Category

TMT/Internet

Daily Brief TMT/Internet: Socionext, Pushpay Holdings, Lionheart Studio, Meituan, Palo Alto Networks, Zebra Technologies Corp, Adyen BV, Amphenol Corp Cl A and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Socionext IPO Trading – Upsized IPO with Strong Demand. Peers Inched Downwards, but Upside Remains
  • Pushpay: BGH Resurrects The Catholic Opportunity
  • LionHeart Studio Pre-IPO – The Negatives – Appears to Be Well past Its Peak, Founder Cashed In $700m
  • Does Meituan Have the Appetite to Serve HK Food Delivery Market and Take On Foodpanda and Deliveroo?
  • Cyberattacks at Numerous US Airports by Suspects from Russia
  • LionHeart Studio IPO – Peer Comparison – Youngest and Most Untested
  • Zebra Technologies Corporation: Initiation of Coverage – Wide Footprint
  • Adyen ($ADYEY, $ADYYF, $ADYEN)
  • Amphenol Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report
  • Amphenol Corporation: Initiation of Coverage – Financial Forecasts

Socionext IPO Trading – Upsized IPO with Strong Demand. Peers Inched Downwards, but Upside Remains

By Clarence Chu

  • Socionext (6526 JP) raised around US$463m in its Japan IPO. The IPO consisted of 100% secondary shares.
  • Socionext is a fabless semiconductor provider which commenced operations after integrating the system on a chip (SoC) businesses of Fujitsu Semiconductor Limited and Panasonic Holding Corporation.  
  • In this note we will talk about the trading dynamics.

Pushpay: BGH Resurrects The Catholic Opportunity

By David Blennerhassett

  • Back on the 26 April, church donor management tech play Pushpay Holdings (PPH NZ) announcedunsolicited, non-binding and conditional expressions of interest or approaches from third parties“. No price was mentioned. 
  • Roughly a month later, BGH Capital and Sixth Street, both existing shareholders, entered into a cooperation agreement with respect to a potential transaction for Pushpay. Again, no price was provided. 
  • Pushpay has now announced it has received a non-binding proposal. Word on the street this involves BGH. Still, no price was made public. A 30% premium to undisturbed is ~NZ$1.34/share.

LionHeart Studio Pre-IPO – The Negatives – Appears to Be Well past Its Peak, Founder Cashed In $700m

By Sumeet Singh

  • Lionheart Studio (426630 KS), a game development studio based in South Korea,  aims to raise around US$420m via its South Korean IPO.
  • The company is majority owned by Kakao Games Corp (293490 KS) , which after having recently hiked its stake, owned 54.94% of the company prior to listing.  
  • In this note, we will talk about the not-so-positive aspects of the deal.

Does Meituan Have the Appetite to Serve HK Food Delivery Market and Take On Foodpanda and Deliveroo?

By Shifara Samsudeen, ACMA, CGMA

  • Several news media outlets reported that food delivery giant Meituan (3690 HK) is preparing to enter the food delivery market in Hong Kong as domestic market is slowing down.
  • Slowdown in Chinese economy coupled with regulatory hurdles have made it impossible for Meituan and other domestic tech players to expand locally.
  • Online food delivery market in HK is dominated by Foodpanda and Deliveroo, and we think Meituan will have to offer deep discounts to grab market share from these two dominants.

Cyberattacks at Numerous US Airports by Suspects from Russia

By Douglas Kim

  • In the past 24 hours, there have been many news flow about numerous US airports that have been cyber attacked by suspects from Russia. 
  • The increasing media attention on cyberattack threat could result in greater concerns about cybersecurity inducing higher global spending on software and other services that help to protect against cyber attacks. 
  • Global cybersecurity stocks that could benefit from greater media attention on cyberattacks include Palo Alto Networks (PANW US)  Crowdstrike Holdings Inc (CRWD US)  CloudFlare (NET US).  

LionHeart Studio IPO – Peer Comparison – Youngest and Most Untested

By Sumeet Singh

  • Lionheart Studio (426630 KS), a game development studio based in South Korea,  aims to raise around US$420m via its South Korean IPO.
  • The company is majority owned by Kakao Games Corp (293490 KS), which after having recently hiked its stake, owned 54.94% of the company prior to listing.  
  • We spoke about the company’s past performance in our previous note. In this note, we’ll undertake a peer comparison.

Zebra Technologies Corporation: Initiation of Coverage – Wide Footprint

By Baptista Research

  • This is our first report on one of the leading players in the Automatic Identification Data Capture (AIDC) market, Zebra Technologies Corporation.
  • For the solutions which automate and digitize workflows, customer demand remains strong for Zebra and it saw good growth in the e-commerce, retail, manufacturing, and healthcare end markets.
  • We initiate coverage on the stock of Zebra Technologies Corporation with a ‘Buy’ rating.

Adyen ($ADYEY, $ADYYF, $ADYEN)

By MT Capital

  • When I think about the world of tech, there is no shortage of products, developments, or innovations that deserve attention.
  • Some pieces of technology, when broken down, are extraordinarily complex and exist out in the open.
  • Others hide in plain sight, functioning in the shadows, but are still responsible for certain components of indispensable processes that allow our world to operate as we know it today.

Amphenol Corporation: Detailed Credit Analysis & Financial Strength Evaluation Report

By Baptista Research

  • Amphenol Corporation is a renowned designer, manufacturer, and marketer of electrical, electronic and fiber optic connectors and interconnect systems, antennas, sensors and sensor-based products, and coaxial and high-speed specialty cables.
  • The company has seen a strong financial performance in recent quarters and their restructuring strategy is on track.
  • Amphenol’s strong portfolio of advanced connectivity and sensor solutions places the company well across all key defense programs as militaries worldwide continue to deploy a wide range of next-generation defense technologies.

Amphenol Corporation: Initiation of Coverage – Financial Forecasts

By Baptista Research

  • This is our first report on Amphenol Corporation.
  • The company is a well-known designer and manufacturer of electrical, electronic and fiber optic connectors and interconnect systems, antennas, sensors and sensor-based products, and coaxial and high-speed specialty cables.
  • After two challenging years for the airline sector, Amphenol finally saw quarter of strength in the commercial aviation market.

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Daily Brief TMT/Internet: Bilibili, Pushpay Holdings, Lionheart Studio, Tencent, Yaskawa Electric, AVEVA Group PLC, Binance Coin and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Clarifying the Bilibili (9626 HK) Rule on Southbound Eligibility
  • Pushpay Draws Another Sixth Street/BGH Offer
  • Lion Heart Studio Pre-IPO – The Positives – Got One Hit
  • Tencent Seeks Majority Stake in Overseas Game Companies as Game Revenue Slows Down Further
  • Yaskawa (6506 JP) | Constant Currency Concerns
  • Schneider Electric/​Aveva: Potential Offer Price Sweetening
  • Open Interest Hits All Time High

Clarifying the Bilibili (9626 HK) Rule on Southbound Eligibility

By Travis Lundy

  • Bilibili Inc (BILI US) listed in the US in April 2018. It eventually listed in Hong Kong under the ticker Bilibili (9626 HK) in March 2021 as a Secondary Listing. 
  • Bilibili (9626 HK)  announced 16 March 2022 it intended to pursue a HK Primary Listing.  Application was announced on 2 May 2022, Circular a month later. Results announced 29 September.
  • As of 3 October, it is a Dual Primary Listing, making it eventually eligible for Southbound Trading. But there as confusion as to when. Hint:  It’s March 2023.

Pushpay Draws Another Sixth Street/BGH Offer

By Arun George

  • Pushpay Holdings (PPH NZ) confirmed that it had received a “revised” indicative non-binding proposal from a shareholder consortium, believed to be Sixth Street/BGH, which has a 20.3% stake.
  • The proposal is “to acquire the Company at a premium to Friday’s closing share price.” Due to the sell-off, Sixth Street/BGH will likely offer a lower premium than initially intended.
  • Our best guess is that Sixth Street/BGH’s offer is around A$1.30 per share. While not a knockout offer, it is a good starting point in the current grim market conditions.

Lion Heart Studio Pre-IPO – The Positives – Got One Hit

By Sumeet Singh

  • Lionheart Studio (426630 KS), a game development studio based in South Korea,  aims to raise around US$420m via its South Korean IPO.
  • The company is majority owned by Kakao Games Corp (293490 KS), which after having recently hiked its stake, owned 54.94% of the company prior to listing.  
  • In this note, we will talk about the positive aspects of the deal.

Tencent Seeks Majority Stake in Overseas Game Companies as Game Revenue Slows Down Further

By Shifara Samsudeen, ACMA, CGMA

  • Several news media outlets reported last week that Tencent has changed its M&A strategy to obtain majority stakes in overseas gaming companies as opposed to buying minority stakes previously.
  • Tencent’s online game revenue declined YoY for two-consecutive quarters primarily due to decline in domestic game revenue that was impacted by absence of new game titles and minority protection rules.
  • Our analysis on Tencent’s game downloads and ranks reveal that both domestic and international game revenues would decline further in 3Q2022E.

Yaskawa (6506 JP) | Constant Currency Concerns

By Mark Chadwick

  • Yaskawa’s order momentum has peaked. On a constant currency basis, orders growth was -6% sequentially
  • Margins for the key Motion Control segment were 160bps lower in the quarter compared to a year ago
  • A minor revision down relies on aggressive FX assumptions for the 2H. We feel there is another downgrade to come. Stay Bearish

Schneider Electric/​Aveva: Potential Offer Price Sweetening

By Jesus Rodriguez Aguilar

  • Davidson Kempner and others may seek an improved offer of up to 3,500p/share, 29.7x EV/Fwd EBIT, in line with Ideagen’s acquisition multiples. Gross spread is +2.38%.
  • Assuming AVEVA can reach 2018a 34.7% EBITDA margins and increase revenues, the offer price would seem cheap. An increase to 3,300p seems feasible, £4,073 million, similar to the Bridge Facility.
  • Current net debt/EBITDA is 1.3x and EBIT/interest is 33.6x, so it could comfortably take on that additional debt. At 3,300p, proforma net debt/EBITDA would be 1.9x, before adding any synergies.

Open Interest Hits All Time High

By Kaiko

  • Price Movements: BNB, the native token of Binance Smart Chain, is down 8% following a $100mn hack.
  • Market Liquidity: Sushiswap’s market share vs. Uniswap hit all time lows of just 1% in September as new Head Chef takes over. 
  • Derivatives: Open interest on Binance has surged to all time highs, although funding rates remain firmly neutral.

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Daily Brief TMT/Internet: Softbank Group, Link Administration, Taiwan Semiconductor (TSMC) – ADR and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • TOPIX October 2022 Rebal – Buy/Sell Baskets (May the Flow Be Ever In Your Favour)
  • Weekly Deals Digest (09 Oct) – Betagro, Link Admin, Tyro, MACA, Eagle Cement, O2Micro, SMG
  • Taiwan Tech Weekly: Our Summary of Sweeping New China Restrictions, TSMC Results This Week

TOPIX October 2022 Rebal – Buy/Sell Baskets (May the Flow Be Ever In Your Favour)

By Travis Lundy

  • As a follow-on to TOPIX October 2022 Rebal – BIG Names with BIG Flows which discussed ¥2.1trln a side flows overall, this insight analyses and proposes intra-sector baskets.
  • In general, the sector-neutral BUYs vs SELLs baskets of all names where Index Shares change by 10% or more have seen BUYs sharply outperform SELLs in the past three weeks.
  • Look for pre-positioning unwinds so trading BUY vs SELL baskets which have bucked the trend, banks and chemicals – might be worthwhile. Otherwise, pick your spots. Use the flow.

Weekly Deals Digest (09 Oct) – Betagro, Link Admin, Tyro, MACA, Eagle Cement, O2Micro, SMG

By Arun George


Taiwan Tech Weekly: Our Summary of Sweeping New China Restrictions, TSMC Results This Week

By Vincent Fernando, CFA

  • AMD and Samsung preliminary numbers disappoint, PC demand weakness cited.
  • U.S. issues broad new rules restricting technology sales to China, essentially removing China as a long-term demand driver for advanced products.
  • TSMC results coming out this week, expecting all-time high revenue.

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Daily Brief TMT/Internet: Kakao Corp, KLA-Tencor Corp, Softbank Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Is Kakao Cheap or Not? Actions Louder than Words
  • KLA Corporation: Initiation of Coverage – Business Strategy & Key Drivers
  • Index Rebalance & ETF Flow Recap: HSCI, FTSE, HSI, TW Div+, China 50, KOSDAQ150, TOPIX FFW, PEXA

Is Kakao Cheap or Not? Actions Louder than Words

By Ken S. Kim


KLA Corporation: Initiation of Coverage – Business Strategy & Key Drivers

By Baptista Research

  • This is our first report on KLA Corporation, a well-known provider of process control and yield management solutions to the semiconductors industry and other electronics businesses.
  • Strong customer demand across key product categories, macroeconomic uncertainties, and the effects of consumer demand are factors driving this performance.
  • Despite macroeconomic and supply chain headwinds, KLA continues to focus on addressing the most pressing process control concerns.

Index Rebalance & ETF Flow Recap: HSCI, FTSE, HSI, TW Div+, China 50, KOSDAQ150, TOPIX FFW, PEXA

By Brian Freitas

  • We expect a few adds to the HSCI in December followed by a lot more change in March. We could finally reach 80 HSI INDEX constituents in December.
  • There will be a handful of adds to the FTSE All-World/All-Cap indices in December. But there will be many changes to the FTSE TWSE Taiwan Dividend+ Index in December.
  • There were large inflows to the Yuanta/PShares Taiwan Dividend Plus ETF (0056 TT), Hang Seng H Share Index ETF (2828 HK) and Tracker Fund of Hong Kong Ltd (2800 HK)

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Daily Brief TMT/Internet: Servicenow Inc, Netgear Inc, Ciena Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Observability: ServiceNow Acquisition Threatens Dynatrace and Elastic
  • NTGR: Hotspot of a Preview
  • Ciena Corporation: Initiation of Coverage – Partnership With MSAR & Other Drivers

Observability: ServiceNow Acquisition Threatens Dynatrace and Elastic

By Aaron Gabin

  • ServiceNow acquired Era Software this week to extend its presence in the observability and log management space.
  • The deal is most threatening to DT/ESTC (we advocate as longs) and SPLK (short) because of ServiceNow’s ability to bundle functionality for larger deals.
  • That said…the observability space remains one of the hottest in digital transformations, and the deal is on net, more validating than threatening to DT/ESTC.

NTGR: Hotspot of a Preview

By Hamed Khorsand

  • NTGR is relying on the back-to-school shopping season to help sell through some of its lingering wireless router inventory as it transitions to higher end models
  • We continue to believe the retail market remains challenging for NTGR and the Company could have experienced difficulty in selling down inventory to desired levels
  • During the third quarter NTGR used Prime Day as an opportunity to reduce inventory for certain Nighthawk wireless routers. We expect the same again during Prime Day on October 11

Ciena Corporation: Initiation of Coverage – Partnership With MSAR & Other Drivers

By Baptista Research

  • This is our first report on Ciena Corporation, a networking systems, services and software player catering primarily to the telecom industry.
  • In spite of the elongated lead times and supply chain challenges, the strong secular demand trends have not shown any sign of abating.
  • In spite of the supply challenges, Ciena had a record quantity of quarter for its WaveLogic 5 shipments.

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Daily Brief TMT/Internet: Kakao Pay, ISC Co Ltd, Globish, Ambarella Inc, Corning Inc, Binance Coin, Xperi, Trade Desk Inc, Xerox Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Kakao Pay: Downsized Rights Offering of Kakao Pay Securities & Potential Selling by Alipay
  • KOSDAQ150 Index Rebalance Preview: Moving in the Right Direction
  • Thai Online Learning Platform Globish Closes US$2.5M Series A+
  • Ambarella Inc: Major Drivers
  • Corning Inc: Facility Expansion & Other Drivers
  • Introducing: Quarterly Market Report
  • ADEA & XPER: The Spin and Price Targets
  • The Trade Desk: The First-Party Data Playbook & Other Drivers
  • Xerox Corp: Acquisition Of Go Inspire & Other Drivers

Kakao Pay: Downsized Rights Offering of Kakao Pay Securities & Potential Selling by Alipay

By Douglas Kim

  • The lack of minority shareholders participation in Kakao Pay Securities rights offering is likely to be viewed negatively by many investors since Kakao Pay may need to inject more capital.
  • On 8 June 2022, Alipay sold 5 million shares of Kakao Pay and Alipay put a lockup on its remaining 46 million shares in Kakao Pay for another 120 days.
  • All in all, we continue to have a Negative view of Kakao Pay. 

KOSDAQ150 Index Rebalance Preview: Moving in the Right Direction

By Brian Freitas

  • With 85% of the review period complete, we see 10 potential changes to the KOSDAQ 150 Index (KOSDQ150 INDEX) at the December rebalance.
  • There are a few stocks that are close adds/deletes on market cap and liquidity and could make it into the final list depending on price/volume over the next few weeks.
  • The potential adds have outperformed the potential deletes over the last month and pre-positioning could continue till the end of the review period.

Thai Online Learning Platform Globish Closes US$2.5M Series A+

By e27

  • Globish conducts 300,000 English and Chinese classes for learners comprising 20 per cent students and 80 per cent working-age people
  • Thailand’s edutech startup Globish, which provides a live online learning platform, has announced closing its US$2.5 million Series A+ funding round.
  • Globish will use the money for expansion into other ASEAN countries. It recently began expanding in Ho Chi Minh City in Vietnam and plans to expand into more markets.

Ambarella Inc: Major Drivers

By Baptista Research

  • Ambarella’s Q2 results were on par with management expectations and surpassed the analyst consensus on Wall Street.
  • The company’s revenue was up 2% from the same period last year, but it was down 10% sequentially.
  • The company’s blended average selling price surpassed $10 due to the considerable year-over-year growth in CV revenue.

Corning Inc: Facility Expansion & Other Drivers

By Baptista Research

  • Corning delivered a mixed set of quarterly results missing out on market expectations with respect to revenues given the challenging environment.
  • Optical communications were the greatest contributor to the growth of this quarter and were a key factor responsible for the company delivering an earnings beat.
  • We provide the stock of Corning with a ‘Buy’ rating and a revision in the target price.

Introducing: Quarterly Market Report

By Kaiko

  • Q3 was a whirlwind dominated by macro volatility, the Merge, and the ongoing fallout from the crypto credit crisis.
  • Yet, one relatively under-the-radar trend caught my attention: Binance’s increasingly bold moves to clinch market supremacy.
  • On July 8th, Binance eliminated trading fees for 13 BTC trading pairs and shortly after removed fees for ETH-BUSD.

ADEA & XPER: The Spin and Price Targets

By Hamed Khorsand

  • Adeia (ADEA) spun out Xperi Inc. (XPER) to shareholders. We are updating our coverage by downgrading ADEA to Buy Rating from Top Pick, initiating coverage of XPER with Top Pick.
  • The separation of the two businesses should allow the markets to appropriately price each stock. This should lead to a higher overall valuation compared to when the companies were together.
  • XPER is our Top Pick due to the multiple revenue opportunities from new products over the next 12 months.

The Trade Desk: The First-Party Data Playbook & Other Drivers

By Baptista Research

  • Trade Desk’s revenues have continued to grow over the past quarter and the company gained market share in spite of some macroeconomic uncertainty.
  • The worldwide pressure on Google appears to be creating a market opportunity for Trade Desk.
  • The company launched its first-party playbook teaching brands to have a self-assessment for companies and their first-party data for the companies to identify their potential steps in the journey of their first-party data.

Xerox Corp: Acquisition Of Go Inspire & Other Drivers

By Baptista Research

  • In spite of macroeconomic challenges, Xerox managed to deliver an earnings beat in the last quarterly result.
  • The signings of its content and capture business, including processing, data extraction, and digital mailroom services, grew double digits though the company did miss out on revenues.
  • Also, it has launched a worldwide intelligent document process offering to strengthen its content and capture capabilities.

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Daily Brief TMT/Internet: Link Administration, CALB, Samsung Electronics, Twitter Inc, Nasdaq Inc and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Link’s Ongoing Overtures from DND Underscore Its Value
  • StubWorld: Link And D&D Continue Negotiations On Unlisted Ops
  • CALB IPO: Trading Debut
  • Samsung Electronics: Lee Jae-Yong Orders the Creation of a New Task Force to Raise Shareholder Value
  • Elon V. Twitter: Elon Caved…For Sure…Maybe
  • Trading Ideas on the Possibility of Samsung Electronics’ Special Shareholder Returns
  • We are Not Crashing, It’s Just Volatile

Link’s Ongoing Overtures from DND Underscore Its Value

By Arun George

  • Dye & Durham/DND is a persistent bidder and returned with a A$1.27 billion bid for Link Administration (LNK AU)’s CM and BCM businesses. The Board will update next week. 
  • The latest offer is attractive but curiously, contradicts DND’s previous comments that the FCA would make it challenging to distribute any part sale proceeds.
  • Despite the overhang from the FCA fine, DND’s ongoing persistence and the Board’s potential in-specie distribution of the PEXA Group (PXA AU) stake highlight the underlying value.

StubWorld: Link And D&D Continue Negotiations On Unlisted Ops

By David Blennerhassett

  • In a Musk/Twitter-like on/off/on-again situation, Link Administration (LNK AU) announced it received an improved offer for its corporate markets and Banking & Credit Management (BCM) businesses from Dye & Durham.
  • Separately, Link is working with the Australian Tax Office on the in-specie distribution of a minimum of 80% of Link’s holding into PEXA Group (PXA AU).
  • Preceding my comments on Link are the current setup/unwind tables for Asia-Pacific Holdcos. These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

CALB IPO: Trading Debut

By Arun George

  • CALB (3931 HK) priced its H Share at HK$38.00 per share to raise net proceeds of HK$9.9 billion (US$1.3 billion). The H Share will start trading tomorrow.
  • Grey market prices across various platforms show the shares last traded at HK$37.30-38.00 per share i.e., -2% down to unchanged compared to the IPO price.
  • Despite peer multiple derating, the IPO price continues to imply a discount to the median peer CY2023 EV/EBITDA multiple. CALB should be, at least, valued in line with peer multiples.

Samsung Electronics: Lee Jae-Yong Orders the Creation of a New Task Force to Raise Shareholder Value

By Douglas Kim

  • On 4 October, it was reported that Samsung Electronics (005930 KS) has set up a task force to raise shareholder value of the company.
  • This task force was formed at the order of Samsung’s Vice Chairman Lee Jae-Yong.
  • All in all, a major share buyback and cancellations coupled with higher dividends could result in a share price turnaround for Samsung Electronics. 

Elon V. Twitter: Elon Caved…For Sure…Maybe

By Vicki Bryan

  • Elon to Judge: Twitter Lies! Twitter is a fraudster! I am NOT buying Twitter! 
  • Also Elon: Never mind. Carry on. Twitter: Riiiight. We’ll see.
  • Elon’s Bankers: WUT? WE HAVE TO SELL “CCC” LBP BONDS NO ONE WANTS TO BUY?

Trading Ideas on the Possibility of Samsung Electronics’ Special Shareholder Returns

By Sanghyun Park

  • 1P/Ord LONG/SHORT betting on a 1P-skewed buyback does not look very desirable. The Lee family’s financial needs are short-term, so there is no need for a 1P-skewed buyback.
  • Given that the 1P discount rate has stabilized again, a strategy betting on the mean reversion does not seem very timely either.
  • We should look at the possibility that false expectations for a special year-end dividend will further deepen futures backwardation. This situation can lead to quite a juicy spot/futures spread opening.

We are Not Crashing, It’s Just Volatile

By BluSuit

  • Listening to sentiment alone would lead investors to believe we are 50% down on the S&P 500 and we have another 50% to go.
  • But, this simply is not true. When benchmarking the markets recent price action by sector, this bear market, on a technical basis, has the hall marks of every market bottom since 2000.
  • Recollecting Howard Marks book, “Mastering the Market Cycle”, there was a particular part that was of importance.

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Daily Brief TMT/Internet: Nexon, Tencent, O2Micro International, NTT (Nippon Telegraph & Telephone), Mobileye Global, Taiwan Semiconductor (TSMC) – ADR, AXT Inc, Peer Metaverse Coin and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
  • China Internet Weekly (3Oct2022): Tencent, NetEase, Alibaba, Kuaishou, Uxin
  • EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options
  • O2Micro’s “Reasonable” Homecoming Offer
  • O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS
  • NTT (Buy) – Investor Day Highlights Global Data Center Business
  • Mobileye Global IPO Preview
  • Taiwan Tech Weekly: Trying to Recover After a Week of Deep Declines
  • AXTI: The Fruit of a Preview
  • Sporting Crypto – October 3rd 2022: What does the Metaverse mean for Sports?

Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry

By Douglas Kim

  • Saudi Arabia’s Savvy Games Group has a grand ambition to invest in the global gaming industry. It recently announced that it will invest US$37.8 billion in the global gaming industry.
  • There has been a sharp appreciation of the USD and Riyal versus JPY which could help to accelerate more M&As of Japanese game companies by SGG.
  • Saudi Arabia’s aggressive push to expand into the global gaming industry could aid this sector in the coming months as it could result in further major M&As in this sector.

China Internet Weekly (3Oct2022): Tencent, NetEase, Alibaba, Kuaishou, Uxin

By Ming Lu

  • The global game market can shrink in 2022, which will impact Chinese game companies’ global diversification.
  • NetEase formally launched its own social networking service to compete with Tencent.
  • Kuaishou announced that it would launch an e-commerce channel on its App’s homepage.

EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options

By Simon Harris

  • Stock has fallen 17% since Sep 15th, and implied vols have picked up
  • The fundamentals remain strong and tech momentum may be shifting
  • We suggest two directional trades using options to play earnings

O2Micro’s “Reasonable” Homecoming Offer

By David Blennerhassett

  • O2Micro International (OIIM US), an integrated circuits play, has announced a definitive privatisation transaction.
  • The acquirer, led by the CEO and CFO of O2Micro, are offering US$5.00/ADS, a 68.9% premium to the undisturbed price. 
  • The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. Roughly 30% of shares out appear to be supportive. This Offer is expected to close in the 1Q23.

O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS

By Arun George

  • O2Micro International (OIIM US) entered into a definitive agreement for going private with FNOF Precious Honour Limited at US$5.00 per ADS, a 54.8% to the undisturbed price (17 March).
  • Shareholders representing two-thirds of shares present and voting need to approve the deal. The rollover shareholders represent 16.90% of voting rights.
  • The offer is attractive in the context of O2Micro’s weakening performance and grim market conditions. At the last close, the gross spread is 18.2%. Expect a 1Q23 deal close.

NTT (Buy) – Investor Day Highlights Global Data Center Business

By Kirk Boodry

  • NTT’s global data center business has 6% market share with annual revenue growth of 20% that is twice the industry average
  • We have updated our model and valuation summary to reflect the transfer of NTT Ltd, which operates the GDC business, into NTT Data
  • Our valuation remains unchanged although we have lowered our target price ¥4,500 to ¥4,450 for payment of the H1 dividend.  NTT remains a top pick in our coverage

Mobileye Global IPO Preview

By Douglas Kim

  • Mobileye Global (MBLY US) is getting ready for an IPO in the US in late 2022 at an expected market cap valuation of about US$30 billion. 
  • Mobileye Global was acquired by Intel for US$15.3 million in 2017. Intel currently owns a 100% stake of the company’s outstanding common shares.
  • Mobileye has world-class technologies in the advanced driver assistance systems (ADAS) and autonomous driving technologies and solutions.

Taiwan Tech Weekly: Trying to Recover After a Week of Deep Declines

By Vincent Fernando, CFA

  • Taiwan’s tech space fell hard last week, with the tech sector down 5.4%, compared to a 4.9% drop for the overall market. Semiconductors performed the worst, down 6.2%.
  • Hon Hai, Delta, Lite-On — EV a major theme for the first-ever Taiwan Expo USA coming October 12th.
  • Taiwan wafer exports were at an all-time high in August. We note that wafer names have underperformed TSMC.

AXTI: The Fruit of a Preview

By Hamed Khorsand

  • Third quarter results could serve as an inflection point for AXT Inc. (AXTI) after the Company reported a rebound in gross margin in the second quarter
  • When AXTI reported second quarter results, management described a design win that would be part of a consumer electronic device with a feature in a higher end model
  • We believe the reference could have been to the iPhone 14 Pro and Pro Max having different a different display feature compared to the iPhone 14.

Sporting Crypto – October 3rd 2022: What does the Metaverse mean for Sports?

By Sporting Crypto

  • Anything that augments your physical life, to the digital, is in some way or form linked to what currently is, and what will become, ‘The Metaverse’.
  • So a Zoom call or a free world game — whilst they don’t wholly agree with the notion of interoperability or persistence —they still are in essence part of the Metaverse.
  • Now, to give further context, there is the idea of ‘Metaverses’ — aka, Decentraland, Sandbox or any company building their own virtual world.

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Daily Brief TMT/Internet: EVOC Intelligent Technology Company Limited H, Lionheart Studios, Vontier Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • EVOC (2308 HK): 19 October H-Class Meeting. IFA Says Fair & Reasonable
  • Lionheart Studio IPO Valuation Analysis
  • Some new stocks

EVOC (2308 HK): 19 October H-Class Meeting. IFA Says Fair & Reasonable

By David Blennerhassett

  • The Composite Document for electronics play and property developer EVOC Intelligent Technology Company  (2308 HK), has been dispatched.  The EM and H-Class meeting will be held on the 19 October. 
  • The Offer Price is HK$1.75/share. It will not be increased. No further dividends will be added. 
  • This is done. Trading at a gross/annualised spread of 2.9%/34%.

Lionheart Studio IPO Valuation Analysis

By Douglas Kim

  • Our base case valuation of Lionheart Studio is a target price of 19,362 won per share, which is 46% lower than the low end of the IPO price range.
  • Our IPO valuation assumes a 7.2x EV/EBITDA (comps’ average) using 2023 estimated EBITDA of 145 billion won for the company.
  • All in all, we believe there is a strong probability of Lionheart Studio being forced to lower its IPO price range in order to attract more investors. 

Some new stocks

By Turtles all the way down

  • First one is Vontier, its main business is a duopoly in gas station equipment and software.
  • Repair tools for ICE vehicles. Software and hardware for car washes, and some smaller miscellaneous businesses.
  • Some of which they will divest for probably several $100 million in proceeds. And they have a piece in EV charging infrastructure as well. 

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Daily Brief TMT/Internet: EVOC Intelligent Technology Company Limited H, Tencent and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • EVOC’s H Share Class Meeting on 19 October
  • ECM Weekly (2nd Oct 2022) – Onewo, Leapmotor, CALB, Socionext, WCP, Oyo, Ixigo, Tencent, Taiwan Cemt

EVOC’s H Share Class Meeting on 19 October

By Arun George

  • EVOC Intelligent Technology Company Limited H (2308 HK)‘s H Shareholders’ class meeting is scheduled for 19 October. The IFA considers the offer to be fair and reasonable.
  • The key conditions are approval by at least 75% of independent H Shareholders (<10% of all independent H Shareholders’ rejection). There is no minimum acceptance condition.
  • The offer is attractive and should gain approval. At last close and for a 7 November payment, the gross and annualised spread to the offer is 2.9% and 26.0%, respectively. 

ECM Weekly (2nd Oct 2022) – Onewo, Leapmotor, CALB, Socionext, WCP, Oyo, Ixigo, Tencent, Taiwan Cemt

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.
  • On the IPO front, all listing this week failed to impress which means that the HK and Korean markets are probably in for a slow end of the year.
  • Taiwan Cement (1101 TT) and Embassy Office Parks REIT (EMBASSY IN) were the two large placements this week. We also looked at possible Tencent (700 HK) linked blocks.

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