In today’s briefing:
- OneConnect Financial (6638 HK/OCFT US): Ping An Firms Offer @ HK$2.068/Share
- TSMC (2330.TT) Outlook After Intel 18A Setback
- Hang Seng Internet & IT Index (HSIII) Rebalance: Float & Capping Changes
- SPE Part 2: Growth in 2025-26 from AI Segment Only (Logic, HBM, Packaging). Best 2 Stocks: ASML, KLA
- Cyber Security Cloud Inc (4493 JP): Q1 FY12/25 flash update
- LaKeel (4074 JP): Q1 FY12/25 flash update
- POET: Revising Forecasts Due to the Buyout of its JV Partner, Capital Raises, and New Facilities
- Klab Inc (3656 JP): Q1 FY12/25 flash update
OneConnect Financial (6638 HK/OCFT US): Ping An Firms Offer @ HK$2.068/Share
- Back on 3rd March, dual-listed OneConnect Financial (6638 HK/OFT US), a digital retail banking/commercial banking/digital insurance play, announced a non-binding proposal from Ping An, OneConnect’s controlling shareholder with 32.12%.
- By way of a Scheme, Ping An offered HK$2.068/share, or US$7.98/ADS, a 72.33% premium to last close, and a 131.66% premium to the 30-day average. The price was final.
- SAMR has now signed off on the deal and terms are now firmed. M&G is supportive (1.98% of shares out, ~8% of disinterested shares). Perhaps mid-September completion.
TSMC (2330.TT) Outlook After Intel 18A Setback
- TSMC (2330 TT) recent revenues reports were good (April: up 22.2% MoM, and up 48.1% YoY) and its direct competitor Intel (INTC US) is starting to look less competitive.
- According to a report from Reuters, Intel CFO David Zinsner revealed that some of the 18A prospects withdrew after trial production, leading to a lower-than-expected volume of committed demand.
- While Intel struggles, TSMC’s N2 technology is experiencing strong success, being adopted quickly by a wider range of mobile, HPC, AI customers. Our model suggests the stock can rally higher.
Hang Seng Internet & IT Index (HSIII) Rebalance: Float & Capping Changes
- There are no constituent changes for the Hang Seng Internet & IT Index (HSIII) in June but there will be float and capping changes.
- Estimated one-way turnover is 5.95% and that leads to a round-trip trade of HK$3.2bn (US$410m). There are a few stocks with over 0.5x ADV to trade from passive trackers.
- The inflows to NetEase (9999 HK) and Baidu (9888 HK) and the outflows from Kuaishou Technology (1024 HK) and Bilibili (9626 HK) will add to the flows from other indices.
SPE Part 2: Growth in 2025-26 from AI Segment Only (Logic, HBM, Packaging). Best 2 Stocks: ASML, KLA
- AMAT mentions “tremendous architecture inflections” in Logic and Memory (GAA, BSPD, HBM), this is true. But reviewed yesterday, how much, how fast versus declining Mature Logic and China declining?
- 2025 China to decline -25%, RoW to increase +25% on AI. This should continue in 2026. Post China’s elevated capex in 2023-24, the SPE sector is a play on AI.
- ASML and KLA are 1) quasi monopoly 2) in segments that outgrow the total market. ASML is cheapish, KAL at average valuations. Best 2 stocks: ASML, KLA
Cyber Security Cloud Inc (4493 JP): Q1 FY12/25 flash update
- Revenue increased to JPY1.2bn (+24.4% YoY), driven by growth in WafCharm and CloudFastener, with ARR at JPY4.5bn (+30.9% YoY).
- Operating profit declined to JPY241mn (-23.6% YoY) due to increased operating expenses, including personnel and outsourcing costs.
- Shadankun’s ARR reached JPY1.7bn (+6.1% YoY) with a user count of 1,322 companies and a churn rate of 1.06%.
LaKeel (4074 JP): Q1 FY12/25 flash update
- Revenue reached JPY2.2bn (+4.5% YoY), with Product Services at JPY1.5bn (+22.6% YoY) and Professional Services at JPY707mn (-20.0% YoY).
- Operating profit increased to JPY412mn (+45.5% YoY) due to a JPY177mn rise in Product Services gross profit.
- LaKeel product license sales rose to JPY412mn (+174.5% YoY), driven by LaKeel HR, with ARPU at JPY317,000 (+16.5% YoY).
POET: Revising Forecasts Due to the Buyout of its JV Partner, Capital Raises, and New Facilities
- POET Technologies is a startup disrupting the photonics industry with a new technology that eliminates parts of an optical transceiver and replaces them with a single integrated device which is smaller, cheaper, faster, more scalable and with much lower power consumption than the current solutions.
- Its solution can be produced at wafer scale, eliminating costly manual steps, and allowing it to be easily produced in large quantities and at low cost.
- In 2024 it raised $81 million to ramp production and restructure the company by buying out its JV partner.
Klab Inc (3656 JP): Q1 FY12/25 flash update
- Revenue was JPY1.6bn, increasing 3.4% YoY but decreasing 27.2% QoQ, with Japan and overseas declines.
- Operating loss reduced YoY due to cost reduction efforts, with decreased labor, outsourcing, and SG&A expenses.
- Foreign exchange loss of JPY116mn recorded due to settlement and revaluation of foreign currency-denominated receivables and payables.
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