TMT/Internet

Samsung SDI and LG Chem are expected to be newly included in the index, while Hana Financial and KT&G Corporation are predicted to be excluded.
The correlation between the price movement and the flow direction on the rebalancing trading day of constituent changes from the past reviews was quite high.
We can set the price impact expectation for the upcoming review even more aggressively, given that the size of the flow x DTV is more significant than in previous cases.

Calnex: De-Facto Standards for High-Speed Network Infrastructure Worldwide

By Steven Chen

Despite a micro-cap status, Calnex is the key player behind the evolution of high-speed network infrastructure on a truly global basis;
The company has a market-dominant position at several critical points across the global telecoms ecosystem;
The recent plunge in share price demonstrates Mr. Market’s short-termism and presents a good opportunity for incoming shareholders, in our opinion.

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Apr 15

Daily Brief TMT/Internet: Citizen Watch, WCP, Ecopro BM Co Ltd, Longcheer Technology Shanghai, Baidu, Amazon.com Inc, International Business Machines and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways
A High Conviction Long Short Trade in KODEX Battery ETF Rebalancing in June
Ecopro BM: Considering on a CB Issuance of 500 Billion Won
Shanghai Longcheer: Leading ODM Vendor Leveraging Its Expertise for AR/VR
[Baidu (BIDU US) Target Price Change]: Better Recovery with Leading Position in AIGC
Amazon: Having A Long-Term View Doesn’t Mean You Should Disregard Immediate Risks
IBM: Don’t Be Fooled By Recent Share Price Performance

Citizen Watch (7762) : Super-Aggressive Buyback Likely Ending Soon – Beware of Risks Both Ways

By Travis Lundy

In mid-February 2023, Citizen Watch (7762 JP) announced another buyback. It had averaged nearly two small buybacks a year for the past four years for a total of ¥10bn.
This new one was ¥40bn, which assuming a 20% share price jump was 12% of ADV for a year. Bigly! We got the 20% jump, then not much more.
But Citizen has been buying fiercely. In the first 25 days of trading they averaged 25.8% of volume and bought back 11.5% of shares out. There’s a story here.

A High Conviction Long Short Trade in KODEX Battery ETF Rebalancing in June

WCP will likely be included in the rebalancing of Samsung KODEX Secondary Battery Industry ETF in June. And we should consider the possibility of this happening to be quite high.
We can expect a daily passive inflow of around 0.3x compared to WCP’s typical DTV. The practical correlation with the price should be higher than the theoretical level.
We should consider using SKIET, which engages in the same business in the same sector, as a hedge. WCP/SKIET Long Short achieved considerable performance within the past week’s window.

Ecopro BM: Considering on a CB Issuance of 500 Billion Won

According to Hankyung Business Daily, Ecopro BM Co Ltd (247540 KS) is considering on issuing a CB worth 500 billion won to various private equity and asset managment companies.
We would be negative on the potential CB issuance of nearly 500 billion won by Ecopro BM.
The potential issuance of this CB is a signal from the management that it is trying to capitalize on the recent sharp increases in share price to raise more capital.

Shanghai Longcheer: Leading ODM Vendor Leveraging Its Expertise for AR/VR

Shanghai Longcheer Technology is a Chinese company that specializes in providing smart products and services including smart phone ODMs, tablets, VR/AR headbands, smart wearables and smart home products.
Founded in 2022, the company is one of top three global integrated service providers of smartphone ODMs.
Longcheer’s previous attempt to go public in 2018 was rejected, however, it has revived its IPO plans and in 2023, expressed its interest in seeking a public listing.

[Baidu (BIDU US) Target Price Change]: Better Recovery with Leading Position in AIGC

By Shawn Yang

We estimate that Baidu’s 1Q23/2023 bottom line would beat cons. by 13.2%/6.5%, mostly driven by better-than-expected recovery of ads business and cost-saving measures.
We remain optimistic about Baidu’s AIGC leading position, because Baidu still gains the edge for its first-mover advantage and continuous investment.
Maintain BUY rating and raise TP to US$175, implying 17.9X PE in 2023

Amazon: Having A Long-Term View Doesn’t Mean You Should Disregard Immediate Risks

By Vladimir Dimitrov, CFA

After losing nearly a third of its value, Amazon looks more attractive than a year ago.
Investors should be mindful of recency bias when evaluating Amazon’s share price attractiveness.
The unique business model also poses some risks that should be considered regardless of one’s investment horizon.

IBM: Don’t Be Fooled By Recent Share Price Performance

By Vladimir Dimitrov, CFA

IBM has delivered a positive return of nearly 20% over the past two years, but that has little to do with actual business performance.
In addition to sluggish growth, IBM’s declining profitability remains a problem.Issues related to the company’s high debt load, low dividend coverage and an addiction to acquisitions have not gone away.
Being an IBM (NYSE:IBM) shareholder hasn’t been easy over the years as the market continues to make new highs, while IBM still trades at levels from 2010.

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Apr 14

Daily Brief TMT/Internet: Global Unichip, Tata Technologies, Temenos AG, LTIMindtree, Tata Consultancy Svcs, Infosys Ltd, JD.com Inc (ADR), Soluna Holdings and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

MSCI Taiwan May QCIR: Potential Inclusions to Drive Deletions
Tata Technologies Pre-IPO – The Negatives – Still Has a Few Issues
Temenos (TEMN SW; TMSNY US): M&A Looks Imminent
Quiddity Leaderboard NIFTY Sep 23: LTIMINDTREE Could Be an Intra-Review NIFTY 50 ADD
TCS: Q4FY23 Growth and Margins Weaker than Expected
Infosys: Weak Q4FY23 Earnings
[JD.com (JD US, SELL, TP US$27) Earnings Preview]: Slow-Growth and Competitive Pressure Remain
More Milestones Reached on the Path of the Company’s Evolution

MSCI Taiwan May QCIR: Potential Inclusions to Drive Deletions

By Brian Freitas

Based on closing prices from 12 April, we forecast 2 adds and 2 deletes for the MSCI Taiwan Index at the May QCIR.
Global Unichip (3443 TT) is a high probability index inclusion and that will drive the deletion of Giant Manufacturing (9921 TT) from the index.
Wistron Corp (3231 TT) is a potential inclusion and that could result in the deletion of Win Semiconductors (3105 TT) from the index.

Tata Technologies Pre-IPO – The Negatives – Still Has a Few Issues

By Sumeet Singh

Tata Technologies (TATATECH IN) (TT) is looking to raise around US$600m in its upcoming India IPO.
Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers.
In this note we talk about the not-so-positive aspects of the deal.

Temenos (TEMN SW; TMSNY US): M&A Looks Imminent

By Vijay Lohia, CFA

Temenos is an attractive takeover candidate with multiple M&A speculation in the media in the last 12-18 months.
The probability of Temenos being taken over continues to increase especially after the fresh round of banking industry turmoil witnessed in the last few weeks.
At a buy-out multiple of 10x EV/sales, Temenos would be worth CHF110 per share which is roughly 72% upside from here.

Quiddity Leaderboard NIFTY Sep 23: LTIMINDTREE Could Be an Intra-Review NIFTY 50 ADD

By Janaghan Jeyakumar, CFA

In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.
A couple of these names could become intra-review additions if the HDFC Limited (HDFC IN) – HDFC Bank (HDFCB IN) Merger closes prior to the September 2023 Rebalance.
Apart from that, there could be five ADDs/DELs for the NIFTY 100 index which by definition will also be added/deleted from the NIFTY Next 50 index.

TCS: Q4FY23 Growth and Margins Weaker than Expected

By Ankit Agrawal, CFA

TCS reported weaker than expected growth and margins. YoY growth in constant currency (CC) terms came in at just 10.7%. Operating Margin (OPM) came in at 24.1% vs 25% expected.
North America in particular has seen some demand slowdown, largely due to deferment of discretionary projects and delayed decision making. Europe is improving as energy crisis is receding.
Looking forward, Europe, in particular UK, is likely to lead the growth. North America may also come back as the banking crisis there seems to have been contained.

Infosys: Weak Q4FY23 Earnings

By Ankit Agrawal, CFA

Infosys reported a weak Q4FY23 with QoQ CC (Constant Currency) growth down by -3.2%. OPM (Operating Margin) contracted QoQ by -50bp to 21%, and was weaker than 21.5%+ expected.
Led by macro concerns, demand outlook remains cautious with FY24 growth guided to be 4-7% YoY in CC terms.
The bottom end of the FY24 OPM guidance has been lowered to 20% vs 21% achieved in FY23. Overall OPM guidance for FY24 is 20-22%.

[JD.com (JD US, SELL, TP US$27) Earnings Preview]: Slow-Growth and Competitive Pressure Remain

By Shawn Yang

We expect JD to report C1Q23 top-line and non-IFRS net income (1.7%) and (12%) vs. consensus, respectively.
We expect revenue to decline (1%) YoY in 1Q23 and grow just 3% YoY in FY23, due to (1) slow recovery in key product categories like electronics; (2) team restructuring;
And (3) competitive landscape. We maintain SELL and US$27 TP. Our TP implies 10x 2024 P/E.

More Milestones Reached on the Path of the Company’s Evolution

By Water Tower Research

Project Dorothy interconnection now complete and ready for energization.
Soluna announced that it has completed the final interconnection construction, setting up for the energization of the first 25 MW phase of the project, which will soon be followed by the 25 MW phase (Dorothy 1B).
The final energization requests have been submitted to ERCOT (the grid operator) and we expect the project to be energized in the coming weeks.

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Apr 13

Daily Brief TMT/Internet: Tencent, Mirae Asset Tiger 200 It ETF, Tata Technologies, Shift Inc, Hangzho Rokid Technology, Netgear Inc, Verisign Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Tencent (700 HK) – This Is Not the Selldown You Are Looking For
An Alternative Flow Trading Angle for K200 Rebalancing in June
Tata Technologies Pre-IPO – The Positives – A Tata Group Listing After a Long Lull
High Conviction Shift: Margins at Record High with Strict Management and Operational Improvement
Rokid Corporation: AR Player Catering to the Industrials Sector
NTGR: Promotion Stability a Positive
VeriSign Inc.: Initiation of Coverage – Recent Management Focus & Key Drivers
VeriSign Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

Tencent (700 HK) – This Is Not the Selldown You Are Looking For

By Travis Lundy

On April 11, Prosus (PRX NA) made an Update on Repurchase Programme that it had repurchased shares in the market from the 3-7 April. They do so every week.
This one said they would move 96 million shares of Tencent (700 HK) currently held in non-transferrable shares into CCASS so they could be sold.
The ADRs dropped in New York time. Tencent shares fell hard today. If the share price fell because of a block offering, that would be unwarranted.

An Alternative Flow Trading Angle for K200 Rebalancing in June

In KOSPI 200 IT Sector Index rebalancing in June, we should consider using Samsung SDS as a hedge for short positions on KakaoPay from a day trading perspective.
The expected performance of traditional flow trading based on passive impact has become uncertain due to flexible rebalancing trading by local pensions and short selling resumption on K200 new entrants.
As such, flow events on these sector indices that are still pretty much under the radar in the market could be a meaningful alternative for us.

Tata Technologies Pre-IPO – The Positives – A Tata Group Listing After a Long Lull

By Sumeet Singh

Tata Technologies (TATATECH IN) (TT) is looking to raise around US$600m in its upcoming India IPO.
Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers.
In this note we talk about the positive aspects of the deal.

High Conviction Shift: Margins at Record High with Strict Management and Operational Improvement

Shift Inc (3697 JP) reported 2QFY08/23 results on Monday. Revenue increased 34.7% YoY to ¥21.0bn (vs consensus ¥21.3bn vs guidance ¥21.1bn) while OP grew 74.8% YoY to ¥3.3bn (vs consensus ¥2.4bn).
Both GPM and OPM improved significantly reaching record highs as unprofitable projects came to an end with cost optimisation initiatives removing previous concerns over declined margins in 1QFY08/23.
Shift’s share price closed at ¥25,870 closing 15.8% higher than the previous close at the end of yesterday’s trading following its strong set of earnings.

Rokid Corporation: AR Player Catering to the Industrials Sector

Founded in 2014, Hangzho Rokid Technology (2004144D CH) is a Chinese developer of AR glasses and AI robotics software products, and the company operates across 10 countries.
Rokid’s glasses are mainly used for industrial purposes including in oil & gas, electric power, aviation, rail transport and others thereby creating its own niche in the AR/VR glasses sector.
The company has just expanded into North America with further global expansion on the cards and may likely to seek an overseas listing.

NTGR: Promotion Stability a Positive

By Hamed Khorsand

NTGR has been going through a product transition cycle in a soft demand environment for more than a year, but recent promotion activity suggests an end could be near
The scale of promotions seems to have abated in the first quarter of 2023 even though demand has yet to return.
NTGR had been projecting the first quarter would be the low point of the year with sequential revenue growth in the second quarter.

VeriSign Inc.: Initiation of Coverage – Recent Management Focus & Key Drivers

By Baptista Research

This is our first report on the renowned domain name registry services and internet infrastructure provider, VeriSign.
It produced solid financial results throughout 2022 while bolstering its vital Internet infrastructure.
This was made achievable by conservative expense management, restricted pricing flexibility, and minimal domain name base expansion.

VeriSign Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

VeriSign is one of the largest domain name registry services and internet infrastructure providers in the world.
It produced solid financial results throughout 2022 while bolstering its vital Internet infrastructure.
Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.

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Apr 12

Daily Brief TMT/Internet: CELSYS, Temenos AG, Zhejiang Supcon Technology, CommsChoice Group Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

TOPIX Inclusions: Who Is Ready (Apr 2023)
Temenos (TEMN SW): World’s No.1; Improving Fundamentals; M&A Candidate
Zhejiang Supcon Technology GDR Listing – Momentum Has Been Strong and Not a Large Deal to Process
Comms Group (ASX:CCG) – Domestic Restructure to Boost FY24+
Comms Group Limited – Domestic Restructure to Boost FY24+

TOPIX Inclusions: Who Is Ready (Apr 2023)

By Janaghan Jeyakumar, CFA

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.
In the last two months, Amvis Holdings Inc (7071 JP), AXXZIA Inc (4936 JP), and Sosei Group (4565 JP) have confirmed their moves to the Prime Market.
These names appeared in our lists (A or B) of candidates with high “readiness” for TOPIX Inclusions in our recent insights.

Temenos (TEMN SW): World’s No.1; Improving Fundamentals; M&A Candidate

By Vijay Lohia, CFA

Overall, the sentiments are extremely negative with most sell-side analysts having a Sell/Neutral rating on the stock.
We believe either A) Revenue and earnings growth will pick up under the new management team, or B) Temenos will be taken over by some private equity firm.
While revenue growth has remained subdued, the company’s moat remains intact in our view.

Zhejiang Supcon Technology GDR Listing – Momentum Has Been Strong and Not a Large Deal to Process

By Clarence Chu

Zhejiang Supcon Technology (688777 CH) is looking to raise around US$347m in its Swiss GDR listing. Huatai and CLSA are bookrunners on the deal.
The firm is offering 12.5m GDRs (1 GDR to 2 ordinary A-shares) for sale, at a 8.1-10.8% discount to last close on the A-share leg.
The deal is a relatively small one for the firm to digest, representing just 5.9 days of three month ADV on its A-share leg.

Comms Group (ASX:CCG) – Domestic Restructure to Boost FY24+

The company has announced a restructure of its domestic retail business following a review that identified excess resourcing levels.
The result is an estimated 20 redundancies and annualised cost saving of $2m at the EBITDA line
We have upgraded our forecasts from FY24 and our valuation has increased as well.

Comms Group Limited – Domestic Restructure to Boost FY24+

Comms Group Ltd (ASX:CCG) has announced a restructure within its domestic retail business following a review that identified excess resourcing levels.
The result is an estimated 20 redundancies and an annualised cost saving of $2m at the EBITDA line.
Guidance for FY23 EBITDA of $5.0m+ (RaaS $5.1m) remains intact for FY23.

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Apr 11

Daily Brief TMT/Internet: Tencent, Keep Inc, Alibaba (ADR), Naver Z, Vividthree, SmartRyde Inc, Huawei Technology, Soft Space Sdn Bhd, Horizon Quantum Computing Pte Ltd, SDI Group and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

China Internet Weekly (10Apr2023): Tencent, Douyin, Bilibili, Alibaba, Baidu, World Perfect
The Meteoric Rise of China’s Hottest Fitness App Keep and Its Ambitious Plans to Go Public
[Alibaba (BABA US, BUY, TP US$109) Earnings Preview]: Recovery Is on the Way Amid Weakness in C1Q23
NAVER Z: Owner of The Fastest Growing Avatar Platform Zepeto
Smartkarma Corporate Webinar | Vividthree: Monetising Content Through Multimedia
Japan’s SmartRyde Raises $3.4m to Grow Airport Transfer Services
Huawei’s 2022 Profit Plunges 69% Amid Sanctions and Heavy R&D Outlays
Malaysian Fintech-As-A-Service Firm Soft Space Closes US$31.5M Series B1 Round
Tencent, SGInnovate Join US$18.1M Series A Round of Horizon Quantum Computing
SDI Group PLC – Deep Dive

China Internet Weekly (10Apr2023): Tencent, Douyin, Bilibili, Alibaba, Baidu, World Perfect

By Ming Lu

Tencent authorized video editing right to Douyin, one of its main competitors.
Some of Bilibili’s video uploaders cannot survive the hard time.
Both Alibaba and Baidu launched their ChatGPT-like apps, but Baidu’s app was .

The Meteoric Rise of China’s Hottest Fitness App Keep and Its Ambitious Plans to Go Public

By Andrei Zakharov

Keep Inc., the sports technology unicorn and the largest fitness app in China, has renewed its application proof in Hong Kong. Goldman Sachs and CICC are leading the upcoming IPO.
With a mission to make the world move, the fitness app has been making waves in the fitness industry with its innovative approach to online fitness.
Keep fitness app has been downloaded over 300M times since inception and there were 370M+ fitness users in China in 2022, the world’s largest market globally.

[Alibaba (BABA US, BUY, TP US$109) Earnings Preview]: Recovery Is on the Way Amid Weakness in C1Q23

By Shawn Yang

We expect BABA to report C1Q23 (F4Q23) top-line and non-IFRS net income (5.0%) and (5.9%) vs. consensus, respectively,
Due to: 1) weak sales of Taobao, Tmall and 1P sales; 2) the on-going move of a key Cloud client;
We maintain US$109 TP as: 1) Taobao and Tmall sales shows recovery trend; 2) near-term benefit of unveiling its LLM AI; and 3) benefit from the new business unit structure.

NAVER Z: Owner of The Fastest Growing Avatar Platform Zepeto

Naver Z Corporation, a subsidiary of NAVER Corporation, focuses on developing VR and AR technologies. The company can be regarded as one of the promising players in the Metaverse market.
The company’s flagship product, ZEPETO, has become particularly popular among younger users and has been downloaded over 300 million times worldwide.
Naver Z (1838597D KS) ‘s VR and AR technologies have a variety of use cases, and the company has worked with businesses and brands in a variety of industries.

Smartkarma Corporate Webinar | Vividthree: Monetising Content Through Multimedia

By Smartkarma Research

For our next Corporate Webinar, we are glad to welcome Vividthree’s CEO, Jonathan Zhang.

In the upcoming webinar, Jonathan will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.

The Corporate Webinar will be hosted on Tuesday, 18 April 2023, 17:00 SGT.

Register for the Webinar here

About Vividthree

Headquartered in Singapore with subsidiaries in Malaysia and China, Vividthree Holdings Ltd. specialises in Visual Effects (“VFX”), animation and Virtual Reality (“VR”) for content creation and services across the Digital Entertainment and Out-of-Home Entertainment sectors, as well as collaborations in Meetings, Incentives, Conferences, Exhibitions (“MICE”) projects.

Since its establishment in 2006, Vividthree has secured its position as Singapore’s leading 3D animation and VFX studio with its multi-award-winning track record. In 2017, the Company expanded into the immersive media space with virtual reality (VR) and augmented reality (AR) capabilities. The Vividthree brand of excellence can be found in many works, including Singapore’s box-office-breaking trilogy Ah Boys to Men, SG50 Future of Us Exhibition, NS50 Home Team parade and Train to Busan VR Tour show.

Vividthree has secured the exclusive rights to develop a VR tour show for Peninsula, the sequel to the 2016 Korean box office hit, Train to Busan, as well as acquired the intellectual property rights to the popular webcomic, Silent Horror.

Japan’s SmartRyde Raises $3.4m to Grow Airport Transfer Services

By Tech in Asia

SmartRyde, a Japan-based marketplace for pre-booked airport transfers, has raised around 450 million yen (US$3.4 million) through a third-party allocation of shares and a subordinated loan from Japan Finance Corporation.
NVenture Capital led this series A+ funding round, which also saw participation from investors such as SMBC Venture Capital, Yamaguchi Capital, and Hiroshima Venture Capital.
SmartRyde provides its transfer services to over 700 airports worldwide.

Huawei’s 2022 Profit Plunges 69% Amid Sanctions and Heavy R&D Outlays

By Caixin Global

Huawei Technologies Co. posted its lowest profit margin ever for 2022 but managed a slight revenue gain in the third year of U.S. sanctions that forced the Chinese electronics giant to diversify its business into new sectors from cloud computing to automobiles.
The company reported net profit of 35.6 billion yuan ($5.18 billion) for 2022, a 69% decline from 2021, on revenue of 642.3 billion, up 0.9% from a year ago.
Its profit margin fell to a record low of 5.5%.

Malaysian Fintech-As-A-Service Firm Soft Space Closes US$31.5M Series B1 Round

By e27

Soft Space, a fintech-as-a-service company in Malaysia, has completed its Series B extension round at US$31.5 million led by Southern Capital Group.
Returning investor transcosmos, strategic investor JCB, and Hibiscus Fund (jointly managed by RHL Ventures and South Korea’s KB Investment) also participated.
“Building on our strong momentum, the new funds will help expand our global footprint and widen our customer base by accelerating the innovation of our full-stack payments platform while expanding into next-generation technological solutions,” said Soft Space CEO Joel Tay.

Tencent, SGInnovate Join US$18.1M Series A Round of Horizon Quantum Computing

By e27

Singapore-based Horizon Quantum Computing has secured US$18.1 million in a Series A investment from Sequoia Capital India, Tencent, SGInnovate, Pappas Capital and Expeditions Fund.
The investment will allow the startup to strengthen its science and engineering teams to accelerate product development, establish its new engineering centre in Europe, and bring its technology to the market.
This round takes Horizon Quantum’s total funding to approximately US$21.3 million.

SDI Group PLC – Deep Dive

By Fairway Research

SDI was founded in 2008 with two subsidiaries, Atik Cameras and Synoptics, both engaged in digital imaging.
SDI got listed on AIM in 2008 itself, with the intention to use the listing as a means of doing acquisitions in the digital imaging space.
At the time of the initial listing, it had a market capitalization of £5 million. SDI did not raise any money through the listing.

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Apr 10

Daily Brief TMT/Internet: Tencent, Taiwan Semiconductor (TSMC) – ADR, OpenAI and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Last Week in Event SPACE: ANZ/Suncorp, JCNC, Adani, Khan Bank/HS Holdings, Hong Kong Buybacks
Taiwan Tech Weekly: Samsung Finally Announces Chip Production Cuts; Hon Hai’s New EV Factory
AI minus the BS (Part 2)

Last Week in Event SPACE: ANZ/Suncorp, JCNC, Adani, Khan Bank/HS Holdings, Hong Kong Buybacks

By David Blennerhassett

In a dealbreak, ANZ (ANZ AU) will either have enough capital in a downturn or excess capital it could use to buy back stock. If behavioural remedies, SunCorp is cheaper.
Jardine Cycle & Carriage (JCNC SP)‘s implied stub value is around its highest-ever level, dating back to 2004.
There is no good reason to be long Adani names, even if GQG is up 25% on his money so far.

Taiwan Tech Weekly: Samsung Finally Announces Chip Production Cuts; Hon Hai’s New EV Factory

By Vincent Fernando, CFA

Samsung announced that it would reduce memory chip production in light of crashing profits, this is after the company had previously said it would not reduce production. Memory names rallied.
Hon Hai announced a $820m investment plan for EV manufacturing in southern Taiwan.
Japan’s semiconductor manufacturing equipment export restrictions targeting China will take effect starting in July.

AI minus the BS (Part 2)

By Value Punks

In Part 1 of this series, we emphasized that despite the considerable hype and fear-mongering surrounding it, ChatGPT and recent development in the field of AI deserves a closer look.
Then we explored ChatGPT’s basic capabilities.
If you just look at the summary of what it can do, you might conclude that we have just invented a magical unicorn that spews rainbows across the sky as it flies.

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Apr 09

Daily Brief TMT/Internet: Twitter Inc, KT Corp and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Elon Is Scared Poopless Of Us
A Pair Trade Between KT & LG Uplus

Elon Is Scared Poopless Of Us

By Vicki Bryan

Unlike every other (far larger & richer) social media site, Elon Musk has declared war on Substack and anyone who dares post there as well as on Twitter.
It’s the kind of petty retaliation he’s well known for, and a stunt he could repeat against any publishing platform that displeases him for any reason.
His bullying will continue until morale improves. Or until he achieves universal adoration, whichever comes first.

A Pair Trade Between KT & LG Uplus

In this insight, we discuss a pair trade between KT Corp (030200 KS) (go long) and LG Uplus Corp (032640 KS) (go short).
The three major reasons for going long on KT Corp include a) the potential inclusion in MSCI Korea Standard index, b) attractive valuations, and c) a new CEO.
KT Corp is a potential inclusion candidate for MSCI Korea Standard index in May 2023. With foreign room at 17%, it is comfortably above the 15% level threshold requirement.

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Apr 08

Daily Brief TMT/Internet: S&P 500, GigaVis, X2M Connect ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

SPX 4,100 Bull Turn
Gigavis IPO Valuation Analysis
X2M Connect (ASX:X2M) – China Contract Adds to H2 Progress
X2M Connect Ltd – China Contract Adds to H2 Progress

SPX 4,100 Bull Turn

By Thomas Schroeder

SPX met the 4,100 long target and NDX turned higher off of 13,000 support that are expected to induce a secondary April rally.
A push back toward SPX 4,200 will put the final touches on the buoyant April recovery cycle toward SPX 4,200/20. There is risk the rally falters below 4,200.
US 10yr yield hovering above 3.20% lower wedge support per call for an undershoot below 3.35%.

Gigavis IPO Valuation Analysis

Our base case valuation of Gigavis IPO is target price of 61,755 won per share, representing 56% higher than the high end of the IPO price range.
We estimate the company to generate sales of 126.6 billion won (up 27% YoY) in 2023 and 150.9 billion won (up 19.2% YoY) in 2024.
Our base case valuation is based on 21.8x P/E using our estimated net profit of 35.9 billion won in 2023.

X2M Connect (ASX:X2M) – China Contract Adds to H2 Progress

X2M Connect (ASX:X2M), which is focused on digitising the utilities sector across APAC, has secured $1.8m in hardware water quality sensor sales in China with three new contract.
The contracts bring the contribution from China to $3.4m this financial year which exceeds the revenue generated from China in FY22;
While this announcement is in our numbers, it provides comfort for both near-term and longer-term estimates as units in the field support future recurring subscription fees.

X2M Connect Ltd – China Contract Adds to H2 Progress

X2M Connect Ltd (ASX:X2M) has developed and is commercialising a patented proprietary Internet of Things (IoT) solution predominantly focused on the utilities sector across the Asia Pacific region, converting legacy meters into smart meters.
The company has announced it has secured $1.8m in hardware water quality sensor sales in China with three new contracts.
The contracts bring the contribution from China to $3.4m this financial year to date which exceeds the revenue generated from China in FY22.

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Apr 07

Daily Brief TMT/Internet: KT Corp, Xiaomi Corp, Samsung Electronics Pref Shares, Vodafone and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?
Xiaomi: Aggressive Spending on EVs as Smartphone Growth Slows Down
Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2023
Vodafone Group ADR: Initiation of Coverage – Business Strategy

Why Will KT’s Foreign Room Stay Above 15% Until MSCI Review Period?

There is only one factor that could have affected KT’s foreign flow in mid-February, and that is the repurchase of its shares.
If KT continues its buyback at the current pace, which is highly likely, we can bet that the foreign room will not fall below 15% until MSCI’s review period.
This implies an essential premise for us to set up a more aggressive preemptive position on KT.

Xiaomi: Aggressive Spending on EVs as Smartphone Growth Slows Down

Xiaomi Corp (1810 HK) ’s share price has been down more than 10% over the last 12-months with weakening of the company’s earnings particularly the smartphone business.
Xiaomi’s entry into premium segment has not much helped its smartphone biz as it faces stiff competition from Apple and Samsung in the premium segment.
The company spends aggressively on EVs to drive growth, however, with EV subsidies not renewed and intense competition, this may not help Xiaomi in the near term.

Gap Trades in Korean Prefs Vs Common Share Pairs in 2Q 2023