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Dec 25
0

Daily Brief TMT/Internet: Posco DX, Apple , Quantum Solutions Co Ltd, Tencent and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150
  • 2024 High Conviction: Apple’s AI Foray & Services to Power Its Journey to USD 4 Trillion Valuation
  • Quantum Solutions (2338 JP): Look Again at Small Cap Play on AI Servers and Web-3.0 Gaming
  • China Consumption Weekly (25 Dec 2023): Tencent, NetEase, NIO, Xpeng, Alibaba, Meituan, Douyin

Index Rebalance & ETF Flow Recap: STAR50, SET50, AMFI, KOSDAQ150

By Brian Freitas

2024 High Conviction: Apple’s AI Foray & Services to Power Its Journey to USD 4 Trillion Valuation

By Srinidhi Raghavendra

  • Despite being a hated stock among the Super Sevens, Apple shares are up >51% YTD this year. Apple has had little to claim for within captivating AI hype.
  • Apple is not a first mover. Its reputation is of a late comer. But its superior products with mind bending experiences blows competition out of the water.
  • Outperformance of iPhone 15, deepening services penetration, and roll out of AI-features will propel Apple to a USD 4 trillion market cap in 2024.

Quantum Solutions (2338 JP): Look Again at Small Cap Play on AI Servers and Web-3.0 Gaming

By Scott Foster

  • Quantum Solutions has given up 63% of its recent gain but has more NVIDIA GPU related orders in the pipeline. Keep an eye on the stock and the news flow.
  • The recent upward revision to sales and profit guidance has been followed by the announcement of a capital and business tie-up with Hajime Tabata’s JP Games.
  • The addition of Web-3.0 gaming to distribution of AI servers and Arm-based edge computing hardware could change the nature of the investment.

China Consumption Weekly (25 Dec 2023): Tencent, NetEase, NIO, Xpeng, Alibaba, Meituan, Douyin

By Ming Lu

  • Tencent and NetEase’s stock prices plunged after the release of the new law about online game.
  • China Passenger Car Association expects NEV will grow by 37% for 2023.
  • NIO got US2.2 billion investment from CYVN Holdings based in Abu Dahbi.

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Dec 24
0

Daily Brief TMT/Internet: Tencent and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • HK Connect SOUTHBOUND Flows (To 22Dec23); CNOOC/Energy To The Buy Side; Tencent Heavily Sold, Again.

HK Connect SOUTHBOUND Flows (To 22Dec23); CNOOC/Energy To The Buy Side; Tencent Heavily Sold, Again.

By Travis Lundy

  • SOUTHBOUND flows showing reversion tendencies still. Hs up vs As only slightly. Liquid Hs were down vs As. 
  • SOUTHBOUND saw HK$144bn of net INflows on the week to 22 Dec, which was HK$4bn of Tencent net sales and net buying of a bunch of ETFs.
  • Some banks and energy names were top net inflows as a percentage of ADV. This week was heavy for SOUTHBOUND, quiet for foreigners, next week may be quiet for both.

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Dec 23
0

Daily Brief TMT/Internet: Tencent, Micron Technology, Samsung Electronics and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • China Gaming Restrictions 2.0
  • Micron Analysis, Industry Takeaways: Memory Market TAM New Highs into 2025; SK Hynix Trade
  • Upgrading Mexico to Overweight; Technology Remains Global Leadership; Overall Bullish Outlook Intact

China Gaming Restrictions 2.0

By Mio Kato

  • China has tightened restrictions on online games again driving significant falls in names such as Tencent and NetEase. 
  • While the move may surprise some given prior moves to restart approvals in our view the overall trend of regulation is not especially surprising. 
  • In particular, the tightened regulations appear to target the most important drivers of mobile gaming profitability and today’s large drops may actually be underreactions.

Micron Analysis, Industry Takeaways: Memory Market TAM New Highs into 2025; SK Hynix Trade

By Vincent Fernando, CFA

  • Relative Value Trade in Micron Has Worked Since Our Last Piece; Results Blow Away Expectations
  • Memory Pricing Improvement Continues, Management Expects Pricing Increases Through Calendar Year 2024 and 2025
  • We Remain Structurally Long Memory; Now See Relative Value in SK Hynix

Upgrading Mexico to Overweight; Technology Remains Global Leadership; Overall Bullish Outlook Intact

By Joe Jasper

  • Recent developments have continued to reinforce our bullish outlook on global equities (MSCI ACWI).
  • There is no reason to fight this bullish trend, and we continue to expect more upside into the early part of 2024.
  • Upgrading Mexico to Overweight; Technology Remains Global Leadership; Actionable Themes: 44 individual stock buy recommendations within Technology, Services, Consumer Discretionary, Financials, and Materials

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Dec 22
0

Daily Brief TMT/Internet: Plover Bay Technologies, Posco DX, Intel Corp, UBTech Robotics, Telefonica SA, Japan System Techniques Co, Carta Holdings, Inc. and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Plover Bay (1523 HK): Interesting Net Cash /8% Dividend Yield Play/ With ROEs Above 50%
  • KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX
  • Intel’s AI Everywhere In New York
  • UBTech Robotics IPO – Quick Thoughts on Valuation – Too Hefty a Premium for Slowing Growth
  • SEPI/Telefonica: Acquisition of a 10% Stake
  • 2Q Follow-Up – Japan System Techniques (4323 JP)
  • 3Q FOLLOW-UP – Carta Holdings (3688 JP)

Plover Bay (1523 HK): Interesting Net Cash /8% Dividend Yield Play/ With ROEs Above 50%

By Sameer Taneja

  • Plover Bay Technologies (1523 HK) is another exciting play from the stable of net cash (12% of market cap) and high dividend yield (8% FY22) companies.  
  • The company develops networking technologies that enable supercharged connectivity. Users can build always-on networks anywhere by combining fixed, mobile, and satellite connectivity. Its major brands are Peplink and Pepwave.
  • Plover Bay is a high net margin (25%) and high ROE (>50%) business that has 9-10% CAGR revenue growth (trading at 11x PE) with catalysts up ahead. 

KOSDAQ150 Adhoc Index Rebalance: TEMC Added; Short Covering Expected in PoscoDX

By Brian Freitas

Intel’s AI Everywhere In New York

By William Keating

  • Intel’s “AI Everywhere” event turned out to be little more than last minute launches client and server products promised for 2023
  • While these products have little new in the way of ground-breaking AI hardware, the entire event was infused with AI marketing to the highest degree
  • Ostensibly Intel’s great hope in AI hardware acceleration, Gaudi, featured solely as a last minute gimmick announcing that Gaudi3 was “out of the fab and into the lab”. Yawn!

UBTech Robotics IPO – Quick Thoughts on Valuation – Too Hefty a Premium for Slowing Growth

By Ethan Aw

  • UBTech Robotics (9880 HK) is looking to raise about US$168m in its upcoming HK IPO, after downsizing from an earlier reported float of up to US$700m.
  • UBTech Robotics is engaged in artificial intelligence (AI)-empowered robotics in China, dedicated to the innovation of humanoid robots and development and sales of smart service robotic solutions.
  • In our previous note, we looked at the company’s performance and its PHIP updates. In this note, we share our quick thoughts on valuation.

SEPI/Telefonica: Acquisition of a 10% Stake

By Jesus Rodriguez Aguilar

  • The Spanish Cabinet has agreed on the acquisition of up to 10% of the share capital of Telefonica SA (TEF SM) (c.€2.2 billion), higher than the 5% initially mentioned.
  • This should move the market as it represents 48 trading days. This also means that the Government will likely authorise the purchase of up to 9.9% by STC.
  • The Kingdom of Spain 10-y benchmark bond yield is 2.9%, while the 24e dividend yield of Telefonica is 8% (source: IBES), therefore the operation makes financial sense.

2Q Follow-Up – Japan System Techniques (4323 JP)

By Sessa Investment Research

  • Fully independent DX provider: Japan System Techniques (JAST) is an independent system integrator that develops and sells software and systems, which celebrated its 50th anniversary.
  • The company develops systems for customers in a variety of industries and sectors, including finance, manufacturing, distribution, services, public services, telecommunications, transportation, and science and technology.
  • Furthermore, as a developer, the company has three main JAST-branded software offerings for its customers, namely GAKUEN for the education industry, BankNeo for the financial industry, and JMICS (JAST Medical Insurance Checking System) for the medical industry and the profitability of these own-brand businesses is very high.

3Q FOLLOW-UP – Carta Holdings (3688 JP)

By Sessa Investment Research

  • In 2023, the first year of CARTA Holdings’ new medium-term management plan, the company made a solid push to reform its business and organizational structure with the aim of executing a sharp recovery in business performance.
  • It moved forward with narrowing its focus, integrating four direct sales subsidiaries in the digital marketing business, and withdrawing from the low-profit game and hometown tax payment business in the internet-related services business.
  • In addition, the company announced and implemented additional measures to reduce fixed costs to the tune of ¥1 bn, including by calling for voluntary retirement during FY23/12, as its earnings may fall further than initially expected before bottoming out, mainly for reservation-based ads. 

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Dec 21
0

Daily Brief TMT/Internet: LG Display, Whispir Ltd, SiteMinder, Nexchip Semiconductor , Tencent, Viva Republica, Micron Technology and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Arb Trading with Stock Rights in Korea: A Basic Guide Featuring LG Display Offering
  • Whispir (WSP AU): Soprano & Pendula Jostle for Control
  • Quiddity Leaderboard ASX Mar 24: Allkem, Newmont, Costa, and Many More
  • STAR50 Index Rebalance Preview: Four High Impact Changes in March
  • [Blue Lotus Sector Update]: Latest Developments in Short Video Point to Possibilities
  • Key Beneficiaries of a Potential Viva Republica IPO in 2024
  • The First Semi Micron to Guide 1Q24; Conservative Now but Likely Raise Later

Arb Trading with Stock Rights in Korea: A Basic Guide Featuring LG Display Offering

By Sanghyun Park

  • Unlike typical Korean stock rights arbitrage, LG Display’s significant equity offering and active stock futures trading anticipate a spread opening, akin to the recent Hanwha Ocean scenario.
  • In contrast to Hanwha Ocean, the absence of major sellers, like KDB, sets this event apart. LG Electronics, the major shareholder with a 37.9% stake, intends to participate.
  • Despite differences from Hanwha Ocean, LG Display’s high retail shareholder presence implies a substantial likelihood of stock rights overhang, even without players like KDB.

Whispir (WSP AU): Soprano & Pendula Jostle for Control

By David Blennerhassett

  • On the 6 November, cloud communication outfit Whispir (WSP AU)  announced a A$0.46/share unconditional Offer, in cash, from mobile messaging software play Soprano Design.
  • The Offer price was a 92% premium to Whispir’s recent private placement, and a 60% premium to the undisturbed price. Whispir rejected the Offer.
  • Pendula subsequently emerged with a A$0.57/share NBIO. Soprano “countered” with A$0.52/share. Pendula upped its indicative Offer to A$0.60/share. An independent expert’s fair value is between A$0.486/share-A$0.565/share.

Quiddity Leaderboard ASX Mar 24: Allkem, Newmont, Costa, and Many More

By Janaghan Jeyakumar, CFA

  • In this insight, we take a look at the potential index changes for ASX 300, 200, 100, 50, and 20 in the run-up to the March 2024 index review.
  • I expect one change for ASX 20, one change for ASX 100, and four changes for ASX 200 during the March 2024 index rebal event.
  • Separately, there could also be one intra-review change for ASX 200 in February 2024.

STAR50 Index Rebalance Preview: Four High Impact Changes in March

By Brian Freitas

  • The review period for the March rebalance ends 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
  • We expect the index committee to continue using a 6-month minimum listing history resulting in four changes to the index.
  • One way turnover is estimated at 3.3% resulting in a one-way trade of CNY 4,717m. The impact on the deletions will be much larger than that on the inclusions.

[Blue Lotus Sector Update]: Latest Developments in Short Video Point to Possibilities

By Ying Pan

  • We view both Weixin Video Account (WVA) and Douyin China as secondary assets to their respective parents, which in our view, may lead to them forming…(TBC)
  • However, rising competition in the short-play (短剧) market may put the two businesses in more direct confrontation, which may delay or diminish the chance for two to work together;
  • We view Tencent as the likely winner in the continuing evolution of short video as it considers various options to maximize the value of WVA traffic.

Key Beneficiaries of a Potential Viva Republica IPO in 2024

By Douglas Kim

  • It was reported in numerous local media that Viva Republica has sent several RFPs to several large domestic securities companies to be underwriters of a potential IPO in 2024. 
  • Viva Republica is one of the largest Korean fintech companies. Market value of Viva Republica is estimated at more than 9 trillion won.
  • E World, Hanwha Securities, Hana Financial, and Korea Electronic Certification Co are major public companies that should benefit from the listing of Viva Republica. 

The First Semi Micron to Guide 1Q24; Conservative Now but Likely Raise Later

By Andrew Lu

  • Driven by stronger PC/networking DRAM sales, Micron reports 5% stronger 4Q23 sales, 10-13ppts q/q margin improvement and 34% y/y decline in MOI to 5.2 months;
  • Micron guides 1Q24 sales growth 8-16% q/q and 38-49% y/y and gross margin of 12%, beating Bloomberg consensus estimates by 6ppts;
  • Rooms to raise: 1. 1Q24 sales of 18% q/q likely; 2. Turning profits sooner than expected; 3. +Free cash flow in 2024; 4. HBM3E for GH200/H200 to improve mix, margin. 

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Dec 20
0

Daily Brief TMT/Internet: Taiwan Semiconductor (TSMC), Gaia and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • TSMC Chairman to Retire, + or — Impacts to Shareholders
  • Gaia, Inc. – Good Momentum Going into 2024

TSMC Chairman to Retire, + or — Impacts to Shareholders

By Andrew Lu

  • Chairman 69 years old Dr. Liu will retire and 70 years old CEO Dr. Wei will step up. What story do we believe? Will TSMC to regain its strong outperperformance?
  • Positive impacts: we expect Arizona fab equipment move-in and ramp up might be further delayed if no subsidies are granted; two teams competing to one voice/team/direction.
  • Three risks: 1. Dr. Wei at his age of 70 without a strong management backup; 2. Dr. Wei might make a wrong decision deeply; 3. absolute power corrupts.

Gaia, Inc. – Good Momentum Going into 2024

By Water Tower Research

  • We recently caught up with management to congratulate James Colquhoun on his promotion to CEO.
  • We also got a good update on the business as well as some early indications of trends and management focus for 2024.
  • As indicated on the 3Q23 earnings call, new member growth is continuing at a healthy clip and management expects to close 2023 at around 800k members.

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Dec 19
0

Daily Brief TMT/Internet: Link Administration, LG Display and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Link Admin (LNK AU): Mitsubishi UFJ’s Bittersweet Scheme
  • LG Display: Announces a Rights Offering Capital Raise of 1.36 Trillion Won
  • Link Admin (LNK AU): MUFG’s Underwhelming Binding Offer

Link Admin (LNK AU): Mitsubishi UFJ’s Bittersweet Scheme

By David Blennerhassett

  • Link Administration (LNK AU), the largest provider of services in Australia’s superannuation administration industry, has entered into a Scheme with Mitsubishi UFJ Financial Group.
  • MUFJ is offering long-suffering Link shareholders A$2.10/share (in cash) plus a A$0.16/share dividend (25% franked), or a 32.9% premium, all-in, to the undisturbed price. It has not been declared final. 
  • The Offer has the board’s backing. A Scheme Meeting is expected to be held in May with possible completion in June 2024. 

LG Display: Announces a Rights Offering Capital Raise of 1.36 Trillion Won

By Douglas Kim

  • LG Display announced today that it will conduct a rights offering capital raise worth 1.36 trillion won. 
  • The rights offering capital raise involves 142 million shares, which represent 39.7% of its existing outstanding shares. 
  • We believe this rights offering will have a negative impact on LG Display’s share price as it will significantly dilute existing shareholders. 

Link Admin (LNK AU): MUFG’s Underwhelming Binding Offer

By Arun George

  • Link Administration (LNK AU) has entered a SID with Mitsubishi UFJ Financial (MUFG) (8306 JP) at A$2.26 (A$2.10 scheme consideration + A$0.16 dividend), a 32.9% premium to the undisturbed price.
  • The presence of several substantial shareholders, lack of irrevocables, a light offer, recent derisking of the business and a long-dated offer pose a challenge for the scheme to get up. 
  • MUFG’s offer could spark a rival offer, but Link’s long-suffering shareholders have endured a history of failed bids. At the last close, the risk/reward is unfavourable.

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Dec 18
0

Daily Brief TMT/Internet: Shinko Electric Industries, Marvell Technology and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Merger Arb Mondays (18 Dec) – Shinko Electric, Benefit One, Toyo, CPMC, Vinda, Costa, Volpara
  • Marvell Industry Analyst Day

Merger Arb Mondays (18 Dec) – Shinko Electric, Benefit One, Toyo, CPMC, Vinda, Costa, Volpara

By Arun George

Marvell Industry Analyst Day

By Douglas O’Laughlin

  • Marvell reported earnings recently, and I wanted to mention that at least before I continued onwards because that is a good context-setting event for the industry day.

  • Revenue exceeded expectations, but the mix beneath the results was illustrative.

  • Datacenter revenue grew 20% QoQ, cloud over 30% QoQ; while networking was strong, they guided for a 40% QoQ decline, consistent with networking OEM results.

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Dec 17
0

Daily Brief TMT/Internet: Taiwan Semiconductor (TSMC) – ADR, Hang Seng Index and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • Taiwan Tech Weekly: AI Plays Weak Despite Strong Taiwan Tech Market Performance
  • EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-And Pivot!

Taiwan Tech Weekly: AI Plays Weak Despite Strong Taiwan Tech Market Performance

By Vincent Fernando, CFA

  • Overall, it was a strong week for Taiwan Tech. TSMC and Mediatek showed strong performances, as well as key names we like such as Yageo and Himax.
  • AI-Related Taiwan plays showed relative weakness. This weakness interestingly happened during a week when NVIDIA Corp (NVDA US) performed well.
  • According to insight provider Patrick Liao, MediaTek WiFi 7 chip competition is likely to become fierce in 2024.

EQD | Volatility Update: Weekly Review of Vol Changes and Best Trades-And Pivot!

By Simon Harris

  • Weekly summary of vol changes and moves across Global Markets
  • Analysing ATM volatility and skew changes over the last 5 days
  • We suggest a few trades to take advantage of the implied vol surfaces

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Dec 16
0

Daily Brief TMT/Internet: Xperi and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • XPER: The Sense Behind the Cents

XPER: The Sense Behind the Cents

By Hamed Khorsand

  • XPER is streamlining its operations by divesting its AutoSense and image sensing product lines to strategically refocus on the burgeoning entertainment sector
  • XPER is selling AutoSense and the image sensor business to Tobii for $42.7 million plus a performance fee
  • XPER estimates revenue loss from the divesture would be approximately $30 million with adjusted EBITDA moving up

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