Daily Brief TMT/Internet: Xiaomi Corp, DeepSeek, Taiwan Semiconductor (TSMC) – ADR, Samsung Electronics Pref Shares, Hua Hong Semiconductor, Amazon.com Inc, Softbank Group, Alibaba Group Holding , Domain Holdings Australia , Wistron Corp and more

• Hang Seng Indexes announces changes to the Hang Seng Index, Hang Seng China Enterprises Index, Hang Seng TECH Index, HSIII Index and HSCI Index (among others) post market close today. 
• The net round-trip trade across the stocks is estimated to be HK$35bn (US$4.5bn) with big impact in a lot of stocks.
• Capping will lead to most inflows to Meituan (3690 HK) while the largest outflows will be from Alibaba Group Holding (9988 HK) and Xiaomi Corp (1810 HK). 

• Liang Wanfang became a celebrity overnight, with visitors from all over Guangdong coming to pay their respects
• Liang has been praised for his contributions to China’s tech sector, surpassing competitors and boosting national pride
• China’s tech sector has faced challenges, including regulatory crackdowns and decreased foreign investment, leading to a shift towards state-backed funding and increased risk for entrepreneurs.

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• TSMC: +22.2% Premium; Wait for Higher Level Before Fresh Short of Spread
• UMC: 0% Premium (Parity) — Massive Increase in ADR Headroom
• ChipMOS: +0.5% Premium; Wait for More Extreme Levels; Earnings Ahead

• Samsung Life isn’t getting a boost from Samsung Fire, so they need to stay focused on managing equity to maintain their K-ICS ratio.
• They’ll use capital securities issuance as a quick fix but must also monitor their Samsung Electronics stake, a major asset, to manage the situation effectively.
• Samsung Electronics will likely focus on dividends over buybacks. Watch for a pair trade setup between common and preferred shares, favoring long positions on preferreds.

• Hong Kong’s secular bull market continues this year with record buying from mainland investors through the Southbound Connect platform.
• AAC Technologies Holdings (2018 HK) announced a positive profit alert of of 150% increase in profit for 2024.  The AI, phone and auto segments saw value content increases.
• Hua Hong Semiconductor (1347 HK) is well-positioned to cater to China’s increasing demand for locally designed and produced chips, especially in the EV, smart home appliances and wearables industries.

• Amazon.com reported a strong fourth quarter for 2024, with a revenue of $187.8 billion, reflecting a year-over year growth of 10%.
• Notably, this growth was primarily driven by the company’s strategic focus on expanding its product selection, competitive pricing, and enhanced delivery services, which significantly boosted customer engagement and unit sales, especially in the North American and International segments.
• The company’s operating income also saw a substantial improvement, reaching $21.2 billion, marking a 61% increase from the previous year, further supported by effective cost management and productivity improvements throughout its distribution network.

• Softbank’s investment in Arm, valued at around USD 148 billion, is its new NAV driver, after its 300% rally post its IPO.
• Despite an ongoing share buyback and an LTV near 12.9%, Softbank is still trading around a 59% discount to its net asset value. 
• Softbank looks like a good proxy for investing in Arm and being long Softbank and Short Arm looks like reasonable risk/reward at current levels. 

• After rallying ~50% from its lows, Alibaba rallied another ~10% after reporting in-line result, despite saying it would spend more capex in the next 3 years than the previous 10; 
• Behind this performance is a sudden clarification of AI’s monetization future in China. Alibaba’s vision certainly has itself at the center of beneficiary, but a few other readings also exist;
• Alibaba suggested that partial replacement of human worker is possible in a platform with structured workflow, allowing AI users to reap benefits earlier than we have anticipated. 

• Costar Group (CSGP US) bought a 16.9% stake in Domain Holdings Australia (DHG AU) yesterday at A$4.2/share in cash. That is a 34.6% premium to the last close.
• Then, Costar Group (CSGP US) made a non-binding indicative proposal to buy all the Domain Holdings Australia (DHG AU) shares it did not own at A$4.2/share.
• Nine Entertainment Co Holdings (NEC AU) owns just over 60% of Domain Holdings Australia (DHG AU) and should move higher on the offer.

• Honda-Nissan merger and Renault-Geely alliance shake up auto industry landscape, causing speculation and uncertainty.
• AI technology leading to increased demand for edge computing and device upgrades due to affordable costs and improved efficiency.
• Liquid-cooled fast charging technology set to revolutionize EV charging by 2025, allowing for ultrafast charging speeds. Tesla’s India factory plans criticized by Trump. Grok 3 drives spike in AI server demand.