In today’s briefing:
- Changyou (CYOU US): Short-Form Merger Dissent Now (Definitely) Permitted
- CSI500 Index Rebalance Preview: 50 Changes; 10% Turnover; US$3.6bn Round-Trip Trade
- Taiwan Dual-Listings Monitor: TSMC Trading Range Breakdown? ChipMOS Discount Rare Long Opportunity
- Tech Supply Chain Tracker (13-Mar-2025): Semiconductor industry forecast for 2025.
- Kakao Corp: Insiders Are Buying and Cancellation of Treasury Shares
- Taiwan Tech Weekly: If TSMC Joins Intel for Foundry, It Will Entrench Dominance; Structural Long
- WEX Launches $750M Tender Offer with Odd-Lot Provision Amidst Share Price Decline and Strategic Stake Increase
- SAP SE (SAP GR): A Lot of Efficiency Ahead
- Intel: A Better CEO that Understand that Intel Should Fix Its Own Problems, Not Compete with TSMC
Changyou (CYOU US): Short-Form Merger Dissent Now (Definitely) Permitted
- In a long-form merger for Cayman incorporated companies, dissenters can petition the Grand Court for determination of fair value. For short form merges, that avenue of dissent was not available.
- But on the 28 January 2021, the Grand Court of the Cayman Islands concluded that shareholders of companies that undertake a ‘short-form’ merger were entitled to dissent.
- Changyou.com (CYOU US) appealed this decision in the Court of Appeal, and was dismissed. Then appealed to the Privy Council. In a judgement handed down yesterday, this was also dismissed.
CSI500 Index Rebalance Preview: 50 Changes; 10% Turnover; US$3.6bn Round-Trip Trade
- With 85% of the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index at the close on 13 June.
- We estimate a one-way turnover of 10% at the rebalance resulting in a round-trip trade of CNY26.4bn (US$3.6bn). The Information Technology gains at the expense of Healthcare and Consumer Staples.
- The forecast adds have outperformed the forecast deletes and the CSI Smallcap500 Index over the last 6 months. The best part is that the volatility of the trade is very low.
Taiwan Dual-Listings Monitor: TSMC Trading Range Breakdown? ChipMOS Discount Rare Long Opportunity
- TSMC: +14.1% Premium; Given Latest Market Weakness, Safest to Wait for a Slightly Lower Premium Before Going Long
- ASE: -1.8% Discount; Good Level to Go Long the Spread
- ChipMOS: -6.8% Discount: Long the Spread, Historical Extreme Discount Level
Tech Supply Chain Tracker (13-Mar-2025): Semiconductor industry forecast for 2025.
- Semiconductor industry set to see significant growth by 2025 due to technology advancements and global demand for electronic devices.
- TSMC proposes joint venture with Intel’s foundry division, showcasing industry collaboration for mutual benefit and innovation.
- Huawei takes action against recruitment fraud, penalizing 72 employees, while Altera CEO highlights FPGA advantages over ASIC in AI technology.
Kakao Corp: Insiders Are Buying and Cancellation of Treasury Shares
- Kakao Corp (035720 KS) has two near-term positive catalysts. First is treasury shares cancellation. Second is insiders buying of its shares.
- These moves suggest the management’s confidence in the company’s outlook ahead of the AGM on 26 March.
- In our view, one of the major reasons why the insiders are buying could be due to Kakao’s collaboration with OpenAI.
Taiwan Tech Weekly: If TSMC Joins Intel for Foundry, It Will Entrench Dominance; Structural Long
- TSMC Eyes Intel Foundry Joint Venture: Strategic Expansion or Risky Bet?
- TSMC Addresses U.S. Expansion Concerns: Strengthens TSMC Position & Positive for Semi Industry Capex
- MWC Barcelona Showcased The 6G Showdown: MediaTek Vs. Qualcomm in the Race for Wireless Supremacy
WEX Launches $750M Tender Offer with Odd-Lot Provision Amidst Share Price Decline and Strategic Stake Increase
- WEX launched a $750m tender offer to repurchase ~12% of shares at $148-$170/share, prioritizing odd lots.
- Impactive Capital increased its stake in WEX from 5.6% to 6.7%, purchasing at $154.75/share average.
- WEX is highly leveraged with net debt at 5x EBITDA, despite slowing growth and weak guidance.
SAP SE (SAP GR): A Lot of Efficiency Ahead
- FY 2025 guidance exceeds previous expectations, with cloud revenues expected to grow 26-28%, and profit to rise 26-30%. Cloud revenues are expected to reach 70% by 2027.
- SAP optimises its cloud offerings and Opex, with a focus on driving long-term growth through its ‘land and expand’ strategy and AI. Recent senior appointments aim to support operational efficiency.
- SAP expands AI capabilities, with 50% of deals involving AI use cases. It is aiming to enhance AI agents while positioning itself to benefit from lower AI costs.
Intel: A Better CEO that Understand that Intel Should Fix Its Own Problems, Not Compete with TSMC
- The return of Mr. Tan as CEO suggests that spinning off or selling Intel Foundry will accelerate, Intel’s focus should improve.
- It probably also means scaling down considerably Intel manufacturing plans and outsourcing more to TSMC. If you can’t beat them, join them.
- Now is not a good time to buy Semiconductor stocks. It will take a couple of years to fix Intel’s problems. TSMC will benefit.
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