In today’s briefing:
- China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up
- Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March
- Alibaba (BABA US): Upzised Share Repurchase to Support Share Price
- SMIC (981.HK): The GM Reaches a New Low of 9-11% in 1Q24F, Despite Revenue Growing by 2% QoQ.
- The Paytm Saga: A Tale of Non-Compliance and Controversy
- Kakao Games: Put Options on CB Likely to Drive Lower Share Price
- The Reality of Mixed Reality
- Teradyne Inc.: Diversification into AI and Robotics Could Catalyze Growth! – Major Drivers
- Super Micro Computer: Initiation of Coverage – Unlocking the Power of AI with Green Computing – Why Investors Can’t Afford to Miss Out! – Major Drivers
- Celestica Inc: Increasing Demand in AI/ML Compute Programs & Other Major Drivers
China ETF Inflows & Impact: Concentrated, Then Diversified; Central Huijin Steps Up
- Nearly US$37bn has flowed into mainland China listed ETFs since 2 January and could be driven by the National Team supporting the market. Central Huijin has announced their ETF buying.
- Most of the inflows have been focused on large cap indices including CSI 300, SSE50, CSI 500, CSI 1000, ChiNext, STAR50 and Chinext50 indices.
- While the inflows were initially focused on the CSI 300, there has been a diversification recently with big inflows to the SSE50, CSI 500, CSI 1000 and ChiNext indices.
Quiddity Leaderboard KOSPI 200 Jun 24: L&F (066970) Likely To Miss Out on Fast Entry in March
- KOSPI 200 is a Korean blue-chip index that tracks the 200 largest and most-liquid names listed in the KOSPI section of the Korea Exchange (KRX).
- In this insight, we take a look at the names leading the race to become ADDs and DELs during the upcoming semiannual review in June 2024.
- There could be up to four changes in the KOSPI 200 index in the run up to the June 2024 index rebal event including an intra-review fast entry change.
Alibaba (BABA US): Upzised Share Repurchase to Support Share Price
- Alibaba reported a largely in-line December quarter as lower take rate and widened loss from international commerce businesses resulted in pressured bottom line.
- The results also suggest a persisting pattern of China consumers trading down, which – along with the company’s ongoing internal overhaul – will continue to be headwind in 1H24.
- That said, we see increase of US$25 billion share repurchase program and dividend policy to well support share price at current valuation.
SMIC (981.HK): The GM Reaches a New Low of 9-11% in 1Q24F, Despite Revenue Growing by 2% QoQ.
- The 1Q24F outlook is still showing a decline, with a slightly increase in revenue of 2% QoQ. However, the GM is expected to decrease to 9-11% from 16.4% in 4Q23.
- Management predicts that there will be a double U-shaped recovery in 2024F. Revenue in 2024F is expected to grow annually by mid-single-digit.
- The main areas of growth for SMIC in 2024F will be in mobile phones, smart homes, IoT, and computing.
The Paytm Saga: A Tale of Non-Compliance and Controversy
- Paytm Payments Bank faces regulatory scrutiny and compliance challenges, impacting its trajectory and profitability amid ongoing supervisory action by the RBI.
- With significant restrictions on operations and revenue streams, Paytm navigates a complex financial landscape, highlighting resilience amidst regulatory uncertainties and governance concerns.
- Despite proactive measures, including partnership diversification and service continuity, Paytm’s future hinges on addressing compliance lapses and fostering transparent governance to regain trust in the fintech sector.
Kakao Games: Put Options on CB Likely to Drive Lower Share Price
- One of the biggest risks facing Kakao Games is nearly 500 billion won that it may need to pay to investors that exercise their put options on CB.
- The full exercise of the put options on CBs (500 billion won) could represent nearly 24% of Kakao Games’ market cap at current prices.
- The worst case for Kakao Games would be for the company to pay nearly 500 billion won at once by the end of March.
The Reality of Mixed Reality
- The world does not need another opinion on the Vision Pro, the Apple mixed reality device whose launch coincided with Meta earnings, but I will share mine so I can understand my thought process in the future.
- I have the right to be wrong. The revenue share of Meta’s FRL is so small it might seem redundant to give it so much limelight.
- But, directionally, it’s an important category for the company. With a launch of this scale, the hyperbole and sensationalism rhyme with things we’ve seen in decades past.
Teradyne Inc.: Diversification into AI and Robotics Could Catalyze Growth! – Major Drivers
- In the fourth quarter of 2023, Teradyne, a provider of computer-controlled configurations, and collaborative robots, reported financial results in line with its guidance.
- The company highlighted strong performance in the Memory Test sector, which saw the double year-over-year revenue from DRAM testers due to HBM demand, and in the Industrial Automation marketplace.
- Additionally, Teradyne experienced robust growth sequentially in sales from its Robotics team, as it elevated shipments to meet the record backlog of its UR20 Cobot at Universal Robots.
Super Micro Computer: Initiation of Coverage – Unlocking the Power of AI with Green Computing – Why Investors Can’t Afford to Miss Out! – Major Drivers
- This is our first report on one of the fastest growing high-performance server and storage solutions providers, Super Micro Computer Inc.
- The company reported a record-breaking fiscal second quarter performance for 2024, with a revenue of $3.66 billion and an earnings per share of $5.59, marking a 103% increase from last year.
- This is the first time the company has crossed the $3 billion mark in quarterly revenue, which surpassed even the total annual revenue collected in 2021.
Celestica Inc: Increasing Demand in AI/ML Compute Programs & Other Major Drivers
- Celestica Inc hosted its fourth-quarter 2022 earnings call recently, reporting a positive Q4 and expressing optimism for the future.
- The company achieved revenue of $2.14 billion and a Non-IFRS adjusted EPS of $0.76, marking an increase from the previous year and surpassing its guidance range, driven by the continued strength in the company’s CCS segment backed by its hyperscaler portfolio.
- In contrast, the ATS segment reported a slight decrease year-over-year due to a slowdown in demand in the industrial business and sustained demand headwinds in the capital equipment business, partially offset by growth in the A&D business.
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