TMT/Internet

• Shift Up reported solid IPO book building results. Shift Up’s IPO price has been determined at 60,000 won won, which is at the high end of the IPO price range.
• According to Hankyung Business Daily, the demand ratio was 223 to 1. Shift Up will start trading on 11 July.
• Our base case valuation of Shift Up is market cap of 5.7 trillion won or target price of 95,510 won (59% higher than the IPO price of 60,000 won).

• Six months after announcing a binding proposal, Ascendent has obtained all the Chinese regulatory approvals for its US$26.50 Hollysys Automation Technologies (HOLI US) offer. 
• The gross spread was wide due to the information vacuum, which has resulted in various conspiracy theories and rumours circulating.
• The two remaining conditions required for close are the maximum dissenting cap (should be waived) and minimum net cash condition (satisfied). At the last close, the gross spread was 22.5%.

• SenseTime Group (20 HK) and JD Logistics (2618 HK) are potential deletions while PICC Property & Casualty (2328 HK) and New Oriental Education & Techn (9901 HK) are potential adds.
• Estimated one-way turnover at the rebalance is 1.8% resulting in a one-way trade of HK$950m. Official capping will be based off the close of trading on 3 September.
• There will be 1-2x ADV to buy on the adds and over 2x ADV to sell in JD Logistics. The impact on SenseTime is lower given the recent surge in volume.

• Shift Up (462870 KS) will raise KRW 435bn (US$315m) in its IPO, valuing the company at KRW 3,482bn (US$2.52bn). Listing is expected later this month.
• Competition for the shares has been fierce with institutional investors indicating demand for 226x the number of shares on offer at prices higher than the top end of the range.
• Inclusion in the KOSPI 200 looks likely in June 2025, while inclusion in global indices is likely in December. But there could be some passive inflows in September.

• Despite achieving significant milestones, Elon Musk’s $56 billion compensation package was voided in January 2024 due to a flawed approval process, ruled a Delaware judge.
• Tesla’s shareholders voted to reinstate Musk’s package in June 2024, but the lawsuit continues, and the contract’s future remains uncertain.
• Tesla faces challenges with slow EV sales growth, rising competition, and the need for lower-cost models, which may impact stock performance despite Musk’s ongoing leadership.

• Chenqi Technology Limited (CT HK) is looking to raise US$130m in its upcoming Hong Kong IPO, after downsizing from an earlier reported float of US$300m.
• Chenqi Technology (Chenqi) is a mobility technology and service company in China, founded by the GAC Group and Tencent.
• In our previous note, we talked about the company’s historical performance. In this note, we talk about its PHIP updates.

• Toyo Corporation is a trading company specializing in measurement technologies.
• With several initiatives and strong structural demand in the electric vehicles space in particular, we expect the company to achieve higher revenue and profitability.
• Higher recurring revenue and proprietary product ratios will support a margin improvement in the future. 

• Indian smartphone exports boosted by iPhone makers as Xiphera introduces quantum security improvements in crypto solutions
• Ola Electric pioneers solid-state batteries for electric vehicles, while SK Hynix invests $75 billion to dominate HBM Market for AI Chips
• China nationalizes rare earth resources as airlines struggle with high costs to achieve sustainable fuel goals, Foxconn denies mistreating married women in India

• Shanghai Voicecomm Information Technology Co., an IT solution provider for enterprise-level users in China, plans to price its IPO by July 10, 2024 and raise ~HK$664M.
• CICC is leading the offering in Hong Kong and the IPO is expected to be priced at HK$152.10 per H share, implying a market cap of ~HK$5.4B or ~$690M.
• Cornerstone investors have agreed to acquire ~1.8M H shares, representing 41% of the offer shares or ~5% of the total outstanding shares.

• The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
• Last week saw NORTHBOUND net SELL RMB 11.8bn of A-shares. NORTHBOUND bought utilities and raw materials and sold everything else, especially consumer names. Appliances remain on the sell side.
• It is notable that net flows as a percentage of value traded are clearly “short gamma”, which is to say, sector underperformers are being sold, not bought. 

• TSMC: +16.7% Premium, Has Remained Rangebound; Watching for Over 20% or Under 15%
• UMC: +2% Premium, Upper End of Trading Range, Can Consider Shorting
• ASE: +9.9% Premium; Spread Could Have Further Room to Bounce Higher

• There are 12 changes for the TIP Taiwan Technology Dividend Highlight Index in June/July. The Fuh Hwa Taiwan Technology Dividend Highlight ETF (00929 TW) has an AUM of US$7.16bn.
• One-Way turnover is estimated at 35% and that will result in a round-trip trade of TWD 134.7bn (US$4.1bn). There are 8 stocks that could have over 5x ADV to trade.
• The ETF started rebalancing their portfolio on Friday and will continue to trade the stock over the next 7 trading days.

• PC & Server solutions names have fallen moderately from highs in June, however enterprise server company HPE soared 20% on AI strength.
• Despite the market pullback from highs, we note that 2025E forward growth expectations have generally increased for the universe over the last month.
• Latest Taiwan PC company revenues indicate healthy growth and HPE’s management guided for Enterprise AI orders to accelerate.

• Douyin’ GMV increased by 300% YoY in the “June 18” sales season.
• The revenue of a pre-IPO restaurant chain, Green Tea, increased by 55% in 2023.
• Alibaba’s supermarket chain, Freshippo, opened 12 new stores in June.

• Integral Ad Science (IAS) had a constructive start to 2024 as highlighted in their recent financial performance discussion.
• The company reported that revenue and adjusted EBITDA for the first quarter surpassed previous forecasts, demonstrating a robust economic position and potential upward trajectory in its financial metrics.
• Revenue increased by 8% to $114.5 million, which was above the company’s guidance range of $111 million to $113 million.

• Client-Driven innovation fosters R&D via proactive, marketable solutions and an SDE framework for excellence
• In-Depth understanding of sectors and data-driven innovation drives strategic growth
• Comprehensive data analytics solutions from start to finish for business success

• We hosted a conference call with Global Unichip (GUC); GUC is 34.8% held by TSMC and a key provider of semiconductor design services to companies aiming to manufacture with TSMC.
• GUC’s Revenue Prospects are Linked to TSMC’s Growth, However the Success of Its Customers’ Chips Also a Factor — Lagged Strong Revenue Growth Likely
• Conclusion: GUC a Second-Derivative Play on TSMC’s Structural Drivers with Potential to Surprise the Market and Catch Up to TSMC’s Share Performance

MoneyHero has made a promising start to FY24, with robust levels of revenue growth in Q124 across several core markets and all product verticals. Investment in the platform has resulted in improved application conversion rates, while several senior hires have been made, including the new CFO, Hao Qian, and a head of AI. Although the EBITDA loss widened in the quarter, management expects profitability to improve to a break-even run rate by end FY24. Our estimates are unchanged, anticipating sequential quarterly revenue growth as management accelerates investment in its user base and benefits from operational leverage.

• Fastly’s first quarter 2024 results demonstrate both promising advancements and headwinds that underscore the complexity of its market environment.
• Revenue growth of 14% year-over-year to $133.5 million surpassed the midpoint of Fastly’s guidance, reflecting effective customer growth and retention initiatives.
• The customer base expanded to 3,290, marking an increase from previous quarters.

• NAR settlement presents big opportunity for CSGP’s homes.com business with rapid growth in traffic and monetization
• CSGP trading in-line with historical valuation, offering a cheap option on homes.com network for further growth
• Settlement may lead to unbundling of buy-side commissions, disrupting traditional US portal model and driving CSGP stock higher

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• Broadcom’s Strong Q2 Performance: Broadcom’s Q2 revenue surged 43% year-over-year to USD 12.5 billion, driven by AI demand and VMware contributions.
• Dominance in AI ASIC Market: Broadcom holds a 60% market share in AI-specific integrated circuits, serving major clients like Alphabet and Meta.
• Lead up to Stock Split Upside Potential: Mega caps have seen an average 17% outperformance relative to S&P 500 from announcement to actual stock split, signaling sharp upside for Broadcom.

• South Korean battery makers stand to benefit from Tesla’s production issues with 46800 cells, boosting profitability in May 2024.
• STMicro and Panasonic Cycle Tech team up to introduce AI technology in e-bikes, making safety enhancements more affordable and accessible.
• Axelera AI secures US$68 million for global expansion in AI, recognizing computing as the new currency and focusing on growth in the tech industry.

• Our bullish outlook (since early-November 2023) remains intact. We continue to recommend buying dips as long as MSCI $ACWI and $EEM remain above important supports at $110 and $41-$42, respectively.
• We are reiterating Japan as an Overweight — Add Exposure; Nikkei 225, TOPIX, TOPIX Small All Breaking Out. And 2+ year RS uptrends remain intact on TOPIX and Nikkei 225
• We take a break from recommending Technology (though we are still bullish) and highlight buys within global Energy, Health Care, Telecommunications, and Utilities

• On June 27, Keywords Studios (KWS LN) received an updated cash offer of 2,450p/share from EQT (3.9% lower than initial 2,550p), 66.7% premium, implied EV €2,405 million, 13.2x EV/fwd NTM EBITDA,
• 22.4x Fwd P/E. The likelihood of a strategic buyer making an offer is low, while the offer from EQT is opportunistic, which will seek to merge Keywords with Virtuos.
• The revised lower offer and the small extension to the PUSU deadline do not inspire optimism. Nevertheless, EQT remains a credible bidde. Gross spread stands at 5.9%. Maintain long.

• Nvidia surpasses $3 trillion valuation, a first in semiconductor industry
• Company’s rapid growth raises concerns about stock market dynamics
• Debate on Nvidia’s dominance in AI computing and comparisons to past tech industry booms.

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• Delta Taiwan has outperformed Delta Taiwan recently. The parent vs. subsidiary market cap ratio is now trading consistently over 1.0x. and can go higher in our view.
• Nvidia opportunities and other similar cutting edge technologies will first go to Delta Electronics Taiwan (2308 TT) and not to Delta Electronics Thailand (DELTA TB).
• Conclusion — Expect further Delta Taiwan outperformance over the long-term vs. Delta Thailand.

• Data Centers — Traditional Data Center Recovery Starting; In Addition to HBM Demand, SSD Memory Seeing Strength for AI Applications
• PCs — Upcycle to Accelerate “Late CY2024E”, Driven by Windows 12 and End of Windows 10
• Mobile Devices — Moderate Growth in CY2024E; Potential for Smartphone Upgrade Cycle Acceleration

• Anthropic is releasing a new, highly intelligent and powerful model in the near future
• Developments in interpretability of AI models are progressing, allowing for greater understanding of decision-making processes
• Progress in understanding AI models is happening rapidly, but keeping pace with the complexity of new models remains a challenge

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• Humanoid robot development is rapidly advancing with improvements in AI, mobility, and interaction capabilities, exciting progress being made.
• China’s cloud service spending expected to surge 20% by 2024, with the country leading the hydrogen race through policies and demand.
• Former TSMC R&D director sheds light on Taiwan chip industry facing geopolitical shifts, reaching a crucial crossroads amidst declining semiconductor market.

Softbank Group (SBG) has launched a four-part benchmark-sized bond offering comprising USD and EUR notes. The proceeds will mainly be used for debt repayment, including the redemption of foreign currency-denominated bonds, as well as for general corporate purposes, including the maintenance of a cash position for the redemption of outstanding notes due over the next two years along with new investments. In particular, SBG will redeem its USD 766.8 mn 4.75% 2024 bonds (due September) early at par.

• Confluent (CFLT) is an infrastructure software company offering managed data streaming and processing services
• The company went public in 2019 and has experienced a decrease in stock price, presenting a potential opportunity for rerating
• Confluent’s strong product story around Apache Flink and usage by companies like FedEx and Uber position it for future growth

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• We update Klarna’s and Stripe’s IPO valuations based on recent share transactions; Indian payments company Pine Labs is also reported to be looking to IPO
• Our 2Q24 recommended shares performance was very mixed, with it being a mainly challenging quarter for long investors in payment companies
• We retain Visa as a core holding and also keep PagSeguro and Shift4 as buys, replacing PayPal with European value play Nexi; we keep our sell rating on Affirm

• Jabil recently disclosed its financial outcomes for the third quarter of the fiscal year 2024, delivering robust figures that reflect its strategic maneuvers and adjustment to changing market dynamics.
• The company posted revenues of approximately $6.8 billion, surpassing expectations by $265 million.
• This was aided by significant contributions from the connected devices and networking and storage sectors, which outperformed anticipations.

• Delivery Hero is a food and grocery delivery service founded in Berlin in 2011 with a leading position in 56 countries
• Despite being publicly traded and having a market cap of around €7.5bn, the company faces challenges such as being lossmaking and having significant net debt
• With concerns about liquidity, cash burn, regulatory issues, and intense competition in the market, Delivery Hero may be at risk of a significant price correction

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• China announced game approval for the June batch. The number of games approved remained at a higher level than 2023.
• The pace of China game approval appears to have accelerated to the same level as pre-tightening, though the number of approvals appears to be slower than March.
• Of companies that we are monitoring, Tencent and iDreamSky clinched one approval each.

• Generative AI is driving hardware advancements and creating new industrial prospects, with Synopsys offering automation and analytics tools for chipmaking facilities in India.
• Cultivating global cash cows like CHPT and Chief Telecom to enhance revenue streams, Volkswagen is investing $5 billion in Rivian to create an EV software joint venture, while Poland’s CEZAMAT boosts photonics and chip goals in Europe.
• Indian electronic component production value is set to increase 5x by 2030, but slow data center expansion may affect chip sales, according to Nvidia CEO. SiFive also unveils 4th-gen essential product line to drive innovation in embedded applications.

• Broadcom Inc. presented its second quarter fiscal year 2024 financial results, underscoring notable growth and strategic advancements, particularly through its semiconductor and software segments.
• The revenue recorded was $12.5 billion, a substantial 43% increase year-on-year, buoyed significantly by the inclusion of a full quarter’s financial contribution from VMware.
• Excluding this factor, revenue was up 12% from the previous year.

• Warner Bros. Discovery commenced the first quarter of 2024 with a focus on adjusting its operations for future sustainability in an industry marked by rapid disruption due to technological advancements.
• The company acknowledges the transformative necessities dictated by changing consumer behaviors and the technological landscape.
• On a positive note, Warner Bros. Discovery reported an encouraging increase in subscriber growth for its streaming service, Max, which saw an addition of 2 million subscribers across various regions, pushing its total Direct-to-Consumer (D2C) subscriber count towards 100 million.

• The Calix’s financial performance for the first quarter of 2024 underscores the company’s resilience amid shifting market conditions.
• Calix recorded a revenue of $226.3 million, settling within the provided guidance.
• This positioning affirms the continued relevance and efficacy of its platform, cloud, and managed services in driving its business agenda despite current industry challenges.

• The King Yuan Electronics Co, Ltd. (2449 TT) outlook for 3Q24 could see a 5-10% quarter-on-quarter growth at present.  
• NVIDIA Corp (NVDA US)  is currently the second-largest client of KYEC, and its business is rapidly expanding.
• STMicroelectronics NV (STM US) and Will Semiconductor Shan (603501 CH) are currently the third and fourth largest clients, respectively.

• On 24 June, NCSoft announced a corporate split-off of two divisions called named NC QA Company and NC IDS Company.
• NCSoft plans to hold a shareholders meeting where to vote on the split off decision on 14 August. Effective date of the company split is scheduled for 1 October 2024.
• The consensus estimates sales of 2.0 trillion won (up 19.2% YoY) and operating profit of 272 billion won (up 155.2% YoY) in 2025.

• Cover Corp, a leading talent management company in the rapidly growing VTuber industry.
• They’re considered the most prestigious agency and should attract the best talent.
• Superior Underlying Performance Metrics: Cover boasts superior key performance indicators (KPIs) compared to their main competitor Anycolor, including higher engagement metrics like subscribers, hours watched, and viewership.

• Taiwan Shares Fall With Nvidia… SK Hynix HBM DRAM with Global Unichip? Taiwan’s Vietnam Shift Continues… Broadcom Developing an AI Chip with Bytedance
• TechChain Insights: Call with Elan Micro; AI PC Significant Uptake 4Q24/1H25; Supply Chain Preparing 
• UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ. 

• Taiwan is utilizing AI supercomputers for medical and life science innovations, showcasing a commitment to technological advancement in those fields.
• Wistron is making a significant investment of $24.5M for a new factory in Vietnam, indicating a desire to expand production capabilities in the region for potential economic growth.
• Samsung is poised to overtake Apple in Taiwan’s mobile market by June, highlighting the company’s competitive edge and potential dominance in the industry.

• Expect Micron to report strength in AI, highlight the company’s HBM efforts, and quote McKinsey’s trillion-dollar forecast in their earnings call tomorrow
• Although Nvidia’s growth has really helped the DRAM market, along with 2023 CapEx cuts, there are important concerns of double-ordering which could lead to a collapse soon
• Semiconductor market revenues have leveled off since December 2023, hinting a return to more normal growth for the rest of the year

• Xiao-I (NASDAQ: AIXI) is leveraging its existing relationships and signing new clients at an impressive pace.
• The company has announced nearly a dozen new products or relationships utilizing its AI platforms in the past two months.
• Competition remains intense in the AI market and we think investors are questioning if Xiao-I has the financial capacity to remain competitive across multiple industries as private and public companies continue to invest heavily in its core markets.

• FormFactor delivered mixed first-quarter results for the fiscal year 2024, with its revenue closely aligning with the upper end of forecasts due to robust demand in the DRAM probe card sector, corroborated by significant advancements in setting standards for testing high-bandwidth memory (HBM).
• However, the company encountered challenges as non-GAAP earnings per share (EPS) dipped below the anticipated range primarily due to a less favorable product mix across its segments and heightened warranty costs in the Probe Cards segment.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Celestica launched the first quarter of 2023 on a robust note, demonstrating a significant enhancement in its financial metrics and strategic position.
• The firm reported revenues of $2.21 billion, surpassing their high-end guidance and representing a year-over-year increase of 20%.
• Notably, the adjusted earnings per share (EPS) reached $0.86, exceeding expectations by $0.39 compared to the prior year period.

• CarGurus Inc. recently disclosed its first-quarter 2024 financial results, presenting a mixed outcome with several highlights and areas of concern.
• In terms of positives, the company reported an increase in non-GAAP consolidated adjusted EBITDA by 24% year-over-year, marking the highest first-quarter EBITDA margin in three years.
• This growth was primarily fueled by a continued expansion in the subscription base and revenue generated from its Marketplace business, which witnessed an acceleration of 12% year-over-year growth in revenue.

• Belden Inc., a global leader in signal transmission solutions, reported their first quarter 2024 financial results, demonstrating a performance that exceeded expectations amidst a challenging market environment.
• Revenue for the quarter stood at $536 million with earnings per share (EPS) of $1.24, surpassing the high end of their guidance.
• This achievement was undergirded by a sequential increase in orders by 5%, resulting in a book-to-bill ratio of 1.03, suggesting a shift toward more stable conditions.

• Mega cap stocks like Nvidia, Alphabet, and Microsoft surpass lofty market expectations, in the latest earnings season leading to continued rallies. 
• Profits from AI innovations are accumulating predominantly at the bottom of the supply chain, benefiting large hardware and cloud service providers. 
• Smaller tech companies, including Salesforce, MongoDB, and Dell, have experienced sharp corrections due to lofty expectations and their limited capacity to generate significant AI revenue.

• Former TSMC R&D director Konrad Young advocates for a partnership between Taiwan and the UK in quantum technology.
• Chinese car brands attract young Thai consumers with innovative smart cockpit features, winning over the market.
• Xiaomi implements strategic changes in India after a decade of entering the market, adapting to new trends and demands.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Softbank Group

• While current underlying demand has yet to show signs of a strong recovery, progress has been made in inventory adjustments in the distribution supply chain, and TOREX expects a recovery in sales from the 2H of 2024, and the top priority for this term is strengthening sales expansion initiatives.
• Regarding the initial FY25/3 consolidated OP forecast, in addition to a contribution of ¥1,150mn from the +8.7% YoY increase in net sales, the decrease of ¥2,370mn in inventory write-downs in manufacturing cost of sales will drive a strong recovery in OP.
• Although capex is set to decline -31.9% YoY to ¥3,600mn (mainly for equipment being installed in the new Phenitec Kagoshima Fab clean room), having peaked out last term, depreciation will increase +27.7% YoY to ¥3,000mn as the new clean room has started operations. 

• Aviat Networks has successfully turned around its business in the telecom equipment sector despite challenges
• The company has outperformed larger competitors by focusing on execution during the COVID boom-bust cycle
• Despite investor caution due to competitive landscape and poor sector valuations, Aviat Networks’ fundamentals are strong and outpacing its stock performance, positioning it well for future growth

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• TSMC: +16.1% Premium, After Sharp Drop, Will Be Interesting to See If Spread Will Remain Within the Recent ~15-25% Range
• ASE: +7.4% Premium; Can Consider Going Long the Spread Given Recent Trading Range
• ChipMOS: -2.4% Discount Repesents Extreme Low of End of Range; Can Consider Going Long the Spread

• Erajaya Swasembada (ERAA IJ) is back on track with its handset business, with stronger volume growth driven by more affordable models from Infinix and Techno brands.
• The company’s buildout of its electrical retailer Erablue, a JV with Mobile World, is gaining momentum and should become a significant growth driver along with Grand Lucky supermarket.
• Erajaya will slow its store buildout this year as it focuses on productivity ny it still expected to add 200 new stores over in Indonesia. Valuation is attractive.

• I tally 48  – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Two new deals discussed this week: the Capitol Health (CAJ AU) / Integral Diagnostics (IDX AU) merger; and Infocom Corp (4348 JP)‘s Tender Offer.
• Key updates took place on: MMA Offshore (MRM AU), L’Occitane (973 HK), Mimasu Semiconductor Industry (8155 JP), Tatsuta Electric Wire & Cable (5809 JP), and Great Eastern Holdings (GE SP).

• Never a pioneer, instead a perfectionist in delivering mind bending experience. That’s what Apple has stood for traditionally. Can it repeat the act in the Gen AI era? 
• Siri to have advanced language comprehension and Writing Tools to deliver useful features to drive convenience and productivity. 
• Private Cloud Compute ensures user data remains encrypted and secure. Reflects Apple’s commitment to privacy amidst growing concerns surrounding data misuse.

• We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
• Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.  
• Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.  

• United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
• We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
• UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

• We expect Novatek Microelectronics Corp (3034 TT) to achieve approximately a 5% QoQ growth in revenue and relatively flat gross margin (GM) QoQ in 3Q24.
• Semiconductor Manufacturing International Corp (SMIC) (981 HK) and HLMC are capable of producing DDICs at 40nm and below.
• Novatek is experiencing a decline in demand for 55nm Touch with Display Driver (TDDI) in 3Q24.