Daily BriefsTMT/Internet

Daily Brief TMT/Internet: Nexon, Tencent, O2Micro International, NTT (Nippon Telegraph & Telephone), Mobileye Global, Taiwan Semiconductor (TSMC) – ADR, AXT Inc, Peer Metaverse Coin and more

In today’s briefing:

  • Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry
  • China Internet Weekly (3Oct2022): Tencent, NetEase, Alibaba, Kuaishou, Uxin
  • EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options
  • O2Micro’s “Reasonable” Homecoming Offer
  • O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS
  • NTT (Buy) – Investor Day Highlights Global Data Center Business
  • Mobileye Global IPO Preview
  • Taiwan Tech Weekly: Trying to Recover After a Week of Deep Declines
  • AXTI: The Fruit of a Preview
  • Sporting Crypto – October 3rd 2022: What does the Metaverse mean for Sports?

Saudi Arabia Gaming: Plans to Invest $38 Billion in Global Game Industry

By Douglas Kim

  • Saudi Arabia’s Savvy Games Group has a grand ambition to invest in the global gaming industry. It recently announced that it will invest US$37.8 billion in the global gaming industry.
  • There has been a sharp appreciation of the USD and Riyal versus JPY which could help to accelerate more M&As of Japanese game companies by SGG.
  • Saudi Arabia’s aggressive push to expand into the global gaming industry could aid this sector in the coming months as it could result in further major M&As in this sector.

China Internet Weekly (3Oct2022): Tencent, NetEase, Alibaba, Kuaishou, Uxin

By Ming Lu

  • The global game market can shrink in 2022, which will impact Chinese game companies’ global diversification.
  • NetEase formally launched its own social networking service to compete with Tencent.
  • Kuaishou announced that it would launch an e-commerce channel on its App’s homepage.

EQD | Tencent (700 HK): Time to Take off Hedges and Leverage up Using Options

By Simon Harris

  • Stock has fallen 17% since Sep 15th, and implied vols have picked up
  • The fundamentals remain strong and tech momentum may be shifting
  • We suggest two directional trades using options to play earnings

O2Micro’s “Reasonable” Homecoming Offer

By David Blennerhassett

  • O2Micro International (OIIM US), an integrated circuits play, has announced a definitive privatisation transaction.
  • The acquirer, led by the CEO and CFO of O2Micro, are offering US$5.00/ADS, a 68.9% premium to the undisturbed price. 
  • The Offer requires shareholders representing at least two-thirds of O2Micro vote FOR. Roughly 30% of shares out appear to be supportive. This Offer is expected to close in the 1Q23.

O2Micro Enters into a Definite Privatisation Agreement at US$5.00 Per ADS

By Arun George

  • O2Micro International (OIIM US) entered into a definitive agreement for going private with FNOF Precious Honour Limited at US$5.00 per ADS, a 54.8% to the undisturbed price (17 March).
  • Shareholders representing two-thirds of shares present and voting need to approve the deal. The rollover shareholders represent 16.90% of voting rights.
  • The offer is attractive in the context of O2Micro’s weakening performance and grim market conditions. At the last close, the gross spread is 18.2%. Expect a 1Q23 deal close.

NTT (Buy) – Investor Day Highlights Global Data Center Business

By Kirk Boodry

  • NTT’s global data center business has 6% market share with annual revenue growth of 20% that is twice the industry average
  • We have updated our model and valuation summary to reflect the transfer of NTT Ltd, which operates the GDC business, into NTT Data
  • Our valuation remains unchanged although we have lowered our target price ¥4,500 to ¥4,450 for payment of the H1 dividend.  NTT remains a top pick in our coverage

Mobileye Global IPO Preview

By Douglas Kim

  • Mobileye Global (MBLY US) is getting ready for an IPO in the US in late 2022 at an expected market cap valuation of about US$30 billion. 
  • Mobileye Global was acquired by Intel for US$15.3 million in 2017. Intel currently owns a 100% stake of the company’s outstanding common shares.
  • Mobileye has world-class technologies in the advanced driver assistance systems (ADAS) and autonomous driving technologies and solutions.

Taiwan Tech Weekly: Trying to Recover After a Week of Deep Declines

By Vincent Fernando, CFA

  • Taiwan’s tech space fell hard last week, with the tech sector down 5.4%, compared to a 4.9% drop for the overall market. Semiconductors performed the worst, down 6.2%.
  • Hon Hai, Delta, Lite-On — EV a major theme for the first-ever Taiwan Expo USA coming October 12th.
  • Taiwan wafer exports were at an all-time high in August. We note that wafer names have underperformed TSMC.

AXTI: The Fruit of a Preview

By Hamed Khorsand

  • Third quarter results could serve as an inflection point for AXT Inc. (AXTI) after the Company reported a rebound in gross margin in the second quarter
  • When AXTI reported second quarter results, management described a design win that would be part of a consumer electronic device with a feature in a higher end model
  • We believe the reference could have been to the iPhone 14 Pro and Pro Max having different a different display feature compared to the iPhone 14.

Sporting Crypto – October 3rd 2022: What does the Metaverse mean for Sports?

By Sporting Crypto

  • Anything that augments your physical life, to the digital, is in some way or form linked to what currently is, and what will become, ‘The Metaverse’.
  • So a Zoom call or a free world game — whilst they don’t wholly agree with the notion of interoperability or persistence —they still are in essence part of the Metaverse.
  • Now, to give further context, there is the idea of ‘Metaverses’ — aka, Decentraland, Sandbox or any company building their own virtual world.

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