Vitarka Insights

Bristol Myers Squib & Celgene–Starboard Objections Addressed Today- Successful Deal Closure Probable

The proposed Bristol Myers Squibb Co (BMY US) & Celgene Corp (CELG US) transaction announced in the first week of 2019, garnered many sceptical comments. Starboard Value jumped in the fray by writing a letter denouncing the transaction while one of the largest holders of BMY, Wellington Management Group, holding about 7.7% of the stock expressed a desire to vote against the transaction. BMY’s response to Starboard’s half-baked objections…

Facebook Inc. – Is Consensus Overly Cautious?

Facebook Inc A (FB US) is a bellwether stock for the equity markets. Although the market capitalisation is approaching $475 billion, the Company is still considered a growth stock. In our view, 2019 could be a pivotal year for the Company after a lack lustre 2018, when FB, although volatile, underperformed the NASDAQ. We believe that investors are underestimating revenue growth for 2019 and that FB is likely to…

Meituan Dianping – Is a One Billion U.S. Dollar Impairment Forthcoming?

Since initiating coverage prior to Meituan Dianping’s (3690 HK) IPO, we have been bearish with respect to both its valuation and its business prospects given escalating competition in China in the food delivery segment, courtesy Alibaba Group Holding (BABA US). Moreover, with a slowing Chinese economy putting downward pressure on outbound tourism from China, as witnessed in recent data from Macau, the Company’s travel business is also likely to…

Tesla Motors – Gaining Industrial Strength

Tesla Motors (TSLA US) continues to power ahead of the competition in electric vehicles with an 80% market share of all electric vehicles sold in the United States in 2018. With approximately 140,000 Model 3 cars sold in the U.S., Tesla outsold every marquee sedan brand. Model 3 outsold mid-size SUVs including BMW X3, Acura MDX, Audi Qs, Lexus RX and even the Mercedes C-Class.

Bristol Myers Squib – Reaffirming Its View on Celgene Corp

The management of Bristol Myers Squibb Co (BMY US) reiterated its optimistic view regarding the acquisition of Celgene Corp (CELG US) on its Q4-18 earnings conference call today. Unlike most acquisitions that succeed based on cost cuts or revenue synergies, Celgene’s distressed valuation allowed BMY to swoop in and buy a leading bio-tech at a bargain price: if the pipeline succeeds. We are betting it will. If not, the…

Celgene and Bristol-Myers Squibb – Undervalued and Underappreciated

A dismal 2018 for the pharmaceutical and bio-tech stocks seems far in the rear view mirror. 2019 began with a bang with two blockbuster deals in the pharmaceutical space within days. In this note, we discuss Bristol Myers Squibb’s Co (BMY US) acquisition of Celgene Corp (CELG US) and outline our view that investors should go long BMY.

Tesla Motors Inc: Come Hell or High Water

It is our view, that come hell or high-water, in 2019, Tesla Motors (TSLA US) will establish itself as the pre-eminent large-cap growth stock. Those that are short would cover the position at a loss and those that are long are looking at another Apple Inc (AAPL US) or Amazon.com Inc (AMZN US) in the making. The ride may be volatile, but will be worth it.

Tencent Music Entertainment Group – Back in the Groove with an Unjustified Valuation Multiple

The proposed IPO of Tencent Music Entertainment (TME US) although highly anticipated is no slam dunk for investors. China’s online social entertainment market is hyper -competitive with multiple players vying for attention. Online music streaming is no less competitive with Baidu Inc (ADR) (BIDU US) and Netease Inc (Adr) (NTES US) joining forces to compete head-on with TME. We remain on the sidelines and suspect that a better entry…

Tesla Motors Inc. — For Whom the Bell Tolls

An eventful November 2018 continues for Tesla Motors (TSLA US). The Company surpassed market expectations for gross margins and free cash flow generation, appears to have stabilised its Model 3 production, is no longer expected to default on convertible debt due in March 2019, and most recently reduced pricing in China to maintain momentum. All of these are good signs which point to a break-out year for Tesla in…

Meituan Dianping – Is the Impressive Growth Sustainable?

Meituan Dianping (3690 HK) appears to have side stepped the slowdown in the Chinese economy by posting a robust set of numbers. While on a YoY basis the trends are unambiguously positive, QoQ numbers suggest a challenging 2019 is in store. Ultimately it will be a trade-off between user incentive spending and transaction growth. MD users are currently transacting at a rate that is 2.8x that of Just Eat…

Xiaomi Corporation – Running Harder to Stay Still

By focusing investor attention on gross profit, Xiaomi Corp’s (1810 HK) Q3-18 results deftly side-stepped the YoY EBITDA decline of 14.3%. To us it is evident that economies of scale are absent in the business, and with an ever increasing emphasis on extending generous credit to boost sales overseas, Xiaomi is playing with fire. We advise investors to exercise caution. In our view, there is better value elsewhere in…

Xiaomi Corporation — Running

By focusing investor attention on gross profit, Xiaomi Corp’s (1810 HK) Q3-18 results deftly side-stepped the YoY EBITDA decline of 14.3%. To us it is evident that economies of scale are absent in the business, and with an ever increasing emphasis on extending generous credit to boost sales overseas, Xiaomi is playing with fire. We advise investors to exercise caution. In our view, there is better value elsewhere in…

Tencent Music:We Estimate Value at USD 3.77 Per Share; Lower Than Many Expect – $11.7 B for TME

In ANTYA’s view, TME is another IPO where investors need to pay attention to the valuation because like the online lending boom in China which fizzled out pretty quickly, live-streaming of entertainment content is a me-too business model employed by TME fighting for the same eyeballs and advertising dollars that other more established players such as Momo Inc (MOMO US), YY Inc ADR (YY US), HUYA Inc (HUYA US),…

Tencent Music: Part 3 – Reverse Merger with China Music Corporation; Idiosyncratic Data Disclosures

Tencent Music Entertainment (TME US) was created via a reverse merger whereby Tencent Holdings (700 HK) combined its music apps with those of China Music Corporation to create an online music behemoth. While subscription-based online music is still in its infancy in China, live video streaming appears to be a part of the mainstream. The question that investors need to answer is that given that TME is not really…

Tencent Music Entertainment Group – Much Ado Nah Music About Nothing!

Tencent Music Entertainment (TME US) (“TM”) is the latest family member to grow up under the Tencent Holdings (700 HK) umbrella and is now looking to spread its wings further afield by standing on its own. We believe investors will be disappointed with what they see and will quickly come to the conclusion that TM neither offers unique growth prospects nor a defensible business model. In our view, this…

Tesla Inc.-Undermining Naysayers and Nabobs of Negativity ; Q3-18 Will Again Surprise to the Upside

As outlined in its release today, with the inventory of Model S and Model X stable, and that of Model 3 declining 28% QoQ, accompanied with a 100% increase in deliveries to customers; ANTYA believes that gross margins, cash flow from operations and free cash flow of Tesla Motors (TSLA US) will surprise to the upside when it reports Q3-18. That needs to be weighed against management’s commentary related…

Tesla Inc. – SEC Overreaching to Pin Musk; Unlikely to Succeed

Tesla Motors (TSLA US) is in the news once again for all the wrong reasons. This time it is the SEC that has filed a civil complaint against Musk alleging recklessness on part of Musk, and hence wants a jury to bar Musk from acting as an officer and director of a publicly traded company. The saga began with the going private tweet of August 7, 2018.

Niu Technologies – Another EV Upstart From China; This One Has Zest

f NIO is for the Braveheart and Tesla is for the Warrior in You, then Niu Technologies is for the investor that is looking for growth investing but only wants to put money to work with those that have already delivered. Niu Technologies (NIU US) is making and delivering e-scooters from its own manufacturing facility. Financials for 2016, 2017 and YTD 2018 are respectable and highlight progress with each…
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