TMT: Activision Blizzard, Netmarble Corporation, SK Square, Globalwafers, Mindtree Ltd, Mio, Hcl Technologies, Marvell Technology Group Ltd and more

• Microsoft’s largest-ever acquisition provides boost for cloud gaming and metaverse ambitions.
• Deal comes as Activision Blizzard’s been mired in gender pay disparity and sexual harassment storm.
• Controversial CEO Bobby Kotick to continue in his role as head of Activision Blizzard, though WSJ says otherwise.

• On 18 January, Microsoft Corp (MSFT US) announced that it will acquire Activision Blizzard (ATVI US) for $68.7 billion all-cash deal.
• The acquisition of Activision Blizzard by Microsoft is likely to have a positive impact on the entire global game sector including in Korea. 
• This major acquisition of Activision Blizzard by Microsoft could rejuvenate the entire global game sector as it could signal greater M&A interest in high-quality game companies.

• Our updated NAV analysis of SK Square suggests an implied price of 92,050 won per share, representing 46.3% upside from current levels.
• Among the affiliated companies, OneStore and SK Shieldus are expected to be listed in the Korean stock market in 1H 2022.
• MSCI is likely to increase the weight of SK Square in the MSCI Korea Index rebalance announcement on 10 February. 

• We think the chance for GlobalWafers mergence case to have the final approval could be high. Even if it finally failed, the raw wafer supply should be full until 2024.
• This deal was granted by seven governments and organizations already. And it is still under review of Chinese and Japanese governments.
• The deal will not change the worldwide raw wafer supply status, especially such supply tightness. To our understanding, the secrets to achieve success are cost reduction and resource management mostly.

• Mindtree Ltd (Mindtree) is a mid-tier IT company with a presence in the US, Europe & RoW catering to BFSI, communication media & technology, retail & travel
• Expertise in infrastructure & application catering to Global 2000 clients
• We maintain HOLD rating on the stock. We value Mindtree at Rs 5,055 i.e. 40x P/E on FY24E

• Mio, a Vietnam-based social commerce startup, has raised US$8 million in a series A funding round led by Jungle Ventures
• The investment boosts Mio’s total funding raised to US$9.1 million.
• Founded in June 2020, Mio uses a network of resellers to sell fresh produce such as fruit, vegetables, and meat

• HCL Technologies Ltd (HCL Tech) Q3FY22 performance stood above our expectations and beat our estimate on all fronts.
• The company reported revenues of Rs 22,331 Cr, up 8.1% QoQ and 15.7% YoY.
• We recommend a BUY on the stock and assign a 24x P/E multiple to its FY24E earnings of Rs 67.4/share which gives a TP of Rs 1,600/share, indicating an upside of 20% from CMP.

HCLT delivered an exceptionally strong revenue growth of 7.6% QoQ CC in 3QFY22, 310bp above our estimate, led by its troubled Products and Platforms (P&P, +24.5% QoQ) vertical, which did exceptionally well despite benefitting from seasonality and deal spill over from 2QFY22 (600bp impact). Its Services verticals (IT Services/ER&D up 4.7%/8.3% QoQ CC) continued to clock strong growth and was ahead of our estimate. HCLT reported strong new deal TCV of USD2.1b (flat QoQ, +64% YoY).

• This short model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.  
• They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts.  When the company’s issues become well-known, there is often multiple compression as well as a rerating.
• These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings.