloomberg (the study of the Washington Institute of International Finance), the outflow of capital from emerging markets in the past year hit the record for 15 years, 735 billion dollars, 7 times higher than the figures in the United States in 2014 (111 billion dollars). It is expected that in 2016, investors will withdraw from these markets 448 billion US dollars. As a result of the oil shock and the slowdown in China's economy, capitalization of 31 largest emerging markets has decreased since the beginning of 2016 to 2 trillion US dollars. Stock markets in developing countries have fallen to lows since May 2009, and 20 currencies showed a record decline. Due to the devaluation of the Chinese currency for the year by more than 5%, most of the outflow is observed in China, where investors have withdrawn 676 billion US dollars. According to Bloomberg, it is expected that in the current year, provided that oil prices will recover, and the US Federal Reserve will raise rates this year only twice, capital outflow will slow, but will still remain significant. Under these conditions, more attractive in terms of investment, are the developed markets (US and Europe). At the same time, large companies increase the monopoly position at the market, actively using M & A transactions for diversification and differentiation of the range of goods and services, which also draws good prospects for shares.
In February JSC "Centras Securities" has launched a new product to provide analytical information - "Virtual Portfolio". To the attention of investors were offered the most attractive companies in the international market.
Today we offer you to pay attention to the following companies:
1.Wizz Air – low cost carrier, whose shares in the past year have demonstrated predominantly positive trend, mainly due to the strong operating and financial performance. On 24th of June by the results of the referendum in the UK, where the majority voted for the country's exit from the European Union, European stock markets, the US and Asia-Pacific fell. Wizz Air's shares were also under pressure from the general pessimism and lost 29%. At present day quotes increased 11%, and continue to show an upward trend. We believe that the shares of Wizz Air have growth potential, we expect an increase in passenger traffic in the summer season, which has a positive impact on revenue and recommend to go to the current levels.
2. Cognizant Technology Solutions provides customized consulting services in the field of IT, technology and outsourcing services, including consulting services for technology strategy, the development of integrated systems, introduction and maintenance of corporative software packages. The Company's shares sank heavily by the results of the referendum Brexit (-10%), but has already managed to increase by 3%. Based on its global delivery model and expansion capacity in areas with low costs, the company remains well-positionable in the outsourcing market, and therefore, we believe that the share has a high growth potential.
3. Activision Blizzard - US video game publisher. Shares of the company fell short of expectations, reaching the target level, and updating the end of June highs (US $ 39.6.). The main trigger for the growth of quotations was the active development of the gaming industry despite the global economic slowdown. Thus, the quotations positively affected the June premiere of Warcraft movie. However, in connection with the achievement of the shares of Activision Blizzard of the level “take profit”, we recommend that you close a position at current levels.
4. Netflix - an American company, a supplier of films and TV series based on streaming media. It was founded in 1997. At the beginning of this year, the company has more than 69 million customers worldwide. The company holds 36% on the US market and can further absorb the competitors, having the opportunity to global domination. The best known own series of the service - "House of Cards", "Daredevil", "Eighth feeling" and others. Netflix Soaps are also the most expensive in the US market. For comparison, according to US media, a series of "Eighth feeling" is worth 12 million US dollars, and the popular "Game of Thrones" costs twice cheaper - over 6 million US dollars for the series. Last spring, at the premiere of the 1 season of "Daredevil", the shares of Netflix rose to 17%. Earlier this year, the company began operation in 130 new countries, including Russia, in the future, most likely, streaming television services, provided by the company, will be toll, which will positively affect the company's profits.
5. Shares of Comcast's, in our opinion, grew, ending at a June auction at a maximum of 65.28 USD. In connection with the achievement of the shares of Comcast of “take profit” level, we recommend that you close a position at current levels.
6. Telenor - is a Norwegian telecom group, which owns assets in Norway, Denmark, Sweden, Hungary, Serbia, Montenegro, Bulgaria, Pakistan, Bangladesh, Thailand, Malaysia, India and Myanmar. The subscriber base in the countries of presence exceeds 200 million. The company's shares experienced losses due to Brexit. We recommend to close a position now in connection with the achievement of the “take profit” level.
7. NewLink Genetics Equity - is a pharmaceutical company, the shares of which reached the “stop loss” level the disappointing results of clinical trials.
8. Shares of Internet giants Google and Facebook win back the losses suffered after the announcement of the referendum results. In the future, thanks to the rapid development of the advertising business, shares of Google and Facebook can continue to grow.
9. Apple shares slipped significantly below the psychological mark of 100 USD due to the recession of iPhone quarterly sales growth and under the pressure of general pessimism in the markets. However, stocks are likely to recover losses, given that in the near future, the company will present the iPhone 7. As in previous years, it is expected that Apple will hold the presentation of iPhone 7 (and possibly other novelties) during the second or third week of September. Often published release dates have a positive effect on the quotations of securities.