Category

TMT/Internet

Jan 05
0

Daily Brief TMT/Internet: Pinduoduo and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Raise 2023 Forecasts Due to High Take Rate

Raise 2023 Forecasts Due to High Take Rate

By Shawn Yang

  • There has been debate: 1) why PDD’s take rate can be higher than BABA, 2) how to justify PDD’s long term margin, 3) will PDD be able to beat cons.
  • We suggest that the key driver of PDD’s outperformance in recent quarters has been the weak macro environment.
  • We raise our 2023 forecasts of total revenue and non-GAAP net income by 4% and 19%, more than consensus by 8% and 7% respectively.

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Jan 04
0

Daily Brief TMT/Internet: Softbank Group, Taiwan Semiconductor (TSMC) – ADR, Arlo Technologies Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Softbank Group – Vision Fund: Gains on Dollar Basis in Q3 but Stronger Yen Points to Quarterly Loss
  • Taiwan Tech Weekly: Signs TSMC Winning the 3-Nm Battle Vs. Samsung, Apple Bargaining Down Suppliers
  • ARLO: Discounts and Subscriber Growth

Softbank Group – Vision Fund: Gains on Dollar Basis in Q3 but Stronger Yen Points to Quarterly Loss

By Kirk Boodry

  • The Vision Fund public portfolio closed Q3 in the black as gains for Didi and AutoStore offset weakness for Asian investments Goto and Coupang. We have included updated tables inside
  • On a yen basis, however, Softbank will likely post a Q3 segment loss for Vision Fund as a weaker dollar more than offsets the local currency gains.  
  • SBG shares have traded close to the 35% discount to NAV level since end-November but that could expand if sentiment on China weakens or tech valuations remain volatile

Taiwan Tech Weekly: Signs TSMC Winning the 3-Nm Battle Vs. Samsung, Apple Bargaining Down Suppliers

By Vincent Fernando, CFA

  • TSMC’s revenue could drop in the near-term due to customers cutting orders, however full year 2023E growth still likely thanks to advanced chips.
  • Samsung has guided staff internally for a major slump in its semiconductor unit’s operating profit.
  • Apple is pushing for price cuts amongst its suppliers due to weak end demand for its products.

ARLO: Discounts and Subscriber Growth

By Hamed Khorsand

  • ARLO spent the fourth quarter adjusting to a tough consumer environment with deep discounts to clear out channel inventory. 
  • ARLO had already provided quarterly revenue guidance taking into consideration the discounting and promotions that would run during the quarter.
  • Paying subscriber count rising remains the value proposition in owning shares of ARLO. Quarterly adds closer to what ARLO has been achieving would be a positive for the stock. 

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Jan 03
0

Daily Brief TMT/Internet: New Relic Inc, Tencent, Universal Display and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • New Relic: $1B+ Revenue By FY24. Cost Discipline Will Drive Profitability
  • China Internet Weekly (2Jan2023): Alibaba, Tencent, Douyin, Bilibili, Uxin
  • Universal Display Corporation: Initiation of Coverage – Contract With Samsung & Other Drivers

New Relic: $1B+ Revenue By FY24. Cost Discipline Will Drive Profitability

By Andrei Zakharov

  • We double down on New Relic stock as we see operational improvement and a clear path to non-GAAP profitability. A strong balance sheet will help to survive an economic downturn.
  • The company will repay 0.5% senior convertible notes in 2023 and is not interested in diluting existing shareholders. New Relic ended 2QFY23 with $833M in cash and cash equivalents.
  • American activist investor Jana Partners held ~3.2M New Relic shares as of Nov-22. New Relic Inc (NEWR US)  shares underperformed in 2022, with shares down ~49%

China Internet Weekly (2Jan2023): Alibaba, Tencent, Douyin, Bilibili, Uxin

By Ming Lu

  • Alibaba’s CEO will lead the cloud business himself, because the retailing business faces headwind.
  • Tencent will enter the short video market again, because the online game is till stagnant.
  • Douyin will launch a car-hailing platform, which will compete with Meituan.

Universal Display Corporation: Initiation of Coverage – Contract With Samsung & Other Drivers

By Baptista Research

  • This is our first report on Universal Display Corporation, one of the largest players in the domain of OLED technologies and materials for use in display and solid-state lighting applications.
  • The management anticipates that the OLED market will continue on its long-term growth trajectory.
  • We initiate coverage on the stock of Universal Display Corporation with a ‘Hold’ rating.

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Jan 02
0

Daily Brief TMT/Internet: Alibaba (ADR), Hong Kong Hang Seng Index and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Alibaba 4Q Ecommerce Outlook
  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

Alibaba 4Q Ecommerce Outlook

By Xin Yu, CFA

  • December GMV was below expectations, due to elevated case counts after the relaxation of the covid restriction
  • With high return rate and more merchant supports, gap between GMV growth and CRM growth remained large in 4Q. 
  • Long-Term wise, Alibaba will continue losing market share while PDD’s market share may potentially surpass JD. 

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

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Jan 01
0

Daily Brief TMT/Internet: Taiwan Semiconductor (TSMC) – ADR, Meituan, Elan Microelectronics, Quanta Computer and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • China Semiconductor Restrictions: How the Vice Is Becoming Tighter and Tighter
  • Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows
  • Taiwan Dual-Listings: Premium/Discounts Mostly in the Middle, ChipMOS Opportunity
  • Elan Microelectronics: Capacity for Share Buybacks in 2023E, Intel Event Could Provide Cycle Clarity
  • Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?

China Semiconductor Restrictions: How the Vice Is Becoming Tighter and Tighter

By Vincent Fernando, CFA

  • We provide a timeline and analysis of key measures from May 2019 to December 2022.
  • How successive tightening steps led to a critical consolidation in October 2022.
  • Recent developments show the U.S. has motivated additional countries to participate and more restrictions are likely in 2023E.

Index Rebalance & ETF Flow Recap: Meituan, S&P/ASX All Tech, 2022 ETF Flows

By Brian Freitas

Taiwan Dual-Listings: Premium/Discounts Mostly in the Middle, ChipMOS Opportunity

By Vincent Fernando, CFA

  • TSMC ADRs are trading at a small premium; 4Q22 results will be released on January 12th.
  • UMC ADRs are trading at a discount; 4Q22 results will be released on January 16th.
  • ChipMOS ADRs are trading at a decent discount, opening a trade opportunity.

Elan Microelectronics: Capacity for Share Buybacks in 2023E, Intel Event Could Provide Cycle Clarity

By Vincent Fernando, CFA

  • We believe Elan Microelectronics has capacity for share buybacks in 2023E, and that it could be in shareholder interests.
  • Even in the coming 2023E down-year, we believe the company could generate over NT$1.7bn in EBITDA. Its balance sheet will remain net-cash.
  • The company is in a strong position as a leader in touch screens, touch pads, and fingerprint sensors. Intel’s upcoming January webinar could provide clarity on the industry cycle.

Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?

By Vincent Fernando, CFA

  • Apple shares have fallen recently, nearing 52-week lows as analysts have been cutting share targets on China production uncertainty and weak consumer end-market demand.
  • Key Apple suppliers Quanta and Pegatron, in particular, appear to have not yet reacted to the declining market sentiment towards Apple.
  • Investors can consider Shorting Quanta and Pegatron vs. a Long position in Apple. We see limited potential for positive news flow for the stocks through January.

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Dec 31
0

Daily Brief TMT/Internet: HPSP, Taiwan Semiconductor (TSMC) – ADR and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2023
  • Intel Vs. TSMC Monitor: After a Quiet December, January Will Be a Big Month

End of Mandatory Lock-Up Periods for 57 Companies in Korea in January 2023

By Douglas Kim

  • We discuss end of the mandatory lock-up periods for 57 stocks in Korea in January 2023, among which 5 are in KOSPI and 52 are in KOSDAQ.
  • These 57 stocks on average could be subject to further selling pressures in December and could underperform relative to the market. 
  • Among these 57 stocks, the top 5 market cap stocks include Sungeel Hitech, HPSP, CJ CGV, Sillajen, and Eoflow. 

Intel Vs. TSMC Monitor: After a Quiet December, January Will Be a Big Month

By Vincent Fernando, CFA

  • Intel outperformed TSMC in 1H December, and then TSMC outperformed after some negative rumors about an Intel product delay/cancellation.
  • After a quiet December, January will be a big month as we will have 4Q22E result for both companies. The expectatioins bar for INTC is set very low.
  • We see a potential Long INTC vs. Short TSMC opportunity after TSMC has released results and before INTC has released its results.

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Dec 30
0

Daily Brief TMT/Internet: O2Micro International, NCSOFT Corp, Mediatek Inc, Chewy Inc, Hon Hai Precision Industry, Tencent and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • O2Micro Trading Wide To Terms Ahead Of Shareholder Vote
  • China Allows Import of 45 Foreign Video Games Including 7 Korean Games
  • Mediatek: We Contacted Management Re: Latest Arm Restrictions, Accumulate
  • Chewy Inc.: Initiation of Coverage – Post-Pandemic Recovery & Key Drivers
  • Hon Hai: EV Growth Will Come Into Focus in 2023E, Can Hit NT$155 Per Share
  • Tencent/Netease: Tencent Behind Smaller Peers in This Year Game Approval

O2Micro Trading Wide To Terms Ahead Of Shareholder Vote

By David Blennerhassett

  • Back on the 30 September, O2Micro International (OIIM US), an integrated circuits play, announced a definitive privatisation from management at US$5.00/ADS, a 68.9% premium to the undisturbed price. 
  • An EGM will take place on the 31 January. The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. 16.9% of shares out are supportive. 
  • This Offer is expected to close in the 1Q23. The IFA considers the Offer fair. 

China Allows Import of 45 Foreign Video Games Including 7 Korean Games

By Douglas Kim

  • On 28 December, the Chinese regulators announced that it will allow import of 45 foreign video games in China, among which seven are Korean video games.
  • Now that the Chinese authorities have allowed greater imports of foreign games, this will act as a significant positive catalyst to boost share prices of Korean game companies.
  • Among the major Korean game companies, we believe that NCsoft and Netmarble are best positioned to capitalize on this catalyst.

Mediatek: We Contacted Management Re: Latest Arm Restrictions, Accumulate

By Vincent Fernando, CFA

  • We contacted Mediatek management in regards to the latest Arm restrictions for China; Mediatek doesn’t expect to be impacted.
  • Mediatek’s latest chipsets are competing well against Qualcomm, and its China competition has been stunted by U.S. restrictions in our view.
  • We have established our financial model for the company – We believe the shares should be held or accumulated on a value-basis.

Chewy Inc.: Initiation of Coverage – Post-Pandemic Recovery & Key Drivers

By Baptista Research

  • This is our first report on Chewy, the leading pure play e-commerce company in the U.S. in the domain of pet food, pet supplies, and pet healthcare products.
  • During the quarter, they announced the growth of CarePlus, their exclusive line of insurance and wellness products with Lemonade-powered plans.
  • In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

Hon Hai: EV Growth Will Come Into Focus in 2023E, Can Hit NT$155 Per Share

By Vincent Fernando, CFA

  • Hon Hai’s Zhengzhou problems appear to be easing; Nevertheless, the company is expanding in India and Vietnam regardless.
  • We believe the company’s EV platform business and EV milestones will drive the shares in 2023E.
  • We have developed a financial model for Hon Hai and are establishing a 12-month price target of NT$155 per share, 55% above current levels. This is higher than the Street.

Tencent/Netease: Tencent Behind Smaller Peers in This Year Game Approval

By Ke Yan, CFA, FRM

  • China just announced game approval for December batch. The number of games approved is slightly higher than the previous three months.
  • Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
  • In both December batch, as well as over the past year, we see Tencent behind its smaller peers in terms of receiving game approval. 

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Dec 29
0

Daily Brief TMT/Internet: Kingsoft Cloud, Meituan and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Kingsoft Cloud HK Listing: Significant Upside in the Medium Term
  • Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

Kingsoft Cloud HK Listing: Significant Upside in the Medium Term

By Shifara Samsudeen, ACMA, CGMA

  • Kingsoft Cloud (KC US) shares will begin trading on the Main Board of the HKEx on Friday, 30th December by way of an introduction.
  • The company’s competitive pricing strategy to onboard customers has impacted its profitability, however, KC has begun to shift focus on profitability by raising prices in the medium term.
  • Raising prices in the medium term will likely support KC’s profitability and we have valued the company using potential price hikes to non-key customers.

Meituan (3690 HK): Passive Selling Next Week; Plus the Prosus Overhang

By Brian Freitas

  • Tencent (700 HK)‘s in-specie distribution of Meituan (3690 HK) shares goes ex-dividend next Thursday. Passive Hang Seng trackers will sell Meituan (3690 HK) stock at the close on 4 January.
  • The passive impact is not very large but there could be selling from active investors, both before and after settlement of the shares that is scheduled for 24 March.
  • Prosus/Naspers will receive 258.93m shares (HK$47.69bn; 6.5x ADV; 4.18% of shares outstanding) of Meituan (3690 HK) and that will be an overhang on the stock for the near future.

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Dec 27
0

Daily Brief TMT/Internet: Freshworks, Taiwan Semiconductor (TSMC) – ADR, Bitcoin, Core Scientific and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Freshworks: Insiders Keep Buying Shares. Path To Sustainable FCF Positive Business Looks Clear
  • Taiwan Tech Weekly: Samsung Will Keep Expanding Capacity, China Chip Restrictions Tighten Further
  • The 10 Defining Market Events of 2022
  • What Will Crypto SPACs Look Like in 2023?

Freshworks: Insiders Keep Buying Shares. Path To Sustainable FCF Positive Business Looks Clear

By Andrei Zakharov

  • Freshworks (FRSH US)  shares underperformed in 2022, with shares down ~47% YTD versus a 33% loss on the Nasdaq Composite. US software stocks lost ~51% on average over the year. 
  • Insiders keep buying shares. VC firm Accel, a 5%+ shareholder, acquired ~$50 million worth of Freshworks (FRSH US)  shares in 2H22. Strong insider buying indicates the stock could hit bottom. 
  • We estimate Freshworks (FRSH US)  crossed the $500M ARR mark in 3QCY22. The company may report strong 4QCY22 results and surprise investors and analysts.

Taiwan Tech Weekly: Samsung Will Keep Expanding Capacity, China Chip Restrictions Tighten Further

By Vincent Fernando, CFA

  • While most of the semi industry is reducing capex due to market weakness — Samsung says it will still expand capacity next year.
  • China chip restrictions get more severe — Now Arm is not selling its most advanced chip architectures to Chinese firms.
  • TSMC in advanced talks to set up its first European production capacity in Germany.

The 10 Defining Market Events of 2022

By Kaiko

  • The crypto safe-haven narrative gained traction in the beginning of the year after the start of the Russia-Ukraine war.
  • Both ruble and hryvnia trade volumes surged immediately after Russia’s invasion, boosted by record local currency devaluation and market disruptions.
  • Interestingly, the increase was mainly driven by stablecoin volumes rather than BTC, with weekly Tether (USDT) volumes jumping more than five-fold in early March relative to the start of the year.

What Will Crypto SPACs Look Like in 2023?

By subSPAC

  • If 2021 was the year when crypto SPACs became mainstream, 2022 was the year of what could have been.
  • This week, Peter Theil-backed crypto exchange Bullish finally called it quits on its $9 billion merger with Far Peak Acquisition Corp, nearly seventeen months after announcing the transaction in July 2021.
  • Bullish isn’t the only though; several large Crypto SPAC transactions, like Circle, Roxe, and eToro, have all been called off their mega-mergers this year due to regulatory hell.

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Dec 26
0

Daily Brief TMT/Internet: Nanya Technology, Tokyo Stock Exchange Tokyo Price Index Topix and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Nanya Technology: Consensus Numbers Likely Too High, Net Loss Potential
  • Japanese Companies Will Be Selected as One of Global Stocks for Individual Investors in near Future

Nanya Technology: Consensus Numbers Likely Too High, Net Loss Potential

By Vincent Fernando, CFA

  • Micron’s recent results, where it showed a major margin slide and swung to a net loss, imply weak results ahead for Nanya Tech.
  • We believe that Nanya’s FY2023E consensus figures are likely to be revised down.
  • We see more downside risk ahead for Nanya Tech shares, and will await lower levels before buying based on deep-value.

Japanese Companies Will Be Selected as One of Global Stocks for Individual Investors in near Future

By Aki Matsumoto

  • The government’s policy to expand small investment tax exemption program is expected to lead to increase in stock investments. Individuals are keen to invest in stocks with higher performance potential.
  • Trading in U.S. equities is prominent among under-40s generation. It is a rational investment for these generations with higher risk tolerance to invest in foreign equities with higher expected returns.
  • Individuals no longer have a single choice of Japanese equities as they did during the bubble economy, but have begun to select their investment targets as one of global equities.

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