TMT/Internet

By Shifara Samsudeen, ACMA, CGMA

Today PCAOB announced that they had secured complete access to inspect and investigate Chinese Firms for the first time in history.
This was on back of the Aug 2022 agreement between PCAOB, CSRC and MOF, which was followed up with a Hong Kong visit by PCAOB officials over Sep-Nov 2022.
We wrote about this on 14th Dec 2022 and expected the results to be out on Friday (16th Dec), they have come out a day earlier than we expected.

Tokyo Electron (8035) | Huge Upside if Management Hit Targets

By Mark Chadwick

Tokyo Electron is a structural growth stock that has fallen by 31% YTD reflecting near term risks to growth and margins
We believe that the digitization of society has only just begun and that data volumes will grow exponentially
We analyse TEL’s core value drivers – revenue, margins, risk and reinvestment – and see 38% upside

Fujifilm: An Inspiring Transformation Story

Established as a domestic photographic film manufacturing company, Fujifilm has successfully evolved into a healthcare company with majority revenue earned from medical and life science related businesses.
Fujifilm is now a leading player in Bio CDMO market through a combination of acquisitions and in-house developed capabilities. The company has gained recognition among leading pharmaceutical companies.
We think there is further upside to Fujifilm’s valuation multiples as the market still values the stock as an image/photography company and not in line with healthcare peers.

Kakao Corp: FTC Going After Chairman Kim Beom-Su’s K Cube Holdings

On 15 December, it was announced that Korea’s FTC decided to refer K Cube Holdings (KCH) to the prosecution over alleged illegal execution of voting rights to Kakao companies.
This could signal that the financial regulators may become more forceful in enforcing numerous other regulatory pressures on Kakao Corp and its affiliated companies to reduce their monopolistic business practices
Our NAV valuation of Kakao Corp suggests NAV per share of 45,942 won, which is 17% lower than current price.

Taiwan Dual-Listings: Premiums Bounced… And Have Now Declined Again

By Vincent Fernando, CFA

TSMC — Small premium currently, recent trading range appears unaffected by Buffett investment
UMC — Bounced from discount to premium, now at a discount again
ChipMOS — Bounced from discount to premium, now back to a decent discount

Hang Seng Index, Alibaba, and Longfor Group

By Untying The Gordian Knot

After the sharp rally comes the pause; almost all constituents and leading indices are forming an inside week or a weekly Doji (small or long body with very little difference in open and close levels) [based on mid-day Thursday].
These two formations are a typical indication of market indecision.
However, it is unlikely to be quiet for the rest of December.

MediaTek: Mid (Inventory) Cycle, Long-Term Growth Story Intact, Attractive Yield, and Multiples

By Wium Malan, CFA

Although the overall channel and customer inventories have reduced aggressively by the end of 3Q2022, we are only in the middle of the inventory adjustment cycle.
We’ve seen early signs of global inflation peaking, and an initial normalization in US dollar strength, which supports recovery in end consumer demand and channel inventory restocking by mid-2023.
Current dividend yield and PE ratio indicate a meaningful margin of safety in valuation levels, with probabilities skewed towards positive surprise.

ROIC Helps to Raise Transparency in Business, but Management Skills Are the Key to Improve Return

By Aki Matsumoto

The important thing is not whether the ROIC tool is used or not, but rather the risk-taking for investment and whether it resulted in sufficient returns.
A change in the outlook for improving profitability is necessary for the stock price to rise, and furthermore, a compelling growth policy and capital allocation can also be effective.
The fact that valuations have not risen sufficiently in the current situation infers that investors lack confidence in the path to improving profitability for each business.

ASML ADR: Initiation of Coverage – Business Strategy & Other Drivers

This is our first report on ASML, a Dutch major focused on providing advanced semiconductor equipment systems consisting of lithography, metrology, and inspection related systems to memory and logic chipmakers.
The company delivered outstanding results in the last quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
ASML’s management anticipates increased revenues in the fourth quarter as it resolves supply chain difficulties and shortens cycle times.

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Dec 15

Daily Brief TMT/Internet: Paytm, Meituan, Douzone Bizon, GoTo, Alibaba Health Information Technology, Baidu, Western Digital, Ziff Davis and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

PayTM (One 97 Communications) Announces a BUYBACK – Overhang Vs Feelings Vs Buyback Vs Index
Meituan Food Delivery 4Q Updates
Alpha Generation Through Share Buybacks in Korea: December 2022
Our IPO Calls for 2022
Alibaba Health Information Technology (241.HK) FY23H1 – Concerns Behind the Performance Turnaround
Baidu: Initiation of Coverage – Market Position & Key Drivers
Peloton Interactive Inc.: Initiation of Coverage – Challenging Macro Environment & Other Factors
Western Digital Corporation: Initiation of Coverage – Recent Collaborations & Other Drivers
Declining Business Short Candidates: Ziff Davis, Burlington Stores, Nat’l Vision, Otis Wwld, Monro

PayTM (One 97 Communications) Announces a BUYBACK – Overhang Vs Feelings Vs Buyback Vs Index

PayTM, which IPOed 13 months ago at Rs2150/share and now trades 75% lower “intimated” the possibility of a buyback on the 8th, and shares jumped 7.2% on the 9th.
The Board approved the INR 8.5bn buyback at max price INR 810/share late last night. The shares fell slightly today. Now we move to a postal ballot.
The buy-back rules crate interesting parameters and these buy-back terms provide interesting opportunities.

Meituan Food Delivery 4Q Updates

By Xin Yu, CFA

Meituan food delivery order growth slowed down in Oct and Nov due to covid restrictions.
Meituan Instashopping continued to grow fast in terms of its daily orders.
TikTok food delivery service so far hasn’t posed big threats to Meituan.

Alpha Generation Through Share Buybacks in Korea: December 2022

By Shifara Samsudeen, ACMA, CGMA

In this insight, we discuss the alpha generation through companies that have been buying back their shares in the Korean stock market in the past two months.
In addition to these share buybacks, there has also been more recent news flow regarding the share purchases of Samsung Electronics by numerous senior directors.
In the past month, some of the larger market cap companies including KT&G, Douzone Bizon, and Hyundai Elevator that have been buying back shares have been outperforming KOSPI.

Our IPO Calls for 2022

As 2022 comes to an end, we revisit our IPO calls over the last 12-months and how these stocks have performed to assess the effectiveness of our calls.
We made explicit buy/sell calls on 12 IPOs during this period with a hit-rate of 83.3% with Grab, GoTo, Cloud Music, SenseTime and Leapmotor IPOs making the highest returns.
We also wrote on several other IPOs during this period, however, those IPOs have not received approval yet.

Alibaba Health Information Technology (241.HK) FY23H1 – Concerns Behind the Performance Turnaround

By Xinyao (Criss) Wang

Although Alibaba Health turned loss into profit in FY23H1, it was mainly benefited from the obvious effect of expenses control,which isn’t a long-term solution to achieve the goal of profit.
Alibaba Health has a more difficult problem. The logic of relying on multiple entrances to obtain customers to drive online drug sales has failed to bring higher revenue growth.
In other to keep sustainable growth, it’s important for Alibaba Health to further improve user conversion rate. It is also urgent to actively expand new business growth points.

Baidu: Initiation of Coverage – Market Position & Key Drivers

This is our first report on Chinese internet behemoth, Baidu.
The company’s operating loss and margin year over year and quarter over quarter for AI Cloud improved.
Their new AI businesses, like AI Cloud and Intelligent Driving, are in line with China’s national ambitions and digital innovation.

Peloton Interactive Inc.: Initiation of Coverage – Challenging Macro Environment & Other Factors

This is our first report on Peloton Interactive, one of the most popular interactive fitness platforms in the world.
The company delivered a disappointing set of results as it failed to meet Wall Street expectations with respect to revenues as well as earnings.
We initiate coverage on the stock of Peloton Interactive, Inc. with a ‘Hold’ rating.

Western Digital Corporation: Initiation of Coverage – Recent Collaborations & Other Drivers

This is our first report on Western Digital Corporation, one of the largest manufacturers and distributors of data storage devices and solutions in the world.
The HDD revenue of Western Digital during the quarter declined modestly.
Western Digital is deep into qualifying its most recent generation of hard drives, including its 26-terabyte UltraSMR hard drives, at numerous OEM and U.S. cloud customers.

Declining Business Short Candidates: Ziff Davis, Burlington Stores, Nat’l Vision, Otis Wwld, Monro

By Eric Fernandez, CFA

Sales declines, margin compression, cuts in SG&A and cuts in guidance and estimates feature in our Declining Businesses model.
Declining business shorts tend to be lower beta, have longer time horizons, and tend to produce steadier (although slower) short returns.
Today we are flagging: Ziff Davis, Burlington Stores, Natl Vision, Otis Wwld, Monro

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Dec 14

Daily Brief TMT/Internet: NTT Data Corp, Total Access Communication, LG Energy Solution, Omron Corp, Alibaba (ADR), Temc, WCP, Lumen Technologies, Oracle Corp and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

NTT Buying NTT Data Shares – ¥40bn to Go
DTAC/True Merger: The Court Dismisses the Consumer Council’s Petition
Korean Pair Trades Review in 2022
Omron (6645) | Key Beneficiary of Industry 4.0
China ADRs Delisting – Friday Could Be Judgment Day for over US$800bn Mcap of Stocks
EQD | Alibaba (BABA US): Revisiting the December Call Ratios
TEMC IPO Preview
Recent IPOs Carrying Putback Option in Korea: Market’s Attention Is on WCP
Lumen Technologies Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
Oracle: Key Considerations For Long-Term Investors From Yet Another Strong Quarter

NTT Buying NTT Data Shares – ¥40bn to Go

NTT (Nippon Telegraph & Telephone) (9432 JP) and NTT Data Corp (9613 JP) did a deal earlier this year to sell NTT’s global data business to NTT Data. Discussed here.
NTT sold 55% of its current overseas business in NTT Communications, Dimension Data, and NTT Security Group, in return getting 45% of NTT Data’s current global business, plus ¥112bn.
NTT would then spend ¥100bn of the ¥112bn increasing its stake. So far it has spent ¥58.39bn buying 18% of volume every day since Oct 1.

DTAC/True Merger: The Court Dismisses the Consumer Council’s Petition

The Administrative Court has dismissed the Thai Consumers Council petition to impose an injunction on the Total Access Communication (DTAC TB)/True Corp Pcl (TRUE TB) merger.
Telenor ASA (TEL NO) and CP Group are currently seeking clarification on certain NBTC conditions such as tariff adjustments and MVNOs network capacity.
Completion is targeted for 1Q23. The current share price ratio of 9.072x vs exchange ratio of 10.221x is attractive. Timing and tweaks to the exchange ratio are risks.

Korean Pair Trades Review in 2022

In this insight, we review all the 16 Korean pair trade ideas in 2022.
A few of the best performing pair trade ideas this year included long LG Chem/short LGES, long Doosan Corp/short Doosan Enerbility, and long KIH/short MFG.
Going forward in 2023, as the market continues to show higher volatility, there could be continued strong interest in pair trade ideas in Korea.

Omron (6645) | Key Beneficiary of Industry 4.0

By Mark Chadwick

Omron is a structural growth stock that has fallen by 39% YTD reflecting near term risks to growth and margins
We believe that Omron is a major beneficiary of continued investment in automation and the shift to Industry 4.0
We analyse Omron’s core value drivers – revenue, margins, risk and reinvestment – and see 35% upside

China ADRs Delisting – Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we’ll talk about the latest developments, possible outcomes and implications.

EQD | Alibaba (BABA US): Revisiting the December Call Ratios

By Simon Harris

In November we published on the upside potential in Alibaba
Stock has rallied and the call ratio we recommended has performed very well
We evaluate the trade and look at potential trade options

TEMC IPO Preview

TEMC is getting ready to complete its IPO in Korea in January 2023. TEMC is a materials company that produces specialty gases for the semiconductor and display production processes.
The IPO price range is from 32,000 won to 38,000 won and the expected market cap is expected to be from 361 billion won to 429 billion won.
The company’s sales increased at a 57.4% CAGR from 2019 to 2021. Its sales exploded higher by 254% YoY to reach 238 billion won in 1Q-3Q 2022.

Recent IPOs Carrying Putback Option in Korea: Market’s Attention Is on WCP

By Sanghyun Park

WCP has the largest gap between the exercise and current prices (-16%). And its retail allocation is also the largest (5.44% of SO). In addition, it is subject to short-selling.
The deadline is January 2nd. A large-scale option exercise will be unavoidable if the share price does not exceed ₩54,000 by that date.
It is very likely that WCP’s share price will experience strong downward pressure for a week after January 2nd. We need to consider a position setup that actively utilizes this.

Lumen Technologies Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

Lumen Technologies is a big player in the facilities-based technology and communications domain.
The customer experience offered by them continues to improve, driven by the company’s very high NPS as well as customer e-scores for both the upper end of the company’s customer base and Quantum Fiber.
Apart from that, Lumen Technologies has been expanding its premier residential as well as Quantum Fiber aggressively in over 30 cities and metro areas.

Oracle: Key Considerations For Long-Term Investors From Yet Another Strong Quarter

By Vladimir Dimitrov, CFA

Oracle continues to outperform its peers and the broader equity market after reporting yet another strong quarter.
The cloud application segment continues to deliver, the infrastructure side of the business deserves more attention, according to analysts and market commentators.
The early signs were plain to see a couple of years back, says analyst.

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Dec 13

Daily Brief TMT/Internet: Bilibili Inc, Stripe, Tencent, NetEase and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

BILIBILI (BILI US): Can Achieving Breakeven Justify US$10bn Market Cap?
2023 IPOs Pipeline Worldwide (Top 100 Companies)
China Internet Weekly (12Dec2022): Bilibili, Tencent, JD.com
NetEase: Initiation of Coverage – Market Position & Other Drivers

BILIBILI (BILI US): Can Achieving Breakeven Justify US$10bn Market Cap?

By Eric Chen

BILIBILI shares have rallied more than 200% since early November on prospects of China exiting zero-COVID, short covering, and accelerated breakeven timeline.
Yet simply achieving breakeven doesn’t justify its US$10 billion valuation. It has to be accompanied by decent profitable growth – an unlikely scenario given the aggressive downsizing needed for breakeven.
BILI’s businesses also entail structurally low margin. Stock could easily de-rate by 30% or more when growth euphoria recedes and disappointed profitability checks in during 2023.

2023 IPOs Pipeline Worldwide (Top 100 Companies)

This is our fourth annual edition of the IPOs Pipeline Worldwide (Top 100 Companies) report.
Among 100 companies in our list, those from the US, India, China/HK, and the UK account for 79% of total.
For those investors that closely monitor the global IPO opportunities, this is a good reference insight to check out the largest potential IPOs that could get completed next year.

China Internet Weekly (12Dec2022): Bilibili, Tencent, JD.com

By Ming Lu

Bilibili is dismissing employees in live streaming, cartoon, and main station.
The Chinese mobile game market began to expand, but the global market is shrinking.
JD.com chairman reorganized its company, reducing the departments from eight to three.

NetEase: Initiation of Coverage – Market Position & Other Drivers

This is our first report on online gaming giant, NetEase.
In the quarter, the new expansion packs unveiled for the summer holidays, the legacy PC side of the company, which includes New Westward Journey Online 2 and Fantasy Westward Journey Online, continues to attract players.
Among other updates, NetEase has recently announced that the company’s game division, NetEase Games, acquired Quantic Dream, one of the world’s major independent video game developers.

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Dec 12

Daily Brief TMT/Internet: Tyro Payments, Nitro Software Ltd, Taiwan Semiconductor (TSMC) and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Tyro Payments (TYR AU): Potentia Returns with a A$1.60 Offer
Merger Arb Mondays (12 Dec) – Nitro, Tyro, Bigtincan, Warrego, Genex, Elmo, Golden Energy
Taiwan Tech Weekly: Broadcom Results Provide Some Signs of Strength, Hon Hai Facility Ends Lockdown
Potentia Bumps But Tyro Shuts Down Talks

Tyro Payments (TYR AU): Potentia Returns with a A$1.60 Offer

The AFR reports that Potentia has increased its offer for Tyro Payments (TYR AU) by 26.0% from A$1.27 to A$1.60 per share, a 62.4% premium to the undisturbed price.
The revised offer remains light and likely to be rejected again by the Board. Grok’s get-out clause with Potentia now sets the floor price of a competing bid at A$1.85.
Potentia’s revised bid is the catalyst for the other rumoured suitors (Westpac Banking (WBC AU) and Moneris) to get their act together. A competing offer of around A$2.00 is possible.

Merger Arb Mondays (12 Dec) – Nitro, Tyro, Bigtincan, Warrego, Genex, Elmo, Golden Energy

We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
Highest spreads – 21Vianet Group (VNET US), Alliance Aviation Services (AQZ AU), Genex Power Ltd (GNX AU), Bigtincan Holdings Ltd (BTH AU), Golden Energy & Resources (GER SP), Origin Energy.
Lowest spreads Nitro Software Ltd (NTO AU), Warrego Energy (WGO AU), Chip Eng Seng Corp (CHIP SP), Uzabase Inc (3966 JP), Elmo Software (ELO AU), OZ Minerals Ltd (OZL AU).

Taiwan Tech Weekly: Broadcom Results Provide Some Signs of Strength, Hon Hai Facility Ends Lockdown

By Vincent Fernando, CFA

Broadcom FY22 results indicate strength in data centers, telco infrastructure, enterprise IT spending.
Hon Hai’s Zhengzhou facility ends closed-loop operations, returning to a more normal state.
U.S. asking Japan to have its firms comply with U.S. chip restrictions on China.

Potentia Bumps But Tyro Shuts Down Talks

Potentia has increased its indicative proposal for Tyro Payments (TYR AU) to A$1.60/share from A$1.27/share. Grok, holding 12.5% of shares out, remains supportive.
However, Tyro’s board believes the revised terms remain below what is considered fair, and has ceased all discussions.
Separately, Westpac has decided not to submit an Offer. After conducting due diligence. Shares are down 19.5% as I type.

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Dec 11

Daily Brief TMT/Internet: Softbank Group, Tencent and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Last Week in Event SPACE: JAFCO, Jardine Cycle, Softbank, Star Health
ECM Weekly (11th Dec 2022) – ITail, Sunshine, Weilong, VinFast, Skymark, Tian Tu, Cntry Gard, Nippon

Last Week in Event SPACE: JAFCO, Jardine Cycle, Softbank, Star Health

In principle, Jafco Co Ltd (8595 JP) still wants to be greenmailed to get Murakami-san out.
Jardine Cycle & Carriage (JCNC SP)i is expensive here – relative to historical values – and from an implied stub perspective. And the MSCI inclusion event has now passed.
If you think this is a “risk”, then you want to be long when the discount is wide and Softbank Group (9984 JP) is monetising assets in some way.

ECM Weekly (11th Dec 2022) – ITail, Sunshine, Weilong, VinFast, Skymark, Tian Tu, Cntry Gard, Nippon

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
On the IPO front, the usual year end rush in smaller deals appears to have resumed.
On placements front, this week was one for real estate with Country Garden Holdings Co (2007 HK), Macrotech, Seazen (1030 HK) and Nippon Prologis Reit (3283 JP) undertaking deals.

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Dec 10

Daily Brief TMT/Internet: Softbank Group, NTT (Nippon Telegraph & Telephone) and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Can Son-San Take Over Softbank Group Through Buybacks?
2023 High Conviction: NTT (Buy) – Surging DoCoMo Underappreciated as Markets Step Back from Value
Softbank Group – China Rebound Has Helped After End-Of-Buyback Hangover

Can Son-San Take Over Softbank Group Through Buybacks?

On Thursday 8 December, an article showed up in Bloomberg suggesting Son-san had “increased his stake” as the company bought back shares, giving him more rights, “edging towards a buyout.”
That is a stretch. He went from below one-third to above one-third, giving him an explicit veto on shareholder super-majority resolutions, but it’s minor. He now has 34.2%.
The suggestion: if he got two-thirds, he could squeeze out minorities without a Tender Offer. Technically true, but not easy. I dig deeper and propose how it could be done.

2023 High Conviction: NTT (Buy) – Surging DoCoMo Underappreciated as Markets Step Back from Value

By Kirk Boodry

We have tweaked our numbers after Q2 results and catching up with the company. In particular, we come away with more confidence in wireless / fintech growth
NTT looks cheap at 11x FY22e EPS v 12x for KDDI even as relative growth is expected to be better with ~9% EPS growth
Shares have outperformed TOPIX (+18% YTD v -3%) and this should continue in 2023 as solid financial performance and an attractive shareholder returns story provide support

Softbank Group – China Rebound Has Helped After End-Of-Buyback Hangover

By Kirk Boodry

Alibaba is up 20% QTD and the public Vision Fund portfolio is on track for its first positive quarter in almost two years thanks to China upside, mostly for Didi
That has kept the share price elevated even as the discount to fair value has expanded since buybacks ended at Q2 results
At 34% now, there is room for the discount to expand further as the range before the buyback surge was generally closer to 40%

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Dec 09

Daily Brief TMT/Internet: Trina Solar Co Ltd, Infosys Ltd, Nitro Software Ltd, Glints, SK Telecom, Elastic NV, OpenAI, PagerDuty Inc, Ambarella Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

China Rebalances at the Close Today- BIG Flows
Infosys (INFY)’s US$1.1bn Buyback
Nitro Software (NTO AU): Potentia Raises to A$2.00 as the Battle Heats Up
Singapore-Based Glints Lays off 18% of Employees
Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis
Nitro Software: Potentia Matches KKR’s $2.00/Offer
Elastic NV: Improvements To The Elastic Search Platform & Other Drivers
What Is ChatGPT and What Does It Bring to the Table?
PagerDuty Inc: Major Drivers
Ambarella Inc: Major Drivers

China Rebalances at the Close Today- BIG Flows

By Brian Freitas

There are multiple local China indices that rebalance at the close of trading today. Plus MSCI China and FTSE All-World/All-Cap flows due to changes to the Northbound StockConnect Buy-and-Sell list.
China Pacific Insurance (Group) Co., (601601 CH) replaces Beijing-Shanghai High Speed Railway-A (601816 CH) in the FTSE China A50 Index (XIN9I INDEX).
The round-trip turnover at the close of trading today should be in excess of US$8bn.

Infosys (INFY)’s US$1.1bn Buyback

Infosys Ltd (INFO IN) (Infosys Ltd Sp Adr (INFY US)) on 5-6 December announced an on-market buyback of more than US$1.1bn.
The company has done buybacks before, and it is worthwhile looking at the details.
The buy-back looks small, and may be impactful near-term in near-space.

Nitro Software (NTO AU): Potentia Raises to A$2.00 as the Battle Heats Up

Nitro Software Ltd (NTO AU) has received a revised Potentia off-market takeover offer at A$2.00 per share, an 11.1% premium to its previous offer and in line with Alludo’s offer.
By bumping its offer, adding a scrip alternative and signalling a potentially higher price on due diligence access, Potentia has ramped up the pressure on the Board.
Potentia/Alludo offer remains at the low end of the IE’s valuation range. Alludo would have anticipated this move and likely will have factored in the need to raise its offer.

Singapore-Based Glints Lays off 18% of Employees

By Tech in Asia

Glints, a Singapore-based careers platform, is laying off employees “based on market conditions and business priorities,” the firm’s co-founder Oswald Yeo said in his address to staff.
The development comes after the startup raised US$50 million in a series D funding round in August.
In the same month, the firm claimed that its annual revenue and gross profits grew 2.5x over the past 12 months.

Targetable Names on KOSPI for Dividend Arbitrage: DPS Estimates & Current Basis

By Sanghyun Park

Targetable names on KOSPI for dividend arbitrage: SK Telecom (017670), Woori Financial (316140), SK Hynix (000660), KB Financial (105560), Korea Zinc (010130), and HMM (011200)
Samsung Electronics (005930)‘ basis does not reflect special dividends, even though speculations have not disappeared entirely.
As the current basis hasn’t widened to an entirely sufficient level, we need to target arb trade openings focusing on the above stocks a bit more aggressively.

Nitro Software: Potentia Matches KKR’s $2.00/Offer

Potentia Capital has bumped its Offer for Nitro Software Ltd (NTO AU) to A$2.00/share, matching KKR’s earlier Offer.
Potential’s proposal – which also boasts a scrip alternative for those investors wishing to remain invested – is open for tendering, and has no minimum acceptance threshold.
Nitro’s board has yet to provide a view on Potentia’s revised terms.

Elastic NV: Improvements To The Elastic Search Platform & Other Drivers

Elastic NV managed to deliver an all-around beat in the last result as it continues making progress across innovation.
The company has recently announced innovations over the Elastic Search platform, the prominent data analytics platform for search-powered solutions for transforming the way organizations observe, search, and protect their data.
This quarter, Elastic expanded business with RDD, the leading supply chain, print, packaging, and marketing solutions provider.

What Is ChatGPT and What Does It Bring to the Table?

By Tech in Asia

OpenAI, a US-based AI firm set up by Elon Musk and Sam Altman, released the preview version of a chatbot model called ChatGPT (Chat Generative Pre-Training).
Immediately, the model took the internet world by storm, as the chatbot produced accurate, human-like answers (most of the time) to questions and commands.
In a nutshell, the model was trained using a form of supervised fine-tuning called reinforcement learning from human feedback (RLHF).

PagerDuty Inc: Major Drivers

PagerDuty performed well in the last quarter despite the relatively uncertain environment and delivered an all-around beat.
The company saw a good performance in financial services, tech retail, and other verticals.
Total paid and free customers on its platform grew, and consumers continued to adopt more products and services and expand users.

Ambarella Inc: Major Drivers

In this quarter, Ambarella experienced material headwinds from the industry-wide semiconductor cyclical downturn.
Also, the content in the products of the customers continues to rise as it leveraged its historical success with optimized processing for high bandwidth sensing.
We provide the stock of Ambarella with a ‘Hold’ rating with a revision in the target price.

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Dec 08

Daily Brief TMT/Internet: Tongcheng-Elong Holdings Ltd, Appier Group, Salesforce.Com Inc, Synopsys Inc, Crowdstrike Holdings Inc, Zscaler, Hewlett Packard Enterprise Co, Marvell Technology Group Ltd, Workday Inc Class A, Netapp Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)
TOPIX Inclusions: Who Is Ready (Dec 2022)
Salesforce Inc: New Real-Time CRM Platform & Other Drivers
Synopsys Inc: Collaboration With SiFive & Other Drivers
CrowdStrike Inc: Major Drivers
Zscaler Inc: Zero Configuration Data Protection & Other Developments
Hewlett Packard Enterprises: New Product Launches & Other Drivers
Marvell Technologies: New Product Launch & Other Drivers
Workday Inc: Cloud Transition Collaboration With KPMG & Other Drivers
NetApp Inc: The BlueXP Launch & Other Drivers

HSTECH Index Rebalance Preview: Tongcheng Travel (780 HK) Could Replace Ming Yuan Cloud (909 HK)

By Brian Freitas

Tongcheng-Elong Holdings Ltd (780 HK) could replace Ming Yuan Cloud Group (909 HK) in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
One way turnover is estimated at 2.1% resulting in a one-way trade of HK$1.7bn. Passive trackers will need to buy nearly 10x ADV on Tongcheng-Elong Holdings Ltd (780 HK).
After being deleted from the MSCI China Index at the November SAIR, this could be the next major index deletion for Ming Yuan Cloud Group (909 HK).

TOPIX Inclusions: Who Is Ready (Dec 2022)

By Janaghan Jeyakumar, CFA

Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Oct 2022)
At present, there are 60 names that satisfy all of these conditions and there are more names that are close to being in that group.

Salesforce Inc: New Real-Time CRM Platform & Other Drivers

Salesforce’s stock has been badly hit by the general bearishness in the markets towards tech stocks and is trading at a low.
However, the company’s results were decent as it delivered strong sales growth and profitability surpassing Wall Street expectations on all fronts.
This quarter, the ARR increased by more than 50% in seven of their 13 industry clouds.

Synopsys Inc: Collaboration With SiFive & Other Drivers

Synopsys ended the year with a decent result meeting the revenue expectations of Wall Street and managing an earnings beat.
The company reached the $5 billion yearly revenue milestone during this quarter as they extended customer relationships and altered their product lineup in order to sharpen their competitive edge.
Despite a slowdown in revenue growth for the semiconductor business, design activity is still strong.

CrowdStrike Inc: Major Drivers

CrowdStrike had a solid quarter increasing its revenue by 53% year-over-year, surpassing Wall Street expectations.
In the enterprise, sales cycles or average days to closure remain marginally higher than the previous quarter.
Furthermore, LogScale experienced another solid quarter in Q3 thanks to their wins in the financial services, insurance, technology, retail, energy, and telecommunications industries.

Zscaler Inc: Zero Configuration Data Protection & Other Developments

Zscaler delivered good results in the last quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
Consumers are buying Zscaler for users, its complete platform for user protection, including ZDX, ZPA, and ZIA bundled together.
We provide the stock of Zscaler a ‘Buy’ rating and a revision in the target price.

Hewlett Packard Enterprises: New Product Launches & Other Drivers

Hewlett Packard Enterprises had a decent fourth quarter as its revenues managed to surpass Wall Street expectations and strong quarterly free cash flow.
The company managed to meet Wall Street expectations with respect to earnings.
We remain neutral on Hewlett Packard Enterprises and maintain our ‘Hold’ rating with a revised target price.

Marvell Technologies: New Product Launch & Other Drivers

In the last quarter, Marvell delivered a disappointing result as its revenues and earnings failed to meet Wall Street expectations.
The company’s top-line continues to be driven by its auto, 5G, and cloud businesses.
On a sequential basis, the data center revenue of the company declined because of softness in its on-premise business.

Workday Inc: Cloud Transition Collaboration With KPMG & Other Drivers

Workday delivered another solid quarter and managed an all around beat.
The company’s APA won over a number of clients, including Trip.com, Fletcher Building, Bank of Queensland, and a pharmaceutical company.
During the quarter, they also disclosed their collaboration with KPMG to launch Industry Accelerators in two important corporations, including banking and healthcare, based on their Industry Accelerator program.

NetApp Inc: The BlueXP Launch & Other Drivers

NetApp generated a mixed set of results for the last quarter as it failed to meet Wall Street expectations with respect to revenues and billings but managed an earnings beat.
It is evident that their cloud services’ growth has slowed down.
Besides, they have significantly adjusted their revenue projection for the remaining months of the fiscal year in light of impending economic headwinds.

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Dec 07

Daily Brief TMT/Internet: Fujitsu Ltd, Sohu.com, DeNA, LG CNS, Nasdaq-100 Stock Index, Net Protections, Intuit Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Fujitsu (6702) Buyback Just Getting Started
Negative EVs: JOYY & Sohu’s Steep Discount To Net Cash
DeNA (2432) Buyback – Accretive on a Low Leverage Business Which Will Grow In Time
2023 Major IPOs Pipeline in Korea
EQD | SPX Index/NDX Index : Big Data Week Coming Up-We Look at What Is Priced In
Net Protections Holding IPO Lock-Up – PE Owner Is Free to Shed Its Remaining Stake
Intuit Inc: The SeedFi Acquisition & Other Drivers

Fujitsu (6702) Buyback Just Getting Started

On 28 April 2022, with full-year earnings, Fujitsu Ltd (6702 JP) announced a buyback programme to buy back up to 12mm shares (6.11% of shares out) for up to ¥150bn
That was when the shares were ¥18,540. The shares popped 10% in 2 days. Then fell 25% into end-September. Yesterday, they announced they’d bought back 1.9mm shares in November.
Those were the first shares bought back under the Programme. And that leaves 4 months and a lot of stock to buy.

Negative EVs: JOYY & Sohu’s Steep Discount To Net Cash

Screening US-listed China plays with negative EV and positive tailing EBITDA generates eight names.
Of these companies, only two are expected to be EBITDA positive in FY22.
They are JOYY (YY US) and Sohu.com (SOHU US). This insight looks at both names.

DeNA (2432) Buyback – Accretive on a Low Leverage Business Which Will Grow In Time

DeNA (2432 JP) announced in June a buyback programme to buy up to ¥15bn of stock over the next nine months. They are two-thirds the way through.
At current pace, they should finish by end-Jan or early Feb, then cancel 8mm shares, leading to a small TOPIX selldown likely in March or April.
The company remains cash and securities rich (net cash, after-tax value of securities, and equity affiliates are 100% of market cap). And growth lines will slowly claw their way positive.

2023 Major IPOs Pipeline in Korea

This is our 8th “Annual Edition of the Major Korean IPOs Pipeline Preview” at Smartkarma!
This insight will feature 50 of the biggest potential IPOs in Korea in 2023.
The overall IPO market in Korea is likely to continue to be weak in 1H 2023, although there are some potential for a rebound in 2H 2023.

EQD | SPX Index/NDX Index : Big Data Week Coming Up-We Look at What Is Priced In

By Simon Harris

Next week is the last big week of data releases for the year
With CPI data and also a FED meeting there is lots of potential volatility to come
We look at what is priced in to the derivatives market and suggest some trade ideas

Net Protections Holding IPO Lock-Up – PE Owner Is Free to Shed Its Remaining Stake

Net Protections (7383 JP), a buy now pay later service provider, raised around US$570m via selling a mix of primary and secondary shares in its Japan IPO in Dec 2021.
As per Yano Research, it had 40% market share in the domestic BNPL market for B2C transactions.
In this note, we will talk about the upcoming lock-up expiry on 9th Dec 2022.

Intuit Inc: The SeedFi Acquisition & Other Drivers