@FirstHillcap I didn’t ask about pricing, because there are two big clients (SONY and TSM), I don’t think RS has any pricing power. However thay said that capacity is fully booked and their expansion is based on the clients’ expectations.
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Grana Research
103 posts
Grana Research
@granaresearch
Deep-dive equity research. Exploring opportunities across GARP, Deep Value, and Special Situations.
Not financial advice Katılım Eylül 2022
134 Takip Edilen372 Takipçiler
@granaresearch Nice. Any clarity on price increases / pricing power they have as wafer volumes increase? If they are capacity constrained can they not raise prices? Or too commoditized
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I have to say, Fable can write pretty good investment research BUT you have to plug it in to live financials for it to produce accurate financials
x.com/FirstHillcap/s…
First Hill Capital@FirstHillcap
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$APP Management did indeed say that they do not expect to sustain 30% growth in the Gaming segment indefinitely, and the market understandably focused on that comment. At the same time, they also stated that they expect Gaming and the Consumer segment to likely converge over the next 3-5 years. As a result, management appears comfortable with investors underwriting a long-term growth rate in the 20-30% range.
rubicon59@rubicon59
I didn't like the "gaming slowdown" message $APP delivered today on their Jeffries conference presentation. :-((
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I know from past earnings calls that Wise is quite deliberately allocating resources towards lobbying in the US.
For instance, they asked regulators to more aggressively point out hidden fees charged by banks in your typical cross-border transfer. I'm not even sure to what extent they've made progress in that regard.
Reading the post below, I'm inclined to think $WISE needs to up it lobbying game in the EU too to not let Iberpay, with presumably an inferior product, take its pie. $WSE
Grana Research@granaresearch
A potential force behind the lobbying effort against $WSE $WISE.L appears to be Iberpay, the operator of Spain's national payment system. That is what we heard and what we understood from Iberpay — that they were saying: "Well, we're lobbying against that behavior because we don't want that behavior to grow. What we're building at a European level across the different networks that do SEPA payments is to also replace Swift or multiple banking connections, and then connect major corridors through systems such as Faster Payments in the U.K., Pix in Brazil, and their equivalents." What concerns regulators? Under Wise's pooled-liquidity model, there is no clear end-to-end payment chain linking the sender and the recipient in the traditional sense, because funds do not pass through the standard sequence of intermediary banks. Frankly, these concerns represent a risk to the entire Wise transfer model. How this issue is ultimately resolved could have significant implications for the future of the European cross-border payments market. There are, however, some encouraging signals. The amount under discussion is relatively small — roughly $500 million of transactions. One can cautiously infer that Wise's KYC/AML controls are functioning effectively. This has long been our base assumption, given that KYC and AML compliance represent one of Wise's largest operating expense categories.
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A potential force behind the lobbying effort against $WSE $WISE.L appears to be Iberpay, the operator of Spain's national payment system. That is what we heard and what we understood from Iberpay — that they were saying:
"Well, we're lobbying against that behavior because we don't want that behavior to grow. What we're building at a European level across the different networks that do SEPA payments is to also replace Swift or multiple banking connections, and then connect major corridors through systems such as Faster Payments in the U.K., Pix in Brazil, and their equivalents."
What concerns regulators? Under Wise's pooled-liquidity model, there is no clear end-to-end payment chain linking the sender and the recipient in the traditional sense, because funds do not pass through the standard sequence of intermediary banks. Frankly, these concerns represent a risk to the entire Wise transfer model. How this issue is ultimately resolved could have significant implications for the future of the European cross-border payments market.
There are, however, some encouraging signals. The amount under discussion is relatively small — roughly $500 million of transactions. One can cautiously infer that Wise's KYC/AML controls are functioning effectively. This has long been our base assumption, given that KYC and AML compliance represent one of Wise's largest operating expense categories.
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@realroseceline Interestingly, the company claims to be FCF positive, yet they're burning all that cash on buybacks just to keep up with SBC dilution. The real question is how they'll manage grant sizes now that RSUs are such a huge part of pay and the stock is tanking.
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$TEAM looks like a cash machine at first glance.
~$1.3b operating cash flow
~$50m capex (tiny capex, only 4% of operating cash flow)
But then you see ~$1.5b in stock based comp and that’s the real spend.
In fact, they spend $165m more on SBC than they bring in from operating cash flow.
They’re paying employees with stock instead of cash, which makes cash flow look strong while diluting shareholders.
So yeah, capex is very low but the real reinvestment is SBC ($1.5b) and R&D ($3b).
If you treat SBC like a real cost, this business is a lot less “cash rich” than it looks.
🌹
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In our recent LVMH $LVMH $LVMHF $MC.PA note, we outlined the main challenges for the company. This proved to be extremely relevant. If you missed it, head over to our Substack.
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Wise $WISE.L $WISE $WPLCF has just confirmed that fourth-quarter cross-border volumes grew by 26%, while active customers rose 22% year-on-year. We have been monitoring the company for a long time, and our model had projected volume growth of 17.98% and active customer growth of 18.55% YoY for Q4. Even with those assumptions, we were seeing a PBT margin of 16.6% - slightly above the upper end of the guidance range. Likely, the company will confidently outperform on both the top and bottom lines.
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Our first post in the Grana Insights series is dedicated to LVMH $LVMH $MC $MC.FP and the challenges the company is facing. A slightly unconventional format - we’d love to hear your feedback.
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@blondesnmoney They can't just buying back since BDCs have to distribute at least 90% of net income. They also can't use debt due to 2x leverage cap
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Grana Research retweetledi
Grana Research retweetledi
Private Equity is Back, Baby - KKR just returned a fund in one deal, let's break down the deal
Mid-2023, no one is talking about AI or data centers and KKR acquired CoolIT for a very fair 16.5x EBITDA multiple
So what does the company do? They are a pioneer in direct liquid cooling technology for data centers, this removes heat from data centers enabling more energy-efficient and higher-performance operations than traditional air cooling
Fast forward 3 years, and the company has exploded, coolant distribution unit capacity grew 25 times. 25 times! CoolIT's technology ended up deployed in over 300 data centers globally.
Today, KKR agreed to sell CoolIT to Ecolab, a Minnesota-based industrial water treatment and hygiene giant, for $4.75 billion in cash, representing 29x NTM EBITDA of $164M.
Read that again. 10x increase in EBITDA and 12x of multiple expansion. So good.
The result, a nice 15x MOIC and 150%+ IRR.
What I think is even more fascinating is that this comes from the Impact Fund which is $2.8bn of total commitments, so I estimate that this deal just returned the entire fund. Sooo good.
Genius or luck?
In my opinion, genius. Chapeau to KKR.
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Apollo $APO also carries the lowest software exposure among its peers - approximately 2% of total AUM and 1% of credit AUM. By comparison, Blackstone sits at 8%, Ares at 9%, and Blue Owl at 16%. On the 4Q 2025 earnings call, Marc Rowan noted:
"In our PE business, our software exposure rounds to 0. In our Athene balance sheet, our software exposure rounds closer to 0 than to 1."
Athene's balance sheet contains roughly 0.5% software exposure, nearly all of which consists of hyperscaler obligations.
Grana Research@granaresearch
Apollo is certainly not immune: should systemic risks materialize across the sector, $APO will feel the pain too. The right question to ask, however, is: what the worst case actually looks like, what happens to the credit business's growth trajectory going forward, and - most importantly - how does the downside scenario compare to what the market has already priced in. $APO is arguably the best-positioned alternative asset manager against the risks currently facing the industry, because: a) the company has minimal reliance on BDC / retail / wealth channels for fundraising and, therefore, no meaningful risk of capital outflows; b) the asset base is dominated by permanent capital, which accounts for approximately 60% of total AUM and over 70% of FGAUM; c) the largest single source of capital is its wholly-owned insurance subsidiary, Athene - roughly 42% of AUM and ~58% of earnings; d) Apollo carries minimal software exposure within its AUM mix and limited Private Equity allocation, which reduces asset marking risk.
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