TMT/Internet

• ROHM Co Ltd (6963 JP) announced salutary H1 results on Nov 1. The numbers were good, the innards suggested cost pressures. The revised forecasts suggested conservativeness, or risk of weakness.
• The company also announced a stock buyback. It’s only about 2% of shares out, which is 5-10% of Real World Float, but the stock has a low-beta risk character.
• And it is quite cheap on a capital construct basis. EV/EBITDA to Mar23 on conservative guidance is 4.6x. Adj EV/EBITDA Mar23e deducing securities and net receivables? 3.7x. 

• Chinese social media giant Tencent Holdings Ltd. and state telecom operator China Unicom were cleared by the country’s antitrust regulator to set up a joint venture to develop data and cloud-related businesses.
• The new business, one of 15 investment deals that cleared antitrust review Tuesday, will focus on content delivery networks and edge computing.
• The partnership is another tie-up between Tencent and China Unicom after a 2017 investment in which the social media giant acquired a 5.18% stake in the telecom company.

• Meta Platforms delivered a highly disappointing set of results with a huge earnings miss.
• The company’s ballooning costs to fund its virtual reality vision have resulted in a drop in profitability.
• We provide the stock of Meta Platforms with a ‘Hold’ rating and a revision in the target price.

• The target market size that will be affected by the Default Option is estimated to be ₩92T. Up to 30% of them (₩30T) can flow into single-stock ETFs.
• Competing against TDFs, half of this ₩30T is a conservative estimate for single-stock ETFs. Then, up to 40% of the ₩15T becomes the flow size entering the local stock market. 
• KODEX’s Samsung Electronics single-stock ETF may dominate the market. In this case, at least ₩3-4T can flow into Samsung Electronics Ord.

• Correlation analysis of the major shareholder factor with ROE, ROA, and Tobin’s Q shows that founding family companies tend to have relatively high profitability (ROA) and high stock price valuations.
• On board practices, companies with more than 50% ownership are generally less concerned about improving their practices, because they don’t have to worry as much about voices of minority shareholders.
• With regard to key actions, companies with shareholders holding more than 50% interest are presumed to be proactive in growth investments.

• FishLog, an ecosystem enabler for the fisheries cold chain industry in Indonesia, has closed its US$3.5 million pre-Series A round

• FishLog was established in 2020 by Bayu Anggara, Reza Fahlepi, and Abdul Halim to solve the fragmentation in cold chain fisheries in Indonesia

• The agritech startup improves cold storage, processor, and distribution in Indonesia’s fisheries to enable the industry to meet global supply and demand better

• Microsoft delivered a good result in the last quarter surpassing Wall Street expectations on all counts.
• Microsoft Cloud revenue surpassed $25 billion, increasing by 24% and 31% in constant currency.
• Microsoft is getting more customers that want to grow and innovate with its existing infrastructure.

• ATEN continues to demonstrate its growth ability by focusing on its security first approach. ATEN reported third quarter revenue slightly more than we were projecting
• The steady growth ATEN has experienced this year has come through the diversification of its customer base
• ATEN’s management asserted demand has been consistent and dependent on performance. ATEN has added more customers throughout the year, which should serve as a baseline for incremental revenue in 2023

• Singapore-based ecommerce giant Lazada has released its first environmental, social, and governance (ESG) report.
• As a largely unexplored concept in Southeast Asia, the firm enlisted the help of an independent consultant to map out its ESG priorities.
• The core tenets of the firm’s ESG framework are “empowering communities, developing a future-ready workforce, ensuring responsible stewardship, and effective governance.”

• Alphabet’s stock price has undergone a strong correction after the company delivered a disappointing third-quarter financial result, failing to meet Wall Street expectations in terms of revenues as well as earnings.
• Alphabet did have a decent underlying growth in Search and momentum in Cloud but the impact of currency conversion is reflected in their results.
• Lapping the high growth levels from the previous year and the difficult macroeconomic environment also influenced the growth in their advertising revenues.

• On 2 November, it was reported that Sweden’s EQT Partners is to acquire a 36.87% stake in SK Shieldus. 
• EQT Partners is expected to invest more than 2 trillion won in SK Shieldus which is expected to be valued at about 4.5 trillion won to 5.2 trillion won.
• Our base case valuation of SK Square is NAV per share of 59,272, which is 59% higher than current price.

• KDDI posted its best revenue growth since 2019 but an acceleration in power costs and expenses associated with the July network outage kept a lid on margins
• On balance, the print is positive and management remains confident on full-year targets
• There are sector reads from corporate sales (good), higher power costs (bad), and stable competitive intensity whilst modest erosion in roaming revenue indicates Rakuten’s rebound from peak losses is modest

• Software outfit ReadyTech (RDY AU) has announced an indicative proposal from Pacific Equity Partners and affiliates, to acquire ReadyTech by way of a Scheme of Arrangement at $4.50/share.
• Pemba Capital, with 32.01% of shares out, are in discussion with PEP as to what appears to be the PE firm rolling over shares. 
• ReadyTech’s independent board has granted PEP non-exclusive due diligence to flesh out a firm Offer. According to media reports, Microequities, with ~13%, is not on board whatsoever.

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
• The reference period for the trading data used for the index selection ended on 31st October 2022.
• There have been a couple of key revisions to the index selection methodologies for SENSEX and SENSEX Next 50 which could have important consequences.

• Growth Stocks have been hammered in the rising rate environment
• Inflation may have peaked and central banks could be reaching the end of the hiking cycle
• We look at derivative strategies on ARKK US to gain a broad exposure to the growth and tech

• ReadyTech Holdings Ltd (RDY AU) confirmed that it received a conditional, non-binding indicative proposal from Pacific Equity Partners (PEP) at A$4.50 per share, a 38.9% premium to the undisturbed price.
• PEP aims to jointly work with Pemba, the largest shareholder with a 32.01% stake, on the proposal. Microequities, the second-largest shareholder, is said to oppose the offer.
• The offer represents an all-time price high but struck at a discount to peer multiples, suggesting room for a bump. At last close, the spread to the offer is 8.4%.

• On 25 October, we recommended a pair trade between LG Chem (go long) and LGES (go short). Since then, this trade has resulted in a net gain of 15.7%.
• It is very unusual to get this kind of alpha sized gains on Korean large caps in such a short time period. 
• Given the sharp net appreciation on this pair trade in the past week, we would close out this trade. 

• For the month of October, 6 new deals (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$4bn.
• The average premium for the new deals announced (or first discussed) in October was ~56%, and a year-to-date average of 40%.
• This compares to the average premium for all deals in 2021 (165 deals), 2020 (158 deals), and 2019 (145 deals) of 33%, 31%, and 31.5% respectively.

• KPIT Technologies (KPIT) reported decent Q2FY23 earnings. Sales grew 8.3% QoQ and 27% YoY in Constant Currency (CC) terms. EBITDA and Net Profit grew 33% and 28% YoY, respectively. 
• Led by an all-time high order pipeline, KPIT Technologies (KPITTECH IN) gave a bullish outlook and upgraded its FY23 growth guidance. KPIT’s Technica acquisition also looks very promising.
• In terms of order pipeline, KPIT has a couple of mega deals ($100mm+) in the offing, which if realized, would be the first-ever in its history.

• Because there’s nothing about addressing environmental issues that the company itself opposes because they are global issues, it’s relatively easy to vote in favor of shareholder proposals on environmental issues.
• Governance proposal is the most sensitive because it’s directly related to election of directors. It’s challenging for domestic investment managers to vote in favor of shareholder proposals during proxy fights.
• FSA’s tightening of oversight of ESG investment trusts has triggered shift by major Japanese investment managers toward establishing ESG-related-voting policies and exercising their voting rights in accordance with these policies.

• DeFi options protocols’ TVL did not change much in the past three months despite the bear market we are now in.
• Many (TradFi) institutions and institutional investors we spoke to believed the next bull market/major innovations in DeFi might be coming from protocols that offer yields from real-world assets. 
• To drive the next phase of growth, options protocols should leverage their composability to tap into it by offering those protocols additional use cases related to options. 

• With the review period complete, we see 11 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
• Most of the potential changes are high probability ones, but there are some stocks that are very close to market cap and liquidity cutoffs.
• The impact of passive trading will be much higher on the potential deletes as compared to the potential inclusions, though trade notionals are higher for the potential adds.

• Nitro Software Ltd (NTO AU) has received a competing proposal from Alludo. The offer is A$2.00 via a scheme or an off-market takeover at A$2.00, with a 50.1% minimum acceptance condition.
• Unsurprisingly, the Board rejected Potentia’s A$1.80 per share off-market takeover offer. Potentia has three options – lift its offer, do nothing or sell into Alludo’s offer. 
• While Alludo’s offer is 11.1% above Potentia’s offer, it is far from a knockout bid. Therefore, there is a good chance that Potentia returns with improved terms.

• Some workers have been fleeing Hon Hai’s largest iPhone production facility in Zhengzhou, China over the weekend, due to COVID-19 outbreak lock-downs.
• Even a significant hit to 4Q22E earnings is unlikely to change the 2023E and 2024E financial outlook or valuation multiples for the company, in our view.
• Even after considering that Q4 is a high production period, if we assume November is about 1/10th of annual production, then only an estimated 2% annual reduction is at risk.

• Despite the uncertainty brought on by the pandemic, the timing of the cross-border travel rebound, inflation, the Ukraine crisis, and potential recession, Visa’s performance in 2022 has been quite solid.
• The company delivered yet another all-around beat as it established over 400 business collaborations with fintechs worldwide this year, ranging from start-ups to established businesses.
• Cross-border volumes in Q4 increased by 7 points from Q3 and were up 49% year over year and 130% compared to three years earlier, excluding intra-Europe.

• AXTI slightly beat its downward adjusted third quarter guidance but issued fourth quarter forecast showing further deterioration in the business
• During the third quarter AXTI experienced a significant delay in orders from customers causing revenue to decline by approximately 11 percent sequentially
• The spill over of weakness into the fourth quarter should not be a surprise given the pace of decline in revenue in the third quarter

• NTGR reported third quarter results showcasing continued growth in its SMB and service provider product lines while the retail channel remained challenged. 
• NTGR has been transitioning away from the lower end of the Wi-Fi router market, but a contracting market has extended out the timeframe of depleting channel inventory
• NTGR’s growth driver are primarily its Pro AV switches and 5G hotspots, which continue to outperform our expectations

• ATNI has grown the number of subscribers within its portfolio businesses resulting in revenue rising faster than expected
• ATNI’s steady progress with its network expansion is expected to help cash flow from operations in future quarters
• Each of the operating businesses are growing revenue and at a state where management believes there would be positive free cash flow if it was not for investing for growth

• Cadence deliver a good result in Q3 surpassing Wall Street expectations on all fronts, driven by its technological leadership, solid execution, diverse customer base, and robust business model.
• Despite the current macroeconomic uncertainty, it is evident that long-term sustained design activity is being driven by generational drivers like 5G, hyperscale computing, and AI/ML where Cadence is a key player.
• Cadence also added the revolutionary Verisium AI verification tool and the JedAI data platform to their portfolio in Q3.

• Last week saw a wave of major tech companies report earnings with significance toward the semiconductor and technology space in Taiwan.
• Memory chip takeaways – SK Hynix, Samsung see better supply/demand in 2023E. PC market — Recent results discuss slight decline, potential stabilization in 2023E.
• Mobile phones — Relative strength in high-end vs. low-end. Auto & Industrial — Relative strength seen continuing. AMD, Qualcom, Elan, CHIPMos, Acer, Globalwafers results ahead.

• Tyler Technologies delivered yet another all-around beat that was a result of its 3% organic growth in this quarter, excluding COVID-related revenues of approximately 9%.
• It reflects both company’s accelerating shift to the cloud and growth in transaction-based revenues.
• Overall, we provide the stock of Tyler Technologies with a ‘Hold’ rating and a revision in the target price.

• Keyence reported record 2Q Sales and OP, thoroughly beating street expectations. The company recorded high double-digit growth in all regions – even in Europe. 
• Pricing power is on display 10-35% price hikes to shore up the dip in GPM to 81.3%, depressed on higher raw material costs.  Sets up for future earnings growth.
• The share price has underperformed the TOPIX -26%YTD. Valuations at the bottom of the recent range. We expect a share price recovery and are bullish.

• 2Q Earnings Neutral; Mainly FX driven. The company sidestepped the worse of what we are seeing in broader printer market (See XEROX; Canon)
• The outlook remains Negative. Macro conditions set to be worse in H2 vs H1. Core Home & Office Printing Business key IJP unit sales struggling with severe margin pressures.
• Ongoing share buyback mildly supportive but unlikely to be a game changer with falling earnings.  Target-based 0.8x PBR implying ¥1700 TP.  

• LX Semicon (108320 KS) will be traded on KOSPI from November 3rd. This event has no trade suspension. So, it will be traded on KOSDAQ until November 2nd.
• Nextin (348210 KS) will replace LX Semicon for KOSDAQ 150. Again, the effective date is November 3rd. So, the index trackers will rebalance-trade at the close on November 2nd.
• LX Semicon will see an outflow of -1.91x ADTV, whereas Nextin will enjoy an inflow of 3.93x ADTV. This Special Change will likely save AptaBio Therapeutics (293780 KS) from deletion.

• Intel’s 3Q22 earnings beat expectations, and the shares reacted positively, rising 10.7%.
• The company announced $3bn of cost savings for 2023E and $8-10bn in annual cost savings by 2025E. 2023E earnings guidance will be provided at the company’s February Investor Day.
• Intel has outperformed TSMC and UMC since our pre-Intel Innovation Conference catalyst piece. Intel could still re-rate further relative to the companies into its next earnings.

• On the 28 October, Potentia announced an improved (and final) off-market Offer of A$1.80/share for Nitro (NTO AU), a 13.9% improvement over its initial proposal on the 30 August. 
• Nitro has now concluded the Potentia Takeover Bid undervalues Nitro. The Offer, however, is still proceeding, and will open in two weeks.
• Separately, KKR’s Alludo has pitched a non-binding – subject to due diligence – Offer by way of  a Scheme (or off-market takeover) at A$2.00/share. Nitro is supportive of this Offer.

• Delta Electronics (2308 TT) reported its earnings on October 28th, after its subsidiary Delta Electronics Thai (DELTA TB) had reported on October 25th.
• Sales grew 33% YoY and gross margin expanded sequentially, which outperformed Delta Thailand’s margin performance.
• Delta Taiwan shares have outperformed Delta Thailand since having dropped to a historically-extreme relative market cap below 1.0x. However, Delta Taiwan remains historically cheap on a relative basis.

• Mediatek’s business continues to grow YoY, albeit slower than earlier expected. Management comments provided insight into the inventory cycle.
• Management expects to see the worst impact of the inventory correction cycle in 4Q22E, but then in 1H23E sees potential for a turn around.
• We are still developing a conviction view, however we see the latest results as net-positive for the shares given signs of a turn around ahead and the stock’s laggard status.

• Service Now had a solid third quarter and the company delivered another all-around beat.
• Considering the solid organic growth and market demand of the company, it is expected that there will be 750 million new applications built by 2025.
• The company focused on improving customer service experience and expanding its market by acquiring other software companies which is why it closed the acquisition of Era Software.

• Texas Instruments had a good third quarter, with revenue increasing by 13% year over year to $5.2 billion, surpassing Wall Street expectations.
• After two years of construction, the company’s new semiconductor chip facility has begun producing chips.
• The management anticipates Texas Instruments’ fourth-quarter revenue to be in the $4.4 billion to $4.8 billion range.

• SK Hynix and Samsung both released their latest earnings last week. The companies are the leading players for Nanya Tech’s memory chip industry.
• SK Hynix’s latest gross margin performance confirms Nanya Tech performing in-line with the industry leaders.
• Guidance from both SK Hynix and Samsung indicates a likely improvement in supply/demand dynamics in 2023E for the memory chip space.

• Nitro Software Ltd (NTO AU) entered a trading halt in response to Potentia’s off-market takeover offer of A$1.80 per share, a 13.9% premium to its previous rejected offer of A$1.58.
• Potentia will block rival schemes and not accept competing takeover offers. This move will make it hard for the Board to convince a rival bidder to table an offer.
• Potentia wants a friendly offer and placed majority Board support as a condition. The offer is unattractive but Potentia has hinted at improved terms if provided due diligence access. 

• Following its planned section transfer, LX Semicon (108320 KS) will be deleted from the KOSDAQ 150 Index at the close on 2 November and replaced by Nextin (348210 KS).
• Passive trackers will need to buy over 4.5 days of ADV on Nextin (348210 KS) and sell over 1.5 days of ADV on LX Semicon (108320 KS). 
• Belonging to the Information Technology sector, there is zero chance of LX Semicon (108320 KS) being added to the Korea Stock Exchange Kospi 200 Index (KOSPI2 INDEX).

• Pushpay Holdings (PPH NZ) entered a scheme implementation deed (SID) with Sixth Street/BGH at NZ$1.34 per share, a 30.1% premium to the undisturbed price (12.6% premium to the last close).
• The key conditions are shareholder and regulatory (OIO & US antitrust) approvals. The scheme meeting is in 1Q23. 
• The offer is light. A concentrated shareholder register and signs of retail opposition are risks. A 75% deal probability, implies buying up to NZ$1.27 per share.

• Church donor management tech play Pushpay (PPH NZ) has been fielding expressions of interest since April. Earlier this month,  Pushpay announced it had received another proposal, reportedly from BGH/Sixth Street.
• On the 28 October, Puspay announced it had entered into a Scheme Implementation Agreement at NZ$1.34/share with BGH/Sixth Street, which collectively hold 20.34%. This is  a 30.1% premium to undisturbed.
• The offer is subject to shareholder and regulatory approval, with a possible completion date in early 2Q23. 

• Inside is a recap of movements in the last week relating to the Shanghai and Shenzhen-Hong Kong Stock Connect facilities, broken down by company and industry.
• Overall, the net inflow over the past week was ~HK$3.65bn, split (+HK$1.78bn) for Shanghai and (+HK$1.87bn) for Shenzhen.
• The largest inflows were in Tencent (700 HK) and Meituan (3690 HK). The largest outflows were in China Shenhua Energy (1088 HK) and China Overseas Land & Investment (688 HK).

• Softbank Group’s share price has been supported by the share buyback programme since late September, but 2Q FY2022 results are likely act as a negative catalyst for Softbank shares
• Alibaba and its core listed holdings in the Vision Funds have seen market values go lower in recent months; see the diverging market price chart trends in this report
• In addition, valuations among the unlisted holdings are also under pressure into October, so 2Q results may not capture the full extent of the down rounds

• Intel put forth a significant cost cutting program to generate $3B in savings in 2023 and $8-10B by 2025.
• CEO Gelsinger’s PC forecasting track record is horrendous, we wouldn’t bet on a down MSD 2023 market.
• Datacenter…which once carried near 60% margins hit breakeven this quarter… an astonishing fall.

• Micron delivered a mixed set of results for the previous quarter, missing out on the revenue expectations of Wall Street but managing an earnings beat.
• As a result, demand is being reduced for the other parts of the supply chain, which already have more than enough inventory, because the servers cannot be built.
• Therefore, although the overall demand for clouds is generally healthy, this is one factor that is having an impact on it.

• BlackBerry had a mediocre quarterly, beating profitability estimates of Wall Street while delivering revenue aligned with forecasts.
• The best performer continues to be QNX design base revenue.
• Royalty revenue increased on the production side, but it is still below pre-pandemic levels, mostly because of supply chain challenges.

• GoTo on Monday confirmed that it’s currently working with pre-IPO shareholders to explore a coordinated secondary offering of shares held by these shareholders when their lock-up expires on 30 November.
• Following IPO, most shareholders agreed to hold onto their shares for a period of 8-months, and the lock-up period for around 90% of outstanding shares will expire next month.
• As we continue to highlight in our previous insights, growth in top line does not necessarily mean profits for GoTo, and the company continues to burn cash to fuel growth.

• The review period nearly complete, we see 7 potential adds and 9 potential deletes at the December rebalance. However, there can be a maximum of 5 changes at a rebalance.
• We estimate a one-way turnover of 4.28% at the December rebalance leading to a one-way trade of CNY 3.42bn. Index arb activity could add to the impact on the stocks.
• The potential adds have dropped over the last month while the potential deletes have moved higher over the last couple of weeks.

• Elmo Software (ELO AU) entered a scheme implementation deed (SID) with K1 at A$4.85 per share, a 100.4% premium to the undisturbed price.
• The key conditions are a shareholder and regulatory (FIRB & US antitrust) approvals. The scheme meeting is likely in early 1Q23. 
• While not a knockout bid, it is attractive in the context of current conditions. Key shareholders will vote in favour. At the last close, the gross spread is 4.8%.

• Turbulent markets can  widen merger spreads arbitrarily creating attractive  arb opportunities with the potential for outsized IRRs
• Among the several live transactions indicating unusually high spreads, none looks more alluring than the prospective MaxLinear (MX US) acquisition of Silicon Motion (SIMO US) in the semiconductor sector
• The combination of an exceptionally wide spread driven by unsupported skepticism that the merger will not pass muster with China’s SAMR and historically low valuations make SIMO’s risk-reward profile  enticing

• MAUs beat, margins miss, guidance weak. Where / when is the operating leverage?
• Podcasting business took a restructuring charge this quarter, not bullish for the business meant to expand gross margins.
• TikTok reportedly readying a new streaming music app… not good.

• After many quarters of consistently beating Wall Street expectations on all counts, FactSet delivered a mixed result in the last quarter exceeded revenue expectations of analysts but missing out on earnings.
• The company finished fiscal 2022 with organic ASV plus professional services growth of $158 million, accelerating by approximately 200 basis points year over year to over 9%.
• With private company coverage throughout their content refinery, workflow solutions for private equity and venture capital companies, and seamless linked workstation integration, the team is progressing with its private market strategy.

• Verizon ended the quarter with a wireless service revenue increase of 10% over the prior year and 2% over the previous quarter, surpassing Wall Street expectations.
• With consumers responding well to the company’s new offerings and thus increasing store traffic, its Consumer segment has begun to gather traction.
• Their Welcome plan also enhanced customers’ perceptions of cost, which helped to increase consumer phone gross adds year over year.

• The TOPIX October FFW rebalance is Friday at the close. 
• It is still ¥2trln+ to buy and ¥2trln+ to sell. And there are some big names. A spreadsheet is attached with all the flows. 
• Surprisingly, the top 40 Z-scores on each side have traded in a VERY tight range for the 6 weeks prior to the announcement and the two weeks post. Very weird.

• Near the end of the review period, we see 16 potential changes to the CSI 300 Index at the December rebalance. There are other stocks very close to the cutoffs.
• We estimate a one-way turnover of 3.04% at the December rebalance leading to a one-way trade of CNY 8.4bn.
• The potential adds have outperformed the potential deletes, though the gap has narrowed in the last few weeks. We’d position for outperformance post the end of the review period.

• In this insight, we discuss a pair trade between LG Chem Ltd (051910 KS) (go long) and LG Energy Solution (373220 KS) (go short). 
• LG Chem’s shares are trading at nearly 66% discount to its NAV which we believe to be excessive. 
• Another major factor that could negatively impact LGES’ shares in the next several months is the end of the lock-up period for the company’s ESOA shares in about three months. 

• GoTo (GOTO IJ) confirmed that it is exploring a coordinated secondary offering of shares held by pre-IPO shareholders. The Series A shareholders’ lock-up expires on 30 November 2022. 
• The lock-up of 89.63% of the outstanding shares expires on 30 November. Within these shares, Alibaba (ADR) (BABA US) and Softbank Group (9984 JP) stakes are worth a combined US$2.6bn.
• GoTo continues to grow but with material losses and cash burn. The shares are fairly valued but the sizeable secondary offering (US$1 billion based on reports) will pressure the price. 

• In 3Q22, the game market size shrank in China and globally.
• The limitations on time spent on games by juveniles, imposed earlier by the authorities, severely impacted the domestic market.
• We believe the key impact for 2023 is the predictable license approval.

• Delta Electronics Thailand shares rose sharply ahead of its earnings result, where profit beat expectations. Delta Taiwan shares fell the same day, thus we see an opportunity.
• Delta Taiwan to report on October 28th. Delta Taiwan is now smaller in market cap than its subsidiary despite earning substantially higher levels of net profit.
• 2023E growth expectations are relatively similar for both, supporting Delta Taiwan to revert vs. Thailand. Trade opportunity into the Delta Taiwan October 28th results.

• This is our first report on global tech giant, Alibaba.
• The company is currently trading close to its 52-week low with its results just around the corner.
• Tmall GMV and Taobao experienced a percentage decline in the mid-single-digit in the last quarter.

• IRDM put the emphasis on its quarterly report versus commentary on smartphones and drones using satellite connectivity. The third quarter results continued to show the ongoing growth in IOT subscribers
• IRDM’s service revenue has been trending higher with added maritime and IOT subscribers
• During the third quarter, IRDM added 7 thousand voice subscribers and 89 thousand IOT subscribers. The rate of voice customer additions can be lumpy depending on seasonality

• Elmo Software (ELO AU) has entered into a Scheme Implementation Deed (“SID”) with K1 Investment under which ELMO shareholders will be entitled to receive $4.85/share, in cash.
• The SID has the support of the independent board and ELMO’s three largest shareholders collectively holding ~33.4% of shares out. 
• The Scheme is expected to complete in the 1Q23. The proposal requires FIRB approval. This looks done.

• Like most of its semiconductor peers, Lam has witnessed a strong correction after its earlier highs.
• It demonstrated its sustained strength in execution by surpassing the $5 billion revenue for the first time.
• It is ramping up output levels and has increased revenue by almost 10% compared to the previous quarter.

In 1992, a TV series aired in Hong Kong on TVB called The Greed of Man. The series told the three-plus-decade story of Ting Hai, an “uneducated and pathologically self-righteous brute” (played by Canto pop singer and actor Adam Cheng (born 1947)) and Fong Chun-sun, “an honest, cultured and refined leader of the Asian Stock Exchange” (played by Damian Lau) who were childhood friends, split, and saw Ting kill Fong over a girl.

Ting Hai fled to Taiwan, was brutish again, spent a decade-plus in prison there. One of Ting Hai’s sons pursues a Fong daughter, is rebuffed, the son turns violent. Eventually the three Fong daughters are killed, and Fong’s only son (played by Sean Lau) flees to Taiwan and makes it rich through indirect gambling on stocks. In Hong Kong, the Tings have made it rich by being short in the 1987 crash. Ting has come back to Hong Kong, is charged with murder, then buys himself out of a sentence. Fong comes back to Hong Kong, and they duke it out in the stock market in true good guys vs bad guys epic knock-down drag-out drama. Ting and his sons are backed by the triads. Fong is backed by a few HK tycoons. Eventually, Ting is wiped out.

He responds by throwing his four sons off the top of the stock exchange building and following himself. Only Ting survives, now billions in debt, and spends the rest of his life in prison. 

The first episode of the show actually started with that final scene of Ting hurling his sons off the building. TVB got so many calls from disturbed viewers they altered the show, and moved its time slot. Apparently, the re-issues and re-airings of the show all show edited versions. The edited version was re-released on TV in 2015 and was well-received in HK by a younger generation. 

Most importantly to this insight however, is that when the series started in 1992, the Hang Seng Index fell 1200 points in one month – that was almost 20% at the time. It started falling part way through the series, then the index fell 1,000 points (16+%) in four days after the gruesome ending.

There were so many complaints about the ending that TVB revised the video release and subsequent re-releases.

Two years later, another TVB drama series starring Adam Cheng called ‘Instinct‘ was aired starting in November 1994. The index started falling a day or two before, after what had been an ugly year-to-date, and fell 20% in 7 weeks while the series aired.

1996 saw two series starring Adam Cheng air on TVB.

Cold Blood Warm Heart – a romantic crime thriller series of 65 episodes aired its first episode on 5 February and ended its run on 3 May. The market fell 700+ points or 6% in the period. 

In early September 1996, Adam Cheng starred in another TVB series called Once Upon A Time In Shanghai (a remake of a 1980s series called The Bund), which ran from 2 September through 25 October 1996. The Hang Seng Index fell sharply the next day, and this was blamed on the Ting Hai Effect, but the market did pretty well in the 7-week-long series.

In late 1997 he starred in a historical drama called Legend of Yung Ching for a Taiwanese production company, covering a period in the mid 18th century of the Kangxi Emperor, the Yongzheng Emperor (Adam Cheng’s role), and the Qianlong Emperor in the Qing Dynasty. Apparently, the market dropped the day it aired. 

In June 1999, he starred in a four-part series called Lord of Imprisonment (may have been a Taiwanese series) which started apparently late in the month. That apparently started a fall of 6+% in the Hang Seng Index.

In 2000, a series called Divine Retribution aired on ATV. It was a sequel to Greed of Man, and was originally called Greed of Man 2000 and actually took place in the near future, not the recent past as had been the case for the original series. It ran from 11 September through 3 November 2000. The Hang Seng Index fell 10% in 6 weeks before rallying in the last two days of the series.

In March 2004 – from 8 March through 24 April 2004 – a historical drama of 37 episodes (more for the international version) starring Adam Cheng called Blade Heart aired on TVB. The opening theme song was performed by Adam Cheng.

You guessed it. The Hang Seng was down more than 10% in 7 weeks.

Later that year, he was in The Conqueror’s Story from 25 October through 4 December – also on TVB. The market fell nearly 200 points the day the series started. 

Adam Cheng also starred in a period costume drama called The Prince’s Shadow from 14 March through 18 April 2005. The market fell on the first day, regained most of its loss, but that was the high price of the series. The market fell over the period of the series.

In 2007, Adam Cheng played a real estate CEO in a TV drama set in contemporary China. The series, named Return Home ran for 33 episodes starting 15 July 2007.

In 2009 he did a TVB series on Hong Kong TV, titled The King of Snooker. It was 20 episodes airing on TVB from 30 March 2009 through 24 April 2009. On the first day, the market fell 600+ points or 4.7% on the day. He had also filmed a series in 2008 called The Book and The Sword – a 40-episode period drama aired in China starting 20 March 2009. The HK market fell 2.3% that day.

On 21 May 2012, a 30-episode psychological thriller titled Master of Play starred Adam Cheng. It ran on TVB for 30 episodes through 29 June 2012. The market fell 10% in the 10 days running up to the launch of the new series.

A year later, the period drama movie Saving General Yang was released in Beijing on 4 April 2013 and the next day, the Hang Seng was down 610 points (-2.7%).

In April 2015, the original 1992 drama The Greed of Man which made the Ting Hai Effect was rerun. The first day of the re-run (20 April) the market fell 2% or 558 points. 

He was interviewed in the South China Morning Post 9 days later and the next morning the article came out (30 April). He said he wasn’t to blame for the stock market’s falls when his shows aired. 

The market fell five days straight. 

In classic fashion, there was a new series out in 2018 called Ever Night. It saw advertising the two weeks before and the Hang Seng fell about 1,000 points in the two weeks before the release. People joked days before that the market fall was due to the new show.

The show was popular in China, so the 60-episode Season 1 started in October 2018 was followed by a 43-episode Season 2 staring 13 January 2020 and running for 3 months and a week. The market fell 25% from the start of Season 2 before rebounding. 

Which brings us to the present day…

Earlier this month, the sequel to The Greed Of Man was released for streaming on Disney+. The market, which had rebounded that day, fell for the next 6 days. 

And today, 25 October, TVB starts re-runs of the 1988 series Behind Silk Curtains starring Adam Cheng, where he plays the role of the chairman of a bank, and drives a businessman’s company to bankruptcy so he can take it over.

Notes:

• This is a fun thing. But it appears to be taken somewhat seriously. It ALWAYS comes up. 
• Not EVERY movie or tv series appearance causes bad results. Bar Bender aired starting on 3 April 2006 on TVB Jade, and the market was up that day, fell back a little in the following days, but not seriously, and then rose 8% by 26 April. 
• However, enough do that it retains its name decades later. 

Sources:

• CLSA put out a Hong Kong Market Outlook piece in April 2004 about The Adam Cheng Effect. That is probably the first I heard of it. 
• The Ting Hai Effect wikipedia page is a place to start. 
• There was an article in Chinese on www.chinanews.com (original source: http://big5.chinanews.com.cn:89/gate/big5/www.chinanews.com/yl/ypkb/news/2009/04-02/1629867.shtml) in April 2009 just after the King of Snooker series started which talked about the Tin Hai Effect. It is likely the source of some of the later articles in English because one of the dates is wrong and most later English sources copy that date.
• Wikipedia has a list of most of the TVB series by year of production. 
• IMDB has a list of most of his appearances. Wikipedia does too.

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