TMT/Internet

• Nine months ago I first wrote on Anycolor (5032 JP). I thought the guidance growth pattern and valuations remarkable. Results handily beat guidance. Now we’re in Year 2 of guidance.
• After the first full year listed, FY2024 guidance was for +30% in revenue to ¥33bn, and +35% growth in OP. For Q1, reported yesterday, actual results were +51% and +91%.
• The stock is popping this AM, but it is still cheap vs growth rates and margins. There are, notably, still “context issues” here. They merit some consideration (and investigation).

• XL Axiata (EXCL IJ) continues to impress with its growth in revenues and data, driven by its 4G focus and high-quality network, with improving margins at the same time.
• The XL convergence story continues to build, with convergence penetration increasing but the real kicker wILL come once the restructuring with Link Net completes but benefits are already accruing. 
• XL Axiata remains the purest data player in Indonesia, with convergence set to be the next driver. Valuations are attractive on 4.4x FY2024E EV/EBITDA with strong growth ahead. 

• In the face of mounting American political and regulatory pressure, the Chinese video app TikTok officially launched an online shopping feature in the U.S., aiming to cash in on its popularity among 150 million American users.
• TikTok Shop will give brands, merchants, and creators the tools to sell directly through content on the app, the ByteDance Ltd.-owned enterprise said in a press release.
• Users will now find a “Shop” button prominently displayed in certain videos and can buy tagged products directly from videos and livestreaming.

• Huawei Technologies Co. Ltd. and its auto partner Seres Group Co. Ltd. (601127.SH +10.01%) launched an upgraded version of the Aito M7 electric SUV on Tuesday, marking the latest push by the tech giant into China’s highly competitive auto market.
• With a starting price of 249,800 yuan ($34,280), deliveries of the luxury electric vehicle (EV) will begin immediately, Huawei said in a press release. The company is also offering a discount of 33,000 yuan to customers who place their orders before Oct. 7.
• The model, which comes in five variants, is also equipped with Huawei ADS 2.0, the latest generation of its automated driving software and a digital cockpit powered by its Harmony operating system, the company said.

• Pegasystems delivered disappointing results as the company could not meet Wall Street’s revenue and earnings expectations.
• Pega achieved a remarkable feat in the first half of 2023 by producing $114 million in cash flow from operations and $123 million in free cash flow.
• The free cash flow dollars produced in the first half of the year was $123 million.

• EPSILON NET is a leading provider of Information Technology and related services in the Greek market.
• With its broad portfolio of software applications and IT systems, the Company generates revenues from the segments of ERP, Accounting, HR, E-Invoicing and Educational Services.
• EPSILON NET operates via 24 subsidiaries while it has a workforce of 1,200 employees and a network of +500 partners / resellers. 

• Xerox Holdings Corporation delivered mixed results for the previous quarter, with revenues below the analyst consensus.
• This quarter, Quocirca recognized Xerox as a leader in cloud print services, recognizing the company for its breadth of customer service as well as its strategic vision.
• Xerox Holdings received the renewal of a leading healthcare service company this quarter, boosting the yearly contract value by about 40%.

• Broadcom managed to exceed analyst expectations in terms of revenue as well as earnings.
• Infrastructure software revenue increased 5% yearly to 9 billion, while semiconductor solutions revenue gained 5% yearly to $6.9 billion.
• Wireless revenue accounted for 24% of semiconductor revenue in the quarter and was up 4% sequentially but flat yearly.

• Softbank Group (9984 JP) raised around US$4.9bn via selling some of its stake in ARM Holdings (ARM US)‘ US IPO.
• ARM develops and licences high-performance, low-cost, and energy-efficient CPU products and related technology, which is used by semiconductor companies and OEMs to develop their own products.
• In our previous notes, we looked at the company’s past performance and valuation. In this note, we talk about the trading dynamics.

• ARM Holdings (ARM US) has priced its IPO at US$51.00 per ADS, at the top end of the price range. Softbank Group (9984 JP) will raise gross proceeds of US$4.9bn.
• We previously discussed the IPO in ARM Holdings IPO: The Bull Case, ARM Holdings IPO: The Bear Case and ARM Holdings IPO: Unattractive Price Range. 
• The ARM IPO is structurally set up for a first-day pop. Beyond the first-day euphoria, ARM will face the daunting task of delivering bullish estimates to justify the IPO price.

• Maeil Business Daily reported that Alibaba Group Holding (9988 HK) is considering on acquiring a controlling stake in 11st, which is a leading e-commerce platform owned by SK Square
• In 2018, 11st was valued at 2.7 trillion won by financial investors. However, the current valuation of 11st is estimated to have declined to about 1 trillion won (US$760 million).
• We estimate that the probability of Alibaba acquiring 11st is about 60-70%. 

The Asia Trade Book for September 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia HY and crossover credits.

Please reach out to our analysts to discuss any of these ideas, or other trade recommendations from our Asia coverage.

• NEC’ is up almost 90% year-to-date to 16X EPS guidance for this fiscal year and 12x targeted EPS three years out. It now looks fairly valued.
• Profit growth is led by IT Services for the private and public sectors, with strength in finance and system integration. 
• Social Infrastructure is growing, but in the red. Aerospace and national security are profitable, but margins are low.

• Snap-on Incorporated achieved decent growth in both sales and profitability in its most recent result.
• Moreover, Snap-on’s success in the Tools Group highlighted its ability to innovate and cater to customer needs effectively.
• Snap-on’s customization and profitability, particularly in low-volume production, have been a driving force behind its growth.

• Our estimations for FY 2023 annual revenue range at around $8,023 million and for 2024 at around $9,219 million.
• The company’s annual revenue reached $6,622 million in 2022 compared to $5,106 million in 2021, post- ing an increase by 29.69%.
• Constellation Software’s gross profit for FY 2022 was $2,271 million, increased by 44.74% compared to $1,569 million for the corresponding period of 2021.

• Nutanix Inc. managed to exceed the revenue expectations as well as the earnings expectations of Wall Street.
• Notably, the company outperformed all guided metrics, achieving robust ACV billings growth and quarterly revenue.
• Additionally, the company generated significant free cash flow growth compared to the previous fiscal year.

SenSen’s FY23 preliminary results show robust revenue growth, albeit missing our forecasts slightly. Losses narrowed year-on-year from efficiency initiatives. The strategic shift towards more predictable opex and cloud contracts continues to improve the revenue mix. Margin expansion is expected in FY24 following efficiency measures, with potential for cash flow positivity. Valuation remains at a discount to peers despite SenSen being one of the few with a positive FY24 EBITDA forecast.

• PagerDuty Inc. managed to surpass the revenue expectations as well as the earnings expectations of Wall Street with a 19% revenue increase and a 13% non-GAAP operating margin.
• The company’s profitable growth was evident as the year-over-year operating margin expanded by a significant 1,700 basis points.
• Notable organizations like Banco Santander, Cisco Systems, Confluent, Grammarly, DocuSign, HubSpot, and NVIDIA selected PagerDuty as their real-time operations platform.

• GTVs for Yahoo’s shopping division fell by 8% in 1Q2023. 
• Although this was expected and gross profits did improve, the downturn reflects deeper concerns.
• Even the group’s Zozo fashion platform are much more slowly.

• Mediatek shares rallied recently on high volume and are approaching their 52-week highs. We however warn investors to beware emerging news of Huawei/SMIC’s chip capabilities.
• Mediatek announced last week its flagship mobile phone chip was preparing for high volume manufacturing with TSMC’s most advanced 3-nanometer process node.
• However, we believe Huawei’s recent Mate 60 chip development could pose a threat to Mediatek’s market share outlook. We downgrade our rating from Structural Long to Neutral, target price NT$815.

• 4Paradigm (1764934D HK), a leader in enterprise artificial intelligence (AI) in China, is pre-marketing a US$150-200 million HKEx IPO.
• In 4Paradigm 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 Sage Platform’s rapid slowdown, high customer concentration risk, recent gross margin pressure, FCF burn, rising cash collection cycle and BIS entity list designation. 

• India Supply Chain Rising — Hon Hai is helping Apple launch with India-made iPhone 15’s on Day 1. These days, Apple likely wants to diversify away from China even faster.
• ARM IPO prices at high end of range, is backed by TSMC, Apple, Nvidia, Samsung, Intel.
• We downgrade Mediatek: After rally, beware of Huawei/SMIC chip capabilities causing market to realize Mediatek could lose market share.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Nokia’s ESG as “Adequate”, in line with its “Adequate” Environmental and Social pillars. The company has a “Strong” score for the Governance pillar. Controversies are “Immaterial” and Disclosure is “Strong”.

• News broke yesterday that Daniel Zhang is no longer leading Alibaba (ADR) (BABA US)‘s Cloud Business unit.
• The statement from Alibaba’s current chairman, in which he mentions that Zhang would “switch to a different approach and continue to fight alongside us at Alibaba” raises skepticism.
• We also think that the $1.0bn Alibaba committed to a technology fund could be seen as a form of compensation to ensure Daniel Zhang’s silence.

• ARM prices this Wednesday and trades on Thursday.
• I have a lot of thoughts. This will be a great post if you want to learn about ARM. 
• So, without further adieu, let’s dive into the most important IP company in the world.

• 4Paradigm is a pioneer and leader in enterprise AI. The company offers platform-centric AI solutions to enterprises that can be deployed on a large scale to support decision making.
• The company’s application for HKEx IPO has been approved and this insight focuses on new data points from the company’s latest PHIP release (dated 07th Sep 2023).
• 4Paradigm (1764934D HK) revenues have continued to expand with significant reduction in operating losses, and we remain positive on the company’s growth prospects.

• Life is good for the NIFTY Index (NIFTY INDEX) at 20K. Strong domestic sentiment is likely to continue. 
• Paytm (PAYTM IN) posted strong operating metrics for August, but this will be the second last update as the company moves to quarterly disclosures for reasons not completely justified. 
• Other Ideas discussed include Poonawalla Fincorp (POONAWAL IN) , Dabur India Ltd (DABUR IN) and Landmark Cars along with upcoming IPOs. 

• It’s a “show me the money” versus a “build it and they will come” approach
• New fab construction will be based solely on customer commitments.
• It’s a curiously cautious plan and highly unlikely to succeed

• Zhongsheng Group (881 HK) is a potential deletion in December and that could result in China Unicom Hong Kong (762 HK) being added to the index.
• Estimated one-way turnover at the rebalance is 1.36% resulting in a one-way trade of HK$845m. Passives will need to trade over 1x ADV on both stocks.
• There is a very small impact on the fair value of the HSCEI 2023 dividend futures but there will be a larger impact on the dividend futures expiring in 2024.

• 4Paradigm (1764934D HK), a leader in enterprise artificial intelligence (AI) in China, is pre-marketing a US$150-200 million HKEx IPO.  
• 4Paradigm was the largest player by revenue in China’s platform-centric decision-making AI market with a market share of 22.6% in 2022, according to CIC. 
• The bull case rests on the success in increasing key account customer numbers, net dollar expansion rates, improving revenue visibility, strong growth in application development services and reducing loss margin.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess Banijay’s ESG as “Adequate”, in line with its Social and Governance scores, while the Environmental pillar is “Weak”. Controversies are “Immaterial” but Disclosure is “Weak”.
• Banijay creates and distributes content for television and multimedia platforms. It was founded in 2008 by Stephane Courbit, and has since grown through a string of acquisitions.

• MongoDB managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
• The company exceeded the high end of its projection and achieved revenue of $424 million, a 40% year-over-year increase.
• Atlas sales increased 38% year over year, accounting for 63% of revenue, and is now a product with a run rate of more than $1 billion.

• Workday exceeded analyst expectations in terms of revenue and earnings, with a non-GAAP operating margin of 24%, subscription revenue growth of 19%, and a 24-month backlog increase of 23%.
• Early renewals exceeded Workday’s expectations in the quarter and increased the 24-month backlog by nearly 1.5 percentage points.
• Workday’s team anticipates increasing their forecast for subscription revenue for FY 2024 to a new range of $6.57 billion to $6.59 billion, representing an 18% yearly increase.

• 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.
• Since my last insight, three new TOPIX Inclusion events have been confirmed: M&A Research Institute (9552 JP), FP Partner (7388 JP), and I-NE (4933 JP) 
• Separately, Core Concept Technologies Inc (4371 JP) has announced it intends to work towards a Prime Market move in the future.

• VNG (VinaGame) (VNG US), Vietnam’s leading internet platform, aims to raise up to US$300m in its US IPO.
• VNG is Vietnam’s leading homegrown digital ecosystem, as per the company, with diverse product offerings across games, communications and media, fintech and other opportunities.
• We looked at the company’s past performance and undertook a peer comparison in our earlier notes. In this note, we talk about valuations.

• Intel’s upcoming Meteor Lake family of chips will include a new specific component specifically for running AI processes locally on PCs.
• Meteor Lake will enable mass market adoption of AI PCs by providing a platform for developers to create more advanced AI PC applications than are currently possible.
• Meteor Lake’s launch could start by end-October. Intel’s Innovation conference September 19-20th will likely add visibility. Intel’s potential supports a Long thesis for Taiwan’s PC supply chain.

• Salesforce delivered an all-around beat in the previous quarter.
• The company’s non-GAAP operating margin increased in the quarter.
• Salesforce also had fantastic victories throughout the quarter with JPMorgan, Bayer, FedEx, Maersk, as well as the Department of Veterans Affairs.

• Splunk Inc. delivered a decent result and managed an all-around beat in the last quarter, marked by solid execution, operational discipline, and favorable customer engagement.
• Total revenue experienced a healthy year-over-year increase, demonstrating Splunk’s ability to achieve this growth while managing costs underscores its strategic approach.
• Additionally, Splunk continued to innovate by leveraging AI in security and observability, introducing the concept of Splunk AI to empower organizations to detect, investigate, and respond more efficiently.

• CrowdStrike Holdings managed to exceed analyst expectations in terms of revenue as well as earnings.
• The company outperformed top and bottom line metrics expectations, achieving strong, scalable growth, amazing leverage, and operating within its target model overall.
• CrowdStrike also successfully implemented a go-to-market strategy centered on cloud security this past quarter, hosting a virtual cloud security summit with over 12,500 security and DevOp attendees, followed by cloud-focused partner and sales plays.

• Freshworks, a cloud-based customer services software unicorn, held its first Investor Day on September 7, 2023. Management highlighted the long-term target to deliver the Rule of 40 by 2025. 
• The 2023 Investor Day agenda included company vision and strategy, solutions in action, strategy for durable growth, customer spotlight, and financial overview, among others. 
• Management plans to deliver a long-term balance of growth and profitability, with the 2026 model leading to an FCF margin of 20%+ and $1B+ revenue. 

• Marvell Technology delivered a positive result and managed an all-around beat in the last quarter, producing $1.34 billion in revenue.
• Revenue in their data center end market was $460 million, up 6% sequentially and significantly more than their forecast of a flat outlook.
• Notably, revenue from cloud AI and common cloud infrastructure both increased sequentially, with AI expanding more quickly.

• Alteryx Inc, a notable player in the tech and data analytics sphere has sent ripples of excitement across the investment domain, stirred by buzz surrounding its potential sale.
• Boasting a formidable client base of over 8,300 entities, including industry behemoths such as Coca-Cola, Vodafone, Walmart, and Ford, Alteryx has firmly entrenched its position in the data analytics industry.
• Insider sources suggest that the company has engaged the expertise of investment banking stalwart Qatalyst Partners to steer the preliminary talks with potential suitors.

• The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 15 September. There are no constituent changes, but there are float and capping changes.
• The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$9.7bn.
• Estimated one-way turnover is 5.9% resulting in a one-way trade of US$595m. The stocks are extremely liquid, the impact on the stock in terms of ADV to trade is small.

• There are no constituent changes for the MVIS Australia Equal Weight Index at the September rebalance. JB Hi-Fi Ltd (JBH AU) and Charter Hall (CHC AU) have avoided deletion.
• Float and capping changes will result in a one-way turnover of 3.5% and in a one-way trade of A$69m.
• There is a lot of short interest on stocks that will have passive buy/sell flows, but there will not be enough volume traded for shorts to use to reduce positions.

• Intuit Inc. managed to exceed the revenue expectations as well as the earnings expectations of Wall Street.
• The company raised revenue by 13% for the entire year, produced good operating margin growth, and finished the year on a high note.
• Revenue from the desktop environment and QuickBooks Desktop Enterprise revenue increased significantly.

• NetApp delivered an all-around beat in the most recent quarterly result.
• The company’s rigorous operational management and the enthusiastic customer response to its innovation continue to yield positive results.
• They are also making strategic purchases in order to lock in significant loan NAND pricing and reduce future price increases.

• The changes at the Nikkei 225 September rebalance were announced on 4 September. The rebalance of the HSI, HSCEI, HSTECH and HSCI was implemented on the same day.
• The changes to the MVIS indices were announced on 8 September and will be implemented at the close on 15 September. The S&P/ASX family will also rebalance on 15 September.
• After a month and a half of big inflows to onshore China ETFs, there were small outflows from a lot of ETFs during the week.

• NetEase delivered a mixed set of results in the quarter, with revenues well below expectations, but managed an earnings beat.
• Revenues from the Fantasy Westward Journey Saga continued to increase year over year in the quarter, again impressing the industry with this IP’s enduring appeal.
• In the second quarter, Cloud Music’s GP margin increased significantly because of the growth of membership services and ongoing cost-cutting initiatives.

• Analog Devices delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
• The operating margin was almost 48%, the gross margin was above 72%, and the EPS was $249 million.
• Analog Devices anticipates revenue of around $2.7 billion for the fourth quarter.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• In the IPO space, things are getting busy again with multiple deals live across the region, whic his a refreshing change from the slow start in the first half.
• There were only a few placement this week, but what the lacked in volume they made up for in size. 

• After results were transitioned to non-public information, it has been observed that results are reflected in prices significantly later, with substantial price impact occurring close to the rebalancing trading day. 
• Even though the AUMs have recently decreased, the passive impact size is quite substantial, considering a recent pattern of price impact concentrating within a maximum of about two trading days.
• A heavy Long-Short setup on these pairs, DearU / Douzone Bizon and SK Biopharmaceuticals / SK Bioscience (302440 KS), is something we should very actively consider.

• SoftBank’s internal transaction acquiring the 25% Arm stake held by SVF1 valued Arm at USD64bn; the IPO valuation range is from USD48bn to USD52bn
• This valuation range implies an Nvidia-like price to prospective 2024E sales multiple range of 22x-25x; the prospectus reveals risks with Arm China, and confirms its lacklustre revenue and earnings growth
• Given SoftBank’s largely negative track record on the after-market performance of its investee companies IPOs and SPOs; we expect further downside to SoftBank’s share price

• VNG (VinaGame) (VNG US) is getting ready to complete its IPO on the NASDAQ exchange in the next several months. VNG operates the dominant chat app Zalo in Vietnam. 
• VNG is reminiscent of Kakao Corp (035720 KS) in its early years of operations when it captured a dominant portion of Korea’s chat app market through its KakaoTalk app.
• Although the company has yet to provide a firm timeline of the IPO, there is likely to be eye-popping demand for the IPO shares of VNG. 

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• We remain bullish global equities if the major $93 support level on MSCI ACWI (ACWI-US) continues to hold (1+ year base support and the 10.5-month uptrend)
• The 10-year Treasury yield remains below 4.35% resistance (a positive), but the DXY is climbing above $103.70-$104.70 resistance, and $105.70 is the last line of defense (9-month resistance).
• Japan and India remain top overweights, with many of today’s buy recommendations from these countries (Real Estate, Energy, Tech/Services, Discretionary). Also downgrading Taiwan and Greece to market weight.

• US graphics chip designer NVIDIA Corp (NVDA US) has, to date, sourced HBM3 chips exclusively from SK Hynix (000660 KS).
• Shares in Samsung Electronics (005930 KS) promptly popped ~6% last Friday on news it had been added as a supplier to NVIDIA.
• Hana Micron Inc (067310 KS), which boasts Samsung as its largest customer, similarly jumped, and is up 45% in the past week. Too much too quickly?

• Sea Ltd began to step on the gas in terms of promotions in 2Q2023, even warning of potential quarterly losses, mainly due to perceived threats in Indonesia from TikTop Shop.
• Reports that TikTok Shop will be banned in Indonesia will provide significant relief in terms of competition as it is targeted for unfair competition versus local MSMEs through cheap imports.
• Sea Ltd has also relaunched FreeFire in India, which could become a significant catalyst for the recovery of the gaming business.  Valuations are attractive on both sales and earnings.

• The agreement helps Intel fill up some long-underutilised fab capacity at their Rio Rancho, New Mexico facility
• Tower likely gets a bargain-basement opportunity to increase their percentage of 300mm wafer capacity
• Tower’s automotive business grew from 11% of revenues in 2022 to 19% of revenues in H1’23. Greater 300mm capacity will help them meet this demand once foundry starts to recover. 

• NVIDIA Corporation delivered an all-around beat in the previous quarter.
• Notably, the Data Center segment experienced remarkable growth, driven by solid demand from prominent cloud service providers and major internet companies.
• In the quarter, Google Cloud and NVIDIA have recently introduced advanced AI infrastructure and tools.

• Chinese consumers have been buying Huawei’s latest flagship smartphone faster than stores can keep up with online and in some parts of the country, sources tell Caixin, amid mounting speculation the telecom giant has been able to weather U.S. sanctions.
• Huawei Technologies Co. Ltd. began shipping the new Mate 60 Pro Sunday, several people familiar with the matter told Caixin, five days after the phone’s discreet launch.
• A number of distributors told Caixin on Monday that the Mate 60 Pro had immediately sold out upon delivery.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• Due to the sharp appreciation of Hana Micron’s share price this year, its valuation discount to companies such as HPSP has narrowed substantially. 
• Samsung Electronics is one of the major customers of Hana Micron. Samsung recently reported that it has successfully secured the right to supply advanced memory chips to NVIDIA.
• We do not believe Hana Micron’s valuations are attractive right now. Rather than chasing after its shares, we would rather wait for its shares to retreat (20-30%) a bit.

• Over the past few years, SAP has transformed itself into a cloud company with a lean and agile operating structure
• SAP’s cloud business is set to grow over 20% per annum through 2025
• SAP has the potential to re-rate to multiples enjoyed by its ‘pure play’ cloud peers.

• Baidu delivered a positive result and managed an all-around beat last quarter, characterized by progress and expansion.
• The focus on transformation through foundation models, particularly ERNIE and ERNIE bot, led to enhancements in products like Baidu Search and Baidu Wenku, resulting in increased user engagement and conversion rates.
• Baidu’s online marketing division harnessed generative AI to automate and enhance ad offerings, driving growth in online marketing revenue.

• Snowflake Inc. delivered a solid result and managed an all-around beat in the last quarter.
• In terms of the booking aspect, Snowflake observed encouraging indications of stabilization since the number of new bookings surpassed its initial projections.
• The company’s strong developer support, expansion of application providers, and successful events like Snowflake Summit reflected positive momentum and a growing ecosystem.

• So the terms are out for Softbank’s attempt to list Arm. 
• In typical sparkling form, Masayoshi Son has clocked a ~19% drawdown within weeks. 
• Good thing all the bankers will easily get their $8bn loan paid back in full and aren’t subject to conflicting interests…?

• Super Seven are chiefly responsible for the rally in the S&P 500. >80% of the index gains this year were due in large part to the Super Seven.
• Amazon, Apple, Google, Meta, Microsoft, Nvidia, & Tesla are referred to as Super Seven. S&P is market-cap weighted. Little wonder that Super Seven have an outsized impact on it.
• Having strongly priced in expectations, investors wait for the Super Seven to deliver. Falling short can result in sharp price pullback. What next for the Super Seven?

• Axiata Group (AXIATA MK)‘s NAV discount and implied stub are around their lows since the CelcomDigi (CDB MK) / Digi.com merger last November. 
• Preceding my comments on Axiata are the current setup/unwind tables for Asia-Pacific Holdcos. 
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• Over 85% of the way through the review period, we see 14 potential index changes at the December rebalance that will be implemented at the close on 8 December.
• We estimate a one-way turnover of 1.93% at the December rebalance leading to a one-way trade of CNY 6.93bn.
• The huge inflow to passive trackers has led to the gap between the potential adds and deletes narrowing. That should reverse as passive will need to sell the deletes.

• Our base case valuation of Arm Holdings is target price of US$36.3 per share, which represents 23% lower than the lower end of the IPO price range. 
• We estimate Arm’s sales to reach US2,832 million in FY2024 (up 5.7% YoY) and US$3,038 million in FY 2025 (up 7.3% YoY). 
• Given the lack of upside, we have a NEGATIVE view of Arm Holdings. Our valuation sensitivity analysis suggests implied price of US$29.4 to US$43.9 per share. 

• The bankers provided additional valuation framework using P/S basis for Doosan Robotics and based on this methodology, the IPO price range is from 19,000 won to 24,000 won. 
• This does not mean that the bankers have actually lowered the IPO price range but rather they have provided another framework to value the company. 
• We continue to have a Positive view of the Doosan Robotics IPO. 

• JF Wealth Holdings (9636 HK) was listed on 10th March 2023, its one-year lockup will expire on 9th Sept 2023.
• The firm had raised around US$129m in its Hong Kong IPO, at the bottom end of its indicative price range.
• JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.

• VNG (VinaGame) (VNG US) is Vietnam’s leading, homegrown digital ecosystem. VNG has filed for a Nasdaq listing to raise US$300 million.
• In VNG 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 the Communications and Media business’ faltering fundamentals, the Fintech business’ uncertain path to profitability and VNG’s underlying cash burn.

• ARM IPO — TSMC says will decide this week whether to participate. ARM is a company potentially without peers and enjoys support from Apple, Nvidia, AMD, and Samsung.
• Elan, Yageo, ChipMOS top gainers in Taiwan — Three of our Longs have done well most recently on high volume and little new public news.
• Recent Dell & HP results provide additional clarity on the coming AI PC wave.

• VNG (VinaGame) (VNG US), Vietnam’s leading internet platform, aims to raise up to US$300m in its US IPO.
• VNG is Vietnam’s leading homegrown digital ecosystem, as per the company, with diverse product offerings across games, communications and media, fintech and other opportunities
• We looked at the company’s past performance in our earlier notes. In this note, we undertake a comparison versus its local competitors.