TMT/Internet

• BHP launched a bid for OZ Minerals (OZL AU). OZ has rejected it as being too low. BHP said the Offer provides certainty of funding growth. They are both right
• This Offer price for Lifestyle International Holdings (1212 HK) is probably sufficient to get up. It has been declared final for that reason. Optically $6/share was a more reasonable level.
• Nexon (3659 JP) announced another ¥100bn buyback over three years. However, the buyback is too small to pay back the Kim family inheritance tax obligations. 

• Alcohol intoxication of employees during work hours is known to result in millions of dollars’ worth of productivity loss as well as many other risks to corporations each year.
• Given this background, SOBR Safe (NASDAQ:SOBR) has a highly relevant technological solution that can help mitigate and minimize the these risks.
• The company has a particularly large addressable market as it helps employers carry out the alcohol intoxication monitoring of workers with the help of its preventive detection technology platform.

• Today I will be completing an in-depth analysis on AMD .
• Within, I will break down the multitude of opportunities the company has in front of it and provide a succinct overview of the company’s vast technology portfolio.
• Additionally, I will spend time discussing how the company is eating Intel’s lunch, dig deeper into their financials, and discuss some positive and risk-based factors alike that I am considering with respect to the company. 

• We are Bullish on Rorze, a global leader in ultra-clean wafer substrate handling solutions.
• We believe that Rorze is well placed to monetise the long-term growth in semiconductor demand and WFE spend
• The stock has recently underperformed its peer group and valuations collapsed. We see almost 100% upside potential based on a 14x target multiple

• On 12 August, the South Korean government finally gave a presidential pardon to Samsung’s heir Lee Jae-Yong.
• With Lee Jae-Yong given the presidential pardon, there is an increasing likelihood that the Samsung Group could become more aggressive in making major global M&As in the next several years.
• Three major M&As that Samsung could make in the next several years include ARM, Infineon, and NXP Semiconductor. 

• Softbank Group’s fintech portfolio companies – and especially those in the largely Softbank-funded Vision Fund 2 – were a meaningful part of the group’s large loss in fiscal 1Q 2022
• However, Klarna and eToro “down rounds” – concluded in early July – do not seem to have been incorporated into June-end losses; the Vision Funds are absorbing the LatAm Fund
• Despite the public markets rebound, Softbank faces multiples challenges, and it is hard to find positives in the Alibaba derivatives contracts

• Adobe has witnessed a particularly robust demand over Experience Cloud, Document Cloud, and Creative Cloud.
• Adobe is winning in its established business and is viewing significant momentum in innovative categories.
• During the quarter, it hiked prices for particular creative cloud subscriptions which helped the revenue growth.

• Mastercard continued to bear the brunt of inflationary pressures since the start of 2022 but the company has definitely benefitted from the fact that travel-related spending and consumer spending have remained strong.
• Apple Pay Later has been recently announced by Apple which is using the Mastercard installments program.
• In the U.S., the company established a partnership agreements that extend its small, co-brand, credit, and debit business credit programs.

• Toyo Corp (8151 JP) is a smallcap electronics firm specialising in sensors/testers/loggers for industrial and data system processes, large scale antennae systems, high tech medical equipment, remote sensing equipment, etc. 
• They have seen their (extraordinarily seasonal) revenues go mostly nowhere over the past ten years, but they have, until recently, accumulated cash and securities. 
• On 10 August, the company announced a LARGE buyback of up to 8.44% of shares out. The details suggest

• We believe revenue would Still Be Slow in 2Q22, but will recover in 4Q22 or 2023.
• We believe FinTech will be the only highlight, but online game and advertising will be negatively impacted.
• However, we estimate the stock price will have an upside of 55%.

• TSMC’s ADR premium has fallen substantially and is at the lower end of its 3-year range
• ASE’s ADR premium is in contrast near the upper end of its range
• ChipMOS ADRs are now trading at a discount to their Taiwan shares

• In the past several days, there have been numerous local media outlets that have mentioned about a potential launch of Apple Pay in Korea in the coming months. 
• We believe the launch of Apple Pay in Korea could occur in the next 6-12 months and this is likely to further heighten the competitive pressures on Kakao Pay.
• We continue to be concerned about the lofty valuation multiples of Kakao Pay as it is trading at 165x P/E (2024E) and 5.1x P/B (2024E). 

• Kuaishou Technology Co. Ltd., the operator of China’s second-largest short video app, unveiled the new video cloud brand StreamLake and a self-developed intelligent video processing chip Wednesday in key moves to expand its business
• The launch of StreamLake, the first enterprise-facing product from Kuaishou, marks the short-video platform operator’s official entry into the cloud services market and a shift from its original consumer-focused businesses
• StreamLake will provide artificial intelligence-powered video creation and distribution solutions for corporate clients, Kuaishou said.

• The carnage in China and some Hong Kong real estate and property management companies and financials went largely unnoticed.
• The five-day decline in Longfor was 18%, Country Garden by 15.50%, Hang Seng Mainland Properties Index fell 6.75%, and HSI Properties Index fell 2.75%.
• It has had zero impact on the rest of the world (ROW) markets.

• Freshworks (FRSH US)  reported solid 2QFY22 results, and the company beat all key estimates, showed strong revenue growth of 37% YoY, and added ~1,800 net new customers. 
• Welcomed high-profile new customers such as Cloudera, Dynatrace, Sterling Bank, Thomas Cook, World Market, Angi Home, and more. 
• Shares of Freshworks (FRSH US)  have been exposed to heightened volatility lately, which we think provides long-term investors with an opportunity. 

• Softbank today confirmed that the stories circulating about Softbank having hedged a decent portion – 200+mm shares – of its BABA position were true. 
• The market expectation had been that these pre-paid forwards would be held for another two years. The announcement today is that they will be physically settled early. 
• This means the entire accounting effect – worth ¥4.6trln – will hit the income statement (and balance sheet) in the current quarter. There are investment and index implications

• We do not expect any deletions from the FTSE TWSE Taiwan Dividend+ Index in September, but there will be a lot of passive flow due to capping changes.
• Based on the closing prices from 9 August, we estimate one-way turnover of 11.2% at the September rebalance resulting in a one-way trade of TWD 15,754m (US$525m).
• Most stocks with expected passive inflows are trading near their recent lows (leading to higher dividend yield), while most stocks with expected passive outflows have rallied recently (lower dividend yields).

• Softbank will settle all of its forward derivative contracts on Alibaba by the end of September, representing 242mn ADRs. Some had years to run so this is truly surprising
• We estimate Softbank Group (9984 JP) raised $35b selling BABA-linked derivatives since mid-2020, which would imply average proceeds per ADR of $145 versus the $91 it trades at now
• But early settlement also has us wondering when the other show will drop and if that is related to global tech, China or Alibaba specifically 

• Canon Inc (7751 JP) has just started its 17th buyback in 15 years. Like the 16 before, this one is for ¥50bn. 
• The patterns/dynamics of the canon buybacks in the past are remarkable when compared to buybacks of other companies. 
• There are outperformance and under-performance patterns vs Peers, and it is worth taking note if you have a position to trade. 

• Kakao Games Corp (293490 KS) announced today a rights offering worth 197 billion won, representing 4.4% of its market cap.
• Lionheart Studio’s founder and CEO Kim Jae-Young is expected to purchase 3.1 million shares of the rights offering (177 billion won), representing 90% of the total rights offering shares.
• The issue with Kakao Games and Lionheart Studio remains the fact that many investors would rather invest in Lionheart when it completes its IPO, rather than indirectly through Kakao Games.

• Reportedly, the board of the National Broadcasting and Telecommunications Commission (NBTC), Thailand’s telco regulator, has called for a more detailed analysis of the deal’s impact on competition, consumers and industry. 
• This follows recent calls by Thailand’s opposition Move Forward party urging the NBTC to block Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB)‘s merger.
• Both DTAC and True are trading tight to terms – especially True. Time to take down borrow.

• XPER is in the final stages of separating its IP business from its product business.
• The Company reported second quarter results in line with our updated estimates after announcing the purchase of Vewd Software and an IP license agreement
• XPER’s multiple revenue streams gives the Company the ability to grow free cash flow even though one segment could be lagging

• ARLO continues to demonstrate the strength of its paid subscription service by reporting its third straight quarter of non-GAAP net income.
• ARLO’s ability to grow the number of paid subscribers each quarter has pushed the business to achieve annual recurring revenue (“ARR”) of $116.6 million
• ARLO added 206 thousand paid subscribers in the second quarter. This was the second straight quarter where the number of net additions was over 200 thousand for the quarter

• Tencent short from 390 is rewarding and reaching for new chart lows now that the 310 pivot support has given way and leading the likes of BABA.
• MACD target support is the key input to align with a terminal wave 5 low to set up the macro long entry in September.
• Undershoot risk to lower channel support with a low due in September and rally hurdles toward year end at 370/390. 420 remains the forward macro barrier to challenge/clear.

• Nexon (3659 JP) reported Q2 earnings and Q3 forecasts today. Everything is generally “in-line” to tilting slightly light. But USD/yen volatility matters a lot. 
• The company announced a small dividend hike, from largely meaningless to ever-so-slightly less meaningless. And a plan to buy back ¥100bn of shares over 3 years. 
• The inheritance tax issue remains a big one, but overhang appears delayed and buyback accretion is small, and also appears delated. And there’s an index sell at end-September.

In our view, Softbank Group’s (SBG) Q1/22-23 results were dismal, with the company reporting a record loss. This was the second consecutive quarterly loss, after SBG registered a big loss just three months ago. One positive factor is liquidity, with the company holding a large amount of cash after heavily monetising its liquid assets (mostly Alibaba shares) during the quarter.

The improvement in LTV despite the steep drop in NAV signals that the ratio, as defined and reported by SBG, is open to the company’s control and manipulation. SBG still has a lot of room to monetise its asset base (JPY 4.5 tn in Alibaba shares and JPY 1.2 tn in T-Mobile/Deutsche Telekom shares). Thus, LTV is no longer meaningful, as the company appears to be able to manipulate the ratio as it wishes, as long as it has liquid assets.

• Reuters and several other news media outlets reported that Tencent (700 HK) is looking to raise its stake in French game publisher Ubisoft as it seeks to expand overseas.
• Tencent owns approx. 5.0% of Ubisoft which was acquired in 2018 and is said to have reached out to the founding family Guillemot to buy a stake from their ownership.
• As we mentioned in our previous insight, Tencent has been excluded for the fourth time from new game approvals which had impacted its online games biz.

• After the market close on 9 August, NHN Corp announced that it will cancel treasury shares equivalent to 10% of outstanding shares in the next three years. 
• This is a tremendous management move to improve shareholder return policy. 
• A 10% share cancellation of outstanding shares is a major move and this is likely to result in a sharp appreciation of NHN’s share price in the next several weeks. 

• Softbank posted record quarterly losses again ($23bn this time) after an aggressive writedown of private investments in the portfolio
• Vision Fund’s cumulative returns since FY17 are now less than $1bn and valuation losses for WeWork at the parent mean VF and related have lost money
• The good news is Softbank valuations are more closely aligned with reality whilst a ¥400bn buyback takes some of the sting away but tech values (and ARM) remain a risk

• EVOC Intelligent Technology Company Limited H (2308 HK) announced a privatisation offer from Mr Chen Zhi Lie, the ultimate controlling shareholder, at HK$1.75 per H share. 
• The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.  
• The offer price is final. The offer is attractive in comparison to long-term historical share prices and multiples. We think that Mr Chen’s third privatisation attempt will likely succeed. 

• Tencent aims to raise shareholdings in an overseas game company and reduce shareholdings in a domestic movie producer.
• Tencent and NetEase have not got new game licenses and a license black market has emerged in China.
• Autohome revenue decreased in 4Q22 due to the lockdown in Shanghai.

• Q1 revenue growth was the highest since Q3 17, helped by forex tailwinds and stability in the mobile segment
• Core telecom results were also positive as mobile erosion was less intensive than peers on better subscriber growth whilst DX demand has kept enterprise sales healthy
• Management did not change full-year guidance but this almost never happens with a Q1 report and we expect this report is enough to nudge consensus higher

• After shares were suspended on the 1 August, electronics play and property developer EVOC Intelligent Technology Company Limited H (2308 HK) has announced a privatisation at HK$1.75 per H-share.
• This Offer is by way of a Merger by Absorption, which incorporates a Scheme-like vote. There is no tendering condition.
• The premium to last close is just 15.13%; however, it is a 42.28% premium to the five-day closing average. This is EVOC’s third privatisation attempt in the past five years. 

• Mercari reported full year operating loss of ¥3.7b on sales of ¥147b, while providing no guidance for the coming year 
• We remain most concerned about the US business, where GMV is declining and losses look entrenched 
• Mercari JP is also clearly slowing, partly due to post-Covid, but also due to rising competition  

• Visa continued to show resilience in the challenging business environment and actually managed to see a marginal increase in payment volume in the recent result.
• The company managed to surpass Wall Street expectations in terms of both, revenues as well as earnings as its total Q3 payment volume increased by 1 point from Q2 and as much as 136% compared to three years ago.
• They also expanded their partnership with Remitly, one of the top digital remittance service providers in the world, to provide Visa Direct cross-border payments from Canada to bank accounts around the world.

• Twitter has been in the news for a number of wrong reasons off late.
• The total revenue for the quarter increased by 22% and the total revenue for the year by 37%, respectively, to reach $1.57 billion and $5.08 billion. mDAU increased by 1 million sequentially and by 13% year over year to 217 million, which were in line with its predictions.

• Alphabet has been a beneficiary of the growth in both travel and retail in the past few months which enabled its Search business to show formidable growth.
• The company also introduced brand-new ad formats for enhanced visual browsing during searches.
• Overall, we remain optimistic about their future growth and give an ‘Outperform’ rating with a revised target price.

• Cirrus Logic has had an eventful year so far with solid bolt-on M&A and operating momentum.
• This has been possible through a noteworthy expansion in the product mix and technology of Cirrus Logic.
• Lastly, it is worth highlighting that Cirrus Logic operates with quite a strong balance sheet with more firepower to pursue diversification attempts further.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments – Chongqing Hongjiu Fruit (CHF HK) is pre-marketing a US$200-300m IPO.
• Event-Driven developments at Atlas Arteria (ALX AU), Genex Power Ltd (GNX AU), Infomedia Ltd (IFM AU), Link Administration (LNK AU), Ramsay Health Care (RHC AU), ResApp, DTAC/True, Dongzheng AFC.  

• DeFi options protocol’s TVL dropped significantly over the past three months since the collapse of Terra/Luna and amid a series of crypto platforms’ liquidations and withdrawal freezes.
• Albeit this, the three protocols we highlighted in our first note have shown no signs of slowing down in terms of launching new updates and products.
• DeFi options protocols are still at the beginning of their development and need to see to some of their own issues before being able to challenge CeFi/Deribit.

• There are 36 adds and 34 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. Some of the changes are interesting.
• Based on the adds, deletes and capping changes, we estimate one way turnover of 4.75% and a two-way trade of JPY 444.45bn (US$3.3bn).
• Oriental Land (4661 JP) is a delete from the JPX Nikkei 400 Index but a high probability inclusion to the Nikkei 225 (NKY INDEX) at the September rebalance.

• The rebalances of the Philippines Stock Exchange PSEi Index (PCOMP INDEX) and NIFTY100 Index were implemented at the close on Friday.
• MSCI will announce the results of the August QIR pre-market on 12 August (Asia time). This is the last QIR to use the current methodology before we move to QCIRs.
• There were large outflows from KraneShares CSI China Internet ETF (KWEB US) during the week as investors pulled US$267m from the ETF.

• Despite the massive size of its revenues, Microsoft has proven to be a remarkable story in terms of percentage-basis top-line growth over the past few years.
• The Microsoft Cloud achieved a quarterly revenue milestone of $25 billion for the first time, up 28% and 33% in constant currency.
• Additionally, Microsoft acquired the cyber threat research and analysis company Miburo to advance threat intelligence gathering on fresh foreign cyber threats.

• Hoya Corp (7741 JP) today announced great Q1 earnings and a bullish above-consensus revenue forecast for this fiscal year. It also announced a small share buyback. 
• However, the dominant factor in flows near-term will be pre-positioning for a possible Nikkei 225 inclusion in September. That is what will push the stock around. In or not. 
• Hoya has recently outperformed a Peer Basket despite forward expected EPS and EBIT not seeing relative improvement. That suggests some relative risk if it doesn’t get selected for Nikkei 225.

• AMTD Digital’s stock price has started to sink and now there are news that the Cheung Kong (CK) Group (HK) wants to sell its stake in AMTD Group Co.
• The discussion of the CK Group disposing its stake in AMTD Group altogether is likely to further negatively impact AMTD Digital’s share price.
• Li Ka-Shing and his family probably want to distance themselves from all the unnecessary media attention given to AMTD Digital (HKD US) and AMTD Idea Group (AMTD US). 

• Microstrategy Inc (MSTR US)‘s Michael Saylor will now assume the new role of Executive Chairman and Phong Le, MSTR’s President, will serve as the company’s new CEO.
• As Executive Chairman, Saylor will focus more on MSTR’s bitcoin acquisition strategy and related bitcoin advocacy initiatives.
• With one of the most bullish and influential players in the industry now focusing on crypto, this should be considered bullish, according to some media reports. That’s a desperate takeaway.

• Softbank Corp (9434 JP) results were weak as expected as mobile price reductions carved into the consumer revenue base
• Management released some further details on PayPay including a revenue number that implies continued improvement in take rates and plans to carve out a new segment for financial services
• Both KDDI and Softbank net adds were weaker sequentially v Q4 which bodes well for NTT and possibly Rakuten

• Phonepe Pvt Ltd (1732974D IN) runs a digital payment and technology App in India and is currently the leader in terms of UPI transactions processed. 
• Our channel feedback suggests the possible disruption from initiatives like ONDC to be positive for payment apps like PhonePe, with the possible acceleration towards the SuperApp Journey. 
• Revenues are always growing, and so are losses. With ONDC, there is a possibility this may change faster than anticipated and hence warrants close attention. 

• Bukalapak‘s recent 1Q2022 results provided further evidence that the company is moving along the road to profitability with growth in TPV being outpaced significantly by revenue growth.
• The company saw very significant improvements in take-rates for its marketplace and Mitra businesses plus a better contribution margin and we expect this to continue into the 3Q.
• Bukalapak (BUKA IJ) looks cheap, especially when considering its stake in Allo Bank Indonesia and its IDR20tn cash pile, which means you are paying only US$50m for its core businesses.

• The Hong Kong Indices have been much weaker than Taiwan & China due to liquidity and open capital account.
• It is a canary for global indices and should be analyzed accordingly.
• There is no change in views of real estate and technology sector stocks mentioned in previous updates on Hang Seng constituents.

• Confluent (CFLT US)  reported solid 2Q22 results, and most metrics were above sell-side expectations, including subscription revenue, gross margins, and operating margins. 
• We are impressed with Confluent Cloud’s revenue growth of +139% y/y and strong subscription gross margins. Management raised FY22 revenue and profitability guidance. 
• Our price target of $28 is slightly below the current share price. However, we see room for further multiple expansion due to revenue acceleration above consensus.

• This model looks for slowing growth, margin declines, sales and/or earnings disappointments, troubling working capital trends, poor estimate trends or lowered guidance, among other characteristics.
• The key judgement is whether a slowdown is temporary or the beginning of a trend.  These shorts tend to have high valuations and betas.  Multiple compression accelerates the stock’s decline.
• Today we are flagging: Shopify, Snowflake, Intuitive Surgical, and ServiceNow

• AMTD Digital (HKD US) shares are up 230x since its listing at US$7.80 per ADS on 15 July. Its market cap is a staggering US$334 billion.
• AMTD Idea Group (AMTD US) accounts for 99.4% of the voting power. In January 2022, it increased its AMTD Digital shareholding to 97.1% of outstanding shares at US$1.2 billion valuation.
• AMTD Digital’s financials are uninspiring and cannot justify the share price ramp. No sane valuation methodology can support the share price.    

• AMTD Digital is the biggest bubble of 2022, which is ready to pop. AMTD Digital provides digital solutions platform in Asia.
• AMTD Digital currently has a market cap of US$371 billion (US$2,002 per ADS share) (as of 1:40PM NYC time). The company’s market cap is more than JPMorgan Chase & Co.
• No doubt, AMTD Digital is the biggest bubble in 2022 and the bursting of this huge bubble will also devastate (mostly) retail investors in the US. 

• EVOC Intelligent Technology Company Limited H (2308 HK) entered a trading halt pending the release of an announcement under the Hong Kong Code on Takeovers and Mergers on 1 August.
• It is likely that after two failed attempts, Mr Chen Zhi Lie, the ultimate controlling shareholder, will try a third time to privatise EVOC.
• The previous offer of HK$1.50 per H Share in 2020 marginally missed the 90% minimum acceptance condition. Expect a similar structure with a likely slightly higher offer price.  

• China’s gaming regulator has granted publishing licenses to 69 online games, which excludes Tencent (700 HK) and NetEase (9999 HK) again for the fourth time.
• Though 9-month long game approval freeze was lifted in April, both Tencent and NetEase failed to make it into the approved list of more than 200 titles so far.
• Chinese gaming companies have been seeking for overseas expansion as domestic gaming market is struggling with ban on new approvals and new restrictions.

• Apna (1826169D IN) ‘s is India leading networking and jobs platform primarily targeted towards the +250 million grey and blue collared workers, who usually are not on Linkedin. 
• Channel feedback is mixed, Apna is not the only platform of choice. Community initiatives and vernacular interface are key differentiators along with simplicity. 
• Profitability could remain a challenge, Monetisation is work in progress. The model is interesting, but making money off the bottom of the pyramid has never been easy. 

• As a legacy tech company, IBM may have seen a slowdown in its growth trajectory but its acquisition-led growth approach continues to work.
• With this performance, the company is maintaining its model of mid-single-digit revenue growth and a double-digit performance in IBM Consulting.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.