Daily Brief TMT/Internet: GMO Internet, NetEase , Tencent, NVIDIA Corp, All Winner Technology, Apple , Cognizant Tech Solutions A, KLA-Tencor Corp, Automatic Data Processing, Ebay Inc and more

• GMO Internet Group (9449 JP) is looking to sell its 33.4% stake in its subsidiary GMO Internet (4784 JP) to meet free-float requirements.
• As the current free-float is tiny, the deal is more like a quasi-IPO rather than a placement, in our view.
• In this note, we will talk about the deal dynamics as well as updates on the company’s financial performance.

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• The official index changes and indicative weights for the June 2025 index rebal event will be announced after the close on Friday 16th May 2025.
• We continue to expect zero index changes for June 2025 but we estimate there to be capping flows of US$1.85bn one-way.

• In 1Q25, both total revenue and game revenue growth rates accelerated.
• The authorities have been turning from containing games to encouraging games.
• We expect the stock has an upside of 34% and a price target of HK$700. Buy.

• NVIDIA stock rose over 3% Wednesday morning, after news of a reported multi-billion-dollar AI chip deal with Saudi Arabia, announced during an investment forum attended by President Trump.
• Nvidia will supply hundreds of thousands of AI chips over five years to Humain, a new Saudi AI venture backed by the $925B Public Investment Fund.
• Bank of America raised NVDA price target to $160 from $150. A Bloomberg report suggested the UAE may buy over 1 million Nvidia AI chips under a potential U.S. deal.

• With the review period complete, we forecast 10 changes for the ChiNext Index (SZ399006 INDEX EQUITY) and 5 changes for the ChiNext 50 Index in June.
• The largest flows will be in stocks that are adds/deletes for both indices – and there are a few of those. Plus there are some overlaps with other indices.
• While the forecast adds have outperformed the forecast deletes for both indices since January, near-term performance has not been great. That could change as we near the announcement date.

• Origin story of the book: Becoming interested in Apple’s Achilles heel in China after being too bullish on the company’s success
• Focus on the role of manufacturing design engineers in custom manufacturing and orchestration of Apple’s supply chain in China
• Thesis of the book: Exploring Apple’s strategic positioning in China and the symbiotic relationship between economic scale and customer allure in the luxury market

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• Cognizant Technology Solutions reported its financial performance for the first quarter of 2025, demonstrating substantial growth and strategic progress amidst an evolving macroeconomic landscape.
• Revenue for the quarter was $5.1 billion, reflecting an 8.2% increase year-over-year in constant currency, largely driven by the acquisition of Belcan and organic growth in the Health Sciences and Financial Services sectors.
• This growth was instrumental in placing Cognizant in what the company refers to as the “Winner’s Circle,” indicating notable progress in achieving strategic targets.

• KLA Corporation reported strong financial results for the March quarter of 2025, with revenues of $3.06 billion, slightly exceeding the midpoint of their guidance.
• Their non-GAAP diluted earnings per share (EPS) of $8.41 and GAAP EPS of $8.16 also met the upper end of expectations.
• This performance was largely driven by robust demand in advanced logic, high-bandwidth memory (HBM), and significant contributions from its advanced packaging businesses.

• Automatic Data Processing, Inc. (ADP) reported solid financial performance in its third quarter of fiscal year 2025, demonstrating robust capabilities amidst varying global economic conditions.
• The company achieved a 6% increase in revenue, alongside a 10 basis point rise in adjusted EBIT margin and a 6% growth in adjusted EPS.
• ADP showed significant growth across its U.S. portfolio, especially in its small business, mid-market, enterprise, and compliance solutions offerings.

• eBay Inc. began 2025 with results surpassing expectations across key financial metrics, despite a challenging operational environment triggered by ongoing trade policy changes and consumer concerns over increasing prices for imported goods.
• The first quarter saw a nearly 2% increase in Gross Merchandise Volume (GMV) to approximately $18.8 billion, marking a consecutive streak of positive growth for four quarters.
• The company’s revenue rose over 1% to $2.58 billion, and non-GAAP earnings per share grew by 10% to $1.38.