In today’s briefing:
- Meituan Index Flows Clarifications on the Tencent Distribution; Prosus Comments on Its Holdings
- EQD | TSMC (TSM US): Buffet Is Betting on Long Term Upside – We Look at the Options Market for Ideas
- Top Tencent Investor Naspers Considers Selling Meituan Shares
- Iqiyi (IQ US): Compelling Asymmetrical Payoff
- US Vs China Technology, Alibaba, China Unicom, and New World Development
- Skyworks Solutions Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
- Skyworks Solutions Inc.: Initiation of Coverage – Business Strategy & Key Drivers
- MergerTalk:Why Broadcom’s Pursuit of VMware Will Fare Better Than Nvidia’s Doomed Bid For ARM
- Lattice Semiconductor Corporation: Initiation of Coverage – Strong Macro & Other Drivers
Meituan Index Flows Clarifications on the Tencent Distribution; Prosus Comments on Its Holdings
- Days after the Tencent (700 HK) announcement about its planned distribution of the bulk of the Meituan (3690 HK) shares it owns, the Hang Seng Index team clarified index treatment.
- It will be treated in HS Indices as a “listed non-cash distribution” for Tencent. There is theoretically wiggle room on the Meituan side, but it appears it will follow JD.com.
- That means Meituan selling on 4 January at the close, limbo for two months, then Meituan buying. Full model below.
EQD | TSMC (TSM US): Buffet Is Betting on Long Term Upside – We Look at the Options Market for Ideas
- Stock has suffered this year (-47% YTD) with rising geopolitcal tensions and slowing global economy
- Berkshire Hathaway is betting on a recovery in the stock with their $4.1bn stake
- We look at the options market to identify some trades
Top Tencent Investor Naspers Considers Selling Meituan Shares
- Prosus NV, the Dutch unit of Tencent Holdings Ltd.’s largest shareholder Naspers Ltd., said it will consider selling the $4.6 billion of Meituan shares it will receive from Tencent as a special dividend.
- South African media giant Naspers owns about 28% of the Chinese internet giant indirectly via Prosus.
- On Nov. 16, Tencent announced a special distribution of 958 million Meituan shares to shareholders.
Iqiyi (IQ US): Compelling Asymmetrical Payoff
- Iqiyi’s 3Q results released on Tuesday disappointed markets due to dim growth despite sustained profitability for the third quarter in a row.
- “Iconic” turnaround actually put IQ on firmer footing almost on all counts compared to one year ago.
- Stabilizing cost base, strong operating leverage potential and troughs in business and macro cycle spell for compelling asymmetrical payoff – limited downside VS. multi-fold upside.
US Vs China Technology, Alibaba, China Unicom, and New World Development
- The consensus of bottom in China Tech and China A shares continue to gain favour.
- Bank of America is the latest to recommend selling US tech to buy China Tech.
- The Bullish China stocks call is predicated on reopening Pivot, yet the daily increase in cases and sporadic lockdown put the Pivot callers to double down.
Skyworks Solutions Inc.: Detailed Credit Analysis & Financial Strength Evaluation Report
- Skyworks Solutions is a major supplier in the field of radio frequency (RF) components.
- The company has been performing well financially off-late with its growth driven by its diversified portfolio and expanding set of customers.
- Furthermore, the management delivered strong earnings in the automotive industry, with revenue strength emphasizing their connectivity and power isolation portfolio.
Skyworks Solutions Inc.: Initiation of Coverage – Business Strategy & Key Drivers
- This is our first report on Skyworks, one of the leading suppliers of radio frequency (RF) components to the electronics industry.
- The company delivered another all-around beat in the last quarter driven by its diversified portfolio and expanding set of customers.
- Furthermore, the management delivered strong earnings in the automotive industry, with revenue strength emphasizing their connectivity and power isolation portfolio.
MergerTalk:Why Broadcom’s Pursuit of VMware Will Fare Better Than Nvidia’s Doomed Bid For ARM
- While the size of the $61BN Broadcom/VMware deal has naturally attracted the scrutiny of regulators, the transaction’s regulatory obstacles are far less onerous than the failed Nvidia/Arm deal
- Timing risk is a consideration as we can expect a protracted review process
- If the regulatory review timeline does not stretch too far beyond the end 2023, there are still decent IRRs to be earned by arbs
Lattice Semiconductor Corporation: Initiation of Coverage – Strong Macro & Other Drivers
- This is our first report on Lattice Semiconductor.
- The company delivered impressive results in the third quarter, with an all-around beat and a quarterly revenue growth of 31% year over year.
- Overall, we initiate coverage on the stock of Lattice Semiconductor Corporation with a ‘Hold’ rating.
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