TMT & Consumer Independent Equity Research Analyst, Obex Capital Research

Aaron Gabin

TMT & Consumer Independent Equity Research Analyst

TMT & Consumer Independent Equity Research

Obex Capital Research

“Obex” is Latin for Barriers to Entry. Obex Capital Management’s investment philosophy is driven by an intense focus on which business model’s Barriers to Entry are able to withstand the ever increasing competitive disruption in the TMT and Consumer Sectors.

Equity Bottom-Up

Our favorite quote from the conference call was Crowdstrike CEO George Kurtz throwing shade at recent (wildly unprofitable) security rival IPO SentinelOne:“I think if you buy into the marketing hype, that's one thing. But if you look under the covers, we have more automation by far than any other competitor, including SentinelOne. So on the pricing standpoint, we sell on value, and we routinely win with a higher price point because the product works. It doesn't blow up machines, it's scalable. There's a difference between a Fiero and Ferrari. And we happen to be the Ferrari model, and that's what a lot of customers want.”Indeed, Crowdstrike is the Ferrari of security software...and probably all of software. We continue to stay long and would buy any pullbacks.<div class="content-highlight">Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.</div>

Our favorite quote from the conference call was Crowdstrike CEO George Kurtz throwing shade at recent (wildly unprofitable) security rival IPO SentinelOne:“I think if you buy into the marketing hype, that's one thing. But if you look under the covers, we have more automation by far than any other competitor, including SentinelOne. So on the pricing standpoint, we sell on value, and we routinely win with a higher price point because the product works. It doesn't blow up machines, it's scalable. There's a difference between a Fiero and Ferrari. And we happen to be the Ferrari model, and that's what a lot of customers want.”Indeed, Crowdstrike is the Ferrari of security software...and probably all of software. We continue to stay long and would buy any pullbacks.Obex’s fundamental research process is focused on secular change in the TMT and Consumer sectors. We seek to differentiate between fundamental business analysis and security analysis. Before deciding if a security’s pricing and positioning merit a long or short position, we analyze the four pillars of business fundamentals (Secular Factors, TAM, Competitive Advantage, Business Model) in order to determine if this is a “good” or “not so good” opportunity.

Crowdstrike FY2Q22: The Ferrari of Security Platforms

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Thematic (Sector/Industry)

The semiconductor market reached record revenues in June.  Much of this has been driven by a mild shortage in semiconductor memories, DRAM and NAND flash, but the larger shortage of older technologies has also had a hand in this.

The semiconductor market reached record revenues in June.  Much of this has been driven by a mild shortage in semiconductor memories, DRAM and NAND flash, but the larger shortage of older technologies has also had a hand in this.

June Semiconductor Revenues Reach New Record

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

<a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> delivered a strong set of 2Q21 results, beating sell-side consensus estimates on both the top and bottom-line and delivering numbers at the top-end of management’s guided ranges, which, in conjunction with a continued strong demand environment, has led to an increase in growth and profitability guidance for the remainder of FY2021.Further short-term share price weakness, based on supply constraint concerns, along with a continuation of the earnings upgrade cycle, has resulted in MediaTek trading on a 13.8x NTM PE ratio, which is more than one standard deviation below its historical average trading range. MediaTek also currently trades on an extremely attractive 6.3% NTM dividend yield with little risk of a negative surprise to dividend payments given the ongoing earnings upgrades, and MediaTek having generated NT$28bn in Operating Cash Flow, during 2Q21, which helped its Net Cash balance increase further to NT$191bn, now 13% of its Market Cap. In this insight, we look at MediaTek’s 2Q21 results, its medium- and longer-term growth outlook and current valuation levels. This insight is also a follow-up from our more-detailed analysis of MediaTek (<a href="https://www.smartkarma.com/insights/mediatek-high-quality-5g-beneficiary-with-a-tremendously-attractive-dividend-yield" target="_blank" data-smartkarma-citation="insights:53096" rel="noopener">MediaTek: High-Quality 5G Beneficiary with a Tremendously Attractive Dividend Yield</a>) last month.

Mediatek Inc (2454 TT) delivered a strong set of 2Q21 results, beating sell-side consensus estimates on both the top and bottom-line and delivering numbers at the top-end of management’s guided ranges, which, in conjunction with a continued strong demand environment, has led to an increase in growth and profitability guidance for the remainder of FY2021.Further short-term share price weakness, based on supply constraint concerns, along with a continuation of the earnings upgrade cycle, has resulted in MediaTek trading on a 13.8x NTM PE ratio, which is more than one standard deviation below its historical average trading range. MediaTek also currently trades on an extremely attractive 6.3% NTM dividend yield with little risk of a negative surprise to dividend payments given the ongoing earnings upgrades, and MediaTek having generated NT$28bn in Operating Cash Flow, during 2Q21, which helped its Net Cash balance increase further to NT$191bn, now 13% of its Market Cap. In this insight, we look at MediaTek’s 2Q21 results, its medium- and longer-term growth outlook and current valuation levels. This insight is also a follow-up from our more-detailed analysis of MediaTek (MediaTek: High-Quality 5G Beneficiary with a Tremendously Attractive Dividend Yield) last month.

MediaTek: Results Beat, Increased Guidance, Earnings Upgrades… and a Lower Share Price

The SIA has released May semiconductor revenue statistics and the month broke all records for both revenues and unit shipments.  This is a continuation of the trend that this analyst has been reporting on since this time last year.  It appears that there is still plenty of strength in this market to allow further records to be broken.

The SIA has released May semiconductor revenue statistics and the month broke all records for both revenues and unit shipments.  This is a continuation of the trend that this analyst has been reporting on since this time last year.  It appears that there is still plenty of strength in this market to allow further records to be broken.

May Semiconductor Revenues Break a Record Once Again

<a href="https://www.smartkarma.com/entities/mediatek-inc" target="_blank" data-smartkarma-citation="entities:772:1" rel="noopener">Mediatek Inc (2454 TT)</a> is the world’s 4th largest global fabless semiconductor company and powers more than 2 billion devices a year. Global smartphone shipments are expected to grow at a 6.9% cagr to 1.7 billion units in 2025. With MediaTek’s leading market share in 5G SoC, they are likely to experience an outsized benefit from the replacement trend brought by technology upgrades to 5G and Wi-Fi 6, Bluetooth, and ARM-based SoCs that integrate wireless communication. 
This is a high-quality global technology company that is expected to expand its ROE to above 20% driven by increased asset turns and margin expansion whilst the net cash on the balance sheet has nearly doubled to roughly $5.9bn over the past 2 years. 
Given the lack of meaningful acquisitive growth opportunities over the past 5 years, MediaTek has allocated nearly half of its Free Cash Flow generated toward dividend payments. Following their 1Q21 results, the company’s board of directors approved raising the dividend payout ratio to 80-85%, up from 60-70%, with the policy to take effect next year. On top of that, MediaTek has budgeted NT$100 billion over the next four years for special cash dividends. MediaTek currently trades on a forward dividend yield of 5.2%, which should continue to provide share price support, especially considering a continued low-interest-rate environment. 
This insight is also a natural follow up from an idea generated through our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index: <a href="https://www.smartkarma.com/insights/screening-for-gems-june-2021" target="_blank" data-smartkarma-citation="insights:52406" rel="noopener">Screening for GEMs: June 2021</a>.

Mediatek Inc (2454 TT) is the world’s 4th largest global fabless semiconductor company and powers more than 2 billion devices a year. Global smartphone shipments are expected to grow at a 6.9% cagr to 1.7 billion units in 2025. With MediaTek’s leading market share in 5G SoC, they are likely to experience an outsized benefit from the replacement trend brought by technology upgrades to 5G and Wi-Fi 6, Bluetooth, and ARM-based SoCs that integrate wireless communication. 
This is a high-quality global technology company that is expected to expand its ROE to above 20% driven by increased asset turns and margin expansion whilst the net cash on the balance sheet has nearly doubled to roughly $5.9bn over the past 2 years. 
Given the lack of meaningful acquisitive growth opportunities over the past 5 years, MediaTek has allocated nearly half of its Free Cash Flow generated toward dividend payments. Following their 1Q21 results, the company’s board of directors approved raising the dividend payout ratio to 80-85%, up from 60-70%, with the policy to take effect next year. On top of that, MediaTek has budgeted NT$100 billion over the next four years for special cash dividends. MediaTek currently trades on a forward dividend yield of 5.2%, which should continue to provide share price support, especially considering a continued low-interest-rate environment. 
This insight is also a natural follow up from an idea generated through our, machine learning-driven, proprietary GEM screening model, which takes a three-pronged approach to find the best medium-term long ideas within the top100 largest stocks in the MSCI GEM Index: Screening for GEMs: June 2021.

MediaTek: High-Quality 5G Beneficiary with a Tremendously Attractive Dividend Yield

United States

Broadcom Inc. designs, develops, and supplies semiconductor and infrastructure software solutions. The Company offers storage adapters, controllers, networking processors, motion control encoders, and optical sensors, as well as infrastructure and security software to modernize, optimize, and secure the most complex hybrid environments. Broadcom serves customers worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Broadcom (AVGO US)

Crowdstrike FY2Q22: The Ferrari of Security Platforms

Crowdstrike had another monster beat and raise quarter. It is the most deserving of any software company with an extreme valuation. Stay Long.

Aaron Gabin

June Semiconductor Revenues Reach New Record

Semiconductor revenues are breaking historic records. Can this trend continue? Trend analysis indicates that it should end. We will be watching...

Jim Handy

May Semiconductor Revenues Break a Record Once Again

Even the semiconductors that are not in a dire shortage are in tight supply, driving prices and revenues to extraordinary heights. This Insight...

Jim Handy

MediaTek: High-Quality 5G Beneficiary with a Tremendously Attractive Dividend Yield

MediaTek, the world’s 4th largest global fabless semiconductor company with a leading market share, should benefit from technology upgrades to 5G,...

Wium Malan, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Crowdstrike FY2Q22: The Ferrari of Security Platforms

Crowdstrike had another monster beat and raise quarter. It is the most deserving of any software company with an extreme valuation. Stay Long.

Aaron Gabin

June Semiconductor Revenues Reach New Record

Semiconductor revenues are breaking historic records. Can this trend continue? Trend analysis indicates that it should end. We will be watching...

Jim Handy

MediaTek: Results Beat, Increased Guidance, Earnings Upgrades… and a Lower Share Price

In this insight take an updated look at MediaTek, its medium- and longer-term growth outlook and current valuation levels, following its 2Q21 results.

Wium Malan, CFA

May Semiconductor Revenues Break a Record Once Again

Even the semiconductors that are not in a dire shortage are in tight supply, driving prices and revenues to extraordinary heights. This Insight...

Jim Handy

MediaTek: High-Quality 5G Beneficiary with a Tremendously Attractive Dividend Yield

MediaTek, the world’s 4th largest global fabless semiconductor company with a leading market share, should benefit from technology upgrades to 5G,...

Wium Malan, CFA