In today’s briefing:
- Automotive & Industrial Semiconductors Part 2: Is It the Bottom, Finally? Time to Buy?
- SSE50 Index Rebalance Preview: 4 Potential Changes in June
- Tencent (700.HK) Q1 Earnings: Volatility Setup and Post-Release Price Behavior
- A Pair Trade Between LG Electronics and LG Display
- Unisound Pre-IPO: Growing Steadily but Burning Cash
- Toyo Business Engineering (4828 JP): Full-year FY03/25 flash update
- AI Inside (4488 JP): Full-year FY03/25 flash update
- United Inc (2497 JP): Full-year FY03/25 flash update
- Azbil Corp (6845 JP): Full-year FY03/25 flash update
- GMGI’s leverage ratio is down to 2Q24 levels & since the consummation of the Meridianbet transaction
Automotive & Industrial Semiconductors Part 2: Is It the Bottom, Finally? Time to Buy?
- Revenues are hitting the bottom in 1Q25, most firms mention sequential growth in 2Q, sometimes YoY growth. Trends depend on specific firms, mentions of both Auto and Industrial recovering.
- Gross / operating profit recovery could take a bit longer as inventory and price concessions could negate revenue growth for a couple of quarters.
- 2 categories of stocks: the cheap ones (NXP, Onsemi, Renesas, STMicro) and the expensive stocks (Analog Devices, Infineon, Microchip, Texas Instruments). I’d go with Renesas and Texas Instruments.
SSE50 Index Rebalance Preview: 4 Potential Changes in June
- With the review period complete, there are 2 non-constituents in direct inclusion zone and 4 current constituents in direct deletion zone.
- 4 changes result in a one-way turnover of 5.7%, leading to a round-trip trade of CNY 21.8bn (US$3bn). Index arb balances will increase the impact on the stocks.
- After drifting in a range, the forecast adds have outperformed the forecast deletes over the last month. There could be further outperformance as we near the announcement date.
Tencent (700.HK) Q1 Earnings: Volatility Setup and Post-Release Price Behavior
- Tencent has rallied 17.29% off the April low—against this backdrop, we analyze implied vol, the earnings-implied jump, and post-earnings price patterns.
- Relative to past earnings cycles, current implied vol screens lower across multiple timeframes and spread metrics.
- Post-Earnings price behavior reveals some non-intuitive dynamics worthy of consideration.
A Pair Trade Between LG Electronics and LG Display
- In this insight, we discuss a pair trade between LG Electronics (066570 KS) (long) and LG Display (034220 KS) (short).
- LG Display is likely to face greater margin pressures than LG Electronics this year, which could lead a bigger consensus estimates downward revisions for LG Display than LG Electronics.
- Both LG Electronics and LG Display are trading at 0.6x P/B multiples. Given LG Electronics’ much higher ROE vs LG Display, LG Electronics should be trading at higher valuation multiples.
Unisound Pre-IPO: Growing Steadily but Burning Cash
- Unisound AI Technology (1053075D CH) is looking to raise at least US$300m in its upcoming HK IPO.
- The firm specializes primarily in speech recognition and text-to-speech capabilities
- In this note, we look at the firm’s past performance.
Toyo Business Engineering (4828 JP): Full-year FY03/25 flash update
- B-EN-G achieved record-high orders of JPY21.7bn and revenue of JPY20.8bn, driven by IT investments and sales growth.
- Operating profit reached JPY4.7bn, with a 20.4% YoY increase, supported by higher project profitability and license sales.
- For FY03/26, B-EN-G forecasts revenue of JPY22.0bn and operating profit of JPY5.2bn, focusing on digital transformation demand.
AI Inside (4488 JP): Full-year FY03/25 flash update
- Revenue for FY03/25 increased 5.0% YoY to JPY4.4bn, with recurring revenue rising 8.9% YoY to JPY4.2bn.
- Operating profit for FY03/25 declined 14.2% YoY to JPY385mn, with SG&A expenses increasing 10.9% YoY to JPY3.2bn.
- FY03/26 forecast includes revenue of JPY5.1bn (+14.8% YoY) and operating profit of JPY505mn (+31.1% YoY).
United Inc (2497 JP): Full-year FY03/25 flash update
- In FY03/25, revenue declined 4.3% YoY, with operating profit dropping 45.5% YoY due to reduced securities sales.
- Investment segment revenue fell 25.0% YoY, operating profit decreased 34.0% YoY, despite 45 new investments made.
- FY03/26 forecasts a 16.9% YoY revenue decline, with an operating loss of JPY1.2bn, excluding large-scale securities sales.
Azbil Corp (6845 JP): Full-year FY03/25 flash update
- FY03/25 results: Sales JPY300.4bn (+3.2% YoY), operating profit JPY41.5bn (+12.6% YoY), net income JPY41.0bn (+35.6% YoY).
- Medium-term plan targets: FY03/28 sales JPY340.0bn, operating profit JPY51.0bn, ROE 14%, focusing on core and growth businesses.
- Long-term targets for FY03/31: Sales JPY420.0bn, operating profit JPY65.0bn, ROE 15%, revised upward from initial targets.
GMGI’s leverage ratio is down to 2Q24 levels & since the consummation of the Meridianbet transaction
- GMGI’s leverage ratio is down to 2Q24 levels & since the consummation of the Meridianbet transaction, GMGI has reduced the consideration payable to Meridianbet’s former owners to ~$34.9m from $70.0m, through payments in cash and shares.
- GMGI ended 1Q25 with cash and equivalents just shy of $30m to support growth initiatives, including strategic M&A and share repurchases.
- GMGI expects full-year 2025 revenue of $190m-$195m, up about 26% to 29% y/y, as it continues to invest in technology, content and new licenses to drive growth and shareholder value.
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