Daily Brief TMT/Internet: Alibaba (ADR), Tencent, Wistron Corp, Ferrotec Corp, Taiwan Semiconductor (TSMC) – ADR, NVIDIA Corp, Qualcomm Inc, Intuit Inc, DataTec Ltd, Hubspot Inc and more

• Alibaba Group Holding Ltd. outlined timetables for several key business units to complete spinoffs or pursue independent share sales, kicking off major moves in a sweeping reorganization to break up the gigantic conglomerate and unleash new growth momentum.
• Alibaba’s board of directors approved a full spinoff of its cloud services division while exploring initial public offerings for the logistics and grocery arms, the company said Thursday.
• The e-commerce giant plans to carve out the Cloud Intelligence Group within 12 months through a stock dividend distribution to shareholders, meaning it could relinquish control of China’s biggest cloud services platform.

• China just announced game approval for May batch. The number of games approved is in-line with the pace of approval in recent month.
• Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
• Both Tencent and Netease received approval for one game. We saw a pattern of approval rotation for the duo.

• Wistron Corp’s share price is up 96% in the past six months. Despite its outstanding results, a lot of the positives have already been reflected in its share price.  
• We think a more likely scenario for the stock is to undergo a period of share price consolidation in the next several months. 
• Its valuations also appear stretched, especially in terms of P/E and P/B valuation multiples as compared to their historical valuation multiples. 

• Delivered FY’23 net sales of ¥$211 billion, up 57.5% sequentially.
• FY’23 operating profit of ¥35 billion was up 63% sequentially
• Our favourite Japanese semi stock with a TTM P/E <5

• China bans Micron chips for critical information infrastructure — Taiwanese firms could benefit by straddling both sides of the trade tensions.
• TSMC rallies as U.S. and Japan advance incentives for TSMC and Taiwanese firms.
• Nvida earnings this week — We’ll see if the AI leader can keep the market excited about AI’s brave new world.

• First of all, Nvidia is a great business with many applications and infrastructure across many industries and one can even say an AI hardware leader down the road. 
• Overall, a big business with a wide moat in a great secular sector, hence a name that very likely will be here 10-20-30 years down the road.
• Semiconductors in general have been a top sector lately given AI advancements like the ChatGPT breakthrough, and the overall combo of high demand & supply issues.

• Qualcomm’s fiscal Q2 results were decent with revenues above expectations and earnings in line with the analyst consensus estimates.
• It is considered a fair result given the difficult macroeconomic climate and widespread decline in the semiconductor industry.
• During the quarter, there was significant use of Qualcomm’s Snapdragon digital chassis across major OEMs and Tier 1 clients in automotive.

• The IRS would offer a free tax filing option is unlikely to have a material impact on TurboTax.
• The company is taking the right steps to differentiate its service offerings which creates significant pricing power.
• The recent news that the IRS would Offer a free filing option was unlikely to be a material effect on Turbo tax.

Datatec reported group continuing revenue growth of 13% for FY23 (20% in constant currency) with adjusted EBITDA from continuing operations also increasing 13%. Supply chain issues started to ease allowing the company to accelerate delivery of its order backlog. Demand remained robust, resulting in a flat order backlog at the year-end, despite double-digit revenue growth. At a divisional level, Westcon delivered excellent results, Logicalis International performance was solid and, while down for the year, Logicalis LatAm rebounded in H223. Management expects all divisions to deliver improved performance in FY24; we are reviewing our forecasts.

• HubSpot had a strong first quarter as it continued to execute its bimodal strategy, with net customer additions increasing significantly at the lower end of the market resulting in an all-around beat.
• The connected platform of HubSpot continued to gain momentum, especially Sales Hub, which saw Liquidity Services reduce costs by 50% after adopting it.
• HubSpot’s bimodal strategy, which focuses on driving volume at the low market while increasing value upmarket, has proven successful, as demonstrated by the company’s strong customer growth in both segments.