TMT/Internet

• Fadu’s IPO price has been confirmed at 31,000 won (top end of the IPO valuation range). A total of 1,082 institutions participated, with a demand ratio of 362.9 to 1.
• Fadu is one of the biggest IPOs in Korea so far in 2023. 
• Our base case valuation analysis suggests implied market cap of 2.2 trillion won or 43,676 won per share, which represents 41% higher than the IPO price.

• Tencent (700 HK) ’s online games business grew for the first time in 1Q2023 (+10.8% YoY) after four consecutive quarters of YoY decline followed by regulatory hurdles.
• Our app data analysis reveals that online games revenue would grow by about 12% YoY in 2Q2023E driven by increases in both domestic and international games revenues.
• On Monday, it was also reported that Tencent is in the process of acquiring a majority stake in Polish gaming studio Techland, expanding the long list of overseas gaming acquisitions.

• UMC reported 2Q23E results with revenue falling 20% YoY and EPS down 30% YoY. Results were higher than consensus but forward guidance was worrisome in our view.
• We are concerned by UMC’s high exposure to more mature technology nodes, limited exposure to AI, and vulnerability to China competition forced to focus on non-leading edge technology nodes.
• We rate the stock Underperform with a target price of $36 which implies a 2023E PER of 10x.

• Since 1H FY24/3 corresponds with the bottom of the current reset cycle, initial guidance for net sales is -9.3% YoY.
• In addition to ongoing high electricity rates, depreciation expense is set to increase +51.1% YoY, and initial guidance for OP is -62.3% YoY.
• On a cash flow basis, implied EBITDA is forecast to decline -29.1% YoY.

SenSen’s Q423 update shows robust quarter-on-quarter growth in cash receipts, broadly aligning with our full year revenue forecast. Lead indicators for FY24 are positive, highlighted by the recent signing of a A$1.4m three-year contract with a new Asian casino customer, as well as a strong contract pipeline. SenSen also launched several new solution variants in Q4, which could lead to high-margin upsell opportunities. The group has identified cost-cutting measures for H124, with the aim of becoming cash flow positive for the full year, which we have reflected in our updated forecasts.

• IRDM reported second quarter results showing continued growth in service revenue. Commentary related to direct to device and an increase in equipment revenue that drew the ire of investors
• IOT had a larger increase in the number of subscribers than we were expecting, resulting in service revenue remaining towards the higher end of the 9% to 11% growth forecast
• We believe IRDM is managing the business for the longer term and not for a specific quarter, which could contrast with investor expectations related to equipment inventory

• ASML delivered an all-around beat in the previous quarter.
• Looking ahead to the third quarter of 2023, ASML expects continued growth in net sales, driven by deep UV systems and non-EUV bookings.
• We give ASML Holding N.V. a ‘Hold’ rating with a revised target price.

• IBM delivered a mixed result in the recent quarter, with revenues below market expectations, but it managed to surpass the analyst consensus regarding earnings.
• The last quarter demonstrated strong execution of their hybrid cloud and AI strategy, with solid growth in their software and consulting segments.
• Additionally, their enterprise AI initiatives, including the Watsonx platform, show promising results with multiple use cases across various industries.

• Six weeks ago, LDP Policy Research Council chairman KAGIUDA led a discussion about full NTT privatisation to fund defence. Today he said serious deliberations begin in August. Shares fell today.
• The LDP wants non-tax resources to increase defence/social spending. Selling would require a change in NTT Law, but the argument is that communications have changed/internationalised.
• As discussed in NTT (9432 JP) – Would the Govt Sell All Its Shares? Why? How? How Long? Overhang?, there are questions on overhang. BUT… presumably there are mitigants. 

• Persistent fabless inventory issues dampen the slope of H2’23 recovery. FY’23 forecast further reduced to a 10% YoY decline
• AI-Related hardware will reach 6% of revenues in 2023, a welcome boost but insufficient to counter the negative impact of macro headwinds
• TSMC’s earnings provides an important read through on the likely results and outlook for the broader semi ecosystem in the coming weeks. 

• Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has filed for an HKEx IPO to raise US$500 million, according to press reports.   
• Lianlian ranked first among the independent digital payment solution providers in China in terms of TPV in 2022, with a market share of 9.1%, according to Frost & Sullivan.   
• The key elements of the bull case rest on rising market share, doubling of active customers, resilient core business growth and rapidly growing additional revenue streams.

• In this insight, we take a look at the potential ADDs/DELs for Thailand’s SET50 index rebalance in December 2023.
• Delta Electronics Thai (DELTA TB) – one of the largest SET 50 members – has been in the Market Surveillance Measure list a couple of times already this year.
• Although this creates some doubts over the fate of DELTA’s SET50 membership, at present, I believe DELTA will escape deletion in December 2023. 

• Topline grew +9% FXN. While Google Services revenue growth was flat in 1Q’23, it was 5.5% YoY in 2Q’23, with growth re-accelerating in every component of Google Services.
• Despite cost optimization efforts by customers, Google Cloud maintained its momentum with ~28% YoY growth (same as it was in 1Q’23).
• So, on an apple-to-apple basis, Google Services margin would be slightly lower this quarter than reported (say, ~$500 Mn opex for Google Brain).

• Alphawave reported last week.

• The results were not good; they were great.

• I actually am excited to see Tony and the team execute like this. Bookings are growing, and while revenue has not come out yet, it seems very likely they will hit their 2023 revenue estimates.

• APLD released 4Q earnings last night. The stock performed well, +14%.
• The key highlight was the huge guidance. In this post I will run through how the numbers make no sense.

• Jamestown, North Dakota (JT) – 100MW – JT has been operating since 2022. It has ~100MW of capacity and has been running at full capacity over the past two quarters, according to comments made on the company’s 3Q and 4Q earnings calls. Here is a snip for the 3Q call.

• Black Sesame Technologies (BLACKSES HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
• Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
• In this note, we will talk about the not so positive aspects of the deal.

• Robosense Technology (ROBO HK) (RT) is looking to raise around US$400m (estimated) in its upcoming Hong Kong IPO. 
• As of Mar 23, it had earned design wins for mass production of LiDAR for 52 vehicles with 21OEMs and Tier 1 suppliers, ranking No. 1 globally, according to CIC.
• In this note, we talk about the not-so-positive aspects of the deal.

• Share price of Travelsky Technology Ltd H (696 HK) is still down YTD as investors are still overly cautious on Chinese travel data. 
• YTD operational data shows that the number of flights processed is very close to the pre-COVID era. 
• The company announced a profit alert recently, that should help to boost share price. 

• The review period for the September rebalance of the KOSPI Size Indices started 1 June and will end 31 August. The changes will be implemented at the close 7 September.
• We see 8 migrations from MidCap to LargeCap, 7 migrations from LargeCap to MidCap, 6 new adds to MidCap, and 16 migrations from SmallCap to MidCap.
• Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.

• As of 24 July, there could be one set of changes for the iShares China Large-Cap (FXI) (FXI US) in September.
• There should be less than 1x ADV to buy on ZTE Corp H (763 HK) while there will be nearly 2x ADV to sell on Anhui Conch Cement (914 HK). 
• Short interest has been inching higher on ZTE Corp H (763 HK) while it is barely moving on Anhui Conch Cement (914 HK) as the stock trades near its lows.

• Infineon benefits from a strong market position in an industry with high barriers to entry.
• The Company’s backlog of €36bn, representing over 2x annual revenues, reduces the impact of end-market volatility. 
• Silicon carbide, the material for semiconductor wafers, is becoming more prevalent. Infineon is well on track to have a material cost advantage and better technology versus its silicon carbide competitors.

• We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts. 
• However, most of these catalysts appear to be minor. BILI management is fully aware of the challenges in the industry.
• We maintain a SELL rating, and investors may consider shorting BILI after <Uma Musume> is launched.

• Japan’s semiconductor technology export restrictions took effect on Sunday and are unlikely to ease for China any time soon.
• Apple is reportedly telling suppliers that its flagship iPhone volumes will be similar to last year.
• Hon Hai acquires 50% stake in German auto chassis maker, marking a significant expansion in its EV manufacturing efforts.

• As most AI heavyweight stocks (e.g. Nvidia, Microsoft) have already soared, some investors may be left feeling that they have missed the AI bandwagon.
• We believe there’s a delayed “AI winner” which the market is still sleeping on: EPAM Systems.
• With the stock back at ~$230, the risk-reward here is highly attractive in our view.

• Kahoot! ASA (KAHOOT NO) saw better times on the stock market during the pandemic. To revive fortunes, GS AM has enlisted top shareholders and offers NOK 35/share “best and final” price.
• This represents 29.1x EV/Fwd NTM EBITDA, 3.3% FCF yield. I believe the offer price is fair. Interloper risk seems low: a competing bid should come above NOK 38.5, surely overpaying.
• Spread is 0.74%/2.15% (gross/annualised, assuming settlement by 30 November). With better opportunities elsewhere, I would wait for the share price to come under NOK 34.5 to open a position.

• Robosense Technology (ROBO HK) (RT) is looking to raise around US$400m (estimated) in its upcoming Hong Kong IPO. 
• As of Mar 23, it had earned design wins for mass production of LiDAR for 52 vehicles with 21OEMs and Tier 1 suppliers, ranking No. 1 globally, according to CIC.
• In this note, we talk about the positive aspects of the deal.

• Qiniu Limited (1045102D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO.
• Qiniu is an intelligent audiovisual service provider. According to iResearch, the firm is the third largest audiovisual platform as a service (PaaS) provider in China in terms of FY22 revenue.
• Qiniu’s revenue has primarily been driven by its MPaaS segment over the track record period. However, the firm’s losses are still widening while its balance sheet health deteriorates. 

• 111 Inc (YI US), China’s largest virtual pharmacy network, amended an SC 13D filing on 13 July, which belatedly updated the consortium’s privatisation offer of US$3.66 per ADS. 
• The consortium has been revamped such that the lead investors (Dr Gang Yu, Dr Junling Liu and Shanghai Guosheng Capital Management) are joined with 13 additional investors.
• The development facilitates the signing of a definite agreement. The consortium represents 95.27% of the voting power, which ensures a successful vote. At last close, the gross spread is 9.6%.

• SATP Holding, a leading China-based SMB finance and taxation solution provider, filed to go public in Hong Kong. The company is led by visionary Founder and CEO Shugang Zhang.
• SATP Holding offers scalable SaaS-based bookkeeping and taxation solutions to SMBs in China. The proprietary SaaS system (SATP) automates tax filings and financial statement submissions.
• According to Pitchbook and the company’s IPO prospectus, the founder-led software provider has raised ~$226M in funding across nine funding rounds.

• Black Sesame Technologies (BLACKSES HK) is looking to raise around US$300m in its upcoming Hong Kong IPO.
• Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
• In this note, we will talk about the positive aspects of the deal.

• TSMC reduced 2023 revenue guidance when it reported results during the week. A weaker than expected economy in China and general economic weakness was blamed.
• However, the company’s results beat Street expectations and management maintained its long-term gross margin guidance of 53%+, which implies the company maintaining a structurally higher margin.
• Shares fell after results on a profit taking excuse — We however note that latest guidance also reaffirmed multi-year strength ahead. Structural Long.

• We expect Kuaishou to report C2Q23 revenue and non-IFRS net income that are in-line and 27% vs consensus, respectively.
• We slightly cut our revenue forecast for live streaming but increased our revenue forecast for online ads. Kuaishou’s margin beat is mainly due to efficient cost control, especially in overseas.
• Kuaishou still has several minor positive catalysts, but WeChat Video Accounts is the major short thesis in the long run. We raise EPS forecasts, but maintain SELL.

• JFSL spun off from Reliance Industries (RIL IN) last week and Ventia (VNT AU) replaced Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX). 
• The IDX should announce the changes to the IDX30, LQ45 and IDX80 indices early in the coming week.
• There were inflows to Tracker Fund of Hong Kong Ltd (2800 HK) and Hang Seng H Share Index ETF (2828 HK) while Taiwan focused ETFs had outflows.

• 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

• This is our first report on Monolithic Power Systems, one of the largest semiconductor-based equipment companies.
• Revenue from communications also increased due to a slight increase in revenue from the 5G infrastructure.
• We initiate coverage on the stock of Monolithic Power Systems, Inc. with a ‘Hold’ rating.

• This is our first report on Latin American telecom major, America Movil.
• Growth in prepaid and postpaid subscriptions remained steady, contributing to an 8.3% expansion in the postpaid base and a 5.3% increase in the prepaid base.
• Despite a 4.6% year-on-year decrease in Q2 revenue due to the Mexican peso’s appreciation against other currencies, the company still posted MXN 203 billion in revenue, with service revenues declining by 4.2%.

• TSMC reported earnings. They beat Q2 estimates, but importantly they guided down Q3 and FY 2023 estimates.
• The Q2 beat was widely expected regarding revenue, given that TSMC reports monthly revenue, but the Q3 guide was not.
• The midpoint of the guidance has the year-over-year decline decelerating, which I didn’t expect. Moreover, the -10% annual guide throws some water on the second-half recovery. Yes, the second half will be higher than the first, but the recovery is much more muted than historical. And what’s more, margins are looking worse for N3 than a typical node.

• Insiders holding more than 10% of SO must disclose block deals 30 days in advance if they plan to sell more than 1% of SO or an amount exceeding ₩5B.
• The trading window and pricing range for short positions, based on the assumption of deal-taking, will likely vary significantly as the timing of price reflection will see a drastic change.
• There is an increasing likelihood that major shareholders will accelerate their planned block deals and bring them to the market in abundance before October.

• Lasertec (6920) is a shoo-in for Nikkei 225 inclusion in September according to the quantitative analysis. The amount to buy is a small multiple of ADV, making the inclusion “unimpressive.”
• It is probably worth looking at the details of ownership, of volume, and of relationship to other stocks in the same general sector.
• It is also worth thinking about flow channels (stock up or down changes flows) and forward fundamental calculations.

• Erajaya recently released its 1Q2023 results with net sales increasing by +29% YoY but with -20.5% decrease in net profit due to increased opex related to its expansion and inventory build.
• The company plans to add 400 new outlets this year, lower than last year’s 575, as it ramps up its newer stores, which should help to improve profitability in 2H2023.
• Erajaya continues to add to its stable of brands outside mobile handsets, including JD Sports, Wellings, Grand Lucky, The Face Shop, Paris Baguette, and has launched EraBlue with Mobile World.

• FY’23 growth forecast increased despite push outs in the EUV order book and lower than expected IBB revenues.
• Broad-Based recovery is now looking more like a H1’24 scenario with lingering uncertainty as to how it quickly it will unfold thereafter
• System sales to China increased from 8% of revenues in Q1’23 to 24% in Q2’23. Non-China DUV order cancellations are being snapped up by China at an unprecedented rate. 

• Huawei Technologies Co. Ltd. on Tuesday launched the first commercial use of its artificial intelligence (AI) large language model (LLM) Pangu for the mining industry, as it seeks to make use of the next-generation technology to improve the sector’s safety and productivity.
• Developed in partnership with state-owned Shandong Energy Group Co. Ltd. and its unit Yunding Technology Co. Ltd. (000409.SH), the Pangu Mine Model has been deployed in the coal giant’s mines in East China’s Shandong province, Huawei said in a press release Wednesday.
• It also touted the launch as the world’s first commercial large AI model for the energy sector.

• Accenture managed to exceed analyst expectations in terms of revenue as well as earnings.
• Even though the macroeconomic environment remained unclear, the company continued to make large investments in its business and generated good revenue and sales, together with robust profitability and very strong free cash flow.
• Accenture produced $16.6 billion in sales, representing 5% growth, with North America expanding at 2%, Europe at 7%, and Growth Markets at 9%, all in local currency.

Esker continued to make good progress in Q223, with constant currency (cc) year-on-year revenue growth of 15% (the same as in Q123). Order intake on an annual recurring revenue (ARR) basis was 14% higher cc for Q223 and 18% higher for H123. The company narrowed its organic cc revenue growth guidance for FY23 to the upper end of the previous range (now 14–15%) and maintained its operating margin expectations. We maintain our revenue and EPS forecasts and raise our dividend forecasts.

• Digital Turbine delivered a mixed set of results for the previous quarter, with revenues above analyst expectations but below-par earnings.
• The company had an 11% decline in fiscal ’23 revenue due to soft advertiser spending and macro headwinds impacting their On Device Solutions and App Growth Platform businesses.
• Digital Turbine aims to build alternative app stores with equity positions in companies like Aptoide, easing app porting and payment management and tapping into the in-app purchasing market.

• Appian Corporation managed to surpass the revenue expectations and the earnings expectations of Wall Street.
• Appian reported a 31% year-over-year increase in cloud subscription revenue in the quarter, reaching $69.7 million.
• Cloud subscription revenue is anticipated to reach $72 million to $74 million in the second quarter of 2023, reflecting a 26% to 30% increase year over year.

• Lumentum Holdings delivered a disappointing set of results as the company was unable to meet the revenue as well as earnings expectations of Wall Street.
• The company’s commercial lasers business is also expanding into high-growth areas such as solar cells, advanced semiconductors, electric vehicles, and display manufacturing.
• We give Lumentum Holdings Inc. a ‘Hold’ rating with a revised target price.

• On 19 July, there were local media accounts that L&F Co Ltd (066970 KS) is considering on switching its listing from KOSDAQ to KOSPI. 
• L&F’s main business involves making cathode active materials for rechargeable batteries.
• Despite this positive move, we believe the valuations of L&F have become too high. Its operating margins also worsened from 9.6% in 1Q 2022 to 3.0% in 1Q 2023. 

• Money Forward (3994 JP) reported 2QFY11/2023 results yesterday. Revenue increased 43.5% YoY to ¥7.3bn (vs consensus ¥7.18bn) while operating losses dropped to ¥1.58bn vs ¥2.15bn in 2QFY11/22 (vs consensus ¥1.65bn).
• 2Q revenues were within its guidance of ¥7.1-7.4bn and MF has revised its FY11/23E guidance upward based on the progress made during the first half of the year.
• MF’s non-BO business margins continue to decline, and the plan to revise price plans for sole proprietors in December should result in attrition and further increase in advertising spend.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess TDC NET’s ESG as “Adequate”, in line with its Social and Governance scores. The company has a “Strong” Environmental score. Controversies are “Immaterial” and Disclosure is “Strong”.
• TDC NET is a Danish mobile and fixed network service provider. It was formed through the split of Denmark’s incumbent telecommunications company into a netco and servco.

• We had a call with ChipMOS management about their latest long-term R&D efforts and drivers. 
• We see many of the company’s key clients’ businesses turning a corner, hence see these developments likely to benefit ChipMOS.
• The company will be reporting earnings on August 3rd, we have an Outperform rating for the shares. Could see some continued margin weakness, however we believe forward outlook is improving.

• We raise iQIYI’s membership/ads growth in 2Q23 from 12.9%/10.6% to 15.7%/22.4% YoY because of high quality content and recovery of major advertisers.
• We upgrade iQIYI’s rating to BUY because:1) iQIYI exhibits advantages in content quality and production capabilities. 2) Major advertisers are expected to increase their advertising budgets continuously.
• Emergency of mini drama is another variable for the Chinese online video industry. However, we anticipate the impact on iQIYI is relatively limited currently.

Nano Dimension has raised its tender offer for Stratasys again, increasing its cash offer from $24 to $25 per share and extending the closing date to 31 July. If successful, it plans to explore options for further consolidation of the industry. If unsuccessful, it will review its Stratasys investment and may sell its stake on the open market.

• TSMC will report its 2Q23 results today in the afternoon Taiwan time. Look for key readthroughs from the company in terms of robustness of the AI boom and PC recovery.
• AMD’s Chairman and CEO arrived in Taiwan and met with key supply chain partners — Related stocks are surging; ASML beat expectations and raised its guidance.
• Taiwan AI,  PC-linked, and AMD-linked shares are flying; Our recent Memory Monitor piece also highlights signs that the DRAM cycle has bottomed.

• Ventia (VNT AU) will replace Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 21 July.
• The ad hoc change will lead to changes in the list of potential adds and deletes at the regular scheduled rebalance in September.
• Weebit Nano Ltd (WBT AU) is now a potential add in September and could see some pre-positioning in the near future.

• Mobvoi (2185047D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO. 
• Mobvoi is an AI company focusing on generative AI and voice interaction technologies. As per CIC, the firm is the largest revenue-generating AI company focusing on AI-generated content in 2022.
• Mobvoi’s revenue growth was primarily driven by its AI enterprise solutions segment, which led to gross margin expansion and profitability turning positive on all fronts in FY22. 

• One noteworthy aspect is SK Square’s strategic move towards gradually shifting its investment portfolio from platform businesses to companies within the semiconductor supply chain.
• Given SK’s aim to acquire a 1-2% stake as an anchor investor in ARM, selling the Krafton stake is necessary to secure sufficient funds for the potential ARM investment.
• We may consider positioning to capitalize on SK Square’s potential block deal for its Krafton stake, aligning with the schedule for selecting anchor investors in August for the ARM listing.

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2023. 
• The excessive gaps in the preferred and common shares of Kumho Petrochem, LG Electronics, and Samsung Electronics could reverse in the next several months, in our view.
• We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung Electro-Mechanics which have especially high discounts for the preferred shares versus their counterpart common shares. 

• Indonesia-based agritech firm Eratani has secured US$2 million in a seed extension round from SBI Ven Capital, Genting Ventures, Orvel Ventures, and Ascend Angels.
• This deal brings the total seed funding to US$5.8 million.
• The new investment comes about half a year after Eratani raised US$3.8 million from TNB Aura, Trihill Capital, BIG Ventures, and AgFunder.

• This is our first report on GlobalFoundries Inc, a multinational semiconductor contract manufacturing and design company.
• Despite these challenges, the company observed healthy demand in growing segments such as industrial IoT, aerospace, defense, and automotive markets.
• Throughout the quarter, GlobalFoundries demonstrated its dedication to executing targets, delivering value to customers, and sustaining its position in the industry.

• Indonesia’s aquaculture company eFishery has raised US$200 million in its Series D funding round led by Abu Dhabi-based global fund manager 42XFund.
• Malaysian public sector pension fund, Kumpulan Wang Persaraan (KWAP), Switzerland-based asset manager responsAbility, 500 Global, Northstar, Temasek, and SoftBank also joined.
• The funds will be used to expand the eFishery farming community, targeting to engage over 1 million aquaculture ponds in Indonesia by 2025 and increasing the transactions of fish feed and fresh fish on the platform.

Nano Dimension has amended its special tender offer for Stratasys again, increasing its cash offer from $20.05 to $24.00 per share. It has also stated its willingness to explore a potential combination of Stratasys with 3D Systems. Nano Dimension’s resolution proposing to replace the majority of Stratasys’ board will be voted on at Stratasys’ AGM on 8 August.

• Needle, an AI-powered marketing platform from Singapore, has raised US$1.2 million in its pre-seed round led by Iterative, with participation from Ethos Fund and Goldbell Financial Services. Angel investors, including Rainforest founder JJ Chai, also joined the round.
• The fresh capital will be used to expand Needle’s team, consisting of data scientists, AI trainers, and engineers.
• Needle helps ecommerce brands optimize their marketing activities. By analyzing data from various platforms, Needle provides personalized recommendations and automates campaign creation, helping firms reduce costs and improve return on investment.