TMT/Internet

• An additional 24 Equipment are added to the restriction list (negative to AMAT, KLA, LAM). No explicit restrictions on ASML or Tokyo Electron, but that’s done indirectly.
• HBM Memory sales to China restricted (directly negative to Samsung), but restriction of DRAM Manufacturing Equipment sales is long-term positive to Micron, Samsung, SK Hynix. 
• 140 Chinese firms added to the Entity List, including all China’s Semi Production Equipment makers (Naura, AMEC, Piotech, SiCarrier). 

• A case against ASML being brought by the Hollywood Firefighters Pension Fund (HFPF) is now opening up into a class action lawsuit
• Claims that ASML withheld crucial information from investors in the Jan-Oct 2024 time period, e.g. impact of US sanctions, strength of the semi recovery, order backlog etc. 
• In reality, ASML warned in October 2023 that 2024 would be a zero growth year. Did the HFPF think they were kidding?

• Hong Kong market breadth stays strong despite market pullback in November.  Mainland investors continue to increase exposure to HK market through Southbound Connect platform.
• Baidu (9888 HK) , Baidu (BIDU US) , the global leader in Robotaxis, was granted a license to start operating its autonomous cars in Hong Kong.
• Vitasoy Intl Holdings (345 HK) shares surged on takeover rumours after Yeo Hiap Seng (YHS SP) increased its stake to more than 12% allowing them to call a Board meeting.

• Baidu’s third-quarter 2024 financial performance presents a complex picture, showcasing both opportunities and challenges that shape the company’s investment thesis.
• The company reported total revenues of RMB 33.6 billion, reflecting a 3% decline year-over-year.
• However, Baidu Core’s revenue remained stable at RMB 26.5 billion.

• Dell Technologies Inc. reported solid results for the fiscal year 2025 third quarter, demonstrating both strengths and challenges across its various segments.
• The company achieved a revenue of $24.4 billion, marking a 10% increase year-over-year, driven by strong growth in its Infrastructure Solutions Group (ISG) thanks to robust demand for AI servers and traditional servers.
• Diluted earnings per share (EPS) reached $2.15, reflecting a 14% rise, while cash flow from operations was $1.6 billion.

• NetApp’s recent earnings for the second quarter of fiscal year 2025 reflects a strong performance with both opportunities and challenges evident in the company’s results.
• Key aspects of the company’s current position and future outlook can be synthesized as follows: NetApp demonstrated significant growth in its all-flash storage segment, showing a 19% year-over-year increase, and enjoyed solid momentum in cloud storage services, which helped drive revenue beyond expectations.
• The reported revenues reached $1.66 billion, showing a 6% increase compared to the previous year.

• Intel has been making headlines recently with a series of significant developments that underscore the company’s tumultuous state.
• On December 1, 2024, CEO Pat Gelsinger stepped down after a tenure that saw the company’s stock price plunge by 61%.
• The leadership vacuum was filled by interim co-CEOs, David Zinsner and Michelle Johnston Holthaus, with Intel initiating a global search for a permanent successor.

• iQIYI recently divulged its financial and operational results for the second quarter of 2024, revealing several intriguing aspects about its current business trajectory.
• This analysis aims to distill the substantial information provided during the earnings call and form an even-handed view on iQIYI’s performance and future prospects.
• iQIYI remains a significant player in the long-form video sector in China, holding a competitive edge in the drama and film categories.

• Under its mission of “Creating a new view of the world with the AViC Team as the business driver,” AViC (hereafter, the Company) provides a full range of services related to digital marketing, from strategy development to execution.
• In addition, the Company strives for and ensures “quality growth” by maintaining and improving profitability while pursuing sustainable business growth.
• One of the Company’s distinguishing characteristics is its high productivity compared to competitors. 

• In this edition: • ASM International / ASML Holding | US to implement additional export controls to China • InPost | step-up in deployment APMs in the UK and extension of cross-border proposition • Dutch retail sales | up 2.0% YoY in value and up 0.6% YoY in volume in October • Black Friday update | Sunday’s iDEAL transaction data showed a modest YoY increase

• HKBN Ltd (1310 HK)‘s preconditional voluntary conditional offer from China Mobile (941 HK) is HK$5.23. Including the HK$0.165 dividend, the total offer is HK$5.395, an 11.0% premium to last close.
• The offer seems rushed and a reaction to a potential competing offer from I Squared. The lack of privatisation through a scheme and MBK’s irrevocable suggest the offer is light.   
• An unattractive offer, a lengthy precondition long-stop date and the irrevocable competing offer clause invite I Squared to enter the fray. 

• A Bloomberg article mid-day suggested Japan’s Ministry of Health, Labour and Welfare proposed a new “wage growth +1.9%” (vs 1.7% now) return bogey for the US$1.7trln Government Pension Investment Fund. 
• The GPIF is conducting its quinquennial review to assess markets, long-term prospects, correlations, etc, to set a CAPM asset allocation mix to meet the bogey.
• The combination of higher USDJPY, Japan inflation, wider valuation spreads, and the prospect of higher yen rates suggests the review might result in lower yen bond allocs, higher equity allocs.

• There are 7 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index at the December rebalance.
• We correctly forecast 4/7 and 7/7 for the Chinext Index adds/deletes and were 3/5 and 5/5 for the Chinext50 Index adds/deletes.
• Based on the estimated passive tracking AUM, the round-trip trade across both indices is estimated to be CNY 12.24bn (US$1.69bn).

• Kioxia Holdings (285A JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$727 million.
• We previously discussed the IPO in Kioxia (285A JP) IPO: The Bull Case and Kioxia (285A JP) IPO: The Bear Case.
• Our valuation analysis suggests that the IPO price range of JPY1,390-1,520 per share is attractive. Therefore, we would participate in the IPO.

• There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 December.
• Passive trackers are estimated to buy 0.9x ADV in Hwatsing Technology (688120 CH) and sell 0.5x ADV in StarPower Semiconductor (603290 CH). 
• The add has outperformed the delete, but not by a lot. There could be more outperformance over the next couple of weeks.

• Kioxia Holdings (285A JP) is aiming to raise around US$840m (including over-allocation) in its Japan IPO.
• It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

• Kioxia Holdings (285A JP)‘s listing has been approved by the JPX and the stock is expected to start trading on the Prime Market from 18 December.
• At the mid-point of the IPO price range of JPY 1390-1520/share, Kioxia Holdings (285A JP) will be valued at JPY 784bn (US$5.24bn).
• TOPIX inclusion will take place in January while inclusion in global indices is likely to take place in May and June. Selling stock to increase float will be an overhang.

• The TIP Taiwan Select High Dividend ETF (00919 TW) tracks the TIP Customized Taiwan Select High Dividend Index and has an AUM of TWD 285bn (US$8.75bn).
• We forecast 8 changes a side at the December rebalance with an estimated one-way turnover of around 16% and a round-trip trade of around US$2.8bn.
• An equal weighted basket of potential inclusions has outperformed an equal weighted basket of potential deletions since the start of July with most of the outperformance coming from September.

• There could be 19 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 30 December. There are some stocks from the new F&O inclusions.
• If all changes are on expected lines, one-way turnover is estimated at 65.2% and that will result in a one-way trade of INR 71bn (US$837m).
• The potential inclusions have outperformed the potential deletions since the start of July. The pace picked up over the last month as we neared the end of the review period.

• The December 2024 index review results for the ChiNext and ChiNext 50 indices were announced yesterday.
• There will be seven changes for the ChiNext index and five changes for the ChiNext 50 index. Some of these names surprised us.
• In this insight, we take a look at our final flow expectations for the confirmed index changes.

• Kioxia Holdings (285A JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$740 million.
• In Kioxia (285A JP) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on unrealistic long-term financial model assumptions, market share losses, high customer concentration risk, volatile gross margin due to JV and weak FCF profile.

• CSI announced the changes for the December rebalance after market close on 29 November and the changes will be effective after the close of trading on 13 December.
• There are 3 changes for the index and we estimate passive buying of 0.3-0.65x ADV in the adds and selling of between 0.4-0.6x ADV in the deletes.
• On average, the adds to the index have outperformed the deletes over the last 5 weeks with the adds moving higher and the deletes trending lows.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: WealthNavi (7342 JP), Shanghai Henlius Biotech (2696 HK), Shinko Electric Industries (6967 JP), Get Nice Financial Group Ltd (1469 HK), Arcadium Lithium (LTM AU), Canvest.
• Lowest spreads: Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Elematec Corp (2715 JP), I-PEX (6640 JP). 

• CSI announced the changes for the December rebalance after market close on 29 November and the changes will be effective after the close of trading on 13 December.
• There are 3 changes for the index, and we estimate one-way turnover of 1.7% resulting in a round-trip trade of CNY 570m (US$79m).
• Nexchip Semiconductor (688249 CH) and United Nova Technology (688469 CH) are adds to other indices as well and the impact on the stocks will be a lot higher.

• The December 2024 index review results for the STAR 50 and STAR 100 indices were announced after market close on Friday 29th November 2024.
• There will be zero changes for the STAR 50 index and four changes for the STAR 100 index.
• We expect one-way flows of approximately US$793mn and US$136mn for the STAR 50 and STAR 100 index rebal events respectively.

• Following a methodology change in mid-November for the CSI All Share Semiconductor Index, there are 7 adds and 29 deletes for the index in December.
• Estimated one-way turnover at the rebalance is 6% leading to a round-trip trade of CNY 3.15bn (US$435m).
• The adds outperformed the deletes bigly in the first 2 weeks of November. Some of those gains have been given back but a new uptrend seems to be taking shape.

• For the month of November 2024, 14 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$15bn.
• The average premium for the new transactions announced (or first discussed) in November was ~44%. The average premium YTD is ~43%.
• This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

• Hong Kong Alpha portfolio lost 2.9% in November, but has outperformed its benchmark by 4.9% since inception on October 1st.  It has outperformed HSI, HSCI and HSCEI by 9%.
• Hong Kong Alpha has generated idiosyncratic returns during the market correction.  The portfolio has no exposure to energy, healthcare and property sectors. 
• We exit 4 positions at the end of the month and add positions in software, tech components, travel and restaurant sectors.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPOs front, listing in the past week didn’t do much, while a number of comapnies are still looking to beat the year end deadline.
• On the placements front, there were a number of secondary selldowns in Japan.

• Samsung Semiconductor re-org, new reporting lines, top management promotions and demotions, but the same people. That’s going to solve problems? Qualcomm gives up on buying Intel – good idea. 
• Xiaomi to launch its smartphone chip, but what for? Intel launching a PC GPU again . Apple delays or abandons 2nm for M5 chip (too expensive). TSMC increasing CoWoS again. 
• China – US worsening relations, side effect is over buying, over stocking of semiconductors? is there a bunch of inventories in China that we can’t see?  

• Shopify Inc. has reported a strong performance for the third quarter of 2024, showcasing significant growth and expansion across several facets of its business.
• The company’s gross merchandise volume (GMV) grew 24% for the quarter, marking the fifth consecutive quarter of GMV growth over 20%.
• This growth was attributed to increased same-store sales among existing merchants, growth in new merchants, and international expansion, particularly in Europe.

• Kanzhun, along with Kuaishou, Beike and PDD, are we call the “Macro Mauled Champions” (MMC). We suggest long term investors to accumulate;
• Weak industrial sector earnings in October bodes ill for manufacturing hiring into C4Q24 and we think may further extend to early 2025 recruiting season;
• We expect BZ to grow profit faster than revenues on cost savings, particularly on marketing and gain shares. We cut the TP from US$19 to US$17. 

• Gross Margins Aggregate Data – Shows Taiwan Semiconductor Companies Under Pressure
• How TSMC and GlobalWafers show two very different margin environments; However everyone needs to manage rising energy costs into 2025E
• Aggregate Inventory Levels — Inventory Days Declining Trend is a Positive Sign

• TSMC: +20.4% Premium; ADR Premium is Approaching a Short Level
• UMC: +0.7% Premium; Short Interest Soars to New Two-Year Highs
• ASE: +4.2% Premium; ADR Headroom Falls to 100% Maxed Out

• Memory Market Diverges: AI Demand Continues to Surges While Legacy Segments Struggle in November
• Diverging Demand Trends Highlight Market Decoupling — AI Driving HBM, Server DRAM, QLC NAND Demand
• Outlook for the Memory Market — Decoupling Trade: Long SK Hynix vs. Short Nanya Tech Trade

• Microsoft, one of the world’s leading technology giants, is currently facing a comprehensive antitrust investigation by the U.S. Federal Trade Commission (FTC).
• The probe, initiated by FTC Chair Lina Khan, is examining allegations that Microsoft is potentially abusing its market power in productivity software and cloud computing.
• Specifically, the FTC is scrutinizing the company’s software licensing practices, which may be preventing customers from moving their data from Microsoft’s Azure cloud service to competing platforms.

• Shift4 Payments reported strong financial results for the third quarter of 2024, emphasizing both its achievements and areas that need improvement.
• The company set quarterly records for several key performance indicators (KPIs), including volume, gross revenue less network fees, adjusted EBITDA, and adjusted free cash flow.
• The adjusted EBITDA margin reached a new quarterly high of 51.3%, or nearly 54% excluding impacts from recent acquisitions.

• Skyworks Solutions posted robust performance during the fourth fiscal quarter of 2024, marked by revenues of $1.025 billion and earnings per share (EPS) at $1.55, aligning with or surpassing prior guidance midpoints.
• The company generated $393 million in free cash flow, continuing its trend of strong cash generation, which for a second consecutive year surpassed $1.6 billion annually.
• This financial stability underpins investments in technology advancements and product development crucial for future growth.

• Vodafone Idea (IDEA IN) gains a lifeline with the waiver of Rs. 24,700 crore bank guarantees for pre-2022 spectrum acquisitions.
• The waiver eases financial strain, boosts cash flow, and enables critical investments in 4G and 5G upgrades amidst competition from Reliance Industries (RIL IN)‘s Jio and Bharti Airtel (BHARTI IN).
• While a positive step, Vi’s recovery depends on fundraising, reducing debt, and regaining market share, making its turnaround uncertain but slightly more plausible.

• BIDU reported C3Q24 top line, non-GAAP operating profit and GAAP net income in-line, 4.6% and 66% vs. our estimate and in-line, 8.7% and 46% vs. consensus.
• Ads revenue declined and C4Q24 guidance was below expectations. Margin improvement was mainly achieved through personnel cuts, which we think is not sustainable. AI didn’t contribute materially to revenues;
• We see no return to growth from any of the business lines. We keep our SELL rating and cut the TP from US$84 to US$78.

• The latest earnings result and call for NVIDIA Corporation (NVIDIA) indicate a period of remarkable growth and robust financial performance driven primarily by the adoption of its AI technologies and data center products.
• NVIDIA reported record revenue of $35.1 billion, which represents a 17% sequential increase and a striking 94% year-over-year growth, surpassing its revenue outlook of $32.5 billion.
• This growth spanned all market platforms, particularly fueled by the increasing demand for NVIDIA’s accelerated computing and AI solutions.

• Speculation of a Qualcomm-Intel deal diminishes, while Japan boosts semiconductor subsidies to benefit Rapidus, with further support anticipated.
• China’s semiconductor industry growth poses a threat to South Korean companies, prompting Samsung to weigh integration of ChatGPT, sparking concerns over its Google partnership.
• Hiwin bolsters its robotics presence by partnering with Boston Dynamics, expanding its influence in the industry, as India eyes doubling 5G subscriptions by 2030.

• Agora share price rallied 34% on C3Q24 earning call. During the call Agora outlined plans for large scale layoffs and committed to turn profitable for full year 2025;
• With the business rationalization, cooperation with OpenAI now becomes the only growth driver for the future. We believe with Agora’s operation-oriented business model, there is a fair chance for success;
• Considering the price cut speed of 10x in one year from Chat GPT, the audio GAI price lower from US$9/hour to US$1/hour could happen within one year.

• Visa Inc. reported strong financial results for its fiscal fourth quarter and full year 2024, showcasing growth across multiple key performance metrics.
• The company’s net revenue for the fourth quarter was $9.6 billion, reflecting a 12% increase compared to the prior year, driven by growth in payments volume, cross-border volume, and processed transactions.
• A notable highlight is the 8% year-over-year growth in global payments volume with international payments showing a 10% increase and cross-border volumes, excluding intra-Europe, rising 13%.

• Some speed bumps at the Device segment – Continuing positive demand from the smartphone sector and sustained growth at the Eco-Solution segment were overshadowed by a loss in earnings momentum at the Devices segment in Q1-2 FY3/25.
• The recovery in demand from the industrial sector remains delayed, together with a sales mix lowering gross margins and FX impact contributing to overall OP falling 3.8% YoY, despite 11.3% sales growth driven primarily by acquisitive growth.
• The current outlook for H2 FY3/25 is assisted by the weak Japanese yen, acquisitive growth, and we expect to see a continuation of the positive demand themes from smartphone and alternative energy.

• Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
• It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
• We have looked at the company’s past performance in our earlier notes. In this note we undertake a peer comparison.

• Kioxia Holdings (285A JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
• It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
• We have looked at the company’s past performance in our earlier notes. In this note we talk about valuations.

• Kioxia Holdings (6600 JP) is a leading player in the NAND flash memory market. It will list on 18 December and seek to raise up to US$740 million.   
• Bain Capital, Toshiba Corp (6502 JP) and Hoya Corp (7741 JP) currently own 56.23%, 40.64% and 3.13% of the voting rights, respectively. 
• The bull case rests on an attractive market opportunity, a return to revenue growth, margins close to all-time highs, a favourable cash conversion cycle, and modest leverage. 

• China announced game approval for the November batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to the same level as pre-tightening.
• None of the companies that we are tracking got any approval for November batch.

• Kioxia Holdings (285A JP) ’s long waited IPO is now live and plans to raise US$700m at a much lower valuation of US$4.8bn vs price paid by Bain 6-years ago.
• The company’s IPO is very timely as earnings have almost approached the cycle peak, but margins have continued to trail peers who have a more balanced product portfolio.
• Kioxia’s valuation has declined while market sentiment for memory names has also been that great. We will discuss our valuation in a follow-up insight. 

• FY24 1H results and update on the ongoing long-term plan

• Intel is now set to receive $7.86 billion in CHIPs Act funding, down from the $8.5 billion originally touted back in March 2024
• The funding comes with a raft of restrictions and caveats regarding what happens in the event of any changes in Intel’s organizational structure and/or ownership
• The US Department of Commerce also reserves the right to withhold funding and/or weigh in on decisions around outsourcing if Intel fails to meet key, critical milestones. Ouch!

• FY24上期決算と長期計画のアップデート

• Delta Electronics Thailand (DELTA TB) is a prominent data center and EV charging solution provider in Thailand.
• Rich valuation, especially against the parent company, but its PEG ratio says otherwise.
• It is proven that the share price weakness due to SET suspension is a buying opportunity.

• China smartphone market grows significantly in 3Q 2024, demonstrating strong demand for mobile devices.
• Lam Research establishes new office at Tata-PSMC wafer fab, enhancing their presence in the semiconductor industry.
• LG shifts focus to solutions over products in major restructuring, while BYD plans cost cuts in anticipation of potential tariffs.

• Kioxia has been under-investing in Capex (27% of revenue versus competitors 37%) and R&D (5% versus 11%) because Free Cash Flow is low, too low to pay back debt. 
• The Memory cycle peaked in June-24 and NAND prices have been declining since. Memory stocks (Micron, Samsung, SK Hynix) peaked in June. 
• The valuations multiples that reconcile with a US$4.9bn market value are half or one-third that of competitors. A huge discount is applied, reflecting the financial and technological weakness of Kioxia. 

• US Set to Unveil New Wave of Semiconductor Restrictions on China
• Hon Hai Subsidiary Says Progress for Nvidia GB200 Servers is Smooth, Mass Production in 2025E
• PC Monitor: Dell & HPQ Highlight Sharp Divide Between Corporate and Consumer PC Demand; Shares Slump 

• On Monday, I had the great pleasure to speak to Kaonavi’s (4435 JP – US$131 million) CFO, Kimitaka Hashimoto.
• He provided color on Kaonavi’s second-quarter earnings result, which were released on 13 November and led to a negative reaction from the market.
• In short, Kaonavi is a Japanese developer of talent management software. It helps companies manage their employees by solving staffing problems, designing their organizational structure, performance reviews, surveys, training, internal recruitment, etc.

• Ibotta operates a performance network connecting consumers with CPG companies and retailers for digital promotions and cashback rewards
• Despite a successful IPO, Ibotta has seen a significant derating due to failing to meet expectations
• Strong partnerships, growing user base, and unique business model suggest potential for a 56% upside towards a price target of $90 and eventually $120

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

• A rare cross asset relative value opportunity; time horizon two months, market neutral, near zero-cost premium.
• The strategy exploits the historically low difference between implied volatilities for the Nasdaq-100 Stock Index (NDX INDEX) and the SPDR Gold Shares (GLD US).
• This insight lays out trade rationale, historical context, fundamental drivers, and trade implementation. Nasdaq-100 Vega exposure provides the strategy with an extra edge and tailwind for success.

• Talabat Holding, one of the leading food delivery platforms in the MENA region, is getting ready to complete an IPO in Dubai. 
• IPO price is between AED 1.50 ($0.41) and AED 1.60 per share. At the high end of IPO price range, Talabat could raise up to AED 7.5 billion (US$2 billion).
• The final IPO offer price will be announced on Friday (29 November). This IPO is expected to start trading on 10 December. 

• India’s PC market shows growth in 3Q24, indicating signs of recovery in the industry after a challenging period.
• Taiwan’s aerospace industry experiences a surge in ambitions amidst global security worries, highlighting the region’s competitive edge.
• Samsung makes changes in leadership with new foundry CTO appointment, signaling a strategic shift in the company’s direction.

• ServiceTitan, a VC-backed cloud-based software company for the home and commercial service industries, files to go public and may raise up to $500M.
• The company serves many trades, including plumbing, HVAC, garage doors, landscaping, pest control, water treatment, heating, construction and others.
• ServiceTitan is well positioned as a leader at scale in the trade industry. They currently operate in the United States, Canada and see significant opportunity in international markets.

• Cumulative Q3 FY12/24 sales increased 52.7% YoY, with operating profit up 224.6% YoY, driven by memory probe cards.
• Segment sales reached JPY37.4bn (+53.9% YoY), with memory probe card sales at JPY11.0bn (+54.6% YoY).
• Full-year FY12/24 forecast remains unchanged, with sales progress at 70.9% and operating profit at 74.5%.

• Soft PC Results from Dell and HPQ and Delayed Industry PC Upgrades into  2025E; Dell and HPQ Shares Fall Sharply
• Conclusion: Both Firms Confirm Relative Strength for Commercial and Weakness for Consumer; AI PCs and Windows 11 to Drive 2025E Upgrades
• Asia PC Makers Showing Stronger Growth; However, Dell & HPQ Share Rout May Weigh on Sentiment

• Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
• It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
• In this note, we talk about the not-so-positive aspects of the deal.

• Tier-2 commodity Memory is a lousy business, which requires high Capex and R&D, generates very low Free Cash Flows. DRAM is more sustainable than NAND as peak margins are higher. 
• Kioxia only makes NAND, has a high market share (16%) but is a Tier-2 supplier with a roadmap lagging SK Hynix by ~2 years, and a high exposure to Consumer. 
• The Memory cycle has recovered, probably close to peak earnings. That’s why stocks have been declining (Micron, Hynix).  Part 2 will cover financials (there’s a bad surprise) and valuations. 

• Xiaomi’s stock price has risen 62% since our buy rating after 2Q24 results.
• We believe vehicle production will bring Xiaomi a revenue of RMB90 billion maximum.
• The sum-of-the-parts valuation suggests significant downside for the next twelve months.

• Hong Kong continued a correction in its Bull market which has lifted the HSCEI to be the best performing Asian index this year.  Southboune buying is strong.
• AAC Technologies Holdings (2018 HK) share price had a breakout relative to the MSCI AC Asia Index.  The company reported solid results benifitting from the smartphone and auto sectors.
• CGN Power (1816 HK) share price relative to MSCI China broke down.  The company reported a disappointing 3Q24 results even as power generation increased by 15% YoY for the period.

• TSMC: +19.2% Premium; Middle of Most Recent ADR Spread Trading Range
• UMC: -1.7% Discount; Local Shares’ Short Interest Continues to Rise
• ASE: +4.0% Premium; Local Shares’ Short Interest Has Finally Stopped Rising

• Delta Thailand Still Grossly Overvalued Even After Recent Correction; Under Market Surveillance Until December 11th
• Delta Taiwan’s Market Cap Remains at Just 57% of Delta Thailand
• Further Valuation Correction Likely Between the Two Names; We Believe Delta Taiwan Should Outperform

• Former TSMC chairman Mark Liu believes Taiwan’s chip industry is unaffected by Trump’s trade policy, showing confidence in the sector.
• DIGITIMES Research predicts a 3.6% CAGR growth in global smartphone shipments from 2024-2029, indicating steady expansion.
• Despite potential US bans and chip supply halts, Huawei remains dedicated to developing advanced technology, including AI chips.

• Trustpilot is a leading online consumer review platform with a strong presence in Europe and North America
• The company is undergoing fundamental improvements following a leadership team upgrade
• Trustpilot has unmatched reputation and scale in the industry with 1.1 million rated businesses, 60 million monthly unique visitors, and a quarter-billion total reviews

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

• Buffett has famously called Bitcoin a “mirage” and “rat poison squared”.

• If so, then the corporate wrapper masquerading as intelligent leverage of Bitcoin known as MSTR equals that squared — and is perhaps the epitome of late-stage capital cycles expressed

• Before I start, let me just say that I completely get the bull thesis behind Bitcoin. 

• Q2FY3/25 showed strong recovery in OP margins from 3.5% in Q2 FY3/24 to 5.3% in Q2 FY3/25, reflecting stringent cost control and AGEST Group turning to the black.
• Although the performance improved YoY, the company revised its FY3/25 OP guidance down to ¥2.5bn from ¥3.1bn mainly due to a negative impact from a cancellation of a large project for AGEST Group in Q1.
• Nevertheless, the company expects 24.5% OP growth YoY for FY3/25.

• Move away from short gamma levels and position covering help push HSI implied vols lower on the week. 
• Short dated Puts are still very active in HSCEI at the 6300 and 6800 strikes. 
• Both HSI and HSCEI implied vols are trading about 2 points above their pre-stimulus levels. 

• Initiate a short position in MCHP Target Price Range: $45-50 Time Horizon: 6-12 months 
• Declining fundamentals: Q2 FY2025 revenue declined 48% YoY, with adjusted EPS falling 72% YoY. Valuation concerns: P/E of 36.8x vs. sector median of 22x, unsupported by current performance.  
• Geo-Political risk: 50% of sales from Asia, exposed to potential trade tensions. Operational challenges: Customer destocking and sluggish demand. ETF-Driven price support: Potential for sharp correction if sector rotation occurs. 

• Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO
• It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
• In this note, we talk about the positive aspects of the deal.

• HP undergoes leadership overhaul and revamps supply chain in preparation for Trump 2.0, while strict qualification measures impact 7nm technology development.
• TSMC’s AI chip expansion is overshadowed by the potential return of Trump, with global notebook shipments fluctuating in Q3/Q4 2024.
• DIGITIMES Research forecasts a steady revenue growth of over 10% CAGR for the global wafer foundry industry during the 2024-2029 period, while Apple India’s sales soar to US$8B driven by strong iPhone sales. Availability of Samsung’s HBM3E for Nvidia’s Blackwell remains uncertain.

• JST Group (1703609D CH) is looking to raise up to US$100m in its upcoming Hong Kong IPO.
• It is China’s largest and most popular e-commerce SaaS ERP provider to facilitate the connection of merchants with over 400 e-commerce platforms in China and across the world.
• In this note, we look at the firm’s past performance.

• The company continues to make progress with its international expansion which partially offsets concerns over the challenges in the company’s domestic market.
• Estimating the total number of shares (and by default ADSs) outstanding has been incredibly challenging as the company has financed operations by issuing stock as the market price of the ADSs has fallen.
• We now estimate that the company has 164 million common shares outstanding which equates to 1.8 million ADSs given the new ADS to common ratio of 1 to 90.

• Secai Marche, a farm-to-table startup connecting farmers with restaurants and retailers in Southeast Asia, has secured an additional JPY 250 million (US$1.6 million) in its Series A funding round.
• The round includes equity financing from Mitsui Sumitomo Insurance Venture Capital (MSIVC) and debt financing from The Shizuoka Bank and The Hokkoku Bank.
• This follows a US$3.5 million Series A round of investment from investors, including Beyond Next Ventures, Spiral Ventures Asia, Mitsubishi UFJ Capital, Future Food Fund, Tsuneishi Shoji, Fukuoka Sonoriku, and Foodison co-CEO Toru Yamamoto, in August this year.

• Kuaishou Technology (1024 HK) and New Oriental Education (9901 HK) will be added to the Hang Seng Index in December while New World Development (17 HK) will be deleted.
• Estimated one-way turnover is 2.7% and the estimated round-trip trade is HK$10.89bn (US$1.4bn) with over 1 day of ADV to trade in the adds and the delete.
• The index committee has net added 1 stock to the Hang Seng Index this year to go from 82 to 83 constituents. Reaching the 100-member target will drag into 2026.

• Aequitas Research’s weekly update on the IPOs, placements, lockup expiry and other ECM linked events that were covered by the team over the past week.
• On the IPOs front, S.F. Holding (6936 HK) and Kioxia Holdings (6600 JP) launched their much awaited IPO, while we had a new launche in Australia in as well.
• On the placements front, Keppel DC REIT (KDCREIT SP) undertook a large placement

• Despite being a key beneficiary in travel and tourism in China, the rather muted growth in the first half does not bode well for Travelsky Technology Ltd H (696 HK) .
• YTD share price performance has reflected the above, but the deep discount valuation to Trip.com (TCOM US) might be temporary.
• In the near term, the company’s share price will not rebound as the company has less upside participation compared to Airlines and OTA. 

• Smartphone demand remains slow, that contributes to weak outlook for commodity DRAM.  Nvidia / Mediatek and Qualcomm AI PC chips should be launched mid-2025. 
• Nvidia allocation of TSMC CoWoS remains at 60% in 2025, capacity doubles, Data Center GPU revenue will double? TSMC 2nm-16A roadmap on track.  
• SK Hynix is now ahead of Samsung in HBM, DDR5, 3D NAND and SSD. Meanwhile, Samsung is buying back shares. 

• Kuaishou reported C3Q24 revenue, IFRS operating profit,and IFRS net income in-line with our estimates and consensus.The only negative was that C4Q24 guidance for operating margin missed consensus and our estimate;
• Within mid-sized Internet platforms, Kuaishou lacks fresh secular driver, putting its stock under pressure. Advertising and GMV growth still outpace the industry and some peers. The stock is undervalued;
• We maintain our BUY rating and slightly revised down TP to HK$72 to make up for the higher-than-expected OPEX guidance.

• Haier plans to acquire all shares of Autohome and dismiss 30% of Autohome’s employees.
• In 3Q24, Xiaomi’s revenue grew by 30% YoY or 17% YoY without electric vehicle.
• In 3Q24, Tongcheng Travel’s revenue increased by 51% YoY with gross profit up by 29% YoY.