TMT/Internet

• 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.

• TSMC: +16.1% Premium; Strong Spread Rebound, Potential Opportunity to Short the Spread
• UMC: +1.6% Premium; Consider Shorting the Spread at This Level
• ASE: +3.8% Premium; Uncertainty Remains on the Sustainability of the Recent Breakdown

• Last Week — TSMC’s July Revenue Soared, Asustek Guided for PC Growth Acceleration, While KYEC, Mediatek, and UMC Rebounded
• Key Events — This Week Look to Hon Hai & Zhen Ding Earnings and Guidance for Servers, AI PCs/Mobiles, iPhone 16
• PC Monitor: Promising Uptake of Microsoft Copilot and AI Services; Remain Structurally Long 

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• We provide updates on recent results for Plover Bay Technologies (1523 HK) and upcoming H1 results for the Philippines names. 

• Trend Micro Inc (4704 JP) shares rose 14.8% on Friday after Reuters reported that it is exploring a sale after attracting buyout interest. 
• The interest is unsurprising due to the weak share price. Since ValueAct disclosed a stake on 8 August 2022, the shares are down 0.7% vs the Nikkei 225’s 23.6% increase.
• The lack of a controlling shareholder and increased cybersecurity M&A activity support the buyout interest. A privatisation price is likely to be around JPY9,000. Valuation is undemanding at last close.

• Strong Revenue Growth Signals Robust Demand in PC and Server Markets for Asustek and Acer
• Asus Management Continues to Describe Multi-Year PC Growth Cycle Ahead; 3Q24 Will Be Start of ‘New Product Lifecycle’
• Visit to Guang Hua Digital Plaza to Review New PC Models First-Hand. Remain Structurally Long PC Makers; Acer, Asus, Dell.

• I tally 46 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• Three new deals were discussed this week on Smartkarma: KKR’s tilt for Fuji Soft (9749 JP); and Itochu’s Tenders Offers for Descente (8114 JP) and C.I. TAKIRON Corporation (4215 JP).
• Key updates took place on Pacific Smiles (PSQ AU), Greatview Aseptic Packaging (468 HK), L’Occitane (973 HK), Fancl Corp (4921 JP), Shinko Electric Industries (6967 JP), and Isetan Singapore (ISET SP).

• Consolidated financial results for 1H FY12/24: Sales JPY26.2bn (+54.1% YoY), Operating profit JPY5.8bn (+229.4% YoY), Net income JPY3.7bn (+222.4% YoY).
• Segment sales in Q2: Memory probe card sales JPY12.4bn (+124.1% YoY), Non-memory probe card sales JPY1.3bn (+66.8% YoY).
• Full-year FY12/24 forecast: Sales JPY55.0bn (+43.6% YoY), Operating profit JPY11.6bn (+118.4% YoY), Net income JPY8.3bn (+101.1% YoY).

• The second quarter 2024 financial results for Amazon.com Inc. showcased both growth and challenges as the company continues to navigate a complex global economic environment.
• Overall, Amazon.com reported an 11% year-over-year increase in revenue, totaling $148 billion, which excludes the effects of foreign exchange rates.
• The operating income notably increased by 91% year-over-year to $14.7 billion, and the free cash flow adjusted for leases surged by 664% to $51.4 billion.

• Motorola Solutions has posted a robust performance in its second quarter of 2024, reflecting notable strides in revenue and earnings amidst varied operational outcomes.
• The company demonstrated a commendable 9% revenue growth, surpassing their initial projections, primarily fueled by significant contributions across all three technological divisions despite facing headwinds such as a $5 million impact from foreign exchange rates.
• In the breakdown of revenues, the Products and Systems Integration (SI) segment witnessed a substantial 15% increase, buoyed by robust demand and improved supply chain conditions for Land Mobile Radio (LMR) products.

• Sales grew 2.4% YoY to JPY55.2bn, with Accounting Firm segment up 3.4% YoY and Local Government segment up 0.5% YoY.
• Operating profit increased 1.9% YoY to JPY13.6bn, with Accounting Firm segment up 2.1% YoY and Local Government segment up 6.4% YoY.
• Net income attributable to owners of the parent decreased 0.7% YoY to JPY9.7bn, despite overall sales and operating profit growth.

• Apple reported an impressive fiscal third quarter with revenue reaching $85.8 billion, marking a 5% year-over year increase and setting a new record for the June quarter.
• This growth in revenue was accompanied by a double-digit increase in earnings per share (EPS) to $1.40, also a record for the period, reflecting robust financial performance amidst challenging market conditions.
• On the product forefront, iPhone sales were slightly down by 1% at $39.3 billion compared to last year, although there was growth on a constant-currency basis.

• A Reuters article overnight says Trend Micro might be up for sale. This caused the ADRs to jump 10% overnight. The remaining co-founders are 65 and 70 this year. 
• The stock has effectively gone sideways the last few years as Value Act has been activisting. Now one has to exercise one’s imagination to think about a possible sale price. 
• On a DCF basis, a PE fund couldn’t reasonably do this. Multiples are too high. That means a strategic buyer would be more likely. But Who? Why? And How much?

• Reddit (RDDT US) is ineligible for inclusion for the upcoming August review because of fcap failing the fcap threshold if it qualifies for the standard segment. 
• Reddit (RDDT US) is ineligible for inclusion for the upcoming September review because of failing the minimum public voting rights threshold.
• The IPO lock-up expiry increases the probability for inclusion in November and December review for US and Global indices. Forecasted demand in December is ~$360m and 2.1 ADV. 

• FY03/25 forecast: Revenue JPY2.30tn (+25.6% YoY), Operating profit JPY627.0bn (+37.4% YoY), Recurring profit JPY630.0bn (+36.0% YoY).
• R&D investment plan: JPY1.5tn over FY03/25–FY03/29, with JPY253.0bn in FY03/25 for new development buildings and equipment.
• Shareholder returns: JPY319.8bn total, including JPY79.9bn for share buybacks and JPY239.8bn for dividends.

• TSMC achieves record-breaking performance in July thanks to high demand from key clients like Apple, Intel, and Nvidia.
• Chang Wah Electromaterials appoints new CEO and plans a major US$100M expansion in Malaysia through CWTC.
• South Korean micro LED component makers target the backplane market with AI-driven AR and VR technologies gaining popularity, while Taiwan’s PCB sector faces sustainability challenges in Southeast Asia.

• Expected sequential revenue growth of 13% to 15%, gross margin expected between 18% and 20%.
• The company has not increased capacity utilization through price cuts but supports customers in facing competition to maintain market share.
• Inventory replenishment behavior will end in the third quarter, and fourth-quarter orders will more accurately reflect actual demand rather than the impact of restocking.

• Q1 revenue increased by 27.4% YoY to JPY839mn, achieving an operating profit of JPY40mn and a recurring profit of JPY49mn.
• Revised FY03/25 forecast: revenue JPY3.7bn (+16.1% YoY), operating profit JPY200mn, recurring profit JPY200mn, net income JPY13mn.
• Company recorded JPY150mn in tender offer-related expenses in Q1 and will not distribute an annual dividend for FY03/25.

• In evaluating Cognizant Technology Solutions’ performance for the second quarter of 2024, several important factors come to the forefront, presenting a mixed picture of the company’s financial health and operational execution.
• The company, driven by strategic acquisitions and improved operational efficiency, posted better-than expected revenue and margin figures, but has notably seen year-over-year revenue decline and continuous pressure in certain industry sectors.
• Positively, Cognizant’s revenue in Q2 amounted to $4.85 billion, surpassing the high end of their guidance range and marking a 2.1% sequential growth in constant currency, the highest since 2022.

• CDW’s earnings for the second quarter of 2024 indicated a cautious consumer behavior resulting in elongated sales cycles and a preference to prioritize immediate needs over expansion endeavors.
• CDW has witnessed a hesitation in capital investments, particularly those tied to data center and network modernization, alongside a significant interaction with client device refresh activities.
• Additionally, unexpected market-specific dynamics, such as escalated challenges in the UK market and concerns around federal funding in the US, were cited as influencing factors.

• Revenue for Q1 FY03/25 was JPY12.1bn (+27.2% YoY), with operating profit at JPY1.1bn and recurring profit at JPY1.3bn.
• Electronic Materials segment revenue increased 32.7% YoY to JPY7.2bn, with an operating profit of JPY488mn (loss of JPY260mn in Q1 FY03/24).
• Display Materials segment revenue increased 75.9% YoY to JPY1.3bn, with an operating profit of JPY515mn (+309.9% YoY).

• Sales reached JPY27.6bn (+5.4% YoY), driven by mobile batteries, AC chargers, and beauty appliances from Tescom Denki Group.
• Operating profit was JPY2.5bn (-25.2% YoY) due to a rise in SG&A expenses despite higher gross profit.
• B2C sales were JPY18.8bn (+12.6% YoY), with e-commerce sales at JPY4.9bn (+21.5% YoY), and B2B sales at JPY8.8bn (-7.3% YoY).

• Barito Renewables Energy (BREN IJ) is down 19% in the past month. But still accounts for ~730% of parent Barito Pacific (BRPT IJ)‘s market cap. Still unsustainable.
• Preceding my comments on the Barito complex AND the Kyocera Corp (6971 JP) / KDDI Corp (9433 JP) Holdco, are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation (sub/parent) >20%.

• KKR has announced its previously leaked takeover of Fuji Soft Inc (9749 JP). Two activists with 30+% between them have agreed to tender at ¥8,800.  
• Given what the founder, crossholders, and other arbs own, this gets done easily. Congrats on the win to the activists. 
• We will see more activism and more pressure on under-earning companies to go private to clean themselves up outside the public eye. Big opportunities for years.

• Amidst the volatility in the Japanese yen, companies like Money Forward, with a strong domestic revenue base and minimal exposure to forex risk, present an attractive investment opportunity.
• Despite broader market uncertainties, Money Forward continues to demonstrate impressive growth, with its corporate ARR surging by 38% YoY in the most recent quarter, signaling sustained momentum.
• The recent agreement to divest 49% of its non-core B2C segment, Money Forward ME, underscores the significant undervaluation of its core operations. 

• Following media reports, Fuji Soft Inc (9749 JP) announced a pre-conditional tender offer from KKR at JPY8,800 per share, a 1.0% discount to the last close price of JPY8,890 (8 August).
• The pre-condition is approvals under competition laws of Japan, Vietnam and possibly Belgium. The offer is anticipated to commence in mid-September.
• The offer is a knockout bid and the culmination of an auction process. The board’s recommendation and the irrevocables from activist shareholders ensure this deal is done.

• TSMC’s new plants will increase its production capacity for 3-nm chips, aiming to triple output this year. Global market share stands at 18%.
• Major tech companies’ increased AI investments are driving demand for TSMC’s advanced semiconductors, crucial for AI and machine learning applications. 
• TSMC’s automotive solutions output is expected to grow at a 50% CAGR through 2024, addressing global chip shortages in the auto industry.

• In this insight, we take a look at the potential index changes for F100 and F250 in the run-up to the September 2024 index rebal event.
• There could be up to three M&A-related intra-review changes in the next few weeks.
• Apart from that, there could be two changes for the F100 index and two other changes for the F250 index during the September 2024 review.

• Super Micro Computer, Inc. has garnered attention with its strong financial performance in Q4 2024, reporting record revenue growth driven by its AI server and data center infrastructure solutions.
• The company’s transition to direct liquid cooling (DLC) technology and AI-focused strategies have positioned it as a key player in the rapidly evolving technology landscape.
• With a 143% year-over-year revenue growth to $5.31 billion, SMCI has demonstrated its capability to scale and meet the increasing demand for AI infrastructure.

• Acer’s subsidiaries are driving growth, providing resilience and optimism in the face of shifts in the PC market.
• China’s smartphone industry is experiencing a boom in the second quarter of 2024, indicating strong potential for growth.
• A potential US ban on Chinese vehicle technology could deepen the technology rift with lasting effects, impacting various industries.

• King Yuan Electronics Co, Ltd. (2449 TT)‘s 2Q24 revenue/GM/OPM/EPS were NTD$9,035mn/40.5%/29.8%/NTD$2.2.
• The main reasons of revenue growth shall be the AI aspects, especially the contribution from NVIDIA Corp (NVDA US).
• For the upcoming 3Q24, we are keeping a relatively strong confidence of 5-10% growth rate for KYEC.

• Revenue for 1H FY12/24 was JPY8.4bn, with an operating loss of JPY44mn and pre-tax profit of JPY16mn.
• Cloud services revenue increased 63.4% YoY, while packaged systems revenue decreased 6.2% YoY.
• Full-year FY12/24 earnings forecast revised: pre-tax profit to JPY100mn and profit attributable to owners of the parent to JPY90mn.

• There are 44 adds/41 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
• Based on the adds, deletes and capping changes, we estimate one way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn).
• The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.

• Nikkei and Bloomberg report that Fuji Soft Inc (9749 JP) will be privatised through a KKR-sponsored MBO at a price just below JPY9,000, a 21.8% premium to the last close.
• The rumoured privatisation proposal is the culmination of a sale process initiated by 3D Investment Partners, the largest shareholder, in September 2023.
• The Board will meet tomorrow to discuss the proposal. The rumoured offer represents an all-time high and a knockout bid, suggesting a done deal if a binding proposal materialises.

• Cap Gemini SA (CAP FP) is estimated to be excluded from the selection list in the long-run due to being pushed way above 60% coverage in the Technology sector.
• Merck KGaA (MRK GR) switches between in and out of the selection list because it fluctuates close to the 60% coverage of the Health Care sector.
• Nokia OYJ (NOKIA FH) has a higher probability of deletion from SX5E if Merck KGaA (MRK GR)  qualifies to the selection list. Forecasted passive fund supply is  ~15 ADV.   

• Palantir Technologies continues to establish itself as a leading force in the world of data analytics and artificial intelligence.
• The company’s recent financial results reveal a mixed but overall positive picture, showcasing strong revenue growth and solidifying its position as a key player in both the government and commercial sectors.
• Palantir’s focus on leveraging AI to solve complex problems at scale is clearly paying off, with impressive strides in revenue and customer acquisition.

• Last year into early 2024, Fuji Soft Inc (9749 JP) – partially at the prodding of 3D Investment Partners – took in 4 subs and conducted a strategic review.
• In January, I explored the situation here suggesting the stock had run, FujiSoft needed to liquidate more assets, but a PE firm would look at a valuation of ¥600bn.
• Last night, the Nikkei reported that US PE Firm KKR planned to take Fuji Soft private with a TOB valued at ¥600bn. Limit up will take us to ¥560bn+.

• In this insight, we provide an update on the K Bank IPO, which is more likely in 1H 2025. K Bank is one of the largest Internet-only banks in Korea. 
• A successful IPO of K Bank could have a positive impact on KT Corp (030200 KS) which is the indirectly the largest shareholder of K Bank. 
• K Bank had total operating income of 51.5 billion won (up 328% YoY) in 1Q 2024. Operating margin improved materially from 5.7% in 1Q 2023 to 19.5% in 1Q 2024.

• Given market concerns that AI is overhyped and not yet delivering sufficient value, we analyze Microsoft’s Copilot disclosures and examine signs of AI services traction among corporate clients.
• Signs indicate that Copilot is gaining substantial traction with corporate clients, adding value to software development, business operations, and healthcare documentation functions.
• The number of organizations paying for MSFT’s AI services is expanding rapidly. We view this as a promising indicator of increased AI adoption and substantial value creation.

• Black Sesame Technologies (BLACKSES HK) raised around US$133m in its Hong Kong IPO, after pricing its IPO at the low-end.
• Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• Apple achieved a record $85.78B in Q3 revenue, up 5% YoY, and earnings per share rose 11% to $1.40, exceeding expectations and reflecting strong financial health. 
• IPhone revenue was $39.3B, surpassing the $38.81B estimate. Despite a 1% YoY decline, iPhone sales showed growth on a constant currency basis, contributing significantly to overall revenue.
• Services revenue reached a record $24.2B, growing 14% YoY. The gross margin was 46.3%, slightly above estimates, despite challenges from foreign exchange and product mix changes.

• Airtel Africa is undervalued and has potential for upside growth
• Company has shown strong performance in revenue and EBITDA growth despite challenges
• Potential IPO of mobile money business could unlock more value for shareholders

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.

• NVIDIA Corp (NVDA US) and Apple (AAPL US) switched positions in June setting off huge flows. Those flows could reverse in September if the current index methodology is used.
• To avoid frequent reverse turnover, S&P DJI have started a market consultation to change the index weighting methodology. We believe feedback will be positive and the proposals will be approved.
• Apple (AAPL US) will have inflows in September while there will be outflows from Microsoft Corp (MSFT US) and NVIDIA Corp (NVDA US). 

• Palantir Technologies Inc. provides software solutions for government customers in national security and intelligence
• Facing competition in AI products in the commercial sector, which may affect stock performance
• Company founded in 2003, known for utilizing technology to extract insights from data for government operations, with significant impact on Western society.

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.

• The 2Q24 revenue was NT$15.3bn, 1.6% QoQ and -14.4% YoY. GM in 2Q24 was 32.3%, -5.8% QQ and -14.3% YoY. OPM in 2Q24 was 22.0%, -16.3% QoQ and -24.1% YoY.
• The widespread adoption of AI-driven electronic devices, along with the onset of the AI-powered device replacement cycle, is likely driving increased demand for peripheral ICs and sensors. 
• With inventory levels gradually depleting and downstream customers ramping up production capacity in 2025, the semiconductor industry is expected to recover in 2H24 and maintain an optimistic outlook for 2025.

• WeRide Corp (WER CH) is looking to raise around US$300m in its upcoming US IPO.
• WeRide provides autonomous driving products and services from L2 to L4 of driving automation.
• We had looked at the firm’s past performance in an earlier note. In this note, we will undertake a peer comparison.

• Horizon Robotics, a leading provider of ADAS and AD solutions for passenger vehicles, plans to raise up to $500M in Hong Kong IPO.
• I expect Horizon Robotics will price its IPO below last round valuation of ~$8.7B as revenue growth will slow below 50% y/y in 2024, down from 71% y/y in 2023.
• The company’s key competitors, including Mobileye and Microchip Technology, revised their revenue guidance downwards for the second half of 2024.

• Amid recent market turmoil, we believe that SK Telecom could be a solid blue-chip, defensive Korean stock that could outperform the market in the next 6-12 months.
• SK Telecom reported better than expected profits in 2Q 2024. The company’s sales were 0.5% higher than the consensus and its operating profit was 3.9% higher than the consensus estimates.
• SK Telecom’s shareholder return policy is to return at least 50% of adjusted profit for the year on a consolidated basis.

• Wacom is a technology company specializing in the development of graphic tablets (pen tablet products), pen displays (display products), and related digital interface solutions.
• Leveraging its high reputation for its branded products, it is expanding in the OEM solutions market.
• Due to changes in market structure driven by demand shifting towards general-purpose tablets and lengthening replacement cycles, Wacom is focused on improving its sales mix and earnings quality by developing a service-centric growth engine. 

• The 3Q24 revenue is expected 10.5% higher than 2Q24, but the GM/OPG outlook will be 5.1%/3.6% lower because of pricing adjustments and limited NRE sales .  
• Smartphone’s demand will enter peak season with expected stockpiling for new models. Automotive inventory adjustment is needed due to muted demand.  
• Dividend payout ratio has remained at 80-85% in recent years, with no major changes expected.

• Microsoft, a technology giant with a market-leading position across various sectors, finds itself at a crossroads.
• The company has demonstrated remarkable growth, with annual revenue surpassing $245 billion, driven largely by its cloud services and AI-driven innovations.
• However, recent events have cast a shadow over its future prospects.

• Sales decreased to JPY4.1bn (-9.3% YoY), operating profit to JPY528mn (-32.0% YoY), and recurring profit to JPY521mn (-34.3% YoY).
• Q1 FY03/25 results achieved 62.5% of 1H sales forecast, 88.0% of operating profit, and 86.8% of recurring profit.
• Sales of products for pachinko and pachislot machines decreased YoY, with graphics LSI sales dropping by 20,000 units.

• IPO lock-up expiry of Kokusai Electric (6525 JP) results in a forecasted increase in free float to 35% and fcap of $2.9bn for the August 2024 review. 
• Secondary offering of Kokusai Electric (6525 JP) results in a forecasted increase in free float to 60-65% and latest fcap of $3.4bn- $3.7bn for the November 2024 review. 
• Inclusion will be determined based on fcap against the fcap threshold. Fcap uncertainty for November is largely driven by stock price fluctuations and the Greenshoe Option. 

• The Technology Select Sector SPDR (XLK US) ETF tracks the Technology Select Sector Index and has an AUM of over US$65bn.
• The recent drop in NVIDIA Corp (NVDA US) has taken its market cap and free float market cap lower than Microsoft Corp (MSFT US) and Apple (AAPL US). 
• If that continues to be the case on 13 September, there will be huge outflows for NVIDIA (NVDA) and huge inflows for Apple (AAPL) at the close on 20 September.

For our next Corporate Webinar, we are glad to welcome MoneyHero Group’s CEO and Director, Mr Rohith Murthy and CFO, Mr Hao Qian.

In the upcoming webinar, Rohit and Hao will share a short company presentation after which, they will engage in a fireside chat with Smartkarma Insight Provider, Ishan Majumdar. The Corporate Webinar will include a live Q&A session.

This Corporate Webinar will be hosted on Tuesday, 13 August 2024, 15:00 SGT. 

About MoneyHero Group

MoneyHero Group connects people to a better financial future. The mission at MoneyHero Group is to make all of life’s financial decisions a time saving and rewarding experience. MoneyHero Group educates consumers about personal finance, helps them decide which products are best suited for their needs, and facilitates getting the product. They connect financial institutions with their target customers and help them achieve their customer acquisition objectives.

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• SUNWELS Co (9229 JP) and Macbee Planet (7095 JP) moved to the Prime market in July 2024 which means there will TOPIX Inclusions at the end of August 2024.
• Our pre-event pick CELSYS (3663 JP) has seen its price fall by more than 20% during the recent market sell-off and it is close to a key share price threshold.  

• Arm’s revenue of $935M marks a 39.1% YoY increase, driven by a significant 70% rise in license revenue. Earnings of $0.40 exceeded expectations, reflecting a robust 67% YoY growth.
• Arm’s R&D investments in AI workloads drive future royalty growth, with v9 and compute subsystems enhancing licensing value amid strong AI demand, particularly in data centers.
• Shares dropped 13% as Q2 revenue guidance of $780M-$830M and FY25 revenue guidance of $3.8B-$4.1B were below market expectations.

• Flex Ltd. reported solid financial results, reflecting a combination of strategic positioning and operational resilience.
• The company delivered $6.3 billion in revenue for the quarter, slightly exceeding expectations, while achieving an adjusted operating margin of 4.8%.
• This translated into an adjusted earnings per share (EPS) of $0.51, which is a 9% increase year-over-year.

• Silicon Motion reported 2Q24 results on Friday, describing strong demand for NAND flash controllers driven by the PC industry and improving demand from the smartphone industry.
• The company expects industry NAND flash pricing to continue improving into 2025E. Moreover, SIMO expects to expand its market share for NAND flash controllers by year-end.
• Maintain Structural Long rating for SIMO. The recent share price decline is painful for holders however share weakness is an accumulation opportunity with an investment view to mid-2025E.

• In line with the company’s plan –Semiconductors saw a lower segment OP margin (7.3% Q1 FY3/24, 4.0% Q1 FY3/25) with a revenue decline in profitable Industrial (-34.8 YoY) due to weakness in the semiconductor market.
• Compared to the previous quarter, the segment OP margin declined (5.4% Q1 FY3/24, 4.0% Q1 FY3/25) with poorer sales due to a higher contribution from less-profitable Memory.
• However, the revenue decline in Industrial was less pronounced (-2.7% QoQ), a sign of bottoming out. 

• Juniper Networks reported its third-quarter results for 2023, delivering a performance that outperformed expectations in a challenging macroeconomic environment.
• Juniper Networks showcased a robust total revenue of $1.398 billion for the quarter, which exceeded the midpoint of its guidance.
• The company experienced better-than-expected non-GAAP gross and operating margins, contributing to a non-GAAP earnings per share of $0.60, surpassing the high end of its quarterly guidance range.

• SS&C Technologies reported encouraging results for the second quarter of 2024.
• The company experienced a record adjusted revenue of $1.4524 billion, which grew by 6.5% and surpassed expectations by $20 million.
• Adjusted diluted earnings per share also saw a significant increase of 17.6% to $1.27.