Newborn Acquisition Corp.

NBAC Details

Business Combination with Nuvve Corporation: Newborn Acquisition Corp. (NASDAQ: NBAC) is a blank check company focused on forming a merger or business combination with other businesses. As on 27 November 2020, the company’s market capitalisation stood at ~$129.05 million.  The company recently signed a definitive merger agreement with Nuvve Corporation, a green energy technology company based in San Diego. Both the companies have signed definitive purchase agreements with institutional investors for the investment of around $18 million in the combined company through a PIPE and bridge financing. Upon completion of the transaction, the combined company will be named Nuvve Holding Corp. and is expected to remain listed on Nasdaq under the ticker symbol “NVVE”. The transaction is expected to close in the first quarter of 2021.

Collaborating with The Lion Electric Co: Nuvve Corporation recently collaborated with The Lion Electric Co. (Lion Electric), a leading original equipment manufacturer of all-electric heavy-duty vehicles based in Saint-Jérôme, to launch vehicle-to-grid (V2G) technology as a standard feature of their zero-emission school buses.

Outlook: Nuvve Corporation expects its FY20 revenue to be in the range of $5 million - $6 million. It expects revenue to grow further to $32.3 million in FY21 and $93.4 million in FY22. The company expects its operating income to grow to $3.2 million in FY21 and $25.4 million in FY22.

Historical and Projected P&L (Source: Company Reports)

Key Risks: The company is exposed to the risks related to the organic and inorganic growth of Nuvve’s business and the timing of expected business milestones. Further, the company’s performance is also dependent on the effects of competition on Nuvve’s Future Business.

Stock Recommendation: Nuvve Corporation expects its revenue growth to outpace the EV charging industry. On the technical analysis front, the stock of NBAC has a support level of ~$14.61 and resistance of ~$22.661. Although the stock of NBAC has provided a return of 74.74% in the last one month, considering the expected benefits from the merger with Nuvve Corporation, its forecasted revenues, and Nuvve’s recent collaboration with Lion Electric, we are of the view that the stock may provide further upside in the coming times. Hence, considering the aforesaid facts and key risks, we give a “Speculative Buy” recommendation on the stock at the closing price of $17.30, down by 22.32% on 27 November 2020.

NBAC Daily Technical Chart (Refinitiv, Thomson Reuters)

Tuniu Corporation

TOUR Details

US$10 Mn Share Repurchase Program: Tuniu Corporation (NASDAQ: TOUR) is a leading online leisure travel company in China that offers a large selection of packaged tours. As on 27 November 2020, the company’s market capitalization stood at ~$393.54 million.  Recently, the company’s Board approved a share repurchase program, under which, the company may repurchase up to US$10 million worth of its ordinary shares or American depositary shares representing ordinary shares over the next 12 months. The company intends to use its available cash balance to fund the repurchases.             

Q2FY20 Result Highlights: For Q2FY20, the company reported net revenues of RMB34.0 million, down by 93.5% on pcp, due to the negative impact brought by the outbreak and spread of COVID-19. The company’s gross margin reduced from 44.8% in Q2FY19 to 22.7% in Q2FY20. As at 30 June 2020, the company had cash and cash equivalent, restricted cash and short-term investment of RMB1.6 billion.

Q2FY20 Results (Source: Company Reports)

Outlook: The company expects its Q3FY20 net revenue to be in the range of RMB85.3 million to RMB170.5 million, representing a decline of 80% to 90% on pcp, mainly due to the impacts of COVID-19. The company intends to release its Q3FY20 results on 1 December 2020.

Stock Recommendation: The stock of TOUR has provided a return of 206.73% and 200.94% in the last one and three-month period. The stock is currently inclined towards its 52-weeks high price of $4.51, demonstrating the limited potential for growth. On the technical analysis front, the stock has a support level of ~$2.02 and resistance of ~$4.12. Considering the ongoing uncertainty regarding the COVID-19 pandemic, weak Q2FY20 results, expected decline in Q3FY20 revenue, and current trading level, we suggest investors to “Avoid” the stock at the closing price of $3.19, down by 9.63% on 27 November 2020.

TOUR Daily Technical Chart (Refinitiv, Thomson Reuters)

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