Daily Brief TMT/Internet: Pine Labs, NEC Corp, Macnica Holdings Inc, Taiwan Semiconductor (TSMC) – ADR, Bitfarms, Glosel , Shutterstock Inc and more

• Pine Labs is a fintech company supporting digitization of commerce through digital payments and issuing solutions for merchants, consumer brands and enterprises, and financial institutions.
• While the company has been growing in line with peers, its focus on enterprise customers and subscription pricing stands out, while peers have focused on merchants with a %-fee model.
• IPO priced at sharp discount to expectations ($2.5bn vs $6bn), which is fair given changing business/industry dynamics. Pending RBI investigation and potential selling from early investors are other near-term concerns.

• NEC and Siemens plan to develop an automated robot teaching system for faster set-up and more efficient operation of production lines incorporating multiple robots.
• NEC’s FY Mar-26 guidance raised on strong 1H results. BluStellar, which includes digital twins for robot teaching, grew faster than expected.  
• Aerospace/Defense led sales growth and followed BluStellar in operating profit. Improving product mix and rising Japanese defense budget point to growing long-term potential.

• Macnica is a leading Japanese technology distributor specializing in semiconductors and network equipment, well-positioned to capitalize on long-term growth in AI, IoT, and automotive sectors.
• The company is strategically shifting towards a higher-margin ‘Services & Solutions’ model, expanding beyond traditional distribution to include proprietary products and cybersecurity services.
• While facing near-term headwinds from semiconductor market cyclicality and margin pressure, Macnica maintains a strong balance sheet, attractive dividend yield, and a valuation that appears reasonable compared to global peers.

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• TSMC: +21.8% Premium; Wait for Lower Premium Before Fresh Long
• UMC: +2.2% Premium; Good Level to Short the ADR Premium
• CHT: -2.0% Discount; Near Level to Go Long the ADR Spread

• Bitfarms is a vertically integrated Bitcoin mining company aggressively expanding its operational footprint in North America and diversifying into High-Performance Computing (HPC) and AI infrastructure to create new, stable revenue streams.
• The company’s strategy hinges on leveraging low-cost, primarily renewable energy sources to maintain competitiveness in a post-halving environment, where operational efficiency is paramount for profitability.
• Significant financial risks exist, including a history of net losses, high stock volatility, and execution risk associated with its capital-intensive pivot to the AI/HPC sector, alongside its inherent exposure to the volatile price of Bitcoin.

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• Glosel is an established Japanese electronics distributor with strong ties to key suppliers like Renesas, positioned to benefit from positive industry tailwinds in automotive and industrial sectors.
• The company exhibits a high-risk financial profile, characterized by strong three-year earnings growth but severely negative operating and free cash flow, leading to the elimination of its dividend in FY24.
• While valuation appears reasonable on a Price-to-Book basis, the persistent cash burn, volatile profitability, and intense competitive landscape present significant uncertainty for investors.

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• Shutterstock is strategically pivoting towards generative AI and data services to counter the secular threats to its core stock content business, a move critical for future growth but with an uncertain payoff.
• While recent acquisitions like Envato are boosting subscriber numbers and revenue, organic growth in the core content segment is declining, and margins are under pressure from a shifting business mix and competitive intensity.
• The company’s strong dividend yield and high momentum score reflect shareholder returns and recent market cap growth, but these are juxtaposed against a challenging long-term decline in net income and cash flow, indicating a high-risk, high-reward transition period.

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