TMT/Internet

• From early June until yesterday, local pension funds have purchased nearly 4% of DB HiTek’s SO. This places DB HiTek in a dominant first position in their net buying list.
• The timing of local pension funds beginning to buy DB HiTek coincidentally aligns with May 22, when DB Inc was requested by the KFTC to transition into a holding company.
• Focus on potential price impact from DB Inc.’s buying and value-up index inflows. Considering a relative overweight in DB HiTek may be strategic despite some risk.

• Excluding the new business electrical vehicle, total revenue increased by 23% YoY in 2Q24.
• Smartphone shipments grew faster than Samsung and Apple in 2Q24.
• We believe electrical vehicle will bring significant gross profit in following two years.

• TSMC Foundry 2.0 more than doubles its addressable market and resets its market share to 28%, down from the ~60% share it has long enjoyed in the “traditional” foundry market
• The lion’s share of this new market will come from IDM, a combination of increased outsourcing (e.g. Intel) and new JV deals (e.g. Germany and Japan)
• Foundry 2.0 reflects the reality of how the semi industry is evolving and it’s the polar opposite of Intel’s IDM 2.0 

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• In this insight, we take a look at the upcoming constituent changes in the run up to the September 2024 index rebal event.
• We expect two regular changes in September 2024. There are also several live M&A events which could trigger intra-review index changes in the late-2024/early-2025.

• Taiwan Tech Stocks Rally, But Lag Nvidia’s Massive Rally; Prepare for Nvidia, Dell, HP Results Next Week
• Hon Hai & Zhen Ding Show No Major AI Slowdown; Taiwan AI Supply Chain Names Lag Nvidia’s Rebound 
• TSMC Foundry 2.0: Strategic Shift Or Brand Tinkering? Why It Is Significant

• SE Asia & India deploying semi supply chains for efficiency & cost reduction, with focus shifting to automotive & mobile ventures.
• Taiwan leveraging strong semiconductor industry to attract foreign students & enhance industry leadership.
• Wiwynn suing Musk’s X over unpaid server bills, UK reassessing semiconductor strategy amid US & China influence. Apple’s Foxconn to manufacture iPhone Pro in India, AMD entering AI market with $4.9 billion investment. TSMC building EUR10B fab in Dresden to boost semiconductor industry.

• Hon Hai’s Latest Key Take Aways — No Slowdown for AI Server or Mobile Demand Indicated
• Zhen Ding — Delivers Higher Than Expected 2Q24 Growth; No Indication of AI Server or Mobile Slowdown
• Taiwan AI Supply Chain Names Have Lagged Nvidia’s Massive Rebound Since August 9th

• IonQ’s second quarter financial and operational performance for 2024 reveals a mix of significant technological advancements and robust commercial progress, underscoring both opportunities and challenges as the company advances in the quantum computing sector.
• Starting with the financial metrics, IonQ reported a revenue of $11.4 million, surpassing the upper range of its guidance.
• This indicates effective contract execution and perhaps a growing demand for their quantum computing solutions.

• The Trade Desk reported a robust performance for the second quarter of 2024, with notable year-over-year revenue growth of 26%, totaling $585 million.
• This growth considerably surpasses the growth rates experienced by peer companies within the digital marketing sector, emphasizing The Trade Desk’s consistent ability to capture increased market share.
• This trend is particularly highlighted in areas like Connected TV (CTV), which continues to be a strong driver of the company’s expansion.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess AMS Osram’s ESG as “Strong”, in line with its Social and Governance scores. The Environmental score is “Adequate”. Controversies are “Immaterial” and Disclosure is “Strong”. 

• Murakami’s entities, City Index Eleventh and Aya Nomura, reported a 5.06% position in Iriso Electronics (6908 JP). The purchases were from 25 July to 13 August.
• Murakami’s average buy-in price over the last 60 days was JPY2,378.90 per share, a 7.8% discount to the last close price.
• Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. The former is likely as Iriso is cash-rich with a P/B less than 1x.

• The gross margin improved 5 pp (percentage points) YoY and the operating margin improved 7 pp YoY in 2Q24.
• In 2Q24, total revenue grew by 12% YoY, with the main business up by 22% YoY.
• Three cross-sectional comparisons reach similar stock upsides about 100%. Buy.

• With the start of the review period around the corner, there could be two changes for the FnGuide Semiconductor Top10 Index at the October rebalance.
• Wonik Ips (240810 KS) and Techwing Inc (089030 KS) are potential adds while ISC Co Ltd (095340 KS) and Dongjin Semichem (005290 KS) are potential deletes.
• Passives will need to trade more than 2x ADV on two potential changes and more than 1x ADV on another potential change.

• SDC closes Slovakia branch due to declining competitiveness in European market, experiencing challenges in the region.
• SSFC remains optimistic about growth in China’s auto market despite market slowdown, seeing potential for expansion.
• Global semiconductor industry strengthens in 2Q24, as per SEMI report, with Taiwanese IPC maker showcasing at Automation Expo 2024 in India.

• Base case valuation of Lumir is target price of 18,542 won per share. Given the low upside relative to IPO price range, we have a Negative view of this IPO. 
• Our net profit estimates in 2025 and 2026 are 38% and 63.3% lower than the company’s estimates.
• Lumir provides key technologies for satellite systems, including small synthetic aperture radar (SAR) satellite systems and payloads.

• Sales increased by 7.4% YoY to JPY49.8bn, with operating profit up 4.4% YoY to JPY9.9bn.
• Recurring profit rose 88.8% YoY to JPY19.9bn, driven by a JPY9.4bn equity method investment gain from Iwatsu Electric.
• FY06/25 forecasts include sales of JPY68.0bn (+36.5% YoY) and operating profit of JPY10.5bn (+6.6% YoY).

• ODDITY’s Q2 2024 earnings report shows substantial growth and operational efficiency, indicating strong performance and an aggressive growth trajectory.
• The company posted a 28% increase in first-half revenue, reaching $404 million, alongside an impressive $110 million in adjusted EBITDA and $104 million in free cash flow.
• Such figures not only indicate potent financial health but also highlight ODDITY’s strategic efficiency, outpacing legacy incumbents significantly.

• Lumir is getting ready to complete its IPO on KOSDAQ in September. The IPO which is expected to raise between 49.5 billion won to 61.5 billion won.
• Lumir specializes in the development of observation satellite technology including image data processing devices and onboard computers for a number of government satellite series.
• Lumir had sales of 12.1 billion won (up 90.5% YoY) in 2023. Its sales surged by 477% YoY to reach 8.2 billion won in 1H24.

• With the review cutoff done, we expect just one change for the iShares China Large-Cap (FXI) (FXI US) ETF in September.
• China Tower (788 HK) is a high probability inclusion while China International Capital Corporation (3908 HK) is a high probability deletion.
• There has been an increase in cumulative excess volume for both stocks in the last few months, but the pace has slowed noticeably in the recent past.

• Foxconn benefits from regionalized production with improved efficiency, reduced shipping costs, and better supply chain integration.
• AMEC is confident in their lawsuit against the US Department of Defense, showing strong belief in the merit of their legal case.
• Japan’s economy faces uncertainty with financial resources at risk after Kishida’s resignation, raising concerns amidst the country’s economic landscape and supply chain players cautiously optimistic about AI server boom.

• Eltek Ltd is an established manufacturer of Printed Circuit Boards (PCBs) that is entering a new growth phase due to increases in manufacturing capacity and potential M&A transactions.
• The company has the potential to grow both revenues and earnings at double-digit growth rates for the foreseeable future if they can execute on their accelerated investment program and maintain technological superiority.
• The company maintains a strong balance sheet and generates free cash flow.

• Global Payments delivered mixed results in its second quarter of 2024.
• The company reported a 6% adjusted net revenue growth or 7% excluding the impact from the divestiture of Netspend’s consumer assets, with adjusted earnings per share growing by 12%.
• Operationally, Global Payments advanced its market positioning through strategic expansions and solution rollouts across varied verticals.

• HubSpot, in its Q2 2024 earnings presentation, portrayed a complex yet promising landscape, balancing solid growth with strategic adjustments in response to market conditions.
• The company reported a 21% year-over-year revenue growth in constant currency, backed by a surge in its customer base to 228,000, marking an addition of over 11,200 net customers within the quarter.
• This growth trajectory was underpinned by enhanced operational efficiencies resulting in a notable improvement in operating margins, expanded by 270 basis points year-over year to 17%.

• Revenue reached JPY3.7bn (+47.5% YoY), with increases in Global Telecommunications but declines in Domestic Telecommunications and Medical & Healthcare.
• Operating profit was JPY760mn (+84.0% YoY), with cost ratio falling 7.1pp YoY and SG&A ratio rising 3.0pp YoY.
• Foreign exchange gains of JPY350mn were booked in Q1 FY03/25 due to valuation of foreign currency-denominated receivables and payables.

• Kulicke and Soffa Industries Inc., a global provider of semiconductor assembly equipment, reported its fiscal third quarter 2024 results with a focus on strategic growth initiatives and progress in various sectors.
• The company has been actively working in areas such as advanced packaging, advanced dispense qualifications, and adopting new ball bonding solutions.
• During the earnings call, the company highlighted its involvement with the U.S.-Joint semiconductor consortium, aiming to foster collaboration in advanced packaging production solutions.

• Viasat, Inc. recently delivered its Q1 FY 2025 earnings results, reporting an encouraging uptick in year-over-year revenue and adjusted EBITDA growth, reflecting a positive development.
• The company showcased a strategic focus in strengthening its capital structure and continues to make significant investments to set the stage for a promising future.
• Specifically, the enhancements include expected activations in aviation, robust defense and advanced technology orders, and a strong existing and prospective order pipeline, which have collectively allowed Viasat to elevate its fiscal year outlook.

• In the second quarter of 2024, Warner Bros. Discovery navigated a mixed environment marked by significant achievements and prevailing market challenges, reflecting the complex visibility of its transition phase two years post its launch.
• The direct-to-consumer (DTC) segment exhibited robust performance, highlighted by impressive international subscriber growth initiated by the strategic timing of Max’s launch in Europe to coincide with the Olympic Games.
• This geographical expansion has fundamentally bolstered Warner Bros. Discovery’s position as a formidable player on the global streaming scene, leveraging large-scale live events to drive subscriber engagement and growth.

• There will be 3 changes for the Hang Seng Internet & Information Technology Index (HSIII) at the September rebalance. There are some surprises.
• Estimated one-way turnover at the rebalance is 3.4% resulting in a round-trip trade of HK$2.04bn (US$262m). 7 stocks will have over 1x ADV to trade.
• Weimob Inc. (2013 HK) is a surprise add. There is 6x ADV to buy from passive trackers and shorts are 12% of shares out and 24x ADV to cover.

• As expected, ASM Pacific Technology (522 HK) will replace Ping An Healthcare and Technol (1833 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the close on 6 September.
• Estimated one-way turnover at the rebalance is 3.2% resulting in a round-trip trade of HK$6.5bn. Passives need to buy over 7x ADV in ASM Pacific Technology (522 HK). 
• Positioning appears light in both stocks. Expect ASM Pacific Technology (522 HK) to move up and Ping An Healthcare and Technol (1833 HK) to move lower near-term.

• The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.
• This time? We get nothing. No name changes. Some capping flows. 6 FAF changes. 
• Minimal flows on the HSI rebalance to be effective on 9 September. 

• In a surprise (maybe should not have been!), there are no constituent changes for the Hang Seng Index (HSI INDEX) in September. However, there are float and capping changes.
• Estimated one-way turnover is 1% and estimated round-trip trade is HK$3.73bn (US$478m). There are no stocks with over +/-0.5x ADV to trade but flows could add to/offset other index flows.
• We remain at 82 index constituents and the road to 100 constituents appears to be a long drawn out torturous one. At this glacial pace, could be an eternity away.

• Berkshire Hathaway Inc Cl B (BRK/B US) held over 5% of Apple (AAPL US). Nearly half of that was sold in the June quarter to take the holding to 2.63%. 
• Berkshire’s selling should result in an increase in Apple (AAPL US)‘s free float in the S&P 500 INDEX (SPX INDEX) and other related indices.
• There will also be large buying in Apple (AAPL US) from the Technology Select Sector SPDR (XLK US) ETF if the proposals in the market consultation are implemented.

• HSTECH sees one ADD, one DELETE and several capping and re-capping actions. One of the re-caps is already an un-recap (i.e. a new capping), to be updated.
• The ADD is ASM Pacific Technology (522 HK), as expected, with significant ADV impact to buy. The DELETE is Ping An Healthcare and Technol (1833 HK), also a big sell.
• Across the three major indices, Alibaba Group Holding (9988 HK) is the big dollar sell and HSTECH changes are the biggies in terms of ADV impact.

• 1H 24 net profit is expected to grow by 54%, a similar amount to FY 23 with a consistent message that revenue growth helps and cost control is in place. 
• Wasion Group Holdings (3393 HK) benefits from the One Belt One Road policy as many of the EM countries do not have smart power meters yet. 
• Wasion’s holding on Willfar Information Technology (688100 CH) is worth around USD 970 million, double the current market capitalization of Wasion.

• TSMC: +16.3% Premium; Can Continue to Consider Shorting the Spread Here
• UMC: +0.7% Premium; Wait for Higher Levels Again Before a Fresh Short
• ASE: +4.6% Premium; Breakdown of Spread Could Persist Since History Indicates It’s Now a Normal Level

• Long Lastertec after a solid set of numbers and the easing of concerns raised by the recent Scorpion Capital short sellers report.
• Short 6525 Kokusai Electric over continuing concerns over the US upcoming trade restriction announcement in September.
• This was previously seen as a dangerous short due to its high outstanding short interest, although it has now unwound to almost zero.

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• In this insight, we have presented our updated rankings for Potential ADDs and DELs for the upcoming index rebal event in December 2024.

• SOUTHBOUND was again a net buyer, for HK$16.6bn this week (now 28wks in a row of net buying), on VERY LOW two-way volumes. 
• Gross volumes were very low. Net volumes were decent. There were three ETFs in the top 5 SOUTHBOUND net buys this past week suggesting position unwinding.
• Top net buys other than the ETFs were China Mobile and Tencent (now 14 out of 15 days seeing net SOUTHBOUND buying)

• PropertyGuru (PGRU US) entered into a definitive merger agreement with EQT (EQT SS) at US$6.70 per share, a 51.9% premium to the undisturbed price of US$4.41 (21 May).
• The shareholder vote is done (two-thirds voting threshold) due to TPG Inc (TPG US)/KKR & Co (KKR US)’s support and drag-along rights relating to REA Group Ltd (REA AU)’s shares.  
• This is a clean deal as there is no dissenting condition or requirement for country antitrust approvals. At the last close and for end-of-year payment, the gross/annualised spread is 2.3%/6.4%.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: WeRide (WRD US) aims to raise up to US$119 million through a Nasdaq IPO and US$321 million through a concurrent private placement.
• Event-Driven developments:China Traditional Chinese Medicine (570 HK), CPMC Holdings (906 HK), JTower (4485 JP), Piolax Inc (5988 JP), Fancl Corp (4921 JP), PropertyGuru (PGRU US). 

• ASPEED’s July revenue amounted to NTD 601 million,  up 159% YoY 
• ASPEED’s YTD revenue of NTD 2,970 million, is up 88% YoY
• This bodes well for H224 server shipments, both general purpose and AI accelerated and should be reflected in NVIDIA’s earnings/outlook scheduled for August 28

• Tencent reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, 10% vs. our estimates and in-line, in-line, 19% vs. consensus;
• Weak fintech revenue, due to weak consumption, dragged down overall growth. But we see structural revenue acceleration and margin leverages in advertising, game and AI;
• We raise TP to HK$485 and keep Tencent as our TOP PICK.

• Fortinet’s second quarter 2024 financial performance presents a mixed but fundamentally robust picture.
• Starting with the positive facets, the company achieved record operating margins at 35%, a significant improvement by 820 basis points year-over-year.
• This financial efficiency was underpinned by a strategic blend of operational prowess and thoughtfully channeled investments toward high-growth markets such as Unified Security Access Service Edge (SASE) and Secure Operations (SecOps).

• The latest earnings announcement by Fidelity National Information Services (FIS) reflects a company leveraging its core strengths and strategic initiatives to navigate through a competitive and dynamic financial technology landscape.
• Under the leadership of CEO Stephanie Ferris and CFO James Kehoe, the company has demonstrated a sustained focus on accelerating profitable revenue growth and has reported a notable improvement in both revenue and profit margins.
• 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.

• Fox Corporation recently concluded its fiscal year 2024, reporting significant financial stability and operational successes.
• The company highlighted a revenue of nearly $14 billion and an EBITDA of $2.88 billion for the fiscal year, exemplifying strong performance even in the absence of high-profile events like the Super Bowl or the FIFA Men’s World Cup.
• The adaptations and growth in Fox’s various segments, especially Tubi, Fox News, and Fox Sports, underscore the company’s strategic execution and market adaptability.

• GlobalFoundries reported its financial results for the second quarter of fiscal year 2024, which showed a performance exceeding the midpoint of the company’s guidance ranges.
• Revenue for the quarter reached $1.632 billion, marking a sequential increase of 5% but representing a 12% decline year-over-year.
• This revenue performance was attributed to various dynamics across different market segments the company serves.

• Trimble’s recent financial results reflect a dual narrative of ongoing strategic execution and areas necessitating cautious optimism.
• Their Q2 2024 earnings evidenced some robust aspects of their business model as well as areas that are currently more stagnant, or in the process of readjustment and scrutiny.
• The company used the earnings call to highlight the actions it’s taking towards overcoming specific challenges while capitalizing on its strategic initiatives.

• ZoomInfo Technologies Inc. reported its financial results for the second quarter of 2024, revealing some challenging areas as well as positive strides in specific segments of its business.
• The report included details about a significant one-time charge due to prior period sales write-offs, particularly with SMBs. This led the company to revise its full-year guidance downward.
• Nonetheless, there were also considerable improvements and highpoints, particularly in new business contributions and product launches such as ZoomInfo Copilot.

• Sea Ltd‘s 2Q2024 results reflected both the success of its bold strategies to drive growth in areas such as live-streaming whilst at the same time increasing take rates and profitability.
• Its core focus on competitive pricing, content, logistics, and especially advertising will help to drive growth, retention, and profitability as unit economics improve, whilst it rolls out its lending products.
• Competitive intensity has stabilised which should allow for take rates to rise higher, whilst Shopee is well positioned to further increase its lead. Valuations look reasonable given Sea Ltd’s profitable status.

• Freee KK (4478 JP) reported 4QFY06/2024 and full-year results today. Earnings were in line with guidance, but operating losses have declined significantly beating consensus by a huge margin.
• The company has issued guidance which calls for a break-even or an adj. OPM of 3% for FY06/2025E suggesting freee’s investments in marketing and client acquisition have finally paid off.
• Freee’s share price has moved up slightly during the last few weeks, but still trading at a discount to its own multiples and at a steep discount to Money Forward.

• Istyle Inc (3660 JP)’s share price surged 17% after strong FQ4 results, surpassing expectations and signaling a potential turnaround.
• Despite past challenges, iStyle’s ambitious mid-term plan promises increased monetization and stronger growth ahead.
• With mid-term revenue and profit far exceeding expectations, istyle’s future looks brighter, with it’s share price potentially rising by more than 200%.

• Visionstate is a rapidly growing SaaS provider for the facilities management industry across the globe.
• The Company is targeting a largely untapped market across hospitality, education, and healthcare.
• The Company has hit an inflection point in its financial results, as revenue is growing >100% and costs are declining dramatically.

• JTower (4485 JP) IPOed itself Dec-2019 at ¥1,600/share. An 8-bagger in a year, fell by half, doubled, fell 70%, then doubled, fell 35%, up 50%. That’s the first 3yrs.
• Since then, the trend has been lower. The stock is down 80+% in 2 years, especially painful after an equity raise at just under ¥5,000 6 months ago.
• But the stock today closed at ¥1,430, and the Tender Offer is at ¥3,600. A 150% premium. That’s big, but it may be “too low.” An interesting case.

• JTower (4485 JP) has recommended a tender offer from DigitalBridge Group (DBRG US) at JPY3,600, a 161.8% premium to the undisturbed price of JPY1,375 (13 August). 
• Despite the hefty takeover premium, the offer is light (compared to historical trading ranges and the recent placement) and opportunistically timed (the share price has fallen 61% since 9 May). 
• Nevertheless, barring a spurt of activism, the offer should succeed as the required 40.7% minority acceptance rate is not onerous and should be comfortably met by Japanese cross-holders.    

• Appier achieved 32% YoY sales growth in Q2, driven by strong US market performance and balanced revenue from both new and existing customers.
• The company’s EBITDA margin improved to 13%, reflecting strong operating leverage despite ongoing investments in growth initiatives.
• Trading at a 2.9x EV/FY25 revenue multiple, Appier is undervalued relative to peers, with significant upside potential from sustained growth and strategic initiatives.

• Total revenue increased by 8% YoY in 2Q24, lightly higher than 1Q24 and 4Q23.
• The gross margins of all business lines Improved significantly YoY.
• We set the upside at 35% and the price target at HK$506 for the end of 2025. Buy.

• On the 25th July, SkyLake Equity Partners acquired a 46.9% stake from Praxis Capital Partners in BusinessOn Communication (138580 KS), Korea’s leading B2B SaaS company; plus 24.3% from BusinessOn’s management. 
• SkyLake has now launched a Tender Offer for 28.94% of BusinessOn. The Tender offer price is ₩15,849/share.
• Super clean deal. SkyLake will acquire all shares tendered. There is no minimum tendering % condition. 

• Tencent (700 HK) reported 2Q2024 results today which beat consensus. Domestic gaming resumed growth driven by the successful launch of DnF Mobile which continues to dominate charts in China.
• All three business segments saw improvement in margins driven by Tencent’s high-margin businesses incl. mini-programs, video accounts, short-videos, etc.
• We expect continued recovery in Tencent’s earnings, however, remain cautious given slowdown in consumption spending and macroeconomic uncertainties.

• Taiwan Semiconductor (TSMC) (2330 TT) has significantly outperformed this year, driven by a global AI-driven tailwind resulting in substantial revenue growth acceleration and a significant earnings upgrade cycle.
• Record levels of FCF generation have supported dividend increases, and whilst future DPS expectations seem conservative, the current dividend yield suggests future increases have been priced in.
• TSMC trades just above its 5-year historic average trading levels and at a premium to its key competitors, other smaller listed foundries, its main customers, and large suppliers.

• On 14 August, Shift Up (462870 KS) reported its 2Q 2024 results, which was the first earnings report post its IPO. 
• Shift Up reported sales of 65.2 billion won (up 65.4% YoY and 19.5% below consensus) and OP of 45.1 billion won (up 49% YoY and 21.4% below consensus) in 2Q24. 
• The company is preparing for a PC release of Stellar Blade in the near future to continue its strong popularity and it expects better results on PC than on console.

• Squarespace’s First Quarter 2024 Earnings revealed a strong performance, with revenue up by 19% and bookings increasing by 23%, surpassing the provided guidance on both metrics.
• The unlevered free cash flow margin stood at 32%, contributing to a positive outlook for the fiscal year 2024 in terms of both revenue and free cash flow.
• Throughout the quarter, growth was primarily fueled by consistent organic momentum in the company’s core business, particularly in website services which experienced robust retention and an uptick in new customer growth both domestically and internationally.

• Revenue: JPY6.5bn (+6.5% YoY), Operating profit: JPY727mn (-15.6% YoY), Recurring profit: JPY697mn (-31.7% YoY).
• Number of recurring revenue customers at end-Q2: 127 companies (+9.5% YoY), Monthly ARPU in Q2: JPY5,080,000 (-4.5% YoY).
• Revenue for Creative & Engineering service line: JPY5.7bn (+7.4% YoY), Talent Platform service line: JPY451mn (+3.2% YoY).

• The constituent changes for the Hang Seng China Enterprises Index (HSCEI INDEX), Hang Seng TECH Index (HSTECH INDEX) and HSIII Index will be announced after market close on Friday.
• We forecast 2 changes for the Hang Seng China Enterprises Index (HSCEI INDEX), 1 change for the Hang Seng TECH Index (HSTECH INDEX) and 3 changes for the HSIII Index.
• With same-way and opposing flow on stocks from different passive trackers, the one-way trade is currently estimated at HK$5.2bn (US$672m). That will change with final capping done on 3 September.

• The announcement of JPY500bn share buybacks is a positive for SoftBank group minority shareholders, and confirms the positive impact of the emergence of Elliott as an activist shareholder
• The combination of the big weighting of Arm Holdings in the group’s equity value and the impact of the appreciating JPY has driven the NAV discount to very high levels
• Much bad news seems priced in following the market turbulence; we remain positive on Softbank shares as they trade at a historically high 57%+ discount to the estimated NAV

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• There could be one index change during the September 2024 index rebal event. The official results will be announced after market close on 16th August 2024.
• In this insight, we take a look at our latest flow expectations based on closing prices on Monday 12th August 2024.

• Last night, MSC published index changes due at the August rebalance. There will be no changes to SA constituents.
• The rebalance is set to take place at the end of the month on Friday the 30th.
• Tomorrow after the HK close, Tencent is expected to report results for 2Q FY24.

• Our NAV analysis of SK Square suggests NAV of 15.6 trillion won or 115,605 won per share, representing 48% higher than current share price.
• SK Square’s market cap is only 39% of SK Square’s stake in SK Hynix. SK Square’s share price has declined by 27% since reaching its recent peak on 11 July. 
• SK Square had excellent results in 2Q 2024, driven by improving results of its affiliates including SK Hynix. 

• DB Hitek’s investment in a golf course operating company is a poor investment, one that destroys shareholder value.
• Most investors would rather have DB Hitek increase shareholder returns through share buybacks/cancellations and dividends as well as invest in its core semiconductor business rather then buy a golf course. 
• Given DB Inc’s lack of cash, there is a growing possibility that it will use the proceeds from selling its DB World shares to increase its stake in DB Hitek. 

• We downgraded our long-term outlook to neutral last week (8/6/24 Compass) after being bullish since early-November 2023. We still believe the SPX is going through a 1-to 4-month consolidation phase.
• It is possible the low for this consolidation has been established within our expected pullback zone of 5100-5191 that we discussed two weeks ago (7/30/24 Compass)
• In terms of upside, the SPX could test its YTD highs or make a marginal new high, or could also see it roll over at the 5400 or 5585 resistances.

• Revenue: JPY4.2bn (+12.3% YoY), EBITDA: JPY653mn (+39.5% YoY), Operating profit: JPY437mn (+49.8% YoY), Recurring profit: JPY424mn (+47.5% YoY), Net income: JPY287mn (+49.3% YoY).
• Product Services revenue: JPY2.4bn (+12.9% YoY), Professional Services revenue: JPY1.8bn (+11.7% YoY), licenses: JPY233mn (+110.6% YoY), subscriptions (LaKeel products): JPY568mn (+22.4% YoY).
• LaKeel product user companies: 344 (+15.8% YoY), ARPU: JPY291,000 (+9.0% YoY), one-time revenue: JPY193mn (+250.4% YoY), recurring revenue: JPY1.6bn (+3.0% YoY).

• Blackberry is viewed as a good investment opportunity with a potential low-teens IRR due to its turnaround story and recent sale of non-core patents
• The company’s new CEO and focus on promising segments like Cybersecurity, IoT, and Licensing make it an attractive option for investors
• The stock is seen as a way to benefit from retail enthusiasm while also appealing to value investors

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.

• Taiwan’s drone sector showcases industry growth with debut expo in October, marking a significant advancement in technology.
• Microsoft makes significant investment of US$308 million in Taiwan to enhance AI technology development, strengthening their presence in the region.
• Samsung plans to establish new CIS lab to compete with Sony in imaging technology, while also investing in in-house chip development for XR market to stay ahead of competition.

• TSMC’s July 2024 revenue reached NT$256.95 billion, up 23.6% MoM and 44.7% YoY. Year-to-date revenue grew by 30.5% to NT$1.52 trillion, driven by strong orders from Apple, Intel, and Nvidia. 
• TSMC forecasts Q3 revenue of $22.4-23.2 billion, anticipating over 25% full-year growth. July revenue already at 35% of Q3 estimates. Analysts advise against assuming these results for the entire quarter.
• TSMC is capitalizing on AI and mobile demand, with analysts maintaining an “Outperform” rating with average upside of 14%, noting potential growth from 5G, HPC, and automotive sectors.

• We believe total revenue will grow by 9% YoY and game revenue began to rise in 2Q24.
• We believe the operating margin will continue to improve YoY in 2Q24 after the seven-year high in 1Q24.
• We set the upside at 35% and the price target at HK$496 for the end of 2025.

• SOUTHBOUND was again a net buyer, for HK$15.2bn this week (now 27wks in a row of net buying), on smallish two-way volumes. Better than the previous month but still low.
• Bank net buying, which had spiked the previous week, didn’t follow through.
• There were three ETFs in the top 15 SOUTHBOUND net buys this past week, reversing last week, which reversed the week before’s flows.

• Webzen Inc (069080 KS) will replace Connectwave (119860 KS) in the KOSDAQ 150 Index (KOSDQ150 INDEX) effective 16 August.
• There is over 2 days of ADV to trade on both stocks though the flows are not very large.
• The Connectwave (119860 KS) delisting will also have an impact on the changes to the KRX New Deal Internet Index in September.

• On 12 August, Skylake Equity Partners announced a tender offer of 6.58 million shares (28.9% stake) of BusinessOn Communication. The tender offer price is 15,849 won.
• BusinessOn is one of the leading digital tax invoice software providers in Korea. It also provides digital contracts, market intelligence, banner advertising, and supply chain management services. 
• Skylake plans to purchase all of the shares subscribed in this deal, regardless of the subscription rate. If the public offering target quantity is successful, Skylake plans to delist BusinessOn. 

• The retail deliveries of NEV (new energy vehicle) increased by 37% YoY in July.
• One of Alibaba’s supermarket chains, Freshippo, will sell its OEM goods, on Lazada.
• Tencent will formally start the game, Arena Breakout: Infinite, in August.

• SDC partners with Microsoft while VCs in India prioritize deep tech startups for innovation and growth.
• Polish startup SEEDiA leads in smart urban infrastructure as AI hype in smart manufacturing is questioned for realistic outcomes.
• Non-a-Si panels expected to dominate auto displays 2024-2029 as Indian opto-semiconductor maker acquires US-based IC equipment company.

• Monolithic Power Systems Inc. has reported a robust second quarter in 2024, reflecting a series of positive outcomes driven by strategic initiatives and diverse market engagement.
• The company announced record revenues of $507.4 million, surpassing the high end of their guidance.
• This performance was largely attributed to the increased demand for AI-powered solutions, an improvement in order trends across various end markets, and revenue generation from previous design wins.

• Roblox Corporation’s second quarter 2024 earnings discussion presented an optimistic outlook underscored by impressive financial and usage metrics.
• The quarter witnessed a 31% year-over-year increase in revenue, reaching $893.5 million, surpassing the guidance.
• Bookings also grew by 22% to $955 million, while daily active users (DAUs) stood at 79.5 million, marking a 21% increase from the previous year.

• Singapore-based UnaBiz, a provider of customised IoT solutions, has announced the first close of its US$25 million pre-series C funding round with Japan’s KDDI Open Innovation Fund 3 and KYOCERA Communication Systems.
• The fresh funds will be used to partner with new companies in the security industry, deepen logistics and supply chain market penetration, and expand utility with hybridisation.
• This capital injection follows UnaBiz’s acquisition and integration of French IoT firm Sigfox 0G technology. In two years, UnaBiz added 4 million new devices to the global 0G Network.