TMT/Internet

• Tencent (700 HK) shares fell 7.3% on 7 January, after being designated a Chinese Military Company by the U.S. Department of Defense, prompting volatility to spike.
• Given the potential for further downside, or a relief rally, significant price movements and high volatility are to be expected.
• A long straddle is detailed to capitalize on the anticipated volatility in Tencent (700 HK) .

• There are 8 stocks listed in Indonesia, Malaysia, Thailand and Philippines that could be deleted from passive portfolios in February.
• There is a fair bit to sell in the stocks with over US$50m flow and between 3.5-64x ADV. Positioning is not very high in a lot of the stocks.
• Stocks could avoid deletion if they move higher in the next week or two. But increased positioning could keep a lid on that.

• The review cutoff date for the March rebalance of the HSIII was 31 December. The changes will be announced on 21 February and become effective after the close 7 March.
• There could be 5 changes to the index with some inclusions driven by potential addition to the Hang Seng Composite Index. That could lead to buying via Southbound Stock Connect.
• Horizon Robotics (9660 HK) is a potential inclusion to the HSCI and the Hang Seng TECH Index (HSTECH INDEX) in March.

• United Microelectron Sp Adr (UMC US) experiences approximately a 5-10% quarter-over-quarter (QoQ) decline in 1Q25. For the full year of 2025, we anticipate a modest year-over-year (YoY) decline of around 5%.
• We have observed some strength from Taiwanese Fabless companies, which could support the 1Q25 demand for UMC.  
• It has been noted that mature wafer demand is not solely driven by China and may help offset the impacts of the US-China Trade War, benefiting foundries outside of China.

• Lumen Technologies’ third-quarter 2024 performance outlines its strategic efforts and current challenges as it navigates a transformative phase to reposition the company within the digital networking and AI infrastructure sectors.
• The company reported a revenue decline, reflecting ongoing headwinds from legacy business sectors, even as it strives to pivot its offerings toward newer, more competitive markets.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• EV price cuts in Europe impact used car market, while US industry faces tariffs
• Kyocera to sell $1.27 billion in non-core business due to declining profits
• Toyota and Nvidia collaborate at CES 2025 for AI alliance towards autonomous future

Team Internet’s board yesterday confirmed that it has received two separate acquisition proposals from TowerBrook Capital Partners and Verdane Fund Manager. Each proposal offers 125p per share in cash, with an option for shareholders to choose an unlisted equity alternative.

• Take-Two Interactive Software has demonstrated a robust performance in its second-quarter fiscal year 2025 results.
• The company reported net bookings of $1.47 billion, aligning with the higher end of its guidance range.
• This performance was notably driven by the continued success of key franchises such as Grand Theft Auto and Borderlands.

• High-margin and growing Positioning business is overshadowed by struggling cellular module business and inventory issues
• Potential for significant upside if company divests or shuts down struggling business segments
• New leadership team and activist shareholder involvement indicate strategic shift towards unlocking value of core strengths in GNSS semiconductors and modules, with potential upside of 50-200% and limited downside risk

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• The U.S. Department of Defense has designated Tencent (700 HK) as a Chinese Military Company. Tencent Holdings (ADR) (TCEHY US) shares were down nearly 8% overnight.
• There is no change to the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC) yet. But the overlap between the DoD list and the NS-CMIC list is high.
• If added to the NS-CMIC list, Tencent (700 HK) will be deleted from global indexes and there will be HUGE passive selling from these trackers.

• Overnight, we got news that the JIC Consortium Deal for Shinko Electric Industries (6967 JP) was approved 27Dec2024. That was the last approval required (other than TSE TOB Launch approval).
• This is “on schedule” or slightly early from the previously-announced expected launch date.
• This morning, the stock is up sharply and is trading <0.75% from terms. Expect an announcement within two weeks. Current arb annualised at high 6% is OK. One could hold.

• The U.S. Department of Defense announced that it has added numerous Chinese companies including Tencent and CATL as companies that work with China’s military.
• This is likely to negatively impact Tencent and CATL’s prices in the next several weeks but positively impact on some of the major Korean rechargeable battery and gaming stocks.
• The higher probability scenario at this point is for Tencent and CATL to be officially included in the Chinese Military Industrial Complex list in the coming weeks. 

• Intel is pinning much hope on the success of the AIPC, a venture in which they are tied at the hip with Microsoft, which calls it a CoPilot+ PC
• The AIPC/CoPilot+ PC concept is struggling to gain traction. They will sell in volume, but only because buyers will have limited alternatives available. Ultimately, we see AIPCs cannibalising non-AIPCs
• Intel’s performance was underwhelming to say the least, but at the same time, not in the least bit surprising. Earnings coming on January 23. 

• Dell’s switch to AMD processors for commercial PCs in CES 2025 poses a threat to Intel’s market dominance in the industry.
• MediaTek and Nvidia’s collaboration to develop advanced supercomputer chips at CES 2025 promises enhanced performance and capabilities.
• US DoD banning Tencent, CATL, and CXMT in response to escalating tech tensions, and Toyota’s inauguration pledge to Trump raising concerns.

• LUNA stock faced a 57% decline due to Nasdaq delisting notice, with trading volume 25 times the average.
• White Hat Capital Partners invested $50m in December 2023 and increased the loan facility to $30m in October 2024.
• Luna Innovations specializes in fiber optic sensing solutions, with notable contracts in aerospace, automotive, and oil & gas industries.

• The Insight presents two S&P 500 INDEX (SPX INDEX) options strategies for 2025. Call overwriting can generate premium income and potentially enhance returns in a choppy but mildly positive market.
• The second strategy is a Risk Reversal, using the proceeds from a short call to buy a protective put option, providing downside protection while still allowing for some upside potential.
• Both strategies are designed to align with the expected market conditions, considering factors such as inflation, economic growth, and market volatility.

• The Fed injected some volatility into the market after their December meeting, as they noted an uncertain inflation outlook and the SEP less expected rate cuts for 2025.
• We discussed in our latest report (12/23/24 ETF Pathfinder), and continue to believe, that this is a buying opportunity.
• Market dynamics remain risk-on, the SPX remains above 5850 (a key support level we have discussed since late-November), mid-caps (IJH) and small-caps (IWM) are above supports at $61.50 and $218

• Latest TSMC Price Hike — Introducing the $18,000 Wafer; Supports The Case That Management Margin Guidance is Overly Conservative
• Mover Over Apple, Nvidia Could Become TSMC’s Largest Customer in 2025E
• SK Hynix(000660.KS): Insisting on HBM Technology and Continuing to Surpass Samsung in Net Earnings 

• Mitsubishi Research Institute (MRI) provides consulting services, as well as research and analysis, for the financial sector, government agencies, and the private sector.
• Profitability is poised to expand through acquiring new clients, growing recurring business, and focusing on profitable projects by moving up the value chain towards upstream consulting within the current medium-term plan (FY9/24-FY9/26).
• MRI aims to achieve 12% ROE by FY9/26 with such initiatives (7.5% FY9/24). Having a strong balance sheet with a net cash position, MRI plans to increase capital allocation to M&A, driving non-organic growth. 

• We see 38 potential and close adds and 51 potential and close deletes for the Hang Seng Composite Index in March. Some of the stocks are close on market cap/liquidity.
• There have been many new listings in the last weeks of December. Some of them are fairly large and will be added and that increases the number of potential deletions.
• There are stocks that have a very high percentage of holdings via Stock Connect and there could be some unwinding prior to the stocks becoming Sell-only.

• On 6 January, LG Corp announced that it plans to purchase 250 billion won worth of LG Electronics and LG Chem from 6 January to 7 March 2025.
• The share buybacks would represent 1.5% and 0.7% of LG Chem and LG Electronics’ market cap, respectively.
• Our base case NAV valuation analysis of LG Corp suggests implied NAV of 14.7 trillion won or NAV per share of 93,430 won, which is 25% higher than current price.

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• In this insight, we take a look at the final rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
• We expect one change for the HSTECH index in March 2025 and combined with capping flows currently see US$475mn one-way flows.

• This Insight analyzes Tencent (700 HK) tailor-made option strategies traded over the last five trading days on the Hong Kong Exchange. Strategy highlights and volatility insights are provided.
• Historically low implied volatility favors bullish or bearish long volatility strategies.
• Calendar Spreads are a popular strategy. Bulls and bears are both very active in the market, expressing their views through trades.

• The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
• In this insight, we take a look at the final rankings of potential ADDs and potential DELs for the March 2025 index rebal event.
• We expect four changes for the HSIII index in March 2025 and currently expect flows of US$114mn one-way (including capping flows which will change).

• ASML CEO and delegation to visit TSMC, showcasing collaboration in semiconductor industry
• US adds 13 firms, majority Chinese, to entity list amid ongoing tensions
• Samsung Display to unveil 18.1-inch foldable OLED panel at CES 2025, showcasing advancements in display technology

AAC Technologies Holdings Inc is a China-based company formed in 1993 and incorporated in the Cayman Islands. It was listed on the Hong Kong Stock Exchange in 2005. AAC is one of the world’s leading solution providers for smart devices, with: [1] cutting-edge technologies in materials research; and [2] simulation, algorithm, design, automation and process development in areas including acoustics, optics, as well as electromagnetic drives and precision mechanics. The company also offers advanced miniaturised and proprietary technology solutions.

• In this edition: • Ahold Delhaize | formal closing of Profi deal • ING | determines cash payment per share as part of current distribution • PostNL / IDS | termination Russian gas transit: no material impact on Křetínský’s financial flex • TomTom | to partner with Esri delivering advanced location analytics • Dutch housing market | first signs of a normalisation?
• • Corporate Agenda week 2

• The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
• There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
• Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.

• SOUTHBOUND gross trading activity was quite light the last two weeks of the year. Non-SB trading of HK was even lighter. Net buying was strong.
• Net buying on tech was VERY big but not on Alibaba Group Holding (BABA US) (small positive) or Meituan (3690 HK) (largest outflow). 
• Financials and High Div SOEs are back on the menu. SOUTHBOUND has been a Very Big Percentage of traded volume. 

• After the peak of 4Q24, Taiwan Semiconductor (TSMC) – ADR (TSM US)‘s  revenue will see a decline of about -5% QoQ in 1Q25.  
• TSMC is expected to use 2nm technology in 4Q25, and we believe Advanced Micro Devices (AMD US) and Apple (AAPL US) could present products around 1Q26.
• TSMC could be set to announce its 2nm production plans, expansion into the US, Germany, and Japan, mature technology quotations, and the Capex budget for 2025. 

• LG CNS (LGCNSZ KS), the IT service unit of LG Corp (003550 KS), seeks to raise up to US$837 million through a primary/secondary offering.
• We previously discussed the IPO in LG CNS IPO: The Bull Case and LG CNS IPO: The Bear Case.
• We examine the syndicate’s valuation methodology. Our analysis suggests that LG CNS is attractive in the IPO price range. We would participate in the IPO.

• Apple’s spectacular 2024 has positioned it as a behemoth in the technology sector, with its stock climbing 30% compared to the S&P 500’s 23% gain.
• It closed the year at $250 per share, giving the company a valuation exceeding $3.8 trillion, just shy of the $4 trillion milestone—a feat no company has achieved.
• This growth was driven by new product launches, including the revolutionary Apple Vision Pro, advancements in AI with Apple Intelligence, and record-breaking revenue of $94.9 billion for the September quarter.

• According to our updated valuation analysis of LG CNS, it suggests a base case implied market cap of 7.4 trillion won, representing target price of 76,383 won per share. 
• Our base case valuation target price of 76,383 won is 23% higher than the high end of the IPO price range. 
• We lowered our target price by 6%, mainly due to greater political risks arising from the recent cancelled martial law and ongoing impeachment of President Yoon.

• AI agents are becoming more powerful assistants but need careful management to avoid potential risks.
• Honor is preparing for an IPO with corporate restructuring and rebranding efforts.
• Taiwan tightens restrictions on tech exports to China while the US considers banning Chinese drones like DJI.

• SSI’s Tracking Portfolio ended 2024 with a -1% return, hindered by cash holdings and significant losses in MSTR, BHIL, and BOOM.
• SSI shared 85 investment ideas in 2024, including 14 Portfolio Ideas, 69 Quick Pitches, and 2 “Why I’m Not Involved” overviews.
• Portfolio Ideas suffered losses over 50% due to ignored red flags, while Quick Pitches had a 60% win rate.

• IPG Photonics’ recent earnings for the third quarter of 2024 highlighted several key developments, financial metrics, and strategic initiatives that offer insights into the company’s current position and future prospects.
• The revenue for the quarter was $233 million, marking a significant year-over-year decline of 23% and an 8% decrease sequentially when adjusted for the sale of its Russian operations.
• Despite this, adjusted earnings per share were at the top end of the guidance, reflecting some operational resilience amid a challenging demand environment.

• LG CNS (LGCNSZ KS), the IT service unit of LG Corp (003550 KS), seeks to raise up to US$837 million through a primary/secondary offering.
• In LG CNS IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on fading growth momentum, mid-tier revenue growth, weak non-AI growth, high contract assets, bottom-tier FCF margin and large share overhang. 

• AI server BBU status being monitored to ensure no issues on the artificial intelligence server, ensuring smooth operations.
• TSMC’s global update highlights Japan, US, and Europe’s progress, showcasing Taiwan’s chip giant’s influence worldwide.
• Xiaomi investing in GPU cluster for faster processing, China’s Hua Hong appoints Intel veteran as President, South Korea investing $24.79 million in chip R&D projects.

• Singapore-based Eureka Robotics has raised US$10.5 million in Series A financing.
• B Capital spearheaded the round. New investors Airbus Ventures, Maruka Corporation, and G. K. Goh Ventures participated along with existing investors UTEC and ATEQ.
• Eureka Robotics was founded in 2018 to enable factories worldwide to automate dull, dirty, and dangerous tasks. The company leverages its proprietary technologies, which include high-accuracy calibration, computer vision, motion planning, and force control.

• Waystar provides cloud-based revenue cycle management and healthcare payments software solutions for healthcare organizations
• Platform streamlines billing, payments, and reimbursement processes for improved revenue collection and patient experience
• Offers two core segments with highly recurring revenue streams: software (financial clearance, claim management, denial management, revenue capture, analytics) and payments tied to transaction volumes

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• In Q324, Didi grew slowly, but core margin improved significantly on higher “take rate”
• Q324 liquidity position sound, but pace of 2024 investment difficult to sustain
• Two important reasons Didi could list shares in ’25, even if cash needs aren’t urgent

• Potential Huawei sanctions under a reelected Trump administration could spell trouble for Chinese tech companies.
• Luxshare’s acquisition of nine Wingtech ODM subsidiaries indicates a consolidation trend in the tech manufacturing industry.
• The 2025 semiconductor boom is expected to be fueled by AI technology, but could face volatility due to Trump-era policies.

• KPay Group, a Hong Kong- and Singapore-based financial management and business operations platform, has secured US$55 million in its Series A funding round.
• This round was led by Apis Growth Markets Fund III and Apis Global Growth Fund III, managed by Apis Partners, a UK-based ESG and impact-native global private equity asset manager.
• The investment will fuel KPay’s expansion plans across key Asian economies, including Indonesia, the Philippines, Malaysia, and Thailand.

• We engaged with the company recently — SIMO remains in a strong position to capitalize on global increased need for high-end NAND memory controllers across mobiles, PCs, and enterprise AI.
• SIMO’s strong positioning in the Client SSD market and its technology leadership in PCIe 5 SSD and MonTitan solutions provide significant growth opportunities into 2025E and beyond.
• Reiterate Structural Long. Given the company’s net cash balance sheet, depressed market price, and multi-year growth outlook, in our view a share buyback program would be accretive to shareholder value.

• TMY Technology (TMYTEK), a Taiwanese provider of millimetre-wave (mmWave) solutions, has raised US$40 million in its Series B funding round. Amazing Microelectronic Corp. and EZconn Corporation led the round, which was participated in by CDIB Capital Group.
• The funding will accelerate the company’s global expansion plans and bolster its research and development capabilities. It will focus on optimising mmWave phased array antenna modules.
• TMYTEK, one of SparkLabs Taiwan’s portfolio companies, also aims to debut on the Taipei Exchange (TPEX) in 2025.

17LIVE is a leading pure-play live streaming platform in Asia with key markets in Japan and Taiwan. Its business lines include Liver live streaming, V-Liver live streaming and other businesses such as in-app games and live commerce. 17LIVE is accessible globally and has fostered a diverse live streaming ecosystem with a loyal and engaged user community, as well as a deep pool of live streamers.

The Smartkarma team spoke to 17Live’s Chief Executive Officer and Executive Director, Jiang Honghui, in an exclusive corporate webinar. Honghui sheds light on the company’s impressive journey and future growth outlook within the vibrant live streaming space.

You can view the webinar via the link below. 

• Mainland China investors continued to increase their purchases of Hong Kong shares through the southbound connect platform after Trump’s win. Mainland investors bought a record HK$800B of HK shares in 2024.
• Weimob Inc. (2013 HK) announced it is connecting its Weimob mini-programs to Tencent’s (700 HK) WeChat mini-shop. This move further integrates the SaaS company into Tencent’s ecosystem.
• Wuxi Biologics (2269 HK) announced a license agreement with US-based Aadi Bioscience (AADI US).  Also, Wuxi was not included in the Senate version of the BioSecure legislation improving investor sentiment.

• Leaked Mediatek Chip Specs? — Talk of a “Qualcomm Killer”
• Hon Hai in the New York Times — Why Foxconn is Investing in Texas & Thailand
• TSMC’s Arizona 4nm Production On Track to Start 2H25E — Still Expected to Be 30% Higher Cost vs. Taiwan and That’s Okay

• The Spanish government extended the anti-takeover shield to December 31, 2026, maintaining oversight of foreign direct investments in critical sectors like energy, defense, and technology to safeguard national interests.
• Investor concerns include regulatory uncertainty, lack of clear criteria, and expanded obligations under the 2023 Foreign Investment Law, deterring foreign investments and delaying significant projects.
• Balancing security and openness preserves free capital movement benefits, addressing vulnerabilities while avoiding protectionism that could harm competitiveness and strain relationships with foreign partners.

• NFRA imposed a Rs. 2 crore penalty on Deloitte and fined two retired partners for audit lapses in Zee Entertainment Enterprises (Z IN)‘s Rs. 200 crore FD mismanagement involving RPTs.
• This case exposes serious flaws in audit practices, corporate governance, and related-party transaction scrutiny, emphasizing the rising importance of professional skepticism in financial audits.
• Audit reports aren’t infallible; investors must independently assess corporate governance and scrutinize financial assumptions, especially in listed companies with complex transactions.

• GB200 NVL shipments expected to increase as KYEC boosts capital expenditure, impacting notebook shipments in November 2024.
• Taiwan wafer foundry industry developments in 4Q 2024 to be discussed at TSMC investor meeting, focusing on company outlook and new US tariff policies.
• South Korea’s acceleration of Yongin semiconductor complex aims to establish global chip leadership, attracting key industry players amidst global semiconductor shifts and US-China chip sector investigation; Taiwan targets AI growth with SEMI’s Indian Semiconductor Academy plan.

• Vishay Intertechnology’s third quarter 2024 results reflect a delicate balancing act within a challenging macroeconomic environment.
• On one hand, the company succeeded in maintaining stable revenue at $735.4 million, amid a backdrop of slowing industrial demand and ongoing inventory destocking.
• This revenue stability highlights a cautiously optimistic demand trend across key growth segments, including smart grid infrastructure, military, high-voltage DC applications, and increasingly, AI-focused server technologies.

• Sanmina Corporation recently presented its financial performance for the fourth quarter and fiscal year 2024.
• The company exhibited a commendable year-end financial performance, with revenue reaching $2.02 billion, surpassing their forecast of $1.9 billion to $2.0 billion, marking a sequential increase of 9.6%.
• Despite facing a challenging fiscal year largely characterized by inventory adjustment with clients, Sanmina achieved non-GAAP earnings per share (EPS) of $1.43, exceeding expectations.

• 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 include: Weimob Inc. (2013 HK), Midea Real Estate Holding (3990 HK), and Pharmaron Beijing (3759 HK).

• Fastly, Inc., a provider of cloud computing services, presented its financial results for the third quarter of 2024, reporting revenue growth and cost management successes amid challenges related to some of its largest customers.
• The company’s revenue for Q3 was $137.2 million, exceeding the high end of its guidance range.
• This growth was underpinned by improvements among its large media clients and gains from outside its top 10 customers.

• InnoScience Suzhou Technology (2577 HK) has priced its IPO at HK$30.86/share, the low end of the range. Over half the shares have been allotted to cornerstone investors.
• InnoScience Suzhou Technology (2577 HK) should be added to the HSCI in March and will be added to Southbound Stock Connect early March.
• Inclusion in global indices will take place in 2026 and there will be supply in mid- and late-2025 following lock-up expiries.

• Intel Corp (INTC US) established “Intel Foundry Services” in 2021, but it has not shown notable performance until now.
• There is some pessimism regarding providing foundry services in the US.  
• Taiwan Semiconductor (TSMC) – ADR (TSM US) should provide foundry services to Intel Corp (INTC US) and potentially other common clients as well.  

• TSMC: +21.1% Premium; Spread Has Fallen From Previous Short Levels, Remains Elevated
• UMC: -0.3% Discount; Middle of the Historical Trading Range, Not Compelling
• ChipMOS: -1.2% Discount; Wait for Deeper Discount Before Going Long