SoftBank Group Earnings Presentation: WeWork Impacts, 60% Discount, Best Deal In Alibaba

SoftBank Group’s presentation gives a fairly good illustration of what the group is holding, the loss on book due to WeWork and the turnaround plan for it.

The presentation talks a lot about WeWork, but it’s Alibaba that contributes/matters the most right now. Nearly half of ($123 billion out of the $256 billion) its equity values of holding comes from Alibaba.

And given SoftBank Group’s market cap ~$80 billion now, it is a very good source of Alibaba exposure even without hedge (personally I think other holdings are also okay).

The turnaround plan relies a lot on higher occupancy rates and cost cuttings as WeWork manage the properties longer.

Here is the presentation.

Tesla Shanghai Version Started To Receive Reservation!

Tesla announced on Weibo that customers can now book their Model 3 China version online or in store.

Source: Tesla Weibo

Prices start at ¥355,800. The first delivery will be in 2020 Q1. Before the Shanghai version, Tesla Model 3 was sold in China for more than ¥439,900.

Customers need to put a deposit of ¥20,000, which can be paid in AliPay or WeChat.

Source: tesla.cn

The pickup availability is shown below.

Source: tesla.cn

Three models of Model 3 will be sold in China.

Biogen’s Amyloid-beta Project Back In The Game, Planning To Submit BLA Early 2020

Earlier this year, Biogen discontinued the Phase III trial of aducanumab in March 2019 following a futility analysis. Biogen’s stock tanked more than 29 percent from $320.59/shr,  closing at $226.88/shr on March 21.

Expectations had been high for aducanumab as Goldman Sachs analysts had projected at one time that sales of the drug could reach $12 billion.

When Biogen said on October 22 that it is going to file its amyloid-beta MAb aducanumab for US approval based on discussions with the FDA, its share price reached $318.00 during the day and closed at $281.87/shr (up more than 26%).

What has changed

Biogen said that, far from throwing in the towel on aducanumab, it has been busy. A “type C” meeting with the US FDA took place in June to discuss a possible path forward; then, just yesterday, there was a second such meeting, at which a new analysis was discussed [EvaluatePharma]

While the issues are complex the group’s new analysis points to a single, simple fact, which has been aired before: if an amyloid-beta MAb can be dosed high enough, for long enough, without insurmountable toxicities, then it should show some effect in a sufficiently early Alzheimer’s population.

An amendment in March 2017 allowed ApoE4 carriers who had earlier been on either 6mg/kg or 10mg/kg to be titrated up to 10mg/kg. This saw more patients overall exposed to 10mg/kg, but crucially the December 2018 cutoff was too early for this effect to manifest itself.

Surprise! Biogen’s longer-term analysis of aducanumab
  Low dose High dose
Emerge Engage Emerge Engage
n=543 n=547 n=547 n=555
CDR-SB (original primary endpoint)
Reduction vs placebo -14% -12% -23% +2%
Nominal p value 0.117 0.236 0.010 0.825
Adas-Cog (one of 3 secondary endpoints)
Reduction vs placebo -14% -11% -27% -12%
Nominal p value 0.167 0.248 0.010 0.245
Source: Biogen presentation, EvaluatePharma

Read more on Biogen’s Aducanumab Update

Question Remained

From FierceBiotech:

Biogen saw a divergence between the data generated in the two studies at the time of the futility analysis but was unable to explain the finding. Now, Biogen thinks the greater exposure to the high dose in EMERGE is the primary driver of the divergence. Biogen pointed to the better results seen in a subset of ENGAGE patients it said were exposed to sufficient high-dose aducanumab to make its case.

As the trials were identically designed, Biogen needs a way to explain why patients in EMERGE had greater exposure to high-dose aducanumab. Biogen’s explanation centers on amendments it made to the protocol. The hypothesis is that the timing of enrollment in the trials meant the amendments had different effects in each study. Biogen knew that was possible but not that it could warp the data to the extent it now claims.

And the big question is what the FDA will make of Biogen’s case.

Umer Raffat, an analyst at the investment bank Evercore/ISI, first asked if the departure of Michael Ehlers, Biogen’s previous research and development chief, had anything to do with disagreements over the Alzheimer’s dataset. Vounatsos, the Biogen CEO, said that Ehlers’ departure was personal, implying that disagreement over data did not play a role. [STAT]

Additional, Raffat noted that the patients who did not complete seemed to show benefit as well. He called this “confusing” in a note to investors following the conversation.

CB Insights: 14 Tech Trends 2019

  1. The hyper-personalization of everything
  2. The smart home targets the senior citizen market
  3. Malls are out. Retail moments are in.
  4. Maps become a layer for all kinds of real-world data
  5. Last-mile delivery gets automated
  6. Tech comes for your sleep
  7. Data becomes a hot-button geopolitical issue
  8. Smart buildings maximize comfort, wellness, and efficiency
  9. Buses and logistics providers go green
  10. China sets the bar for social network innovation
  11. Electric vehicle makers expand into lifestyle products and services
  12. Tech apprenticeships grow in popularity
  13. Digital swag makes big money
  14. The new healthcare clinic is your home

Full report is here.

Most Valuable Casino In Vegas Sold – 2019 Largest Real Estate Single Asset Transaction

MGM Resorts International  is putting the Bellagio into a joint venture controlled by a Blackstone Group Inc real-estate investment trust. MGM is to hold a 5% stake in the venture and $4.2 billion cash and will continue to operate the hotel and casino, which it will rent from the venture for $245 million a year. The transaction values Bellagio at $4.25 billion, the company said. [WSJ]

MGM said it is separately selling another Strip casino, Circus Circus, to an associate of Phil Ruffin, who owns Treasure Island in Las Vegas, for $825 million.

Capital needed for expansion in Japan

Japan’s move last year to legalize gambling opened the way for global casino operators to pursue licenses there.

MGM Resorts has adopted what it calls its “Osaka-first” strategy, pouring its efforts into securing a license in that city.

Asset light

MGM could also look to wring some value from its 50 percent interest in mixed-use complex CityCenter, as well its 68 percent stake in MGM Growth Properties (NYSE:MGP). [casino.org]

The company stated its intention to reduce domestic net debt/EBITDA (on a restricted group basis) to about 1.0x – Moody’s

Who Owns Tech/Venture Capital Medias

Crunchbase News

Crunchbase News, first published on March 13, 2017, is part of Crunchbase.

Verizon retains an ownership stake in the company. [Crunchbase News – About]

  • (Before AOL was part of Oath, a Verizon subsidiary, AOL owned Crunchbase. Later, after Verizon bought AOL, but before it combined the Internet brand with Yahoo to form Oath, Crunchbase was spun out as its own entity.)
  • Update: Oath will be rebranded as the “Verizon Media Group” starting January 1, 2019. Also, Verizon hates it.
  • (Further disclosure: Verizon is the former employer of our editor in chief, who worked for TechCrunch, then owned by AOL, before and after Verizon bought the smaller firm.)

Investors in Crunchbase also include:

  • Emergence Capital Partners
  • Salesforce Ventures
  • Mayfield Fund
  • etc.

The company raised $18 million of Series B venture funding from lead investor Mayfield on April 6, 2017, putting the company’s pre-money valuation at $52 million.


PitchBook

Acquired by Morningstar (NASDAQ: MORN) for $225 million on December 1, 2016. Deal announced in October.

Morningstar was an early investor in PitchBook and owned approximately 20 percent of the company before acquisition.

At that time, PitchBook had $31.1 million in revenue for the trailing 12 months ended June 30, 2016. The company has more than 300 employees located in Seattle, New York, and London.


CB Insights

Raised $10 million of Series A venture funding from Pilot Growth Equity on November 9, 2015, putting the company’s pre-money valuation at $40 million.

China’s Long-term Apartment Rentals Startups

After WeWork’s unsuccessful IPO, several long-term apartment rentals startups in China are preparing to list on Nasdaq. Q&K (青客公寓) will likely be the first, planning to raise $100 million, according to the SEC filing.

Firms like Q&K will lease apartments from individual landlords, renovate the space with uniform styles, and then sublease fully-furnished rooms to tenants, who are mainly young urbanites looking for affordable housing. Q&K reported a net revenue of USD 129.6 million in the fiscal year 2018, up 70.3% year-on-year. Net losses however doubled to USD 72.8 million in the same period. [kr-asia]

I do believe they are similar to WeWork in many aspects.

Q&K is more like a test for investors’ current appetite (especially needed after WeWork), with two other bigger players waiting in line. Not surprisingly, those are backed by Alibaba and Tencent respectively.

Ant Financial-backed Danke (蛋壳公寓) and Tencent-backed Ziroom (自如) both are also looking for an IPO to raise $500 million – $1 billion.

Danke raised $500 million in February 2019.

Ziroom raised $500 million in June 2019.

 

Uber Card vs. Chase Sapphire Reserve (CSR)

Let’s compare the long-term value here.

Dining & Travel is 3.0x points for CSR and a $1.5x value per 100 points -> essentially a 4.5% reward.

Uber Card is 4% on dining and 3% on Travel.

The difference in annual fees are totally different: CSR is $150 ($450 fees minus $300 travel credit) while Uber Card is -$50. (YES, Negative 50 – Uber Card reimburses $50 each year for any subscription e.g. amazon prime while has $0 annul fee).

Assuming a person spends $5,000 per year in travel and dines for $20,000 per year (around $55 per day), then:

CSR will earn 1.5% premium on travel, so $75 more benefits than Uber Card.

And 0.5% premium on dining, so $100 more benefits than Uber Card.

Uber Card wins as the effective saving in annual fee is $200 while the incremental benefit CSR brings is only $175 with our assumptions.

5G And Glass

Why glass matters in the future?

Source: Qualcomm, IHS 5G economic impact study

5G is the buzzword that nearly every industry is talking about. Higher download speed, AR/VR, autonomous driving, industrial IoT – 5G is the future, powering the global economy over $12 trillion by 2035, according to an IHS study.

5G physics

Source: Slideplay
Source: androidauthority.com

With 5G, we are marching into new radio frequencies, subdivided into Sub-6 (<6 GHz) and mmWave (a wavelength range of 10 mm at 30 GHz decreasing to 1 mm at 300 GHz).

4G radio waves ranging from 700 MHz to about 2.5 GHz range from roughly 40 to 12 cm in length. In contrast, a 5G NR wave at 28 GHz are just 1 cm long. And that’s the lowest end of the mmWave frequencies; 60 GHz signals are just 5 mm in length. [edn.com]

mmWave…

  • doesn’t penetrate walls!

This is perhaps the most common issue cited with upcoming 5G networks and it’s true to some extent. Most building materials, such as cement and brick, attenuate and reflect very high-frequency signals with a big enough loss you’re unlikely to receive a very useful signal moving from inside to outside. Even the air produces signal loss, which limits frequencies above 28GHz to about a kilometer anyway. Wood and glass attenuate high-frequency signals to a smaller degree, so you’ll likely still be able to use 5G mmWave next to a window. [androidauthority]

  • cant’t get through hands..
  • doesn’t work well when it rains..

Corning Gorrilla

https://players.brightcove.net/c54a08de-3d27-4a61-b362-8c3251c67445

Apple included glass back since 2017 models.

Source: Apple iPhone 8 & 8 Plus

Industry Progress

AT&T has introduced its 5G+ service in December 2018 with 12 cities: Atlanta, Charlotte, N.C., Dallas, Houston, Indianapolis, Jacksonville, Fla., Louisville, Ky., Oklahoma City, New Orleans, Raleigh, N.C., San Antonio and Waco, Texas.

And later added 7 cities to that list in April 2019 – Austin, Los Angeles, Nashville, Orlando, San Diego, San Francisco, and San Jose, with Las Vegas the 20th in June and New York City the 21st in August.