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    2423   KYG5223Y1089


Delayed Hong Kong Stock Exchange  -  04:08 2022-09-27 am EDT
44.80 HKD   +2.52%
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SoftBank steps up asset sales from sinking portfolio

08/09/2022 | 06:44am EDT
FILE PHOTO: A journalist raises her hand to ask a question to Japan's SoftBank Group Corp Chief Executive Masayoshi Son during a news conference in Tokyo

TOKYO (Reuters) - SoftBank Group Corp is accelerating asset sales after its flagship Vision Fund unit booked nearly $50 billion in losses in just six months, but Chief Executive Masayoshi Son faces narrowing options and slumping valuations, analysts said.

Son said on Monday that he is in discussions to sell asset manager Fortress, without commenting on a valuation. SoftBank also raised $2.4 billion selling shares in T-Mobile US during the latest quarter, while unloading a variety of other holdings.

But as valuations fall, easy options for raising cash are getting harder to come by.

With SoftBank having shifted focus from operating companies to tech investing, and Son staking his reputation on generating big returns that can be recycled into further tech bets, the billionaire will be keen to avoid selling Vision Fund assets at a loss, analysts said.

"Most of the portfolio is underwater, making the case to sell harder to justify," Redex Research analyst Kirk Boodry wrote in a note. He pointed to e-commerce firm Coupang and food delivery firm DoorDash as potential candidates.

Vision Fund exited a swathe of assets in the April-June quarter - including ridehailer Uber Technologies and property platforms Opendoor Technologies and KE Holdings, which operates China's Beike - for a realised gain of $5.6 billion.

SoftBank sold the final tranche of Uber shares at a loss, Boodry calculates, and generated a total return of just $1.5 billion on the stake. Son backed the firm with an eye on autonomous driving, with SoftBank becoming the largest shareholder, but Uber abandoned its efforts to develop a self-driving car.

"SBG (SoftBank Group) is willing to monetise any asset at a reasonable price," Jefferies analyst Atul Goyal wrote in a note.

"It is a good sign for SBG shareholders, though it does not bode well for ... investee companies".

Son has sold assets in past downturns to raise cash, including the early days of the COVID-19 pandemic during which he said startups had fallen into the "valley of the coronavirus".

SoftBank agreed to sell chip designer Arm to Nvidia in 2020 but the deal later stumbled over regulatory hurdles. Son still hopes to list Arm in the United States.

The Japanese conglomerate has also cashed in on its large and liquid stake in e-commerce firm Alibaba to raise funds.

Times have changed, however, with the downturn in valuations.

While SoftBank raised $17.3 billion in the last few months on its Alibaba holdings through prepaid forward contracts, the Chinese firm has lost more than two-thirds of its value from highs in late 2020.

Son has also pledged to "play defence" and on Monday laid out a further scaling back of investing activity and cost cutting across the group.

Some analysts say private asset prices may have further to fall, potentially raising the bar for efforts to generate returns, and Son said SoftBank had been in a bubble in valuations.

"(The) private book is still far more inflated than public listed assets are and hence the real downside could still be material," Jefferies analyst Goyal wrote.

While reshaping its portfolio, SoftBank has also announced a 400 billion yen ($2.97 billion) buyback of its own shares, in addition to an existing 1 trillion yen repurchase programme that is 70% complete and due to expire in November.

"It's possible the structure of the company will be reviewed, including through a management buyout, in the not too distant future," SMBC Nikko Securities analyst Satoru Kikuchi wrote in a note.

($1 = 134.8500 yen)

(Reporting by Sam Nussey; Editing by Miyoung Kim and Edmund Klamann)

By Sam Nussey

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING LIMITED -1.02% 77.9 Delayed Quote.-34.48%
COUPANG, INC. 1.88% 16.8 Delayed Quote.-42.82%
DOORDASH, INC. 0.83% 51.15 Delayed Quote.-65.65%
KE HOLDINGS INC. 2.52% 44.8 Delayed Quote.0.00%
NVIDIA CORPORATION 1.51% 124.13 Delayed Quote.-57.79%
OPENDOOR TECHNOLOGIES INC. 3.27% 3.16 Delayed Quote.-78.37%
SOFTBANK CORP. -1.01% 1473.5 Delayed Quote.2.30%
SOFTBANK GROUP CORP. -0.48% 5013 Delayed Quote.-6.77%
T-MOBILE US 0.27% 132.68 Delayed Quote.14.09%
UBER TECHNOLOGIES, INC. 2.53% 27.57 Delayed Quote.-34.25%
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Analyst Recommendations on KE HOLDINGS INC.
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Sales 2022 62 718 M 8 739 M 8 739 M
Net income 2022 -1 663 M -232 M -232 M
Net cash 2022 33 635 M 4 687 M 4 687 M
P/E ratio 2022 -112x
Yield 2022 -
Capitalization 150 B 20 925 M 20 925 M
EV / Sales 2022 1,86x
EV / Sales 2023 1,42x
Nbr of Employees 102 803
Free-Float 95,7%
Duration : Period :
KE Holdings Inc. Technical Analysis Chart | MarketScreener
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Income Statement Evolution
Mean consensus BUY
Number of Analysts 18
Last Close Price 119,06 CNY
Average target price 145,41 CNY
Spread / Average Target 22,1%
EPS Revisions
Managers and Directors
Yong Dong Peng Chairman & Chief Executive Officer
Tao Xu Chief Financial Officer & Executive Director
Wan Gang Xu Chief Operating Officer & Executive Director
Xiao Hong Chen Independent Non-Executive Director
Han Song Zhu Independent Non-Executive Director
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