TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

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<p>As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike's user conference.</p>
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<p>Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</p>
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As we head into earnings next week, we note attractive setups for Snap and Microsoft from data that came out this week, along with a very bullish presentation at Crowdstrike's user conference.




Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.




TMT Weekly:  3 Things that Stood Out The Week of 10/16/​​​​2020

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

<p>Following the appointment of Lisa Su as CEO in 2014, AMD has staged a stunning turnaround headlined by its Ryzen series of consumer-focused processors. Its recent announcement on Zen 3 cements this and raises questions for both Intel and Nividia as the (formerly?) dominant players in their respective markets. It also has implications for the Arm acquisition, which was on shaky ground already, and that is before even considering what a Xilinx acquisition could mean for the industry.</p>

Following the appointment of Lisa Su as CEO in 2014, AMD has staged a stunning turnaround headlined by its Ryzen series of consumer-focused processors. Its recent announcement on Zen 3 cements this and raises questions for both Intel and Nividia as the (formerly?) dominant players in their respective markets. It also has implications for the Arm acquisition, which was on shaky ground already, and that is before even considering what a Xilinx acquisition could mean for the industry.

Softbank – How Does AMD’s Resurgence and Xilinx Deal Impact the Nvidia-Arm Deal?

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

<p>The much-anticipated acquisition by <a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" data-smartkarma-citation="entities:5891:1" rel="noopener">NVIDIA</a> of <a href="https://www.smartkarma.com/entities/arm-holdings-plc" target="_blank" data-smartkarma-citation="entities:21816:1" rel="noopener">Arm</a> from <a href="https://www.smartkarma.com/entities/softbank-group-corp" target="_blank" data-smartkarma-citation="entities:315:1" rel="noopener">Softbank</a> was formally <a href="https://nvidianews.nvidia.com/news/nvidia-to-acquire-arm-for-40-billion-creating-worlds-premier-computing-company-for-the-age-of-ai" target="_blank" rel="noopener">announced</a> on Monday. The transaction is valued at $40 billion, an approximately equal combination of cash and NVIDIA stock.</p><p>On the surface the deal looks strategically solid from NVIDIA's perspective. It places the company at the center of Arm's one hundred and eighty billion connected device ecosystem. Perhaps even more importantly, it opens up the possibility of an outright assault on <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel's</a> data center dominance by adding Arm-based server processors to complement NVIDIA's existing lineup of GPUs and interconnect.</p><p>Underneath the surface however, this deal is fraught with issues and risks. While Arm has been a very successful company, their growth is flatlining as smartphone sales stagnate. Furthermore, we see the rise of RISC-V as a very real threat to Arm's business model in the coming years. Arm has never competed with its customers. Under NVIDIA ownership, this will be virtually impossible to avoid.</p><p>From a regulatory perspective, Arm IP moving under american ownership will raise the very real prospect that this technology will become a future weapon in the US-China trade and technology wars. In today's environment, it's difficult to see why China would agree to facilitate that possibility.</p><p>All in all we think this deal is not as good as it seems on the surface and that it will be practically impossible to get through the regulatory approval process. </p>

The much-anticipated acquisition by NVIDIA of Arm from Softbank was formally announced on Monday. The transaction is valued at $40 billion, an approximately equal combination of cash and NVIDIA stock.On the surface the deal looks strategically solid from NVIDIA's perspective. It places the company at the center of Arm's one hundred and eighty billion connected device ecosystem. Perhaps even more importantly, it opens up the possibility of an outright assault on Intel's data center dominance by adding Arm-based server processors to complement NVIDIA's existing lineup of GPUs and interconnect.Underneath the surface however, this deal is fraught with issues and risks. While Arm has been a very successful company, their growth is flatlining as smartphone sales stagnate. Furthermore, we see the rise of RISC-V as a very real threat to Arm's business model in the coming years. Arm has never competed with its customers. Under NVIDIA ownership, this will be virtually impossible to avoid.From a regulatory perspective, Arm IP moving under american ownership will raise the very real prospect that this technology will become a future weapon in the US-China trade and technology wars. In today's environment, it's difficult to see why China would agree to facilitate that possibility.All in all we think this deal is not as good as it seems on the surface and that it will be practically impossible to get through the regulatory approval process. 

NVIDIA+Arm. Strategically Solid But Practically Impossible.

<p>So apparently after Sony decided to go with “RGB wireless router stuck on blue” as its design theme,</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/950/original/image_49464720921599621844778.jpg?1599621844" class="editor-image img-responsive" data-smartkarma-image-id="157950"></figure><p>Microsoft decided to one-up them with a full-retro hybrid radio-iStove.</p><table class="table table-striped"><tbody>
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<td style="text-align: center; width: 50%;"><p><strong><em>Xbox Series S     </em></strong></p></td>
<td style="text-align: center; width: 50%;"><strong><em>1940s Tube Radio / Portable iStove</em></strong></td>
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<td style="width: 50%;"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/951/original/image_75811622431599621844778.jpg?1599621845" class="editor-image img-responsive" data-smartkarma-image-id="157951"></figure></td>
<td style="width: 50%;"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/157/949/original/image_68988860241599621844778.jpg?1599621844" class="editor-image img-responsive" data-smartkarma-image-id="157949"></figure></td>
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</tbody></table><p>The price of the system was initially leaked and then confirmed as $300 which is aggressive pricing and could help Microsoft… but we view their strategy as flawed and, in some senses, unlucky due to what Sony and Nintendo are doing. We explain why below.</p>

So apparently after Sony decided to go with “RGB wireless router stuck on blue” as its design theme,Microsoft decided to one-up them with a full-retro hybrid radio-iStove.

Xbox Series S     
1940s Tube Radio / Portable iStove





The price of the system was initially leaked and then confirmed as $300 which is aggressive pricing and could help Microsoft… but we view their strategy as flawed and, in some senses, unlucky due to what Sony and Nintendo are doing. We explain why below.

The Xbox Series S – Minimalism Done Wrong

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Apple (APPL) stores are still crowded.</li>
<li>Tesla (TSLA) refused to deliver vehicles to customers who ordered via Pinduoduo (PDD).</li>
<li>JD.com (JD) did not extend the contract with Alibaba (BABA)’s Sto Express (002468 CN),</li>
<li>Tencent (700 HK) started mini-store in its WeChat for small retailers.</li>
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Apple (APPL) stores are still crowded.
Tesla (TSLA) refused to deliver vehicles to customers who ordered via Pinduoduo (PDD).
JD.com (JD) did not extend the contract with Alibaba (BABA)’s Sto Express (002468 CN),
Tencent (700 HK) started mini-store in its WeChat for small retailers.


China Internet Weekly (24Aug2020): TSLA Refused PDD’s Customers, JD Fired BABA’s Sto Express

United States

Advanced Micro Devices, Inc. (AMD) produces semiconductor products and devices. The Company offers products such as microprocessors, embedded microprocessors, chipsets, graphics, video and multimedia products and supplies it to third-party foundries, as well as provides assembling, testing, and packaging services. AMD serves customers worldwide.

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Advanced Micro Devices (AMD US)

TMT Weekly: 3 Things that Stood Out The Week of 10/16/2020

Datapoints supportive of upside to earnings for Microsoft and Snapchat this past week, plus an ever expanding TAM justifies Crowdstrike's valuation.

Aaron Gabin

Softbank – How Does AMD’s Resurgence and Xilinx Deal Impact the Nvidia-Arm Deal?

We consider the implications of AMD's latest CPU and GPU developments, as well as its move to acquire Xilinx on other competitors such as Nvidia...

Mio Kato

NVIDIA+Arm. Strategically Solid But Practically Impossible.

The long-anticipated acquisition by NVIDIA of Arm Holdings (ARM LN)

William Keating

The Xbox Series S – Minimalism Done Wrong

So apparently after Sony decided to go with “RGB wireless router stuck on blue” as its design theme, Microsoft decided to one up them with a...

Mio Kato

China Internet Weekly (24Aug2020): TSLA Refused PDD’s Customers, JD Fired BABA’s Sto Express

Apple (APPL) stores are still crowded. Tesla (TSLA) refused to deliver vehicles to customers who ordered via Pinduoduo (PDD). JD.com (JD) did not...

Ming Lu

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52-week Range

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TMT Weekly: 3 Things that Stood Out The Week of 10/16/​​​​2020

Datapoints supportive of upside to earnings for Microsoft and Snapchat this past week, plus an ever expanding TAM justifies Crowdstrike's valuation.

Aaron Gabin

Softbank – How Does AMD’s Resurgence and Xilinx Deal Impact the Nvidia-Arm Deal?

We consider the implications of AMD's latest CPU and GPU developments, as well as its move to acquire Xilinx on other competitors such as Nvidia...

Mio Kato

NVIDIA+Arm. Strategically Solid But Practically Impossible.

The long-anticipated acquisition by NVIDIA of Arm Holdings (ARM LN)

William Keating

The Xbox Series S – Minimalism Done Wrong

So apparently after Sony decided to go with “RGB wireless router stuck on blue” as its design theme, Microsoft decided to one up them with a...

Mio Kato

China Internet Weekly (24Aug2020): TSLA Refused PDD’s Customers, JD Fired BABA’s Sto Express

Apple (APPL) stores are still crowded. Tesla (TSLA) refused to deliver vehicles to customers who ordered via Pinduoduo (PDD). JD.com (JD) did not...

Ming Lu

TMT Weekly: 3 Things that Stood Out The Week of 10/16/2020