In today’s briefing:
- HKBN (1310 HK): A Press Report Causes Trepidation
- Hexaware Technologies IPO – Not Cheap on Its Own, but Peers Are Trading a Lot Higher
- SMIC (981.HK): Revenue Growth Decelerated in 4Q24, and Growth Momentum to Be Regained in 1Q25.
- AMD’s AI Bet Is Failing? DeepSeek Challenges the Market While Nvidia Widens the Gap!
- Alphabet’s AI Spending Nightmare: Will $75 Billion CapEx Be Enough To Come Close To DeepSeek & OpenAI?
- Qualcomm’s AI-Powered Future: Will It Dominate PCs, Smartphones, and Cars?
- ARM Holdings Plc.: Will Its Agentic AI Adoption & Transition To Chiplet-Based Architectures Make It A Formidable Player In Its Domain?
- MicroStrategy Incorporated: How Is The Management Embracing Volatility & Innovative Capital Structures?
- SailPoint, Inc. (SAIL) — IPO Price Range Increased; Software Order Book Demand Is Fever Pitch
- Indosat (ISAT IJ) – A More Intelligent Future
HKBN (1310 HK): A Press Report Causes Trepidation
- HKBN Ltd (1310 HK) shares declined 4.4% after a Sing Tao Daily article claimed that the precondition satisfaction of China Mobile (941 HK)’s offer is at a stalemate.
- The mainland regulatory authorities have not provided any feedback on the approval process. The China Traditional Chinese Medicine (570 HK) deal break is cited as a cautionary tale.
- While the China TCM deal break taught us that no deal is safe, even an SOE-sponsored deal, the article’s concerns have little merit. This is a buy.
Hexaware Technologies IPO – Not Cheap on Its Own, but Peers Are Trading a Lot Higher
- Hexaware Technologies (HEXW IN) is looking to raise US$1bn from its India IPO.
- Hexaware is a global digital and technology services company with AI at its core, delivering innovative solutions that help customers in their digital transformation journey and subsequent operations.
- In this note, we discuss its RHP updates, undertake a peer comparison and share our thoughts on valuation.
SMIC (981.HK): Revenue Growth Decelerated in 4Q24, and Growth Momentum to Be Regained in 1Q25.
- SMIC’s 1Q25 guidance is for revenue to increase by 6% to 8% QoQ, and the gross margin to range from 19% to 21%.
- Client revenue contribution from China/Europe/US has changed from 80.8%/15.7%/3.5% in 4Q23 to 89.1%/8.9%/2% in 4Q24. These numbers indicate that SMIC is gradually becoming independent from Europe and the US.
- SMIC’s guidance for the year 2025 is that revenue growth is expected to be higher than the industry average in the same markets.
AMD’s AI Bet Is Failing? DeepSeek Challenges the Market While Nvidia Widens the Gap!
- Advanced Micro Devices reported fourth-quarter revenue of $7.7 billion, a 24% increase year-over-year, driven by strong growth in the data center and client segments.
- The data center segment, which includes AI accelerators and server processors, delivered $3.9 billion in revenue, up 69% year-over-year but missing analyst expectations of $4.09 billion.
- The company gained market share in CPUs, securing key wins with hyperscalers like Microsoft, Meta, and Google.
Alphabet’s AI Spending Nightmare: Will $75 Billion CapEx Be Enough To Come Close To DeepSeek & OpenAI?
- Alphabet Inc. has faced a significant market correction, with its stock declining by 5% over the past week, leading to a $200 billion reduction in its market capitalization.
- This sell-off followed the release of the company’s latest financial results, which, despite reporting revenue growth, highlighted structural challenges that have raised concerns among investors.
- The primary issues stem from Alphabet Inc.’s substantial capital expenditure on artificial intelligence, slowing momentum in cloud computing, and increasing competitive pressures from more agile AI players such as OpenAI and DeepSeek.
Qualcomm’s AI-Powered Future: Will It Dominate PCs, Smartphones, and Cars?
- Qualcomm reported a strong financial performance in its latest quarter, with revenue increasing 17% year-over year to $11.67 billion, surpassing analyst expectations.
- Growth was primarily driven by increased sales in its handset and automotive segments.
- Despite a broader market slowdown, Qualcomm’s handset revenue rose 13%, benefiting from higher premium-tier smartphone sales and design wins with major manufacturers like Samsung and Chinese OEMs. The company also reported a 61% increase in automotive revenue to $961 million, reflecting strong demand for its Snapdragon Digital Chassis solutions.
ARM Holdings Plc.: Will Its Agentic AI Adoption & Transition To Chiplet-Based Architectures Make It A Formidable Player In Its Domain?
- Arm Holdings, a prominent player in the semiconductor industry, reported an optimistic set of results for the third quarter of fiscal year 2025, ending December 31, 2024.
- The company achieved record revenue and a significant increase in royalty revenues, driven primarily by robust demand for AI technologies and the adoption of its latest Armv9 architecture and Compute Subsystem Solutions (CSS).
- On the financial front, Arm’s total revenue reached an all-time high of $983 million, marking a year-on-year increase of 19% and surpassing the high end of company guidance.
MicroStrategy Incorporated: How Is The Management Embracing Volatility & Innovative Capital Structures?
- MicroStrategy Incorporated, now rebranded as Strategy, recently held its earnings call to discuss the performance and strategic developments for the fourth quarter and full year 2024.
- The company is undergoing significant transformation, with its rebranding reflecting its commitment to business intelligence and its role as a major Bitcoin treasury company.
- This name change and strategic shift symbolize a simplification of its identity while retaining continuity with its past and setting ambitious goals for future growth in digital assets and business intelligence.
SailPoint, Inc. (SAIL) — IPO Price Range Increased; Software Order Book Demand Is Fever Pitch
- The underwriters amended the terms of this offering with a S-1/A. The price range has been upwardly revised from $19.00-$21.00 to $21.00-$23.00.
- Cornerstone investor Dragoneer has a strong track record with IPOs that have participated in.
- The upwardly-revised price adjustment is a very bullish sign for the IPO and we have adjusted our early expectations on this deal.
Indosat (ISAT IJ) – A More Intelligent Future
- Indosat (ISAT IJ) booked 4Q2024 results below estimates, despite improving ARPUs and headline revenues, as margins were depressed with a greater focus on its B2B business.
- There was also continuing aggressive competition in starter packs during the quarter, although this abated somewhat in early December but the company also lost non-productive subscribers as a result.
- Indosat continues to build on its AI edge both around its mobile strategies and as a standalone AI-as-a-service business. Valuations are attractive after sharp correction.
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