TMT/Internet

• Insiders holding more than 10% of SO must disclose block deals 30 days in advance if they plan to sell more than 1% of SO or an amount exceeding ₩5B.
• The trading window and pricing range for short positions, based on the assumption of deal-taking, will likely vary significantly as the timing of price reflection will see a drastic change.
• There is an increasing likelihood that major shareholders will accelerate their planned block deals and bring them to the market in abundance before October.

• Lasertec (6920) is a shoo-in for Nikkei 225 inclusion in September according to the quantitative analysis. The amount to buy is a small multiple of ADV, making the inclusion “unimpressive.”
• It is probably worth looking at the details of ownership, of volume, and of relationship to other stocks in the same general sector.
• It is also worth thinking about flow channels (stock up or down changes flows) and forward fundamental calculations.

• Erajaya recently released its 1Q2023 results with net sales increasing by +29% YoY but with -20.5% decrease in net profit due to increased opex related to its expansion and inventory build.
• The company plans to add 400 new outlets this year, lower than last year’s 575, as it ramps up its newer stores, which should help to improve profitability in 2H2023.
• Erajaya continues to add to its stable of brands outside mobile handsets, including JD Sports, Wellings, Grand Lucky, The Face Shop, Paris Baguette, and has launched EraBlue with Mobile World.

• FY’23 growth forecast increased despite push outs in the EUV order book and lower than expected IBB revenues.
• Broad-Based recovery is now looking more like a H1’24 scenario with lingering uncertainty as to how it quickly it will unfold thereafter
• System sales to China increased from 8% of revenues in Q1’23 to 24% in Q2’23. Non-China DUV order cancellations are being snapped up by China at an unprecedented rate. 

• Huawei Technologies Co. Ltd. on Tuesday launched the first commercial use of its artificial intelligence (AI) large language model (LLM) Pangu for the mining industry, as it seeks to make use of the next-generation technology to improve the sector’s safety and productivity.
• Developed in partnership with state-owned Shandong Energy Group Co. Ltd. and its unit Yunding Technology Co. Ltd. (000409.SH), the Pangu Mine Model has been deployed in the coal giant’s mines in East China’s Shandong province, Huawei said in a press release Wednesday.
• It also touted the launch as the world’s first commercial large AI model for the energy sector.

• Accenture managed to exceed analyst expectations in terms of revenue as well as earnings.
• Even though the macroeconomic environment remained unclear, the company continued to make large investments in its business and generated good revenue and sales, together with robust profitability and very strong free cash flow.
• Accenture produced $16.6 billion in sales, representing 5% growth, with North America expanding at 2%, Europe at 7%, and Growth Markets at 9%, all in local currency.

Esker continued to make good progress in Q223, with constant currency (cc) year-on-year revenue growth of 15% (the same as in Q123). Order intake on an annual recurring revenue (ARR) basis was 14% higher cc for Q223 and 18% higher for H123. The company narrowed its organic cc revenue growth guidance for FY23 to the upper end of the previous range (now 14–15%) and maintained its operating margin expectations. We maintain our revenue and EPS forecasts and raise our dividend forecasts.

• Digital Turbine delivered a mixed set of results for the previous quarter, with revenues above analyst expectations but below-par earnings.
• The company had an 11% decline in fiscal ’23 revenue due to soft advertiser spending and macro headwinds impacting their On Device Solutions and App Growth Platform businesses.
• Digital Turbine aims to build alternative app stores with equity positions in companies like Aptoide, easing app porting and payment management and tapping into the in-app purchasing market.

• Appian Corporation managed to surpass the revenue expectations and the earnings expectations of Wall Street.
• Appian reported a 31% year-over-year increase in cloud subscription revenue in the quarter, reaching $69.7 million.
• Cloud subscription revenue is anticipated to reach $72 million to $74 million in the second quarter of 2023, reflecting a 26% to 30% increase year over year.

• Lumentum Holdings delivered a disappointing set of results as the company was unable to meet the revenue as well as earnings expectations of Wall Street.
• The company’s commercial lasers business is also expanding into high-growth areas such as solar cells, advanced semiconductors, electric vehicles, and display manufacturing.
• We give Lumentum Holdings Inc. a ‘Hold’ rating with a revised target price.

• On 19 July, there were local media accounts that L&F Co Ltd (066970 KS) is considering on switching its listing from KOSDAQ to KOSPI. 
• L&F’s main business involves making cathode active materials for rechargeable batteries.
• Despite this positive move, we believe the valuations of L&F have become too high. Its operating margins also worsened from 9.6% in 1Q 2022 to 3.0% in 1Q 2023. 

• Money Forward (3994 JP) reported 2QFY11/2023 results yesterday. Revenue increased 43.5% YoY to ¥7.3bn (vs consensus ¥7.18bn) while operating losses dropped to ¥1.58bn vs ¥2.15bn in 2QFY11/22 (vs consensus ¥1.65bn).
• 2Q revenues were within its guidance of ¥7.1-7.4bn and MF has revised its FY11/23E guidance upward based on the progress made during the first half of the year.
• MF’s non-BO business margins continue to decline, and the plan to revise price plans for sole proprietors in December should result in attrition and further increase in advertising spend.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We assess TDC NET’s ESG as “Adequate”, in line with its Social and Governance scores. The company has a “Strong” Environmental score. Controversies are “Immaterial” and Disclosure is “Strong”.
• TDC NET is a Danish mobile and fixed network service provider. It was formed through the split of Denmark’s incumbent telecommunications company into a netco and servco.

• We had a call with ChipMOS management about their latest long-term R&D efforts and drivers. 
• We see many of the company’s key clients’ businesses turning a corner, hence see these developments likely to benefit ChipMOS.
• The company will be reporting earnings on August 3rd, we have an Outperform rating for the shares. Could see some continued margin weakness, however we believe forward outlook is improving.

• We raise iQIYI’s membership/ads growth in 2Q23 from 12.9%/10.6% to 15.7%/22.4% YoY because of high quality content and recovery of major advertisers.
• We upgrade iQIYI’s rating to BUY because:1) iQIYI exhibits advantages in content quality and production capabilities. 2) Major advertisers are expected to increase their advertising budgets continuously.
• Emergency of mini drama is another variable for the Chinese online video industry. However, we anticipate the impact on iQIYI is relatively limited currently.

Nano Dimension has raised its tender offer for Stratasys again, increasing its cash offer from $24 to $25 per share and extending the closing date to 31 July. If successful, it plans to explore options for further consolidation of the industry. If unsuccessful, it will review its Stratasys investment and may sell its stake on the open market.

• TSMC will report its 2Q23 results today in the afternoon Taiwan time. Look for key readthroughs from the company in terms of robustness of the AI boom and PC recovery.
• AMD’s Chairman and CEO arrived in Taiwan and met with key supply chain partners — Related stocks are surging; ASML beat expectations and raised its guidance.
• Taiwan AI,  PC-linked, and AMD-linked shares are flying; Our recent Memory Monitor piece also highlights signs that the DRAM cycle has bottomed.

• Ventia (VNT AU) will replace Blackmores Ltd (BKL AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 21 July.
• The ad hoc change will lead to changes in the list of potential adds and deletes at the regular scheduled rebalance in September.
• Weebit Nano Ltd (WBT AU) is now a potential add in September and could see some pre-positioning in the near future.

• Mobvoi (2185047D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO. 
• Mobvoi is an AI company focusing on generative AI and voice interaction technologies. As per CIC, the firm is the largest revenue-generating AI company focusing on AI-generated content in 2022.
• Mobvoi’s revenue growth was primarily driven by its AI enterprise solutions segment, which led to gross margin expansion and profitability turning positive on all fronts in FY22. 

• One noteworthy aspect is SK Square’s strategic move towards gradually shifting its investment portfolio from platform businesses to companies within the semiconductor supply chain.
• Given SK’s aim to acquire a 1-2% stake as an anchor investor in ARM, selling the Krafton stake is necessary to secure sufficient funds for the potential ARM investment.
• We may consider positioning to capitalize on SK Square’s potential block deal for its Krafton stake, aligning with the schedule for selecting anchor investors in August for the ARM listing.

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 3Q 2023. 
• The excessive gaps in the preferred and common shares of Kumho Petrochem, LG Electronics, and Samsung Electronics could reverse in the next several months, in our view.
• We see some attractive longer-term opportunities for Amorepacific Corp, Doosan Fuelcell, LG Electronics, and Samsung Electro-Mechanics which have especially high discounts for the preferred shares versus their counterpart common shares. 

• Indonesia-based agritech firm Eratani has secured US$2 million in a seed extension round from SBI Ven Capital, Genting Ventures, Orvel Ventures, and Ascend Angels.
• This deal brings the total seed funding to US$5.8 million.
• The new investment comes about half a year after Eratani raised US$3.8 million from TNB Aura, Trihill Capital, BIG Ventures, and AgFunder.

• This is our first report on GlobalFoundries Inc, a multinational semiconductor contract manufacturing and design company.
• Despite these challenges, the company observed healthy demand in growing segments such as industrial IoT, aerospace, defense, and automotive markets.
• Throughout the quarter, GlobalFoundries demonstrated its dedication to executing targets, delivering value to customers, and sustaining its position in the industry.

• Indonesia’s aquaculture company eFishery has raised US$200 million in its Series D funding round led by Abu Dhabi-based global fund manager 42XFund.
• Malaysian public sector pension fund, Kumpulan Wang Persaraan (KWAP), Switzerland-based asset manager responsAbility, 500 Global, Northstar, Temasek, and SoftBank also joined.
• The funds will be used to expand the eFishery farming community, targeting to engage over 1 million aquaculture ponds in Indonesia by 2025 and increasing the transactions of fish feed and fresh fish on the platform.

Nano Dimension has amended its special tender offer for Stratasys again, increasing its cash offer from $20.05 to $24.00 per share. It has also stated its willingness to explore a potential combination of Stratasys with 3D Systems. Nano Dimension’s resolution proposing to replace the majority of Stratasys’ board will be voted on at Stratasys’ AGM on 8 August.

• Needle, an AI-powered marketing platform from Singapore, has raised US$1.2 million in its pre-seed round led by Iterative, with participation from Ethos Fund and Goldbell Financial Services. Angel investors, including Rainforest founder JJ Chai, also joined the round.
• The fresh capital will be used to expand Needle’s team, consisting of data scientists, AI trainers, and engineers.
• Needle helps ecommerce brands optimize their marketing activities. By analyzing data from various platforms, Needle provides personalized recommendations and automates campaign creation, helping firms reduce costs and improve return on investment.

• Foreign investors have been selling SK Telecom (017670 KS) for over a year now. That has taken foreign room from near zero to close to 15% now.
• That could mean index inclusion for SK Telecom (017670 KS) with timing dependent on when the 15% foreign room threshold is crossed.
• SK Telecom (017670 KS) has performed in line with KT Corp (030200 KS) but trades at higher valuations on most parameters.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads  111 Inc (YI US), Chindata Group (CD US), ENM Holdings (128 HK), Estia Health (EHE AU), Poly Culture Group Corp H (3636 HK), Costa Group Holdings (CGC AU).
• Lowest spreads – Healius (HLS AU), Liontown Resources (LTR AU), Toyo Construction (1890 JP), Kenedix Residential Investment (3278 JP), Penguin International (PBS SP), Challenger Technologies (CHLG SP). 

• 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 – Tryt Inc (9164 JP), Alibaba (ADR) (BABA US)‘s Cainiao & Cloud Intelligence Group, J&T Global Express (1936374D CH) IPOs & Socionext (6526 JP)‘s secondary placement.
• Event-Driven developments – Chindata Group (CD US), IMAX China Holding (1970 HK), Shougang Fushan Resources (639 HK), Invocare Ltd (IVC AU), Musgrave Minerals (MGV AU). 

• TSMC: 9.9% premium, continues to stay above one standard deviation from historical median… Earnings coming this week.
• UMC: 0.0% ADR premium… Trading on par with local shares… Earnings next week.
• Chunghwa Telecom: -0.8% discount represents relatively deep discount vs. history.

• Shift reported 3QFY08/2023 results on Friday and the company’s revenues increased 34.2% YoY and OP more than doubled during the quarter. Both revenue and OP beat consensus estimates.
• Conclusion of unprofitable projects and expansion into upstream services have helped earnings to expand, and we expect full-year earnings to comfortably beat guidance and consensus estimates.
• Shift’s share price moved up by 19% following earnings announcement and has been up more than 39% YTD, and we would recommend holding on as there is further upside.

• Since mid-June, spreads have generally widened across our liquid universe (10 have widened, 8 widened, 1 at same level).
• Recommended trades long ordinary / short preferred shares: Fuchs, Henkel, Schindler, SSAB Svenska Stal.
• Recommended trades long preferred / short ordinary shares: Carlsberg, Ericsson, Media-for-Europe, Sixt, VW, Grifols, Atlas Copco.

• Weekly summary of vol changes and moves across Global Markets
• Analysing ATM volatility and skew changes over the last 5 days
• We suggest a few trades to take advantage of the implied vol surfaces

• Founded in 2012, Unisound AI Technology is a Beijing-based pioneer in Artificial General Intelligence (AGI). The company offers easy-to-deploy AI products and solutions in China. 
• Unisound AI Technology seeks to raise capital for R&D activities, international expansion, and general working capital purposes. The company chose CICC and Haitong to tap capital markets with HK IPO. 
• I like growing brand recognition, in-house 60B-parameter LLM UniGPT, high growth in the Smart Life segment, and the opportunity to sell self-developed proprietary AI chips in China.

• ALT’s IPO price has been determined a 25,000 won, which is 22% higher than the high end of the IPO price range.
• A total of 1,937 institutional investors participated in the IPO offering with a competition demand ratio of 1,836 to 1.
• Our base case valuation of ALT is market cap of 299 billion won or 33,365 won per share, which represents 33% higher than the IPO price range of 25,000 won.

• Kinatico Ltd (ASX:KYP) is a ‘Know Your People” regtech company providing workforce compliance monitoring and management technology and services.
• KYP has announced in a flash update that it expects to report FY23 NPAT greater than $0.2m, marking its first profitable full year since listing.
• This is ahead of our FY23 NPAT forecast of $0.14m. 

• Canon Inc (7751 JP) announced a second buyback this fiscal year on 15 June. As discussed here previously, Canon buybacks are short, sharp, and sweet. 
• The recent one should be done imminently (15 May start ended 13 July). 16 June start? (Note: Canon reports buyback results at 3pm local time, and did not report today).
• This time we have a double-setup with buyback ending and a large TOPIX sell on Canon on 28 July. 

• Ant’s buyback valuation of $79bn is in line with market expectation
• While 40% loss is deep for the latest round investors, earlier investors are still in the money
• Alibaba is expected to record a profit of $18bn if it decided to join the buyback

• Nanya Tech management extrapolated on their recent results call that they believe 2Q23 was the bottom for the DRAM cycle.
• We’ve updated our Nanya Tech financial model and estimates; we still see a short-term trade back to Nanya Tech’s mid-June high. However, Elan Microelectronics is a Long with more edge.
• While Nanya’s comments indicated a more delayed recovery for Memory than Micron’s recent guidance, overall the industry for Micron, SK Hynix, and Samsung appears to be turning a corner.

• We estimate Baidu’s ads revenue growth in 2Q23 will be 10.8% YoY. We largely cut our forecast of 3Q23’s ads revenue growth from 14.7% to 7.1%.
• We lower Baidu’s core other revenue growth in 2Q23 from 18.0% to 9.0% YoY. Baidu’s smart transportation AI cloud business has been affected by the contraction in local government expenses.
• We expect Baidu’s 2Q23’s rev./non-GAAP net income to be (2.3%)/ (1.9%) vs cons, also cut the TP to $162, which implies 16.5X PE in 2023.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Millicom’s ESG as “Adequate”, with a “Strong” score for Governance, but “Adequate” scores for the Social and Environmental pillars. Controversies are “Immaterial” and Disclosure is “Strong”.

• Peloton Interactive delivered a mixed set of results in its most recent result, with revenues above Wall Street expectations but below-par earnings.
• Their management believes they are in a considerably better situation from the cost structure standpoint.
• We give Peloton Interactive, Inc. a ‘Hold’ rating with a revised target price.

• Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
• We view Globo’s ESG as “Weak”, despite its “Adequate” score in quantitative terms. The Social and Governance scores are “Weak”, while the Environmental score is “Adequate”. Controversies are “Immaterial” and Disclosure is “Weak”.
• Globo Comunicacao e Participacoes SA (Globo), privately owned and controlled by the Marinho family, is the largest media group in Brazil. It controls the country’s leading broadcast TV network and its pay-TV programmer, as well as a diversified group of publishing companies and Internet content providers.

• Zebra delivered a solid result and managed an all-around beat in the last quarter.
• Zebra adjusted its sales outlook due to softer demand in certain markets while remaining financially strong and actively managing its supply chain.
• Zebra observed cautious spending behavior among enterprise customers, resulting in a shift from large orders to smaller ones.

• Broadcom remains as one of the best-positioned semiconductors stocks.
• The recent rally, however, is factoring too optimistic scenario for the future and creates a downward risk for the share price.
• Profitability would continue to experience strong tailwinds, but this is unlikely to bring significant rewards for shareholders.

• Pure Storage managed to surpass the revenue expectations as well as the earnings expectations of Wall Street.
• Q1 operating earnings of approximately $20 million exceeded expectations, despite higher-than-expected salary expenditures and their first sales kickoff event since 2020.
• Besides, despite the positive initial reception to FlashBlade//E, Pure Storage expects a modest revenue increase in the second half of the year.

• Fadu (440110 KS) is looking to raise up to US$147m in its Korean IPO.
• Fadu is a South Korean fabless semiconductor maker mainly engaged in flash storage technology innovation. Its core products are Enterprise Solid State Drive (SSD) and Enterprise SSDs.
• In our previous notes, we looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuation.

• The S&P500 E-Mini (ES) is approaching a DAILY resistance level at a point in time where it could perform a quick reversal – a SHORT trade opportunity.
• Watch the 4483-4525 price area, today is the 3rd consecutive day up, the reversal could begin in that area, today or tomorrow.
• The probability for a quick reversal, after 3 days up, in the 4483-4525 price area, is between 67% to 79%, depending on the resistance levels reached.

• On 3 July 2023, the Ministry of Commerce of China announced that it will restrict exports of gallium and germanium starting next month.
• YMC is one of the key beneficiaries in Korea of China’s restriction of gallium exports. YMC makes silicon carbide which can be a substitute material for gallium.
• YMC’s valuation is relatively cheap. Given that YMC currently has a market cap of 150 billion won, this would represent P/E of 7.3x (using 2022 net profit). 

• My read of Bain’s Offer last month, was a tactic to flesh out a competing Offer.  It seemed unlikely Bain would get the regulatory approval to take Chindata (CD US) private. 
• Now state-backed China Merchants Capital Holdings International Ltd. has made a non-binding offer of $9.20/ADS, compared to $8/ADS from Bain.
• This Offer is indicative. But an SOE taking over data centres makes a lot of sense. 

• Ant Group Co. Ltd. has offered to buy back some shares at a whopping 70% discount to the unrealized valuation for its ill-fated IPO, shortly after regulators hit the fintech giant with an almost $1 billion fine.
• Ant Group announced Saturday that it had proposed to repurchase as much as 7.6% at a price that values the company at approximately 567 billion yuan ($78 billion).
• The offer represents a roughly 40% discount to the approximate 960 billion yuan figure achieved in Ant Group’s last fundraising round in 2018, and is around 70% cheaper than the 2.1 trillion yuan valuation touted in its planned 2020 IPO.

• On 10 July, it was reported in the Hankyung Business Daily that Posco DX (022100 KS) could switch its listing from KOSDAQ to KOSPI by the end of 2023.
• One of the key reasons for the change in the listing venue from KOSDAQ to KOSPI is that POSCO Group believes this could lead to improved valuations for the company.
• We believe the valuations of Posco DX have become too high. Therefore, we have a Negative View of Posco DX at current prices. 

• Rorze’s stock price has risen 35% since we became bullish on the stock in August
• Q1 sales and operating profits big miss versus analyst consensus due to slowing semicon capex cycle
• We would be buying into any stock weakness with an eye on recovery in 2H23 into 2024

• Fadu (440110 KS) is looking to raise up to US$147m in its Korean IPO.
• Fadu is a South Korean fabless semiconductor maker mainly engaged in flash storage technology innovation. Its core products are Enterprise Solid State Drive (SSD) and Enterprise SSDs.
• In our previous notes, we looked at the company’s past performance. In this note, we talk about peer comparison.

• NTGR has spent the last two years adjusting to a consumer spending environment post pandemic and should begin to show greater benefits of the new business strategy 
• The inventory rebalancing at NTGR’s main retailers is mostly sorted out and NTGR has been putting greater emphasis on its super premium wireless systems
• NTGR’s ability to generate free cash flow this year should improve investor sentiment in owning the stock.

• We expect that Tencent’s 2Q23’s rev./non-IFRS net income to be 0.2%/5.2% vs cons. 
• We raise Tencent’s ads growth in 2Q23 from 18.2% to 28.4% YoY per our recent checks with ads agencies. 
• There is an increasing possibility that “DNF Mobile” could be launched in the next several quarters. We raise the TP to $450, which implies 20.1X PE in 2023.

• SS&C Technologies delivered a mixed set of results for the previous quarter with revenues above analyst expectations but below-par earnings.
• With a focus on innovation and investment in key areas, SS&C Technologies saw growth in various segments, including alternatives, global investor and distribution services, retirement, and the Institutional and Investment Manager segment.
• SS&C Technologies’ strong financial performance and customer satisfaction are anticipated to position the company as a trusted partner in the financial services sector.

• SunPower delivered a mixed set of results for the previous quarter with revenues above the analyst consensus estimates.
• Despite challenges like unfavorable weather conditions in California and increased costs, its management remains confident in achieving its financial goals.
• SunPower added many new customers, with revenue experiencing notable growth driven by price increases.