Smartkarma Daily Briefs

• A Nikkei article today suggested that Fujitsu had granted preferential negotiating rights to buy Shinko Electric Industries (6967 JP) to a JIC-led consortium (including DNP and Mitsui Chem) for ~¥800bn.
• This happened late in the afternoon session. Shares spiked 5+%, then were halted. A gray market ensued. 
• A Bloomberg article provided more info, and the same info nuanced slightly differently. The wording in yet other articles was interesting enough that it is worth discussing. 

• After months of speculation, Shinko Electric Industries (6967 JP) has recommended the JIC alliance’s preconditional tender offer of JPY5,920 per share, an 18.9% premium to the undisturbed price (31 May). 
• The pre-condition relates to regulatory approvals in Japan, China, Korea, and possibly Vietnam. The offeror may waive the pre-condition. The offer is long-dated and expected to start in August 2024.
• The minimum acceptance condition requires a 33.3% minority acceptance rate. Despite the low 7.1% premium to the last close, the offer resulted from a competing bidding process. 

• Hollysys Automation Technologies (HOLI US)‘s board persistent stonewalling was effectively terminated after the its court injunction was dismissed last month. An SGM will now take place sometime next month.  
• A firm merger agreement was expected this month, and Hollysys announced yesterday Ascendent Capital has emerged as the preferred suitor with a (revised) US$26.50/share Offer. 
• This looks to be (finally) all stitched up. Trading wide-ish to terms. Get involved. 

• Money Forward’s stock price has declined by 2% YTD versus a 23% gain for the overall market. Technically, the stock is approaching oversold levels
• We see 38% upside for Money Forward’s stock price. At 5.5x EV/revenue, the stock is trading at a 50% discount to global peer, Intuit
• We believe that investors are under pricing the size of the Japanese market for cloud accounting and operating leverage from penetration into mid-cap corporate market

• Revenue for November 2023 was NT$206.03 billion, a decrease of 15.3% MoM, and down 7.5% compared to the year ago period.
• Based on the guided midpoint, December revenue will show a further 20% MoM decline
• We estimate FY2023 revenues of $68.8 billion, down 9.4% YoY. 

• China announced game approval for November batch. The number of games approved is in-line with the pace of approval in recent months.
• The Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
• Netease scored one approval while Tencent has been zeroed for five rounds.

• The WiFi technology was dominated by Broadcom Corp Cl A (BRCM US), but Mediatek Inc (2454 TT) has to break into the PC and smartphone markets in 2024F.
• There are speculations that Apple might use MediaTek’s WiFi 7 solution in 2024F or consider MediaTek as a potential chip provider.
• MediaTek will be using 6nm technology for WiFi 7, replacing the current 28nm technology used for WiFi 6.

Nano Dimension reported Q323 year-on-year revenue growth of 21.6%, an adjusted gross margin of 48.0% (+20.4pp y-o-y) and an adjusted EBITDA loss of $30.1m. Despite the Israeli/Palestinian conflict, Nano Dimension maintains its outlook for FY23 and has launched an initiative to improve company profitability. It has also made improvements to corporate governance. With a substantial net cash balance and a material stake in Stratasys, the company is focused on optimising capital allocation, balancing M&A, share buybacks and investment in R&D.

Vection Technologies’ Q124 and AGM update shows continued top-line momentum driven by an established partner strategy. Now embedded with leading players across diverse verticals, management sees an opportunity to convert low-margin, one-off transactions into large, multi-year contracts in FY24. Expanding use cases and commercialisation is driving rapid market growth, underpinning secular tailwinds. To bolster its outlook, the company introduced several efficiency measures in the period, which it expects to enhance margins and cash flows more visibly in H2.

• The data in this insight is collated from the “shareholding disclosure” link on the HKEx website.
• Often there is a corresponding HKEx announcement on the increase – or decrease – in the shareholding by directors. Or pledging. However, such disclosures are by no means an absolute.
• The key stocks mentioned in this regular insight are China HK Power (931 HK)and Meitu Inc (1357 HK)