TMT/Internet

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: Kokusai Electric (6525 JP) lock-up expiry and HD Hyundai Marine Solution (443060 KS), Bharti Hexacom (6597372Z IN) IPOs.
• Event-Driven developments: Langham Hospitality Inv Ss (1270 HK), IntelliCentrics Global Holding (6819 HK) Jastec Co Ltd (9717 JP), JSR Corp (4185 JP), Best World International (BEST SP), Isetan Singapore (ISET SP).     

• Rubrik, a leading VC-backed security software company, filed for a long-awaited IPO in the United States, with Goldman Sachs, Citigroup, Barclays and Wells Fargo leading the offering. 
• The technology company is focused on data protection and helps organizations to protect their data and recover it in case of cyberattacks.
• Rubrik was founded by Bipul Sinha, Arvind Nithrakashyap, Arvind Jain and Soham Mazumdar, and backed by VC investors, including Lightspeed Venture Partners, Greylock Partners and Khosla Ventures.

• Jastec Co Ltd (9717 JP) has recommended a tender offer from NTT Data Corp (9613 JP) at JPY1,940 per share, a 37.6% premium to the undisturbed price (5 April). 
• The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the tender offer is set at a 66.67% ownership ratio.
• Based on the irrevocables, the minimum acceptance condition requires a 56.4% minority acceptance rate. The acceptance condition is achievable as the offer represents a 22-year high.

• Intel launched a new segment reporting structure under which its newly created Foundry P&L allegedly racked up operating losses of ~$17 billion over the past three years
• The Foundry P&L is not expected to reach breakeven until the ’27/’28 timeframe
• Intel’s share price is down >10% in the two days since the new financial model was launched. 

• The third quarter 2024 financial results for Lionsgate reveal positive trends contributing to the company’s growth and strategic developments.
• In this update, there are strong indicators of continued growth owing to an impressive performance across the business segments.
• Conversely, there are risks due to the competitive landscape and the strong reliance on hit content titles.

• Nvidia CEO Jensen Huang has repeatedly emphasized that the data center is the new unit of compute.
• While this concept seemed straightforward at first, the deeper implications became clearer after Nvidia’s presentations at GTC and OFC 2024.
• I only recently grasped exactly what is happening, and a simple reframing of the underlying principles that drove Moore’s Law makes the entire picture clearer.

• On 4 April, Douzone Bizon (012510 KS) announced that it plans to become the fourth Internet bank in Korea. Following this news, Douzone Bizon’s share price increased by 21%. 
• If the company succeeds in receiving the license to operate an Internet bank, this could meaningfully impact the company’s long-term sales and profits. 
• If Douzone Bizone expands into the Internet banking services, it may need additional backing from strategic/financial partners including Bain Capital which has a 10.2% stake in Douzone Bizon. 

• IAS 2023 fourth quarter and full year results depict a robust performance that exceeded expectations, noting an increase of 14% in quarter four revenue to reach $134.3 million and a year growth of 16% to reach $474.4 million.
• This growth marks a path for IAS’s strong commitment toward advancing the industry with its AI-driven measurement systems and optimization solutions.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Gorilla Technology reported a very strong FY23, with adjusted EBITDA of $29.0 million, compared with ($6.0) million for FY22.
• Revenue jumped 189% to $64.7 million, while gross margin increased nearly 30 points to 69.1%.
• Full-year 2023 net income of $19.9 million was also a turnaround from the $87.5 million loss in 2022.

• Kokusai Electric (6525 JP)’s 180-day IPO lock-up period for 71% of outstanding shares expires on 22 April. The shares exiting the lock-up period are worth US$4.8 billion.
• The likely seller will be KKR & (KKR US) as it was the sole selling shareholder in the IPO. The shares are currently trading at 2.4x the IPO price.
• Kokusai anticipates a return to growth and margin improvement in FY24. However, Kokusai trades at a material premium to peer multiples and is fully priced. 

• GAMB is a performance marketing company focused on regulated online gambling, with a $350 million market cap
• Founded in 2006, the company has expanded to target the growing North American market
• Despite a range-bound stock price since its IPO, a secondary offering in June 2023 improved liquidity and reduced shareholder concentration, trading at a modest 8x 2024 consensus EBITDA

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.

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• There were no Section Transfers announced in the last 3 months so currently there are no live TOPIX Inclusion events at present.
• There are currently 79 names capable of satisfying all the key section transfer requirements. Our long-term pre-event candidate CELSYS (3663 JP) is one of them.

• SK Square owns a 20.07% stake in SK Hynix which is now worth 27.2 trillion won. SK Square’s market cap is only 39% of SK Square’s stake in SK Hynix.
• SK Square has benefited from increased capital allocation to low P/B stocks in Korea due to the Corporate Value Up program. SK Square is trading at P/B of 0.7x. 
• Amid the tremendous demand for Nvidia’s AI related chips, this has also benefited several Korean companies including SK Hynix and SK Square. 

• Hyundai Motor Group has become the largest shareholder of KT Corp, as the National Pension Service has recently reduced its stake in KT from 8.53% previously to 7.51%. 
• Despite this recent change in the largest shareholder status of KT Corp, this requires the approval from the Korean Ministry of Science and ICT. 
• Although the Hyundai Motor Group (HMG) has become the largest owner in KT Corp, the most likely scenario is for HMG to remain a passive investor in KT.

• TSMC Q2 2024 outlook is expected to increase by approximately 5% QoQ, with 2024 projected Capex to see a slight uptick. 
• Intel is expected to adopt TSMC N3B technology in 2Q24F, while we anticipate that MediaTek will transition to N3E by the end of 3Q24F.  
• Intel has received financial assistance of US$8 billion through the US Chips and Science Act, and TSMC is also projected to receive around US$5 billion.

• Horizon Robotics is looking to raise US$500m in its upcoming Hong Kong IPO. The bookrunners on the deal are GS, MS and China Securities International.
• Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
• HR was the first and the largest Chinese company providing integrated ADAS and AD solutions in terms of annual installation volume since 2021, according to CIC.

Solid State’s trading update affirms the sustained strength in demand throughout H224, resulting in record FY24 revenue and adjusted PBT ahead of prior consensus of £155m and £12.5m, respectively. This is attributable to the earlier-than-expected delivery of a NATO contract. As a result, consensus FY24 revenue and adjusted PBT estimates have been raised by c 6% and c 20%, with respective FY25 estimates declining commensurately.

• Keysight Technologies In (KEYS US) and Spirent Communications (SPT LN) have agreed a recommended 201.5p/share cash acquisition via Scheme of Arrangement, an increase of 26.5p (15.1%) relative to Viavi Solutions (VIAV US)‘s Offer.
• Spirent, with some scarcity value, should be able to improve its cyclicality as part of Keysight. A counteroffer from Viavi looks unlikely unless Silver Lake significantly increases its stake.
• Gross spread is 1.99%. Using Keysight’s forecast s about completion, at best, estimated annual return would be 3.51% while at worst, 1.88%. This suggests there may be better opportunities elsewhere.

• KRX limits individual stock weight to 20% in ETFs with few constituents. KRX confirms working on it, with an official announcement expected soon.
• Excludes index ETFs like KOSPI 200. KRX hasn’t finalized criteria for constituent number but expected to involve fewer than 30 stocks.
• This could open new passive trading opportunities. Sector ETF cap at 30%, large AUM ones offer noteworthy trading potential.

• There is a rumor in social media that Tencent will dismiss 10% – 30% of its employees.
• Alibaba withdrew the IPO application of its subsidiary Cainiao and all the other IPOs were halted as well.
• Xiaomi began to sell its first vehicle model SU7, but it is too late for the company to enter the market.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, HD Hyundai Marine Solution (443060 KS) and Bharti Hexacom were in the market trying to raise over US$500m each.
• Placements flow continued unabated this week as well, India, Taiwan and South Korea seeing large blocks.

• In my insight, I discuss valuation framework for comparable company analysis and outline revenue growth scenario under my base case.
• Considering Ibotta achieved profitability in 2023 driven by strong growth in the segment of third-party publishers, I view EV/Revenue as the most appropriate methodology to value Ibotta.
• I have a positive view of the upcoming Ibotta IPO. The company’s efficient B2B2C business model, success-based marketing approach and scale provide Ibotta with a long runway of growth.

• The utilization rate for Vanguard in 1Q24F is at a recent low of 50-53%, indicating that the utilization rate is expected to increase from 2Q24 onwards.  
• Vanguard should consider building a new 12″ Fab in Singapore, aligning with our potential acquisition of Taiwan Semiconductor (TSMC) – ADR (TSM US)’s 40nm and above business.
• In conclusion, the future outlook appears promising for the coming 3~4 years.  

• TSMC: +11.8% Premium — Falling Closer to Its Historical Range
• ASE: +9.2% Premium; Further Breakdown Could Indicate Return to Previous Trading Range
• CHT: -1.8% Discount — Good Level to Long the Spread

• Mediatek is advancing full speed with recent industry collaborations for automotive chips, data center connectivity solutions, and AI memory solutions.
• In particular, the company has entered the market for Co-Packaged Optics (CPO), with partnerships announced with Foxconn and Ranovus.
• While the stock has rallied and re-rated, consensus forward estimates do not appear overly demanding and could still have room to increase further.

• Quanta surged with major server wins from Meta, Alphabet, and Amazon. Nanya Tech results are two weeks ahead and Intel will host a webinar this week about its Foundry business.
• Mediatek: Accelerating Momentum in Automotive, Data Center, and AI Memory Solutions 
• Hon Hai (Foxconn): After the 50% Surge, Where Can It Go From Here? 

• In mid-January, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】. But they did not actually shame.
• The list shows which companies have disclosed a policy/consideration. But no data/links. We have the links, and we are weeks ahead of the TSE. Working to get months ahead.
• We created a tool to name everyone, show their reports, provide links, and now a new tool. Put in a name, see the difference between the Old/New Reports.

• China announced game approval for the Feb 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.
• However, neither Tencent and Netease got any approval in March.

• Just a week after Nvidia’s GTC conference, Quanta has reportedly secured large orders for new Nvidia Blackwell-based servers from Google, Amazon AWS, and Meta. 
• Other firms showcasing Nvidia servers at GTC include Wiwynn, Gigabyte, Pegatron, Asus, Hon Hai (Ingrasys), Wistron, Dell, and Super Micro. There could be a higher probability of new order wins.
• Stock Focus: Asustek — Improving outlook as a play on both AI PCs and AI servers.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: Bharti Hexacom (6597372Z IN) and Lianlian DigiTech (2104619D CH) IPOs.
• Event-Driven developments: Lawson Inc (2651 JP), Roland DG Corp (6789 JP), Sciclone Pharmaceuticals (6600 HK), CIMC Vehicle Group Co Ltd (1839 HK), HKBN Ltd (1310 HK), Probiotec Ltd (PBP AU). 

• A shares were down on the week, but rallied Thursday and Friday.
• Net SOUTHBOUND buying was +HK8.5bn after $57bn the two weeks before. SOUTHBOUND ended its consecutive net daily buy streak Monday, then started buying again.
• The flavour of SOUTHBOUND buying has been high-div SOEs for months and months. That is starting to change slightly. Tencent was the top net buy this week. Again.

• Mediatek Inc (2454 TT) Dimensity 9400 is expected to be released in September 2024F.  
• Artificial Intelligence (AI) is a trending topic, and MediaTek is adapting by emphasizing Generative AI functionality in its Dimensity 9300 and 9400 smartphone models.  
• The smartphone market is expected to recover in 2024F, with MediaTek’s revenue in the second quarter potentially surpassing the first quarter.

• We discuss the end of the mandatory lock-up periods for 46 stocks in Korea in April 2024, among which 6 are in KOSPI and 40 are in KOSDAQ.
• These 46 stocks on average could be subject to further selling pressures in April and could underperform relative to the market.
• The top three market cap stocks including those of which at least 1% of outstanding shares could be sold in April include APR, Angel Robotics, and Samhyun. 

• Micron Technology’s Fiscal Second Quarter 2024 Earnings showcased a lean towards optimism with some cautionary notes.
• It was revealed that the Micron sees substantial demand for High Bandwidth Memory (HBM) which has even surpassed their expectations and as such the HBM supply for 2024 is already sold out, with most of 2025’s capacity also already allocated.
• This is due in part to the product’s high performance specs and 30% lower power consumption.

• FactSet Research Systems Inc., a multinational financial data and software company, posted a mixed result for its second fiscal quarter of 2024.
• Despite enduring difficult market conditions and an industry rife with uncertainties, FactSet revealed a year-over-year growth of 5.4% in organic ASV plus professional services.
• The quarter-end showed over 8,000 clients with 75 net new logos added.

• Accenture’s Q2 financials reflect its ability to prosper amidst economic uncertainties due to the deep trust its clients place in it, its aptitude in handling complex core work and its strategic global positioning.
• The firm’s Q2 earnings indicate a persistence of momentum.
• They executed a significantly large number of sizable deals which elevated their positioning to capture more growth in the future, as spending continues to rise.

• Hon Hai shares have hit a new all-time high and have just risen past our target price of NT$155, surging after investors flocked to Hon Hai on AI news.
• Hon Hai showcased two key technologies at Nvidia’s GTC conference last week: Nvidia-based AI servers with liquid cooling systems and an AI autonomous driving controller using Nvidia’s Orin X processor.
• Hon Hai’s sharp rally appears to have partly been caused by a short squeeze; While we like the long-term fundamentals and increased TP to NT$170, Hon Hai appears near-term overbought.

• Bharti Hexacom is looking to raise up to US$513m in its upcoming India IPO.
• Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
• We have looked at the company’s past performance in our earlier notes. In this note, we talk about valutions.

• Bharti Hexacom (6597372Z IN), a 70% owned subsidiary of Bharti Airtel (BHARTI IN), aims to raise up to US$513 million at an IPO price range of Rs542-570 per share.
• We previously discussed the IPO in Bharti Hexacom IPO: The Bull Case and Bharti Hexacom IPO: The Bear Case. 
• Our valuation analysis suggests that the IPO price range is unattractive. Therefore, we would not participate in the IPO.

• Ibotta, a cashback rewards platform provider, files to list IPO on NYSE. The Denver-based technology company was backed by VC investors, GGV Capital, Walmart and Koch Disruptive Technologies.
• Ibotta is a trusted and well-known brand in the cashback space in the United States, and means “I-bought-a”. The company is led by its Founder & CEO, Bryan Leach.
• Considering Ibotta’s strong and profitable growth, low penetration of the addressable market opportunity, and potential international expansion, they should have a successful IPO.

• The electronic financial transactions industry is expanding, with a focus on personalization, the gig economy, and fraud prevention
• Mastercard is well positioned to benefit from the shift away from cash and towards digital payments
• Magellan’s portfolio manager Alyssa DeMarco discusses Mastercard’s growth and innovation with Devin Core, highlighting the company’s evolution over the past decade and its strategic focus on diversification and global expansion

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Genesys Intl Corp (GENE IN) or (GICL) is engaged in Geospatial services.
• The balance sheet of the company is surrounded by impairments; in the last few years, the company has impaired a major chunk of its intangibles, investments, goodwill and advances
• Other forensic insights include doubts on revenue recognition, struggle with the cash flows and earnings quality, recon issues and treatment of few line items

• Astera Labs, an overvalued fabless semiconductor company, has completed its IPO and raised ~$565M of net proceeds in the offering. The IPO was priced at $36/share.
• Astera Labs shares jumped 70%+ in their first trading day and finished session at $62.03. The stock peaked at $95.21 on Tuesday and fell ~21% over the next 2 days.
• According to their prospectus, ~5.9M shares of Astera Labs will be available for sale following the public release of earnings for 1Q’24, which I expect to be announced in April.

• The looming threat of a business ban on TikTok in the United States is driving millions of users and advertisers to seek alternatives to the popular short video platform, presenting a significant opportunity for rivals such as YouTube and Meta.

• Data released by Sensor Tower in March indicates that, over the past 90 days, nearly 94% of TikTok users in the U.S. have begun using Alphabet’s YouTube.

• Additionally, 80% of TikTok users have shifted their attention to Instagram, 68% to Facebook, and 55% to Snapchat.

• U.S. chipmaker Micron Technology Inc. expects deeper cooperation with the Chinese government as Beijing ramps up efforts to boost foreign investment, its CEO said at a forum in the capital Monday.
• Speaking at the China Development Forum, Sanjay Mehrotra hailed the recent release by the State Council of a 24-point plan designed to promote high-level opening-up and attract foreign investment as the latest show of China’s determination to improve its business environment for foreign companies.
• Micron cannot grow its business in China without government support, Mehrotra added, while reaffirming the company’s commitment to expand its business in the world’s second-largest economy, where it has a presence in Beijing, Shanghai, Shenzhen and Xi’an.

• 50% mobile market share with scope to improve shareholder returns – Okinawa Cellular is the operating company for parent KDDI’s (9433) mobile and FTTH brands in Japan’s southernmost prefecture, with a dominant 50% mobile carrier market share.
• The company benefits from the parent’s centralized R&D initiatives limiting its costs, and economies of scale through the joint procurement of handsets.
• With sector-leading operating margins and a strong track record of free cash flow generation, management actively allocates capital to shareholder returns, resulting in an estimated total shareholder payout ratio of 127.8% for FY3/24.