Category

TMT/Internet

Daily Brief TMT/Internet: Grab, Pushpay Holdings, Softbank Corp, Intel Corp, Amazon.com Inc, Sap Se Sponsored Adr, Snap Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Grab(GRAB.US) 4Q22 Preview: Tailwinds from Share Gain and Rebound in Mobility
  • Pushpay Holdings: 3rd March Scheme Meeting. IA Says Fair
  • Pushpay (PPH NZ): Scheme Vote on 3 March but Deal Risks Are Emerging
  • Softbank Corp (Buy) – Q3 22 Results Reaction: Modest Mobile Improvement, on Track to Meet Targets
  • Intel Corp: Launch Of 13th Generation Lineup & Other Drivers
  • Amazon: Recent Quarter Is A Reminder That Red Flags Should Not Be Ignored
  • Amazon 4Q22: When Does AWS Trough?
  • SAP SE ADR: Launch Of SAP Build & Other Drivers
  • Snap Inc: New Promotional Campaign & Other Developments

Grab(GRAB.US) 4Q22 Preview: Tailwinds from Share Gain and Rebound in Mobility

By Shawn Yang

  • In C4Q22, We expect Grab to report total revenue 2% higher than cons., and non-IFRS net loss narrower than cons.. 
  • With competitors cutting back on heavy incentives, Grab has gained share under easing competitive environment in food delivery market in 2022. We expect this trend to sustain in 2023.
  • Mobility is expected to benefit from rebound of tourism and generate stable margin. Pullbacks from off-platform financial services continue to support improvement. Maintain BUY and raise TP to US$ 4.0.

Pushpay Holdings: 3rd March Scheme Meeting. IA Says Fair

By David Blennerhassett

  • Back on the 28 October, church donor management play Pushpay Holdings (PPH NZ/PPH AU) announced a Scheme with BGH/Sixth Street at NZ$1.34/share,  a 30.1% premium to undisturbed.
  • The Scheme Booklet is now out. The shareholder meeting will take place on the 3 March. The independent advisor concluded the Offer price is within its valuation range. 
  • Assuming 11 April payment, this is trading at a gross/annualised spread of 3.0%/18.0%.

Pushpay (PPH NZ): Scheme Vote on 3 March but Deal Risks Are Emerging

By Arun George

  • Pushpay Holdings (PPH NZ)’s NZ$1.34 offer from Sixth Street/BGH is barely within the IE’s valuation range of NZ$1.33-1.53 per share. There is no “fair and reasonable” statement from the IE.
  • Astonishingly, Sixth Street/BGH wrote to the Takeovers Panel to raise concerns about the IE’s report. The Takeovers Panel concluded that the IE report is not misleading or deceptive. 
  • A relatively concentrated register poses a risk, particularly considering the IE’s valuation range and the re-rating of a key peer. While possible, the probability of a bump is low. 

Softbank Corp (Buy) – Q3 22 Results Reaction: Modest Mobile Improvement, on Track to Meet Targets

By Kirk Boodry

  • Consumer mobile revenue fell 7% but that partly reflects how sales were reported a year ago. Reported ARPU was down 5% whilst price cut erosion narrowed
  • Operating income YTD is 94% of full-year targets leaving room for Softbank to achieve its goal even with increased investment spending
  • This was a relatively uneventful quarter and we remain at Buy

Intel Corp: Launch Of 13th Generation Lineup & Other Drivers

By Baptista Research

  • Intel delivered a weak result, failing to meet Wall Street expectations in terms of revenues as well as earnings given the persisting macroeconomic headwinds in the semiconductor industry.
  • Intel continues to integrate AXG into CCG and DCAI to deliver a more effective go-to-market capability, accelerating the scale of these businesses while further cutting costs.
  • The management believes their first EUV-deploying modes, Intel 4 and 3, will significantly improve transistor performance per watt and density.

Amazon: Recent Quarter Is A Reminder That Red Flags Should Not Be Ignored

By Vladimir Dimitrov, CFA

  • Amazon’s share price has fallen 25% since April of last year, sparking a fear of missing out.
  • The pressure for cost-cutting measures will likely increase as profitability and free cash flow remain elusive, according to Amazon.
  • Amazon has seen a 25% drop in its share price in January.

Amazon 4Q22: When Does AWS Trough?

By Aaron Gabin

  • AWS revenue grew 20% YoY to $21.3B, about $400M or ~2% below consensus…and a 700bp deceleration.
  • AWS margins of 24% were down 200bps QoQ / 600bps YoY as continued optimization of customer contracts continues to weigh on margins.
  • Amazon advertising continues to dramatically outpace all other online platforms, highlighting the moat of first party data at the point of purchase, unimpacted by Apple.

SAP SE ADR: Launch Of SAP Build & Other Drivers

By Baptista Research

  • SAP delivered a mixed set of results in the final quarter of 2022 as it surpassed the revenue expectations of Wall Street but missed out on earnings.
  • This year, cloud revenue also surpassed support revenue to become SAP’s single-largest revenue stream.
  • Their overall SaaS and PaaS portfolio grew significantly, with SaaS cloud revenue increasing by 25% and PaaS cloud revenue increasing by 45%.

Snap Inc: New Promotional Campaign & Other Developments

By Baptista Research

  • Snap continued to encounter massive challenges due to increased competition and macroeconomic headwinds.
  • In the quarter, the company released communities to expand its content offerings and onboarded several new media partners.
  • The company has also launched new Snapchat+ features to increase audience engagement on the platform in the quarter.

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Daily Brief TMT/Internet: Hong Kong Hang Seng Index, Xiaomi Corp, O2Micro International, Meta Platforms (Facebook), Peris.ai, Visa, KDDI Corp, Oh Baby Games, Mastercard, WeMo Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Quiddity Primer: The Ongoing Evolution of the Hang Seng Index
  • Xiaomi(1810.HK): Huawei’s Restrictions (Another) Signal of More to Come
  • O2Micro Shareholders Approve Merger. Completion Remains Opaque
  • Meta Platforms 4Q22: Zuckerberg Got Religion?
  • Peris.ai, a Cybersecurity Startup Built by Ritase Co-Founder, Gets East Ventures Backing
  • Visa Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (02/23)
  • KDDI (Buy) – Q3 22 Results Reaction: Super Mobile but Full-Year Targets Look Challenging
  • A $6m Bet to Mix Crypto and Traditional Gaming
  • Mastercard Inc: Treasury Intelligence Platform & Other Drivers
  • E-Scooter Rental Startup WeMo Nets US$15M for Thailand, Indonesia Expansion

Quiddity Primer: The Ongoing Evolution of the Hang Seng Index

By Janaghan Jeyakumar, CFA

  • The Hang Seng Index (HSI INDEX) is a blue-chip index that represents the performance of the large cap stocks listed in the Hong Kong Stock Exchange.
  • The index is undergoing some significant composition changes and the index provider currently uses a highly subjective constituent selection process which is quite challenging to decode.
  • In this insight, we take a look at Quiddity’s approach to solving this Hang Seng constituent selection puzzle and the historical performance of past rebalance events.

Xiaomi(1810.HK): Huawei’s Restrictions (Another) Signal of More to Come

By Shawn Yang

  • Likely new 4G restrictions will delay Huawei’s ability to launch mid-range offerings at volume. Xiaomi stands to gain 1.2ppts of share in 2024 vs. our prior forecast. 
  • However, new limits are long-term negative, as it (1) raises the chance for cascading limits on China 3Cs; (2)  triggers reduced 3C electronics demand; (3) weaker industry electronics demand.
  • The impact of the latest set of restrictions will likely prove net negative, in our view, as a result we re-iterate our SELL rating and HK$7.3 TP.

O2Micro Shareholders Approve Merger. Completion Remains Opaque

By David Blennerhassett

  • At the EGM held on January 31, O2Micro International (OIIM US)’s shareholders voted in favoor of the Merger Agreement.
  • The Offerors didn’t have the necessary two-thirds for the voter to be a foregone conclusion, therefore the outcome wasn’t assured. Although it was an okay offer. With proxy advisor support.
  • Yet even after the vote, this is still trading 7.1% below terms. The drawn-out completion of Glory Star New Media Group Holdings (GSMG US) is evidently uppermost in investors’ minds. 

Meta Platforms 4Q22: Zuckerberg Got Religion?

By Aaron Gabin

  • Meta lowered 2023 expense guide by $5B (or 5%)  to $89bn-$95bn and capex guide by $4B (or 11%) to $30bn-$33bn
  • Metaverse spending continues, META lost $4.3B on $700M in revenue this quarter and losses are expected to accelerate in 2023. 
  • Zuck said the word efficiency 18x and AI 15x…Evidently, these are his priorities!

Peris.ai, a Cybersecurity Startup Built by Ritase Co-Founder, Gets East Ventures Backing

By e27

  • Indonesian cybersecurity-as-a-service startup Peris.ai has raised an undisclosed sum in funding led by East Ventures, with participation from Magic Fund.
  • The startup will use the money to build and enhance its cybersecurity platform, train Machine Learning and AI capabilities, and nurture the ethical hacker community.
  • Peris is supported by a community of more than 1,200 ethical hackers.

Visa Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, ESG & Other Risks (02/23)

By Baptista Research

  • Visa’s performance in the last quarter was solid and it managed an all-around beat as a result of consistent domestic volumes and transactions, as well as a persistent improvement in international travel.
  • Therefore, they are working to position Visa favorably for the future, whether with conventional issuers or co-brand partners.
  • 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.

KDDI (Buy) – Q3 22 Results Reaction: Super Mobile but Full-Year Targets Look Challenging

By Kirk Boodry

  • Core mobile revenue fell 4% but that is an improvement from 7-8% declines over the last few quarters and including value-added sales (VAS), retail mobile spend is up
  • Competitive challenges remain with elevated churn and visible declines in roaming revenue from Rakuten (although sequential change has been modest)
  • KDDI has kept guidance for FY22 operating income growth unchanged despite unanticipated expenses for rising fuel costs and the July network failure

A $6m Bet to Mix Crypto and Traditional Gaming

By Tech in Asia

  • Oh Baby Games said it’s working on an arcade racer that features recognizable figures. Called What The Kart, the company’s first blockchain-powered game will feature personalities from Crypto Twitter
  • The startup said What The Kart will also feature streamers and different communities across the Crypto Twitter sphere.
  • The game aims to mix recognizable characters with the tried-and-tested Mario Kart racing formula

Mastercard Inc: Treasury Intelligence Platform & Other Drivers

By Baptista Research

  • Mastercard delivered a decent result in the last quarter as consumer spending has been steady.
  • Mastercard has strengthened and expanded its long-standing relationship with Citi and Bank of America.
  • Mastercard’s open banking initiatives are supported by connections to over 3000 banks and other financial institutions in 18 markets.

E-Scooter Rental Startup WeMo Nets US$15M for Thailand, Indonesia Expansion

By e27

  • WeMo Corp, an e-scooter rental company based in Taiwan, has completed its US$15 million Series A+ round of financing led by AppWorks.
  • WeMo will use the money to expand its service to Southeast Asia, mainly in Indonesia and Thailand.
  • It is building partnerships with governments, investors, businesses, and transportation providers throughout the region to offer green transportation and fleet management services.

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Daily Brief TMT/Internet: Mercari Inc, Softbank Group, Konan Technology, O2Micro International, Omron Corp, International Business Machines, Lam Research, Servicenow Inc, Lumen Technologies, Cliq Digital AG and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • TOPIX Index Upweights: An Early Preview Of “The Big April Basket” 2023
  • Softbank Group (Neutral) – Japan’s Global Tech Play: Initiation of Coverage and Q3 Preview
  • Konan Technology: Surging Share Price Due to Global Interest in Chat GPT AI
  • O2Micro (OIIM US): US$5 Privatisation Approved, Spread Remains Wide
  • Omron (6645) | Q3 Beat, New Management Team
  • International Business Machines (IBM): New Analytics Offerings & Other Drivers
  • Lam Research Corp: Acquisition Of Semsysco GmbH & Other Drivers
  • ServiceNow Inc: New Offerings & Other Drivers
  • Lumen Technologies Turnaround: Navigating The Risk For A Great Potential Reward
  • CLIQ Digital – Progress made against KPIs

TOPIX Index Upweights: An Early Preview Of “The Big April Basket” 2023

By Janaghan Jeyakumar, CFA

  • The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation. 
  • For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation. 
  • Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2023.

Softbank Group (Neutral) – Japan’s Global Tech Play: Initiation of Coverage and Q3 Preview

By Kirk Boodry

  • In this deep dive report, we initiate coverage on Softbank Group with a ¥6,300 target price and Neutral recommendation
  • We are cautious on global tech and consider that the main risk to the story but a recovery in China sentiment provides some offset
  • For Q3 results next week, we expect the defensive theme of the last two quarters to continue

Konan Technology: Surging Share Price Due to Global Interest in Chat GPT AI

By Douglas Kim

  • Konan Technology is one of the competitors to Open AI (Chat GPT) in Korea. 
  • Konan Technology’s share price is up more than 4x this year. We would not chase the stock at current levels. We provide a framework of valuing Konan Technology. 
  • Four large Korean companies that could be long-term winners in AI space in Korea include Naver, Kakao Corp, SK Telecom, and KT Corp. SK Telecom owns 20.8% of Konan Technology. 

O2Micro (OIIM US): US$5 Privatisation Approved, Spread Remains Wide

By Arun George

  • O2Micro International (OIIM US)‘s US$5.00 per ADS privatisation offer from FNOF Precious Honour Limited was overwhelmingly approved by shareholders.
  • The key remaining condition precedent is obtaining the required regulatory approvals related to the listing rules of NASDAQ and the Cayman Islands. There are no Chinese regulatory approvals required.
  • The conditions precedent should be satisfied shortly. At the current price and for an end-March close, the gross and annualised spread to the offer is 6.4% and 45.6%, respectively. 

Omron (6645) | Q3 Beat, New Management Team

By Mark Chadwick

  • We expected the market to react positively to the Q3 beat. There are clouds on the order horizon, but that is well-known
  • A big management shuffle was also announced. We think the new CEO and CFO will follow the same LT Vision, but need to do more to meet rising capital costs
  • Our core bullish thesis rests on growth in Industrial Automation.  As expectations for interest rate hikes fade, we think investors will start to price in a 2023/4 order recovery

International Business Machines (IBM): New Analytics Offerings & Other Drivers

By Baptista Research

  • IBM delivered a strong result for the last quarter and managed an all-around beat as a result of excellent execution with respect to its AI and hybrid cloud strategy.
  • It delivered decent revenue growth in its business across geographies, infrastructure segments, consulting, and software.
  • The company added a series of innovative IBM software offerings in the AWS marketplace available as-a-Service.

Lam Research Corp: Acquisition Of Semsysco GmbH & Other Drivers

By Baptista Research

  • Lam Research ended the previous year on a strong note and posted an all-around beat in the last quarter.
  • The CSBG revenues in the company’s installed base business expanded faster than its growth in the installed base units.
  • We provide the stock of Lam Research with an ‘Underperform’ rating with a revision in the target price.

ServiceNow Inc: New Offerings & Other Drivers

By Baptista Research

  • ServiceNow continues performing well as its recent quarterly result met market expectations in terms of the reported revenues.
  • The company exceeded its subscription revenue guidance and drove strong expansion and renewal rates.
  • The free cash flow was above its guidance, and it beat the guidance with the growth in subscription revenue and also managed an earnings beat.

Lumen Technologies Turnaround: Navigating The Risk For A Great Potential Reward

By Moat Investing

  • Lumen with a Buy Rating: Anticipating Near-Term Rally. Lumen’s new CEO Brings a Track Record of Growth.
  • The company’s focus is on Fuel Core Business Development.
  • Lumens’ new CEO has a track record of growth and a track Record of growth for the company.

CLIQ Digital – Progress made against KPIs

By Edison Investment Research

CLIQ Digital’s FY22 update showed strong year-on-year growth across all KPIs, as it continues to roll out its subscription-based bundled-content streaming services. The results were broadly in line with our expectations and CLIQ finished the year with a stronger-than-expected net cash position of €10m. Looking ahead, driven by continued investment into marketing and content, management expects FY23 revenue and EBITDA to exceed €345m and €50m, respectively, reflecting growth of at least 25% and 15%. We will update our numbers following the publication of the annual report, scheduled for 21 February.


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Daily Brief TMT/Internet: Delta Electronics, GoTo, Hon Hai Precision Industry, Taiwan Semiconductor (TSMC) – ADR, Harvest Technology Group Ltd and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Delta Taiwan Vs. Thailand Monitor: SET50 Re-Inclusion Surge, Biggest Diversion in History
  • GoTo: Going Gets Tough
  • Hon Hai 4Q22 Results Preview: Brace for a Weak Print, But EV Structural Driver Intact
  • Taiwan Tech Weekly: Samsung Results; Will Bleed Competitors; Japan & Holland Join China Chip Ban
  • Harvest Technology Group Limited – Sales Moving up the Curve

Delta Taiwan Vs. Thailand Monitor: SET50 Re-Inclusion Surge, Biggest Diversion in History

By Vincent Fernando, CFA

  • Delta Thailand has surged post SET50 re-inclusion and the stock has dramatically outperformed both Delta Taiwan and Thailand’s SET Index.
  • For both stocks, forward growth rates are expected to be similar for 2023E and 2024E.
  • Delta Taiwan’s stake in Delta Thailand alone is now worth nearly 90% of its market cap.

GoTo: Going Gets Tough

By Shifara Samsudeen, ACMA, CGMA

  • GoTo’s share price lost more than 75% last year following its weaker-than-expected performance and lock-up expiry despite the company entering into a coordinated secondary offering of shares with pre-IPO shareholders.
  • The company’s share price has moved up 24% YTD partially driven by cost cutting measures that is expected to improve the company’s profitability.
  • Nevertheless, we expect this share price rebound to be temporary with e-commerce and food delivery market in Indonesia slowing down.

Hon Hai 4Q22 Results Preview: Brace for a Weak Print, But EV Structural Driver Intact

By Vincent Fernando, CFA

  • Hon Hai’s upcoming results date hasn’t yet been publicly announced, but last year it was 16 March.
  • Gross margin could come in well below consensus, and net profit could be minimal for 4Q22E. Look for reiteration of its longer-term margin target from management.
  • We remain structurally bullish on Hon Hai and see it as positioned favorably relative to U.S. China semiconductor restrictions. Our TP for Hon Hai is $155, over 50% above today.

Taiwan Tech Weekly: Samsung Results; Will Bleed Competitors; Japan & Holland Join China Chip Ban

By Vincent Fernando, CFA

  • Samsung reported 4Q22 detailed results – Semiconductor earnings evaporated and its memory subsegment likely lost money.
  • Samsung re-iterated that it would NOT cut capex despite the market downturn – Samsung appears ready to endure losses which is negative for Nanya Tech, SK Hynix, and Micron.
  • Japan and the Netherlands have joined the U.S. with chip technology restrictions for China – Hon Hai is a net winner.

Harvest Technology Group Limited – Sales Moving up the Curve

By Research as a Service (RaaS)

  • Harvest Technology Group Limited (ASX:HTG) licenses its proprietary video compression and encryption technology for low-bandwidth, high-latency applications needing secure real-time streaming video communication.
  • The company delivers solutions for data transfer from anywhere via satellite or congested networks.
  • Harvest offers a solution which enables real-time monitoring of remote locations, real-time feedback for field technicians, and secure video conferencing. 

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Daily Brief TMT/Internet: Tencent Music Entertainment Group, Tencent, Taiwan Semiconductor (TSMC) – ADR, NEC Corp, Bukalapak, Tobila Systems Inc, Texas Instruments, Microsoft Corp, Rovio Entertainment, X2M Connect ltd and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Quiddity Flow Expectations HSTECH Mar 23: Two Index Changes Possible
  • Tencent (700 HK): Risen 100% in Three Months, But Still 21%~44% Upside
  • Why Taiwan’s Semiconductor and Hardware Forecasts Might Still Be Too Optimistic
  • NEC (6701) | Strong Network Revenues
  • Bukalapak (BUKA IJ) – Thriving Within a Virtuous Circle
  • Tobila Systems: A Deep-Dive View
  • Texas Instruments Inc: New Chip Launches & Other Drivers
  • Microsoft Inc: Acquisition Of Fungible Inc & Other Drivers
  • Playtika/Rovio: Fortunate Birds
  • X2M Connect Limited – Tracking In-Line Across Key Variables

Quiddity Flow Expectations HSTECH Mar 23: Two Index Changes Possible

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes and the resultant capping flows for the Hang Seng Tech Index (HSTECH INDEX) in March 2023.
  • According to our estimation, there could be two changes for the HSTECH in March 2023 and there could be one-way index flows of US$365mn.
  • The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.

Tencent (700 HK): Risen 100% in Three Months, But Still 21%~44% Upside

By Ming Lu

  • We believe total revenue growth rate will accelerate from 4Q22 and grow by 9% in 2023.
  • We believe the operating margin will be stable from 4Q22 to 2Q23, but the margin will climb up from 3Q23.
  • We believe that EPS will increase by 16% and the stock will have an upside of 21%~44%.

Why Taiwan’s Semiconductor and Hardware Forecasts Might Still Be Too Optimistic

By Vincent Fernando, CFA

  • Inventory levels rose to highs in 3Q22 — Now increased margin pain may come through as we move through the latest earnings season.
  • Forecasts still assume relatively strong margins vs. history and thus appear at risk of disappointment.
  • Earnings forecasts, while assuming a down-cycle, are still assuming a relatively benign down-cycle.

NEC (6701) | Strong Network Revenues

By Mark Chadwick

  • We remain bullish on NEC as we believe that the company is one of the key beneficiaries of the shift to standalone 5G
  • NEC’s Network Services registered double-digit revenue and profit gains in Q3 on the back of growth in 5G equipment sales and IP income.
  • We believe that the current share price (+4% over the past 12m) and valuation (10x PE, 0.8x PB) do not reflect the positive mid-term outlook

Bukalapak (BUKA IJ) – Thriving Within a Virtuous Circle

By Angus Mackintosh

  • Bukalapak (BUKA IJ)  is one of Indonesia’s most differentiated digital economy players plus it is unusual in that it has one of the longest runways amongst peers at 15 years. 
  • Despite operating a marketplace model, the platform uses this to generate traffic for its other businesses including its O2O Mitra Bukalapak business and its growing online speciality store business. 
  • Bukalapak (BUKA IJ) also has strong ESG credentials, the most obvious of which is in the empowerment of MSMEs through its Mitra business. It is also making headway toward profitability.

Tobila Systems: A Deep-Dive View

By Steven Chen

  • This is our second Insight into Tobila Systems – the absolute dominator in the niche of fraud/spam call and message filtering services in Japan;
  • We like the high-quality, unique assets owned by the company, although capital allocation appears to stand out as a wild card in our formula of long-term shareholder-value creation;
  • At the current level, we would hold the shares firmly and wait patiently for more opportunistic offerings from Mr. Market to accumulate more shares.

Texas Instruments Inc: New Chip Launches & Other Drivers

By Baptista Research

  • Texas Instruments delivered a strong set of results in the quarter, with revenue of $4.7 billion and a gross profit of $3.1 billion resulting in an all-around beat.
  • The company’s gross profit fell from a year ago due to lower revenue, higher capital expenses, and the conversion of LFAB-related charges to the cost of revenue.
  • However, given the strong earnings, the company distributed $1.1 billion in dividends during the quarter and spent $848 million on stock repurchases.

Microsoft Inc: Acquisition Of Fungible Inc & Other Drivers

By Baptista Research

  • Microsoft delivered a mixed set of results for the last quarter as its revenues failed to meet Wall Street expectations but the company managed an earnings beat.
  • Revenue for the Microsoft Cloud surpassed $27 billion, increasing 22% and 29% in constant currency.
  • Besides, the company made its Azure OpenAI widely available and has already been used by over 200 clients, ranging from KPMG to Al Jazeera.

Playtika/Rovio: Fortunate Birds

By Jesus Rodriguez Aguilar

  • Highly leveraged mobile-games developer Playtika goes mildly hostile in its pursuit for Angry Brids creator Rovio, albeit with a generous possible offer at €9.05/share (11.1x EV/Fwd EBITDA).
  • The stakes controlled by the Heds total c.32% (source: Rovio), making a hostile offer prone to failure. The shares aren’t succeeding though, and trade 36% below its 2017 IPO price.
  • The shares are trading at a 19.3% discount to the possible offer (and 14.6% discount to my DCF-based fair-value estimate). At this level, they do not seem expensive.

X2M Connect Limited – Tracking In-Line Across Key Variables

By Research as a Service (RaaS)

  • X2M Connect Limited (ASX:X2M) has updated several key variables in conjunction with its December quarter 4C release.
  • Most key variables were in-line or ahead of RaaS expectations including a cash-flow positive Q2, device growth of 23% on September 2022 to 361k (RaaS 345k), H1 FY23 revenue +96% to $9.0m (RaaS $9.2m), cash costs of ~$4.3m (RaaS $4.6m) and a cash balance of $3.05m.
  • Post-month end we estimate a cash balance closer to $3.5m on receipt of a $1.3m R&D credit offset by the repayment of a related R&D loan. 

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Daily Brief TMT/Internet: Taiwan Semiconductor (TSMC) – ADR, KOSDAQ 150 Index, Kanematsu Electronics, Intel Corp, STMicroelectronics NV, Buzzfeed and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums
  • Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts
  • Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest
  • Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E
  • STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View
  • AI Takes the Write Way

Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums

By Vincent Fernando, CFA

  • TSMC’s ADR premium is in the double digits, representing a major breakout.
  • ASE Technology’s premium is also in the double digits and the company will be reporting results next week.
  • Chunghwa’s premium is high for its tight range, and results will be coming out for the company this week.

Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts

By Sanghyun Park

  • KRX (and Korea FSS) no longer collects foreign investors’ entire trade records in real time, as foreign investors are no longer traced based on their unique registration numbers.
  • Foreign investors are likely to engage in more aggressive short-term trading. We need to be prepared for significant price volatility, mainly for small and mid-cap stocks.
  • System changes for trade history management changes will be completed within the third quarter. So, we will likely witness new trading patterns from the fourth quarter of this year.

Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest

By Arun George


Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E

By Vincent Fernando, CFA

  • Intel reported weak results at the end of last week, with its PC segment hit worst.
  • PC total addressable market to fall by 7.5% based on Intel’s guidance.
  • Asus and Acer inventory levels show the problem impacting Intel, and for the industry as a whole right now.

STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View

By Alexis Dwek

  • ST reported solid Q4 results, 4% above consensus expectations at the EBIT level. Q1 2023 guidance is much better than consensus expectations on sales (11% beat) 
  • ST confirmed its view that 2023 will be another growth year, with sales indicated at US$17.3bn, which is +7.5% year over year and well above consensus
  • Stock is up 21% since our initial note. We still see over 30% upside from here

AI Takes the Write Way

By subSPAC

  • Digital Publisher BuzzFeed’s stock has seen an epic rally in the past week, with most of the gains driven by the company’s decision to use Artificial Intelligence tools like OpenAI’s ChatGPT to build quizzes and write content.
  • Essentially, investors have been cheering about the potential for improved profitability and content that can be written at scale by using these various tools.
  • This is a welcome change for the media outlet, which has seen its advertising revenues plummet, its site traffic decline across the board, and its balance sheet crumble.

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Daily Brief TMT/Internet: Kanematsu Electronics, SenseTime Group, Tencent, Tyro Payments, MongoDB Inc, Jabil Circuit, Dropbox Inc, Accenture Plc Cl A and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Kanematsu Electronics (8096 JP): JPY6,200 Tender Offer from Kanematsu Corporation
  • Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani
  • Kanematsu Electronics (8096) – ¥6200/Share Tender Offer by Parent – Easy Takeout
  • ECM Weekly (29th Jan 2023) – Adani, Oasis, Mankind Pharma, ZJLD, India IPO Bookrunners
  • Tyro Payments (TYR AU): Bid Revived as Potentia Secures Due Diligence
  • MongoDB Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)
  • Jabil Inc: Major Drivers
  • Dropbox Inc: The FormSwift Acquisition & Other Drivers
  • Accenture plc: Acquisition of FiftyFive5 & Other Drivers

Kanematsu Electronics (8096 JP): JPY6,200 Tender Offer from Kanematsu Corporation

By Arun George

  • Kanematsu Electronics (8096 JP) has recommended Kanematsu Corp (8020 JP)’s tender offer of JPY6,200 per share, an 32.9% premium to the undisturbed price (27 January).
  • The transaction is a two-step acquisition through a cash tender offer and subsequent squeeze-out. The lower limit of the offer has been set to meet the 66.67% ownership ratio.
  • The tender offer is attractive as it represents an all-time share price high and a premium to peer multiples. This suggests a done deal. 

Index Rebalance & ETF Flow Recap: NKY, LQ45, New Deal, URA, NIFTY, Stock Connect, SenseTime, Adani

By Brian Freitas


Kanematsu Electronics (8096) – ¥6200/Share Tender Offer by Parent – Easy Takeout

By Travis Lundy

  • Kanematsu Corp (8020 JP) announced two tender offers Friday to take out subsidiaries. One more liquid one. One very small sub. This is the larger, easier deal. 
  • Kanematsu Electronics is an IT shop, designing and executing system integration and maintenance services. It is a great business. The takeout is a 33% premium to an all-time high.
  • It might still be a bit cheap, but it is not egregious, and it would be quite difficult to block. 

ECM Weekly (29th Jan 2023) – Adani, Oasis, Mankind Pharma, ZJLD, India IPO Bookrunners

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • While the holiday shortened week didn’t see much action in Asia, but there was one more ADR filing in the US, adding to the mini-pipeline.
  • Adani’s ongoing FPO was the only live deal this week, although it had enough drama to make up for the lack of other deals.

Tyro Payments (TYR AU): Bid Revived as Potentia Secures Due Diligence

By Arun George

  • Tyro Payments (TYR AU) has offered, Potentia, four weeks of due diligence access to “develop a significantly improved proposal.” The Board rejected Potentia’s previous A$1.60 offer on 12 December.
  • Since the rejection of the offer, the FY2023 guidance has been upgraded and peers have re-rated. Therefore, Potentia can afford to be more generous with its terms. 
  • Press reports suggest that an offer of around A$1.85 per share would be supported by shareholders. We would be buyers as Tyro is undervalued at the last close price.

MongoDB Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

By Baptista Research

  • MongoDB performed well in the third quarter in both financial and operational terms.
  • In addition, ISVs are continuing to develop their solutions using MongoDB in an increasing number of cases.
  • MongoDB is looking to achieve profitable growth and focus on acquiring new workloads from both existing and new customers.

Jabil Inc: Major Drivers

By Baptista Research

  • Jabil’s Q1 performance was impressive and the company delivered an all-around beat which helped propel its stock price.
  • The company’s strength resulted in the quarter’s double-digit rise in revenue, core operating income, and core diluted profits per share.
  • 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.

Dropbox Inc: The FormSwift Acquisition & Other Drivers

By Baptista Research

  • Despite a series of macroeconomic challenges, Dropbox had a good last quarter and managed an all-around beat.
  • They also continue to return a sizable percentage of their free cash flow to shareholders through share repurchases.
  • Although they are experiencing moderate growth in their Sign business, it is important to set Dropbox Sign apart from conventional eSign solutions.

Accenture plc: Acquisition of FiftyFive5 & Other Drivers

By Baptista Research

  • Accenture continued its acquisition-led growth strategy in the last quarter and delivered another all-around beat, increasing operating margin while making significant investments in related businesses.
  • Engineering and industrial digitization are still in high demand and experienced strong double-digit growth in Q1.
  • Furthermore, they are assisting Celanese to undergo a digital transformation that will boost their manufacturing production resilience, productivity, and plant operations predictability.

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Daily Brief TMT/Internet: Tyro Payments, Intel Corp, Teradyne Inc, Dollar Index, NortonLifeLock, DocuSign Inc, Five9 Inc, Cognizant Tech Solutions A, Amkor Technology, Lumentum Holdings and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Tyro Offers Due Diligence To Potentia
  • Intel 4Q22: How Many Kitchen Sinks?
  • Teradyne Inc: Merger of AutoGuide Mobile Robots & MiR & Other Drivers
  • Major Top on U.S. Dollar; Overweight Non-U.S. And Europe/UK; Buys in Tech, Comm., Discretionary
  • Gen Digital (formerly Norton Lifelock): Financial Forecasts
  • DocuSign Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)
  • Five9 Inc: R&D Expansion & Other Drivers
  • Cognizant Technology Solutions: Acquisition Of AustinCSI & Other Drivers
  • Amkor Technology: Entry Into TSMC’s OIP 3DFabric Alliance & Other Developments
  • Lumentum Holdings: R&D Expansion & Other Drivers

Tyro Offers Due Diligence To Potentia

By David Blennerhassett

  • After Potentia bumped indicative terms to A$1.60/share last month, Tyro Payments (TYR AU)‘s board considered the revised terms remained below what is considered fair, and has ceased all discussions.
  • Following discussions between Tyro and Potentia, the Tyro Board is now providing Potentia with a 4-week period of due diligence to “enable Potentia to develop a significantly improved proposal“.
  • No indicative price was mentioned. Mike Cannon-Brookes’ Grok Ventures was open to a competing proposal of A$1.85/share. 

Intel 4Q22: How Many Kitchen Sinks?

By Aaron Gabin

  • How many kitchens does Intel have? Intel guided 1Q2023 revenues to $11B, down 40% YoY / 22% QoQ and 21% (!!) below consensus $14B. 
  • 1Q23 gross margins ex-accounting change guided to 36%, the lowest since 1986!
  • Intel’s worsening FCF means dividend cuts are on the table.

Teradyne Inc: Merger of AutoGuide Mobile Robots & MiR & Other Drivers

By Baptista Research

  • Teradyne delivered a solid result in the last quarter as the company surpassed analyst expectations with respect to revenues as well as earnings.
  • At the operating level, it cleared some supply bottlenecks that allowed the company to ship more of semiconductor test products than previously planned.
  • Automation Group’s quarter revenue, in constant currency, grew.

Major Top on U.S. Dollar; Overweight Non-U.S. And Europe/UK; Buys in Tech, Comm., Discretionary

By Joe Jasper

  • 2023 gameplan remains unchanged; we see limited upside from here for ACWI-US, and we expect a rangebound year of trading on ACWI-US with $93 capping upside and $75-77 capping downside
  • We also remain overweight Europe/UK, we want to add exposure on pullbacks to China/Hong Kong/EM, and overweight non-U.S. equities (MSCI ACWI ex-US) relative to MSCI ACWI
  • We highlight buy ideas within Technology, Communications, and Consumer Discretionary. The UK/Europe and Hong Kong/China continue to make up the majority of our buy recommendations

Gen Digital (formerly Norton Lifelock): Financial Forecasts

By Baptista Research

  • After combining the Norton LifeLock and Avast businesses, the company has been renamed as Gen Digital – a corporation with the goal to develop technological solutions that will allow users to profit fully from the online environment while maintaining their privacy and confidence.
  • Today, the company’s brand portfolio includes well-known brands, including Norton, Avast, LifeLock, Avira, AVG, ReputationDefender, and CCleaner.
  • In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

DocuSign Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

By Baptista Research

  • DocuSign delivered solid quarter results despite the challenging operating environment, surpassing Wall Street expectations in terms of both, the top and bottom lines.
  • However, the company stills see healthy results with customers recognizing DocuSign high-ROI applications that are cost-effective, efficient, and easy to use.
  • DocuSign is continuing its innovation on the CLM front, solidifying its execution, customer validation, and vision within the CLM space.

Five9 Inc: R&D Expansion & Other Drivers

By Baptista Research

  • Five9 delivered an all-around beat in its last result as the company stock has seen a reversal in fortunes over the past few weeks.
  • The company gets leverage from its channels, ecosystem of partners, and system integrators, which helped it build its pipeline in its last result.
  • Overall, we provide the stock of Five9 with a ‘Hold’ rating and a revision in the target price.

Cognizant Technology Solutions: Acquisition Of AustinCSI & Other Drivers

By Baptista Research

  • With its results around the corner, it would be interesting to look at Cognizant’s results from the last quarter.
  • The company had delivered revenue below the guidance range of the management, primarily driven by a lower billable headcount in North America.
  • Cognizant has been seeing revenue growth from health services and from products and resources driven by demand for its digital services among travel and hospitality, consumer goods, automotive, and logistics clients.

Amkor Technology: Entry Into TSMC’s OIP 3DFabric Alliance & Other Developments

By Baptista Research

  • Amkor Technology delivered excellent results in the last quarter and managed an all-around beat as its end markets showed a very strong demand.
  • Whereas market forecasts are weakened in some areas and the industry has been facing near-term macroeconomic headwinds, demand for the company’s advanced packaging technology stays strong, and the momentum strengthened in this quarter.
  • Revenue from computing end markets increased, and the test business of the company grew.

Lumentum Holdings: R&D Expansion & Other Drivers

By Baptista Research

  • Lumentum Holdings delivered a strong result in the last quarter and managed an all-around beat.
  • This quarter reported strong demand from customers.
  • Overall, the demand for the Telecom products of Lumentum remains strong, particularly in edge networking applications.

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Daily Brief TMT/Internet: SenseTime Group, Taiwan Semiconductor (TSMC) – ADR, Cellnex Telecom Sau, Ubiquiti Inc., MotorK Ltd, Harvest Technology Group Ltd, Acal PLC and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • SenseTime (20 HK): Index Inclusions Incoming?
  • ASML & Lam Results: Key Take-Aways for Semiconductors in 2023
  • AMT/Cellnex: Possible Combination?
  • UI: Inventory Environment
  • MotorK – Promising signs for 2023
  • HTG – EU Defence Force Needs Secure Communications
  • discoverIE Group – Better trading and acquisition drive upgrades

SenseTime (20 HK): Index Inclusions Incoming?

By Brian Freitas

  • SenseTime Group (20 HK) was added to the Non-SDN Chinese Military-Industrial Complex Company (NS-CMIC) list on 10 December 2021. So, the stock is not a part of any global indices.
  • There is a possibility that the stock is no longer restricted to U.S. investors and that could lead to multiple index inclusions over the next few months.
  • Inclusion in the MSCI China Index could take place in February or May while inclusion in the FTSE All-World Index could take place in March.

ASML & Lam Results: Key Take-Aways for Semiconductors in 2023

By Vincent Fernando, CFA

  • ASML and Lam Research’s latest guidance implies extremely different near-term revenue outlooks but shows an industry pulling back near-term while investing for long-term.
  • Results show the much weaker situation for Memory chips vs. Logic chips, and little discussion of a recovery for Memory from the firms so far.
  • Firms servicing long-term strategic, specialized demand from customers are indeed performing better than those servicing more commoditized demand.

AMT/Cellnex: Possible Combination?

By Jesus Rodriguez Aguilar

  • Press reported (20 January) that American Tower and Brookfield are preparing to launch a takeover bid for European towerco leader Cellnex with the intention of delisting the business.
  • Cellnex on 16.9x EV/22e EBITDA is trading cheaply vs AMT (21.6x) and a diversified unique asset. Its towers would come at €350,000/tower vs. recent deals at €500,000.
  • Top ten shareholders own 57.41%. The last rights issue was done at €36.33/share. At what price those shareholders could be bought out? Unlikely at less than a 25% premium, €45.5/share.

UI: Inventory Environment

By Hamed Khorsand

  • The enterprise segment has fueled revenue growth at Ubiquiti (UI) and it should remain the same in the fiscal second quarter
  • Ubiquiti has expanded its product offering for enterprise customers where it includes a complete solution down to the EV charging station
  • We have made several adjustments to our earnings model. We continue to assume gross margin rising sequentially due to lower costs

MotorK – Promising signs for 2023

By Edison Investment Research

For FY22, MotorK reported a record Q4, driven by its focus on higher-value enterprise contracts, the launch of its SparK platform and the continued migration of acquired companies onto the platform. Annualised recurring revenue (ARR), management’s main metric for tracking performance, was €26.9m, falling short of our €28m forecast and management’s guided range of €28–30m. FY23 and beyond looks set to benefit from a large pipeline of contract opportunities, with €5.2m of additional ARR committed as at 31 December 2022. Growth should be supported by maintaining low customer churn and high net revenue retention.


HTG – EU Defence Force Needs Secure Communications

By Research as a Service (RaaS)

  • Harvest Technology Group Limited (ASX:HTG) licenses its proprietary video compression and encryption technology for low-bandwidth, high-latency applications needing secure real-time streaming video communication.
  • The company delivers solutions for data transfer from anywhere via satellite or congested networks.
  • Harvest offers a solution which enables real-time monitoring of remote locations, real-time feedback for field technicians, and secure video conferencing. 

discoverIE Group – Better trading and acquisition drive upgrades

By Edison Investment Research

discoverIE’s Q323 trading update confirmed continued good momentum, with FY23 underlying earnings tracking ahead of board expectations. The company has completed the previously announced acquisition of Magnasphere, adding a high margin sensor business to the Sensing & Connectivity division. We have upgraded our forecasts to reflect better trading and the accretive acquisition and note that gearing remains below the company’s target range, providing headroom for further M&A.


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Daily Brief TMT/Internet: Sea Ltd, Alibaba (ADR), Samsung Electronics Pref Shares, Broadcom Limited, Juniper Networks, Godaddy Inc Class A, Sunpower Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Sea Ltd: Game Over
  • Alibaba (BABA US): What Is Next After Strong Rally?
  • Samsung Electronics 1P Pushed to a Substantial Diversion (Below -2σ) Today
  • Broadcom Inc: New Test Solutions With Rohde & Schwarz & Other Drivers
  • Juniper Networks: Agreement With Powerco & Other Developments
  • GoDaddy Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)
  • SunPower Corporation: Partnership With General Motors & Other Drivers

Sea Ltd: Game Over

By Oshadhi Kumarasiri

  • We don’t see a way for Sea Ltd (SE US)’s e-commerce business to turn profitable in the next few years.
  • For the moment, the Digital-Entertainment segment is capable of absorbing most of e-commerce losses, but we are expecting the segment profitability to fall 70% to $135m per-quarter over the-next two-years.
  • Once that happens, we think it will be game over for Sea Ltd.

Alibaba (BABA US): What Is Next After Strong Rally?

By Eric Chen

  • Bullish sentiments doubled BABA share price post 20th Party congress, as investors look beyond a soft December quarter and focus on re-opening prospects and flashing regulatory green lights.
  • Expect single-Digit GMV growth, more disciplined OPEX and hence margin recovery to generate RMB180 billion non-GAAP net profit for BABA by FY25. Materializing fundamental recovery will support continued re-rating.
  • That said, we also see headwinds to multiple expansion and expect 18-20x PER (among lowest in sector) for FY25, implying 21%/28% compounded annual return over FY23-25.

Samsung Electronics 1P Pushed to a Substantial Diversion (Below -2σ) Today

By Sanghyun Park

  • SamE PREF’s relative underperformance compared to ORD has been getting a bit worse lately. And finally, today, it went down below -2.0σ on a 20-day moving average.
  • This much diversion is the first in recent months, and the pref discount is close to last year’s peak. The dividend yield difference is also the widest in recent years.
  • The current diversion appears to be a byproduct of the SamE overbuying amid the recent market rally, and we should expect a quick reversion.

Broadcom Inc: New Test Solutions With Rohde & Schwarz & Other Drivers

By Baptista Research

  • Broadcom delivered a strong result in the last quarter with revenues growing 21% year-on-year, surpassing Wall Street expectations.
  • This growth was driven by the company’s strong partnerships and increased R&D investments that enabled accelerated adoption of its new-generation technologies.
  • In the quarter, semiconductor solution revenue and infrastructure software revenue grew.

Juniper Networks: Agreement With Powerco & Other Developments

By Baptista Research

  • Juniper’s stock has seen good upward momentum with its results around the corner.
  • The company had delivered better-than-expected results in the last quarter with its total revenues as well as earnings exceeding Wall Street expectations.
  • The cloud business of Juniper also delivered solid quarterly result with revenue growth.

GoDaddy Inc: Major Drivers, Financial Forecasts, DCF & Comparables Valuation, Key Risks (01/23)

By Baptista Research

  • GoDaddy delivered a mixed set of results for the last quarter.
  • However, it did manage an earnings beat which was largely a result of the robust consumer retention.
  • This quarter, GoDaddy launched free SSL on almost all innovative web hosting plans in its major markets.

SunPower Corporation: Partnership With General Motors & Other Drivers

By Baptista Research

  • SunPower delivered an all-around beat in the last quarter as the value of the company’s storage and solar systems continues to rise with the rise in utility rates.
  • Consumer demand in the quarter continues to be quite strong and it added 23,1000 new customers this quarter which displays a persistent level of robust consumer demand for residential solar, particularly SunPower.
  • We provide the stock of SunPower with an ‘Outperform’ rating and a revision in the target price.

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