TMT/Internet

• There are 13 inclusions and 13 exclusions for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance to be implemented at the close on 13 June.
• For the second consecutive review, Fadu (440110 KS) and Shinsung DeltaTech (065350 KS) have been kept out of the index. Not sure what the index committee’s beef with them is.
• The adds have outperformed the deletes and the KOSDAQ150 since the start of the review period. This has been helped, in no small, part by the ban on short selling.

• There will be 6 additions and 6 deletions for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance that will be implemented on 13 June.
• The index committee has used a boatload of discretion in the inclusion of CosmoAM&T (005070 KS) and the deletion of some of the stocks.
• The adds and deletes from the Information Technology sector will also have passive flow from the sector ETF and will increase the impact of the changes.

• TSMC’s Latest 2024E Industry Guidance Provided at Symposium in Taiwan
• More Potential Details on Nvidia & Mediatek’s AI PC Chip to Compete with Qualcomm & Intel
• Samsung’s HBM DRAM Chips Face Challenges in Meeting Nvidia’s AI Requirements

• Vanguard should declare to established 12″ Fab in Singapore within 2014.
• Vanguard is likely to announce the establishment of 2 sets of 12″ fabs in the next 6 months.  
• China is expanding 28/22nm and above technologies, and we believe it’s more appropriate for Vanguard to compete with others rather than TSMC.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, Go Digit managed to do well despite somewhat tepid subscription rates, while Shift Up (462870 KS) was looking to be the next hot listing in Korea.
• On the placement front, Renesas Electronics (6723 JP) mega-block kept the cross-shareholding unwind going.

• Since late 2020, Search’s share of digital advertising revenue has stabilised at around 8-10%, seemingly retaining its core advertising customers and industries.
• Baidu management expects AI Cloud to maintain strong revenue growth momentum in the upcoming quarters.
• Baidu trades on a 3.6x NTM EV/EBITDA multiple, well below one standard deviation lower than its 5-year historical average trading range and the lowest it has ever been.

• Cisco Systems (Cisco) had a promising Q3, with organic revenue aligning with the higher end of guidance expectations.
• The company has transformed its business model, with over half of its total revenue now coming from subscription services, providing the company with a robust base for potential long-term growth.
• The acquisition of Splunk was also completed, adding over $4 billion in annualized recurring revenue and strengthening Cisco’s position as one of the world’s major software companies.

• Dropbox, Inc.’s Q1 2024 earnings showed both positive and negative aspects of the company’s financial performance.
• In terms of positives, the company reported revenue for the quarter that met its expectations.
• In addition, Dropbox reported an increase in paying users with 35,000 net new additions, despite a challenging fourth quarter.

• Dynatrace, a software intelligence company specializing in Software Intelligence Platform (SIP) and Application Performance Management, has reported an impressive Q4 FY 2024 and the full fiscal 2024 financial report.
• During this period, the company achieved significant milestones and accomplishments, among them surpassing $1.5 billion in Annual Recurring Revenue (ARR), translating to 50% growth compared to the result from two years ago.
• They also closed their largest new logo ever, an almost 8-figure ACV deal, and landed their first 9-figure TCV deal.

• EPAM Systems, a leading global provider of digital platform engineering and software development services, reported their Q1 2024 earnings and these financial results marked a tough quarter as they experienced a year-on-year decrease of 3.8% on a reported basis or 4.3% in constant currency terms, which translated to a revenue of $1.165 billion.
• Their gross margin was also affected, decreasing to 28.4% as compared to 29.3% in Q1 of last year, mainly due to foreign exchange impacts due to the strengthening of currencies in specific delivery locations.
• This was further amplified by their inability to adjust prices following EPAM’s Q2 2023 promotion campaign.

• Onto Innovation’s Q1 2024 results indicate a solid start to the year, reflecting a robust uptake for high bandwidth memory and logic packaging for AI devices.
• The net quarter revenue upsurged at the top end of the guidance range, a significant 15% rise from the same period the previous year.
• Notably, Onto Innovation’s specialty and advanced packaging customers achieved a record growth for the third consecutive quarter, attributing a 64% year on year increase during Q1 2024.

• Following the fiscal 2024 fourth quarter earnings, of Qorvo Inc, an investment thesis can be derived from the presented results that highlights both positive and negative aspects for potential investors.
• Starting with the positive aspects, Qorvo seems well-positioned to capitalize on global secular macro trends, including mobility, connectivity, electrification, and datafication.
• These trends are enabling new applications and user experiences, making them increasingly relevant in the modern business landscape.

• In the first quarter 2024 earnings of Unity, the management expressed strong optimism about the platform’s future, citing the imminent arrival of new CEO Matt Bromberg.
• The interim CEO also noted indicators pointing to the ability to deliver on the plan for the year.
• The previously unsettled customers have now gained confidence with Unity’s transition to runtime fee, and discussions have been productive about this change.

• The KRX have announced the index changes for the KOSPI200 June review.
• The index will be rebalanced in the closing auction on Thursday the 13th of June.
• There will be 6 additions to the index and 6 deletions.

• Unexpectedly, KRX included Cosmo AM&T (005070 KS) despite not meeting the market cap cutoff and excluded DB Hitek (000990 KS) and Lotte Energy Materials (020150 KS).
• Cosmo AM&T’s unexpected inclusion triggers a significant one-day passive flow event through the KOSPI 200 IT, the sector index with the largest AUM.
• Sector index rebalancing, a single-day event managed by one ETF operator, more significantly correlates flow direction with price impact. We should consider a long-short setup for these on June 13th.

• Global EV charger market overview with key players highlighted in the industry, including a focus on technological advancements.
• Ex-IBM Chief Accessibility Officer seeks to revolutionize digital inclusion in Taiwan’s manufacturing sector through innovative strategies and initiatives.
• Updates on notebook shipment for April 2024, global smartphone sales in the first quarter of 2024 as well as collaborations such as SDC & Lenovo teaming up to launch slidable display devices by 2025.

• The company recently announced poor earnings down 56% YoY in 1Q24
• Dwindling cash is another major concern especially with higher debt/ebitda
• At 15-25% ROE is sensible but now back toward 5% there is less enthusiasm

• Kuaishou reported C1Q24 revenue, IFRS OP, and IFRS Net income inline, 58%, and 78% vs. our estimates; and inline, 67% and 86% vs. consensus
• Company suggested contribution of Generative AI (GAI) to the growth of the advertising business to be substantial;
• We reiterate our BUY rating and raised target price to HK$83, implying 17x PE in 2025.

• Warner Music Group (WMG) demonstrates its influence in the music industry with a global team that continuously delivers for its artists and drives the business forward. In the second quarter earnings call transcript, Warner Music Group specified that the total revenue increased by 7% with Recorded Music and Music Publishing increasing by 4% and 19% respectively. This growth reflects the company’s efficacy in creating and promoting music in various genres and throughout all stages of artists’ development. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Fox Corporation reported strong Q3 fiscal year 2024 results, demonstrating its ability to distinguish itself from its peers with a 7% EBITDA growth and the steady performance of its brands. However, these results were compared against last year’s Q3 which benefited significantly from the windfall of Super Bowl LVII.
• Fox’s total affiliate revenue fees showed promising growth, with a 4% increase driven by the benefits of recent renewals. This was evident in both the Television and Cable segments. However, advertising revenues were down due to the absence of the Super Bowl and fewer NFL broadcasts compared to the previous year. If the shortfall from NFL games were disregarded, overall advertising revenues would have increased slightly. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Roblox Corporation reported its results of their first quarter 2024 earnings and reported that daily active users (DAUs) hit over 77 million, marking a 17% increase from the same period the year before. Year-on-year growth for users above the age of 13 was particularly impressive, at 22%.
• Japan, a significant gaming market, reported a growth surge of 50%, while India saw similar success, boasting a growth rate of 58%.
• There was also positive news relating to revenue, which hit $801 million, marking a 22% year-on-year rise and exceeding the company’s own projected range of $755 million to $780 million. Bookings were $923.8 million, landing firmly within the predicted guidance range of $910 million to $940 million. However, Baszucki highlighted expectations were for a higher figure, sparking some concern. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Gen Co., a leader in consumer cybersafety, wrapped up its fourth quarter of fiscal 2024, showing impressive financial growth and gains in operations. Over the fiscal year, the company recorded consistent operational results, making it their fifth year of organic growth. This growth is driven by an increasing awareness of cybersafety needs among consumers, making it a dynamic and compelling market opportunity. Gen’s focus solely on cybersafety sets them apart from competitors who may have other substantial interests. The company’s dedicated teams are continuously uncovering, researching, and stopping new threats. In the fiscal year ’24, over 12 billion attacks were blocked by using threat telemetry data and advanced AI capabilities. Gen’s strong technology offering on all major platforms combined with AI capabilities and market-leading visibility across the entire ecosystem has positioned the company to lead the way in consumer cybersafety. 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Akamai Technologies, Inc.’s first quarter earnings showed strong growth in the company’s security and compute sectors, while facing headwinds in the delivery product line. The financial results saw revenue grow to $987 million, reflecting an 8% increase year-over-year in both constant currency and reported. Non-GAAP earnings per share were reported at $1.64, a 17% increase year-over year and 18% in constant currency. Furthermore, the fast-growing parts of Akamai’s business, including security and cloud computing, grew to represent ultimately 2/3 of total revenue, with an impressive growth of 22% over Q1 of 2023.
• 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. In this report, we have carried out a fundamental analysis of the historical financial statements of the company. We have added reasonable forecasts of the annualized income statement and cash flows and carried out a DCF valuation of the company using its Weighted Average Cost of Capital (WACC) to determine a forecasted share price. We have further incorporated a sensitivity analysis/ scenario analysis to understand how changes in key assumptions could impact the valuation under 3 scenarios – a base case, a bull case, and a bear case. These additional layers of analysis serve to provide a comprehensive and robust valuation, giving investors a nuanced understanding of the inherent risks and opportunities.

• Shift Up plans to raise up to US$320m in its upcoming South Korean IPO.
• Shift Up is a South Korean games developer, which as released three games so far for the global markets.
• In this note, we talk about the positive aspects of the deal.

• Tata Technologies (TT) raised around US$370m in its India IPO in Dec 2023.
• Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Total revenue growth rate climbed up 27% YoY in 1Q24 with all businesses growing strongly.
• Smartphone shipments grew by 34% YoY and achieved global No. 3.
• In 1Q24, the gross margins of all major businesses obviously improved.

• FTA’s revenue growth accelerated in Q124 and exceeded management guidance
• Gross and OpInc margins (cash basis) both improved sharply in Q124
• Growth, profitability, mix improved, but FTA no longer so cheap; HOLD

• Shift Up (462870 KS) plans to raise up to US$320m in its upcoming South Korean IPO.
• Shift Up is a South Korean games developer, which as released three games so far for the global markets.
• In this note, we talk about the not-so-positive aspects of the deal.

• China’s military drills near Taiwan causing concern, but local market still strong
• Taiwan celebrates opening of first offshore wind farm in Asia-Pacific by CIP
• US to increase tariffs on Chinese EVs, batteries, and steel starting August 1, affecting trade relations.

• Marvell has historically performed well in the market but is now shifting its focus to growth areas such as AI, cloud computing, and faster data networks
• Despite recent cyclical weakness, the company is expected to see improved performance and strong earnings growth
• Reactivating the account is a strategic move to capitalize on Marvell’s promising future prospects and potential increase in stock value

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.

• Immersion (IMMR) announced it had renewed its patent license agreement with Samsung Electronics removing the biggest risk overhang of 2024
• Samsung has been IMMR’s largest customer at one point representing more than 60 percent of revenue. In the most recent 10K filing, IMMR describes Samsung as a significant customer
• We assume there was a step down in the rate Samsung pays, since this is usually the norm with technology companies and IP deals

• Shopify reported strong performance for the first quarter of 2024.
• The company saw the addition of millions of merchants globally to their platform, with revenues growing over 25% for four consecutive quarters.
• This was primarily driven by the fact that it had rolled out over 400 new features and updates in just two years, demonstrating leadership in innovation.

• HubSpot Inc.’s Q1 2024 earnings conference call revealed a mix of strong performance and cautious optimism.
• Total customers grew by 22% YoY, translating to over 215,000 customers globally, driven by over 11,700 net customer additions in the quarter.
• Revenue growth was solid at 23% year-over-year in constant currency, alongside another good quarter of operating margin growth, driving the operating margin to 15%.

• Bloomberg reports that KKR and TPG are exploring options, including a buyout of PropertyGuru (PGRU US), and are gauging initial interest from other global investors.
• The favoured privatisation option for US ADRs with the Cayman Islands incorporation is a statutory merger requiring a two-thirds voting approval threshold. 
• The concentrated shareholder register would suggest that TPG/KKR would aim for irrevocable from the other three substantial shareholders, facilitating a modest takeover premium. 

• Our base case valuation of Shift Up is target price of 95,510 won, which is 59% higher than the high end of the IPO price range (60,000 won).
• We believe Shift Up deserves higher valuation multiples than its peers mainly due to higher sales growth, much higher operating margins, and higher ROE.
• Since its launch in April of this year, Stellar Blade (PS console game) has ranked first in sales in eight countries, including the United States, United Kingdom, Canada, and Japan.

• UMC Singapore fab is in the process of moving in new equipment to enhance its production capabilities.
• Japan has a target of manufacturing 12 million software-defined vehicles by the year 2030.
• India continues to enforce import restrictions on IT products, impacting the sector’s growth and development. Power HV brings advanced technology to transformer monitoring in the energy industry for increased reliability.

• AMAT Q124 revenues of $6.65 billion, in line with guidance and essentially flat both QoQ and YoY. Current quarter guidance also flat sequentially
• WFE valuations are at all time record highs while revenues remain on life support from China
• If China revenues fall off before non-China returns to growth, the WFE segment could be in for a world of pain.

• In 1Q24, revenue grew by 17% YoY and e-commerce GMV grew by 28% YoY.
• Both the operating margin and the operating profit reached historical highs in 1Q24.
• We set an upside of 47% and the price target at HK$86.00. Buy.

• With a week left in the review period, Bharti Airtel (BHARTI IN) could replace Power Grid Corporation Of India (PWGR IN) in the Nifty100 Low Volatility 30 Index in June.
• Constituent changes, volatility changes and capping changes will result in one-way turnover of 6.4% resulting in a one-way trade of INR 2.3bn.
• The flows on the stocks are not very large but there will be same side and offsetting flows from other index trackers at the same time.

• Tuya reported a strong 1Q24, with revenue of $61.7 million, up 30% Y/Y (consensus was for ~15% Y/Y growth).
• Gross margin continued to grow, up 360 bps Y/Y to 47.8% (a company record). IoT PaaS revenue grew 36% Y/Y to $45.6 million.
• Its 590-bp Y/Y margin improvement was significant to corporate margin growth. 

• Nvidia announced another sharp sales increase to $26 billion in quarterly revenues
• The company’s growth is far greater than hyperscaler CapEx growth, as standard servers yield to AI servers: Bad news for Intel & AMD
• Some of this may stem from an inventory build at the hyperscaler, which may lead to another Boom/Bust cycle similar to 2018 and 2022

• Grab‘s 1Q2024 reflected strong performance from its deliveries and mobility segments despite seasonal headwinds, with growth driven by new initiatives rather than increased incentives, with affordable products leading.
• The company has launched new products in the premium segment, with advanced bookings improving the most recent initiative, while its saver products are increasing spend, frequency, and retention. 
• Another key feature of the 1Q2024 has been the strong performance of groceries, driven by alliances with retailers, and booking higher growth than food deliveries. 

• Generative AI (GAI) helps capex, no doubt. But key question is whether capex can yield to revenue and profits;
• Content creation industry is sure to realize revenue and profits. iQiyi and NetEase already said so with concreate examples;
• Advertising can realize revenue by better matching of ads inventory and perhaps improve inventory utilization.

• Pompeo advises Taiwan to innovate constantly in chip industry to maintain dominance and not be complacent.
• LG Energy Solutions may surpass Panasonic in launching mass production of 46800 batteries, a significant development in the industry.
• Canadian startup CEMWorks is positioning itself as a key player in semiconductors, 5G, and AI with its simulation tool. SDC and LGD lead OLED monitor market with fast growth and gaming focus. China’s internet giants see 1Q24 revenue soar thanks to AI technology.

• Established in 2012, Raspberry Pi is getting ready to complete its IPO in London soon. Raspberry Pi provides small, single-board computers. 
• Raspberry Pi is backed by Sony and ARM Holdings. Nearly 72% of the company’s sales come from commercial customers embedding its products into various consumer devices and other systems. 
• The company generated sales of US$265.8 million (up 41.5% YoY) and operating profit of US$37.5 million (up 87% YoY) in 2023. 

• The Q2 Fiscal Year 2024 was a good quarter for Apple Inc. as they saw growth in several international markets and set numerous records worldwide.
• The company reported revenue of $90.8 billion and an EPS record of $1.53.
• They also announced revenue records in over a dozen countries and regions, and an all-time revenue record in Indonesia.

• In this insight, we take a look at the potential ADDs/DELs for the DAX index and the MDAX index in the run up to the June 2024 index rebal event.
• There could be two regular MDAX changes in June including the long-anticipated deletion of M&A candidate MorphoSys AG (MOR GR). 
• We do not see any changes for the DAX index based on the current numbers.

• Confluent Inc.’s Q1 2024 performance indicates a robust start for the fiscal year, surpassing all guided metrics with a total revenue growth of 25% to $217 Million, a testament to the successful execution of the firm’s strategies, especially amidst a somewhat unpredictable macro-environment.
• Noteworthy in these earnings is the impressive growth of Confluent Cloud, now accounting for over half of the company’s subscription revenue and emerging as the fastest-growing offering with a 45% increase to $107 Million.
• 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.

• Today post-close, Denso Corp (6902 JP) (via BofA) announced a selldown of 78,127,800 shares of Renesas Electronics (6723 JP). This is the latest in a line of block exits.  
• There was the 130mm offering in November last year by INCJ. There was 123mm shares in Jan 2024 by NEC and Hitachi. A month later, 50mm shares from Mitsubishi Electric.
• In general, they have been absorbed, but one hasn’t needed to buy in the market. Some have broken price. Here, the pricing range is aggressive.

• Denso Corp (6902 JP) is looking to raise US$1.39bn from selling a portion of its stake in Renesas Electronics (6723 JP).
• DENSO’s selldown is a small one at just 4.3 days of ADV. While there is an overhang of around 4% of TSO, DENSO will be locked up for 270 days.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Shift Up (462870 KS) is getting ready to complete its IPO in KOSPI in June 2024. Established in 2013, Shift Up is one of the leading game developers in Korea.
• The IPO price range is 47,000 won to 60,000 won. The IPO offering amount is 340.8 billion won to 435 billion won.
• According to the bankers’ valuation, the market capitalization range of the company ranges from 2.73 trillion won to 3.4 trillion won. This is the second largest IPO in Korea YTD.

• EVs and smart driving systems in China’s car market impacted by price competition, leading to changes in industry dynamics.
• Blue carbon uncertainties could hinder progress towards achieving net-zero goals, says scientist, highlighting need for further research.
• Indian solar firm reducing dependence on Chinese imports for solar components to enhance self-sufficiency, aiming for greater control over supply chain.

• GlobalFoundries Inc. has presented its first quarterly financial results for the fiscal year of 2024.
• Despite facing some challenges, the outcomes have exceeded the guidance ranges indicated in the firm’s fourth-quarter earnings call.
• The industry is showing signs of emerging from a period of inventory correction and uncertainty due to ongoing macroeconomic and geopolitical issues.

• Twilio Inc., a cloud communications platform, had a strong start to the year, exceeding its first quarter guide and reporting $1.04 billion in revenue and $160 million in non-GAAP income from operations.
• The company’s revenue represents a significant year-over-year increase, driven by a record quarter of non GAAP gross profit of $566 million and strong free cash flow of $177 million.
• Twilio has demonstrated disciplined execution across the board, leading to year-over-year growth and profitability.

• Keywords Studios (KWS LN) is in advanced discussions with EQT regarding a 2,550p/share possible cash offer (+1.76p final dividend), which the Board is minded to recommend. PUSU deadline is 15 June.
• Premium (including divi) is c.74%; the implied equity value is c. €2,363 million and the implied EV is c. €2,477 million. The offer seems fair vs. the median of comparables. 
• The offer is pitched at a level that cannot be refused, even considering that Keywords Studios seemed grossly mispriced before the offer from EQT. Gross spread is 11.7%. Long.

• Datadog, during its First Quarter 2024 Earnings, has revealed optimistic outcomes for the quarter.
• A 27% year-on-year increase in revenue at $611 million, surpassing the higher end of company expectations, signaled solid financial growth.
• Furthermore, the increase in the customer base to approximately 28,000, up from about 25,500 during the same period last year, brings a positive outlook for the company.

• The past fiscal year and the final quarter of Electronic Arts (EA) have seen an unexpected increase in growth, bringing more entertainment and deeper experiences to consumers.
• During this timeframe, live services significantly contributed to revenue streams by providing fresh content which translated into long term consumer loyalty and increased spending.
• The past year witnessed the successful launch of EA SPORTS FC, a multi-platform experience which drove strong engagement across experiences due to its ability to connect and engage players globally.

• Match Group’s latest earnings revealed a challenging environment, but also highlighted several growth opportunities for the company in the long-term.
• While acknowledging some headwinds, Bernard Kim, the CEO, emphasized the enduring power of their dating applications, and how they have transformed the way people meet and connect.
• The transcript suggested that despite some users still harbouring a nostalgic preference for organic encounters, dating apps like those created by Match Group have become indispensable tools in today’s dating scene.

• SOUTHBOUND was again a net buyer for HK$18.6bn on strong two-way volumes. The top three net buys of the week were SOE banks. Some may be Central Huijin.
• Some of this may be driven by the dividend w/h tax cancellation on H divs and by significant H-share discounts, but high-div CNOOC was the biggest net sell. 
• No end to the inflows, and HK valuations are not at a place where they would hamper continued flows. Alibaba making HK a Primary will spur more inflows over time.

• BYD Electronics (285 HK) will be added to the Hang Seng Index (HSI INDEX) after market close on 7 June while Country Garden Services (6098 HK) will be deleted.
• Estimated one-way turnover is 1.9% and the estimated round-trip trade is HK$8.46bn (US$1.08bn) with over 1x ADV to trade in the add and delete.
• We remain at 82 index constituents and the road to 100 index members looks to be a long and winding one.

• After Taiwan Semiconductor (TSMC) – ADR (TSM US) N2 technology in 2H25F, A16 technology will be pilot-production in 2H26 and likely unveiled in around 1H27.
• TSMC A16 technology will be utilizing best-in-class backside power delivery solution.
• Si Photonics co-exists with traditional Substrates packages, linked with fiber.

• While historically many new inclusions to the HSI have performed disappointingly after their addition, BYD Electronic (285 HK) looks unlikely to follow such a pattern.  
• Its share price has underperformed YTD, absolute PER valuations are not stretched and forward P/B multiple is only at the historical average level. These provide a good buffer.
• Its industry and business are not at structural and cyclical peaks, with further growth prospects from AI-enhanced products and solutions. A 33% surge in 1Q24 earnings also adds comfort.

• TSMC: +17% Premium; Has Remained Above 15% for Over Nearly Two Weeks
• ASE: +11.8% Premium; We Continue to View 14%+ as Range to Short From
• CHT: +0.6% Premium; Can Consider Shorting the Spread at Current Level

• Arista Networks is well-positioned to take advantage of the rapidly growing opportunities in the artificial intelligence (AI) and cloud computing landscape.
• For the first quarter of 2024, the company reported revenue of $1.57 billion, representing a 16.3% year-over-year growth.
• Contributing a substantial 16.9% of this revenue was services and software support renewals.

• Dolby Laboratories, Inc., a leader in immersive entertainment technologies, posted its Q2 2024 results, providing significant insights into its performance and future outlook.
• The report highlighted that the revenues were on par with their expectations, while the earnings exceeded the forecasted figures.
• However, the full-year guidance remained unchanged.

• Trimble, in the first quarter of 2024 results, highlighted three key areas: performance exceeding expectations, a strategic portfolio highlight involving divestitures and joint venture, and the implementation of its new reporting segments.
• Trimble posted a solid performance with all its three segments surpassing expectations.
• Its annual recurring revenue (ARR) grew 13% organically alongside a strong free cash flow of $227 million.

• Universal Display Corporation reported strong results for its first quarter of 2024.
• The company’s revenue was $165 million, its operating profit was $63 million, and its net income was $57 million or $1.19 per diluted share.
• Its strong start to the year and continuing OLED momentum have led them to raise the lower end of their annual guidance range to now believe that their 2024 revenues will be in the range of $635 million to $675 million.

• The Hang Seng Index benchmark has been expected to see an increase in names and flows to Healthcare. We have only one ADD (IT/tech) and one DELETE.
• But the headlined DELETE candidate in the most recent Quiddity Leaderboard was chosen to be deleted. And the ADD one of our top two.
• Flows are somewhat restrained at capping flows, small name change flows, and then a few FFW/FAF changes to be about 1.9% one-way flows in total.

• The key takeaway from this earning season on the topic of generative AI (GAI) is that in-house generated content has the greatest potential for cost savings;
• Taking a step further, mid-sized video platforms can also use AI to skip the curator layer, similar to Pinduoduo using algorithm to bypass small merchants to connect directly to factories;
• We also notice that general media platforms with ample advertising inventories tend to perform better with AI’s help, which is why ads of Tencent’s advertising performed better than Baidu’s.

• Tencent reported C1Q24 revenue, IFRS operating profit, and IFRS net income in-line, 9.1%, 26% vs. our estimates and in-line, 16%, 21% vs. consensus;
• Game revenues were below our expectations while advertising was above, leading to a gross margin beat of 2.73ppt, powered by video account and AI. 
• We raised our TP to HK$450 to reflect the shift to better-margin revenue mix and upcoming revenue acceleration.

• Tech titans foresee the obsolescence of AI PC by Computex 2024, sparking anticipation for new technological advancements.
• Disney and Warner’s collaboration in the streaming market introduces fresh competition, shaking up the industry landscape.
• ASML’s thriving in the Angstrom Era credits its success to relentless innovation and adaptability within the semiconductor sector.

• Since mid-April we discussed how downside was limited on MSCI ACWI and EURO STOXX 50, and May 2nd discussed it was “quite possible” the lows were in.
• Now, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. Our bullish outlook (since early-November 2023) remains intact; expect higher prices ahead.
• China (MSCI China) continues to lead the EM turnaround, and we remain bullish on the space. We highlight many large-cap EM buys within Communications, Technology, Discretionary; we remain bullish miners.

• KPIT reported a strong Q4FY24 led by 5.1% QoQ revenue growth in constant currency (CC) terms. EBITDA margin came in better than expected at 20.7%.
• Overall, in line with our projection, KPIT even beat its upgraded guidance by posting YoY revenue growth of 39%+ in CC terms vs 37%+ guided.
• KPIT has guided for a strong FY25 with revenue guidance of 18-22% in CC terms and EBITDA margin of 20.5%+.

• CyberArk Software Ltd.
• reported strong first quarter 2024 financial results.
• The company provided earnings per share of $0.75, turning around a loss of $0.17 in the prior year period.

• Paylocity Holdings Corp reported solid results for Q3 2024, with total revenue growth of 18.1%.
• Paylocity credits this trend to their offerings resonating in the market, particularly among the younger generation, due to their investment in meeting the needs and expectations of the modern workforce.
• The company has released new enhancements to their talent acquisition suite to facilitate recruitment, training, and retention of this demographic.