TMT/Internet

• At first glance, the Shinko Electric Industries (6967 JP) and China TCM merger arb has little or no similarities regarding the region, precondition, sector, type of offeror, or offer structure.
• The aftermath of China Traditional Chinese Medicine (570 HK) has resulted in funds resizing well-held merger arb positions, mainly long-dated names with tail event risks. This has increased the Shinko spread. 
• Shinko’s tail event risk (no SAMR approval) remains low. Timing remains the primary risk, as a delay is possible. At the last close, the gross/annualised spread was 8.9%/29.2%.

• Konica Minolta, a key player in the Japanese office equipment market, presents an attractive investment opportunity, particularly in light of the recent actions by activist investor Effissimo.
• The investment case for Konica Minolta hinges on several factors, including potential structural reforms, M&A activity, and undervaluation.
• Given Effissimo’s track record with Ricoh and the broader industry dynamics, the thesis for a bullish outlook on Konica Minolta is compelling.

• Taiwan Semiconductor Manufacturing Company (TSMC) has reported a robust performance in the third quarter of 2024, underscored by significant revenue growth driven by both smartphone and AI-related demand.
• The company’s industry-leading 3-nanometer and 5-nanometer technologies have been at the forefront of this demand surge.
• Revenue for the third quarter increased sequentially by 12.8% in New Taiwan dollars, reflecting not only strong demand but also higher capacity utilization and cost improvement efforts.

• Considering constructive market dynamics and the recent $SPX breakout above 5783 following several months of consolidation, we upgraded our outlook to bullish as of our 10/15/24 U.S. Macro Vision report
• Since late-July, we have been neutral on the SPX, preferring to buy near 5100-5200 support and sell near 5670-5783 resistance until there is a break in either direction.
• The verdict of the market is the only one that matters, and the breakout above 5783 is the market’s way of saying the path of least resistance is higher.

• Foxconn is expanding its SDV development efforts to further the advancement of smart car technology.
• Intel is seeking collaboration with Samsung to better compete with TSMC in the competitive foundry market.
• Nvidia is collaborating with Indian partners to develop a custom chip for the Indian market, while Xiaomi launches China’s first 3nm SoC.

• The Board will likely recommend the 100p/share cash offer (8.0x EV/NTM EBITDA) pending final terms. General Atlantic must make a formal offer by October 25, with potential deadline extensions.
• Shareholders would have the option to elect for an unlisted equity alternative. This means that top two shareholders (24%) will continue invested and that chances of a sweetening seem slim.
• Given LTG’s share performance, shareholders may willing to accept a 33.5% premium. Gross spread is 6.6% (39.4% estimated annual return if settlement by January 6). Long.

• ASML Holding N.V. reported its financial results for the third quarter of 2024, highlighting both achievements and challenges.
• The company recorded total net sales of EUR 7.5 billion, surpassing its own guidance, largely due to increased sales of deep ultraviolet (deep UV) systems and heightened Installed Base Management sales.
• Net income for the quarter was EUR 2.1 billion, representing 27.8% of total net sales, with an EPS of EUR 5.28.

• On 11-Oct, Bain submitted a binding proposal for Fuji Soft Inc (9749 JP). On 15-Oct, FSI acknowledged, but questioned the Nozawa family commitment.  Founder Nozawa wrote letters the 17th.
• O 18-Oct, FSI reiterated support for the KKR First Tender in a late night drop. It included fine print, but no media coverage. Today, FSI filed a Target Opinion Amendment.
• That filing included yet more fine print not in the public filing Friday. And KKR extended. The new fine print is nuanced. But worth reading.

• Over the last few days, Shinko Electric Industries (6967 JP) shares have dipped lower than the previous standard trading range. 
• I expect this weakness is related to investors in other deals deciding to sell this deal too. I believe it is not related to Shinko specifically.
• For that, while gap risk remains somewhat high, I still see break risk as low and see this as a great opportunity to buy the dip.

• Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
• We previously discussed the IPO in Horizon Robotics (9660 HK) IPO: The Bull Case and Horizon Robotics (9660 HK) IPO: The Bear Case. 
• Our valuation analysis suggests that Horizon is unattractively valued at the IPO price range. Therefore, we would pass on the IPO.

• International Games System (3293 TT) could be added to a global index at the end of November and there will be a lot of buying in the stock.
• The big rally in the stock has led to International Games System (3293 TT) trading expensive to its regional peers.
• There has been an increase in cumulative excess volume over the last month. But there could still be more to go over the next week.

• nCino has posted its financial results for the second quarter of fiscal year 2025, delivering performance that exceeded initial forecasts in several key areas, including subscription revenues and non-GAAP operating income.
• The company has observed a notable improvement in the financial services industry in the United States compared to the previous year.
• nCino’s growth in the U.S. has been robust, particularly within its existing customer base which seems keen on leveraging the company’s expanded platform capabilities.

• IRDM started 2024 with changes to its reporting metrics and that trend continued when with Q3. 
• When IRDM reported third quarter 2024 results, the Company disclosed it would experience a decline in reported IOT subscriber metrics.   
• The change subscriber count would not impact IRDM’s revenue due to contract pricing. It could create negative headwind in 2025

• Marathon Holdings’s second quarter of 2024 brought both the continuation of bold initiatives and a renewal of challenges marked by increased operational expenses and pressure on profitability.
• The company underlined its commitment to expanding operations and scaling infrastructure, leading to notable achievements such as strategic acquisitions and technological advancements.
• Noteworthy is the growth in the company’s hash rate and the acquisition of the Garden City data center, which collectively aim to steer Marathon Holdings towards reaching an operational hash rate of 50 exahash by year-end.

• Southern Taiwan Science Park’s output value is projected to hit a new high in 2024, indicating growth in the technology sector of Taiwan.
• Taiwan is looking for global solutions to tackle its green energy deficit, highlighting the government’s efforts to promote renewable energy sources.
• Chinese security measures impact tech giants like Micron, Intel, and Tesla, while Samsung resolves labor dispute in India and adjusts HBM production target.

• Wix, the leading platform enabling users and businesses to create and manage online presence, has reported its second quarter results for the financial year 2024, showcasing considerable financial and strategic achievements, along with disclosing its enhanced focus on AI and commerce capabilities to bolster growth.
• The company’s revenue growth stood at 12%, hitting $436 million, and bookings observed a 15% year-over-year increase, reaching $458 million.
• This bookings growth is an acceleration from the 10% seen in Q1, indicating a strengthening demand for Wix’s offerings.

• Haivision Systems Inc. is a publicly traded company with a current stock price of CAD 4.20, but analysts believe it is worth at least CAD 7.60
• The company has seen strong sales growth and high gross margins in recent years, and is debt-free
• Haivision competes with larger companies like Evertz and EVS Broadcast Equipment in the video solutions market for live broadcasts, making it an attractive investment opportunity for smaller capital pools.

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 Fuji Soft Inc (9749 JP) Board has maintained its recommendation of KKR’s first-stage tender offer. However, the recommendation was not unanimous, with four dissenting directors. 
• Bain’s likely next move is to waive the precondition and launch its offer. To bring KKR to the negotiating table, Bain will want to acquire as many shares as possible. 
• KKR’s first stage closes on 21 October. Success requires KKR to either work with Bain or match terms. As shares trade through Bain’s terms, there is little or no upside. 

• With over 95% of the review period complete, 4 non-constituents are in inclusion zone and 6 constituents are in deletion zone.
• We estimate one-way turnover of 6.5% at the December rebalance leading to a one-way trade of CNY 11.95bn (US$1.7bn). Index arb balances could increase the impact on the stocks.
• The potential adds have continued to outperform the potential deletes. There has been a big jump in the last few weeks as markets have rallied. Trim positions into strength.

• TSMC: +18.7% Premium; Trading Range Sustaining at an Elevated Level
• UMC: -1.8% Discount; Good Level to Go Long the Spread
• ASE: 0.0% Premium; Good Level to Go Long the Spread

• On Tuesday, Fuji Soft Inc (9749 JP) said they had received the legally-binding Bain proposal on 11 October, but noted they could not confirm founder Nozawa-san’s agreement or intentions.
• Founder Nozawa Hiroshi responded with a pair of impassioned letters Thursday criticising process, asking Fuji Soft to withdraw support for KKR, and switch to or allow the Bain Offer.
• Fuji Soft on Friday reiterated support for the KKR First Tender, but interestingly, saw a majority resolve to suggest common shareholders NOT tender because of the optionality.

• I  tally 44 – mostly firm, mostly Asia-Pac – transactions currently being discussed and analysed on Smartkarma. Inside is a timetable of upcoming key events for each deal.
• One new deals discussed this week: Bossini International (592 HK) low-balled scrip Offer from Viva Goods (933 HK). Beijing Capital Grand (1329 HK) also suspended due to the Takeovers code. 
• Key updates took place on: GJS (2611 HK)/Haitong Securities (600837 CH), Fuji Soft Inc (9749 JP), Hotel Property Investments (HPI AU), TCM (570 HK) and Dyna Mac Holdings (DMHL SP) 

• Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.
• In Horizon Robotics (9660 HK) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on high related parties’ revenue, customer concentration risk, pricing pressure, uncertain path to profitability, high cash conversion cycle and FCF burn.

• Allegro MicroSystems presented their first fiscal quarter 2025 results, positioning themselves within a competitive and challenging market environment.
• Positive indicators can be discerned from their performance, although there remain areas of concern which reflect broader market conditions and segment-specific issues.
• Starting with the positives, Allegro MicroSystems reported first-quarter sales of $167 million, which was above the midpoint of their guidance.

• This past week saw mainland investors trade HK$476bn of stock. Not as big as last “week” but still big. BABA buying has slowed, but net buying was still HK$24.4bn 
• The buying is starting to see a longer tail of net positive names, and properties this week saw big net buying, even before the Sunac placement which added more.
• High-Div SOEs are seeing outflows as beta sees inflows. I expect this to continue.

• Blackbaud, Inc. reported a strong second quarter in 2024, showing significant improvement in various financial metrics and advancing its strategic initiatives.
• The company, a leading provider of software to power social impact, has focused on product innovation tailored for non-profit organizations while implementing crucial revenue initiatives and maintaining careful attention to cost management and cash flow enhancement.
• 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.

• Tenable’s Q2 2024 earnings report presents a mixed picture, with various strengths and areas of concern that are pivotal for investors to consider.
• The company, a notable player in the cybersecurity space, reported revenues and earnings that surpassed expectations, but encountered headwinds with calculated current billings (CCB), which fell short of projected figures.
• This discrepancy signals a challenging selling environment and prompts a cautious outlook for the rest of the year.

• Teradata’s second quarter earnings for the 2024 fiscal year demonstrated a mixed performance in a challenging macroeconomic environment.
• On the positive side, Teradata highlighted significant growth in its cloud-based analytics revenue, which grew by 32% in constant currency.
• The company also mentioned a strong cloud net expansion rate of 123%, indicating robust customer expansions within its cloud segment.

• Viavi Solutions reported its fourth quarter and full year results for fiscal 2024, showcasing varied performance across its different segments.
• For the fourth quarter, the company posted net revenue of $252 million, at the midpoint of its guidance range of $246 million to $258 million and reflected a 2.4% sequential increase but a 4.4% decline year-over-year.
• The full-year revenue stood at $1 billion, marking a 9.6% decline year-over-year, influenced predominantly by subdued spending from service providers and Network Equipment Manufacturers (NEMs).

• Vontier Corporation, in its recent earnings call for the second quarter of 2024, presented a mixed financial performance impacted by several external factors.
• The company reported a core decline in sales by approximately 3%, primarily due to delays in customer projects and discretionary spending which affected orders and shipments towards the end of the quarter.
• These delays were noted across Vontier’s Environmental & Fueling Solutions segment and Alternative Energy business, significantly impacting the quarter’s results.

• Shares of Taiwan Semiconductor (TSMC) – ADR (TSM US) surged on a robust results and raised revenue outlook, driven by strength in AI related demand.
• Markets are overlooking the fact that many AI companies and solutions are unnecessary, unsustainable and will lead to blowups and consolidation.
• We make the case for why TSMC is over valued and investors will likely get better entry levels.

• The price of ASML EUV machine is increasing as thruput (wafer / hour) is increasing. 
• TSMC 3nm is fully booked in 2025. Here is the list of clients / chips. 
• SiC and MCU over-investments in China? Very likely. China is limiting SiC investments. 

• Hua-Where? Hua-Who? Report: Apple’s iPhone 16 Pro & Pro Max Sales Surge 44% in China; A Strong Start Amidst Competition
• Samsung Under Siege: Facing Major Challenges Across Verticals as TSMC Tightens Foundry Grip
• TSMC 3Q24: Guidance Remains Strong; Explains Why AI Demand Not Overhyped; Stay Long… TSMC is Working with All AI Innovators

• TSMC reported Q3 revenue of NT$759.69 billion, marking a 39% year-over-year increase, surpassing the guidance range of NT$724-750 billion, driven by strong AI demand.
• The company’s net income reached NT$325.3 billion, up 54% from last year and exceeding LSEG’s estimate of NT$300.2 billion, reflecting strong operational performance.
• TSMC’s gross margin improved to 57.8%, an increase of 4.6% from Q2, highlighting enhanced profitability from advanced chip production amid growing AI applications.

• Accenture recently reported its fourth quarter result for fiscal 2024, showcasing a mixture of strengths and setbacks.
• As a multinational professional services company known for its capabilities in digital, cloud, and security, Accenture’s continued focus on embracing technological transformations, particularly Generative AI (GenAI), and adapting to market demands are pivotal points observed from the earnings report.
• 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 the latest earnings discussion of Five9, Chairman and CEO Mike Burkland relayed a mixed set of results, presenting a blend of successes and challenges.
• The company achieved an annual revenue run rate exceeding $1 billion, primarily driven by a 21% year-over-year growth in LTM Enterprise subscription revenue.
• Alongside, the adjusted EBITDA margin improved sequentially to 17% of revenue, contributing robustly to a strong LTM operating cash flow of $126 million, which is 13% of revenue.

• ATE Energy is leading green energy and marine projects in the Philippines to support sustainability efforts and protect the environment. Taiwan is seeking to import green energy from the Philippines to meet its goal of achieving net-zero emissions by 2050.
• The US faces challenges in expanding nuclear power as part of its efforts to reach net-zero emissions targets. Japan and Taiwan are teaming up to produce the Lean3 EV, promising a compact design and high efficiency for urban areas.
• The new iPad mini features advanced Apple Intelligence technology with four major upgrades for top-tier performance and functionality. Joo-Sun Choi is returning to Samsung’s DS division after a successful term as SDC president. Taiwan is focusing on low-carbon power to drive industrial growth, while ESL adoption is on the rise with retailers like Simple Mart Taiwan and Walmart leading the way in a retail revolution for lower prices.

• Micron Technology’s fiscal fourth quarter 2024 earnings call underscores a period of noteworthy developments and strategic pivots, reflecting both positives and challenges that face the company.
• The call, led by Sumit Sadana and other executives, provided insights into various aspects including demand trends, inventory levels, operational execution, and financial outlook which are critical for understanding Micron’s trajectory and market dynamics.
• 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.

• Paychex, a leading provider of payroll, human resource, and benefits outsourcing solutions for small-to-medium sized businesses, commenced fiscal year 2025 with a quarter that both showcased resilience and drew attention to some of the challenges the company faces.
• During the earnings call for the first quarter ended August 31, 2024, which featured CEO John Gibson and CFO Bob Schrader, the company outlined various facets of its performance and forward-looking statements.
• 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.

• RingCentral’s performance in the second quarter of 2024 has displayed robust financial health and an evolving strategic direction, revealing both strengths and potential areas of concern.
• The company reported a 10% year over-year increase in total revenue amounting to $593 million, surpassing its guided range.
• This growth appears primarily driven by the success of its new products, notably RingCX, which is signaling strong market acceptance.

• Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.    
• Horizon ranked fourth among all global ADAS and AD solution providers in China by solution installation volume in 2023 and 1H24, with a market share of 9.3% and 15.4%, respectively.
• The bull case rests on a large TAM, a blue-chip customer base, a robust backlog, a core business in good health, a high gross margin, and a strong balance sheet.

• Q424 revenue forecast of $26.5 billion, up 13% QoQ and the highest Q3 to Q4 revenue jump since Q4 2017
• Demand for AI acceleration is real and just beginning. According to a key customer of theirs, “demand right now is just insane”
• Overseas fabs progressing well with Arizona yielding well and on track for high volume production in early 2025

• TSMC Delivers Strong 3Q24 Revenue and Margin Growth; Margin Guidance Climbs
• Management Says Believes AI Demand is Not Hyped… Companies Extracting ROIs
• TSMC – Structural Long Rating Maintained; NT$1,515 Price Target Suggests 46% Upside

• Horizon Robotics, a Beijing-based fast-growing provider of integrated ADAS and AD solutions for passenger vehicles, plans to raise ~$700M at the high end of the range at HK$3.99/share.
• The IPO is expected to be between HK$3.73 and HK$3.99. However, the offer price may be, but is not expected to be, lower than the lower end of the range.
• I believe that at the high end of the range, the company’s valuation is full, and I would await a share pull-back before becoming more positive on the stock.

• Main positive surprise in 3Q24 is a sharp margins expansion, reflecting Utilization increase. OP 9% above Consensus.
• Main positive surprise in 4Q24 guidance: high QoQ revenue growth at 13%, which suggests further Utilization increase and TSMC could beat its margins guidance again.  
• Net Income growth is accelerating in 2H24 to ~55% YoY. The stock is not that expensive, we estimate trading at 17.2x 2025 and 13.8x 2026 EPS.

• 4Q24 Guidance: Sales will be US$26.1-26.9bn, up 13%; GM outlook will be 57-59%; and OPM outlook is 46.5-48.5%
• AI revenue contribution will triple and reach mid-teens sales contribution this year. Almost every AI innovator cooperates with TSMC.
• APT will grow above the corporate average in the next five years.GM is approaching the corporate average, but it’s not the same currently.

• Waystar Holding (WAY US) is forecasted to pass the mcap and fcap thresholds for the small-cap segment and get added at the November 2024 review.
• The company currently passes the higher regional mcap and fcap thresholds for the small-cap segment at the December 2024 review.
• Waystar Holding (WAY US) risks failing the fcap threshold at the December 2024 review if the stock price falls back to the IPO price levels.

• CoWoS packaging meets global demand for advanced technology, with efficient design for integration.
• Taiwan reveals breakthrough in tiny quantum computer technology, impacting the tech industry.
• LGES secures multi-billion deal with Mercedes-Benz for EV batteries, boosting electric vehicle industry.

• CK Solution is getting ready to complete its IPO in KOSPI in November. Its IPO price range is from 15,700 won to 18,000 won. 
• The IPO offering amount ranges from 49.4 billion won to 56.6 billion won. The book building for the institutional investors lasts from 4 to 8 November. 
• CK Solution specializes in dry room system for the rechargeable batteries manufacturing process. Rechargeable battery sector accounted for 92.9% of total sales in 1H 2024 followed by semiconductor (3.1%).

Esker made further good progress in Q324, with constant currency (cc) revenue growth of 17% y-o-y in Q324 and 14% for 9M24. Guidance was maintained for FY24; we have revised up our forecasts with revenue at the top end of the guidance range and profitability in the middle of the range. Order intake was stable in Q324 and up 34% cc for 9M24, providing support for our FY25 forecasts. The process to acquire Esker is ongoing, with the offer expected to open within the next couple of weeks.

• ASML reported revenues of €7.5 billion, +19% QoQ and +11.9% YoY. This was €200 million above the high end of the guided range. Q424 guided to €9 billion
• Logic Fab delays and a collapse in sales to China caused ASML to reduce their 2025 forecast to the low end of the €30 -€40 billion guided in November 2022
• Despite these challenges, ASML’s latest forecast still implies 16% YoY growth in 2025

• Comments focus on low bookings in 3Q24. The reset is much larger than this. ASML has capacity for 90 low-NA EUV machines in 2025-26. Demand in 2025 is below 50.
• Bullish 2025-28 guidance (revenue / capacity) provided by ASML end of 2022 is finally resetting. 2025 Consensus Net Income forecast could reset by ~20%, 2026 by ~30%.
• ASML finally factors in 1) weak end demand in all segments except for AI 2) Fab push out or cancellation  3) China accelerated Capex and over capacity are slowing.

• JD Industrial Technology is looking to raise about US$1bn in its upcoming HK IPO.
• JDI is a leading industrial supply chain technology and service provider in China in terms of GMV in each year during the Track Record Period, according to CIC.
• We have looked at the company background and provided our initial thoughts on valuations in our previous notes. In this note, we will talk about the refiling updates.

• Horizon Robotics is looking to raise up to US$696m in its Hong Kong IPO. 
• Horizon Robotics (HR) is a provider of advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions for passenger vehicles, empowered by its proprietary software and hardware technologies.
• We have looked at the company’s past performance in our previous notes. In this note, we will talk about the IPO valuations.

• We expect King Yuan Electronics Co, Ltd. (2449 TT)‘s 4Q24 outlook to be a seasonal uptrend with a slight increase quarter-over-quarter.
• NVIDIA Corp (NVDA US) will become the top client at KYEC, and Mediatek Inc (2454 TT) is expected to become the second-largest client in the outlook for 2025.  
• The focus will primarily be on currently available sources, particularly KYEC for production.  

• Hyundai is competing against the US and China in the global autonomous vehicle market, trying to keep up with the latest technological developments.
• Tesla’s new Robotaxi and self-driving bus have been unveiled, but doubts linger about whether they will be commercially successful in the long run.
• TsangYow is planning for growth as Asian markets recover, with a Malaysian plant set to launch in 2027. HK startups are utilizing AI for growth in education and tourism sectors.

• Dave offers financial products to financially challenged Americans, including early wage access loans and digital checking accounts
• Dave faces regulatory challenges in the fintech industry but is still considered a good long-term investment
• The collapse of Synapse and regulatory scrutiny on banking partners like Evolve have raised concerns about the fast growth of fintech companies without proper supervision, highlighted in articles from WSJ and Bloomberg

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.

• Serverworks reported revenue of JPY17.3bn (+38.6% YoY) and operating profit of JPY603mn (+49.6% YoY).
• Resale services revenue reached JPY15.4bn (+40.7% YoY), driven by increased AWS usage and new customer acquisition.
• Cloud Integration revenue was JPY1.1bn (+30.2% YoY), with 280 projects and 136 customers by end-Q2.

• Toumei’s FY08/24 revenue reached JPY23.9bn (+16.5% YoY), with operating profit at JPY2.3bn (+40.3% YoY), achieving record highs.
• For FY08/25, Toumei forecasts revenue of JPY30.0bn (+25.4% YoY) and operating profit of JPY2.9bn (+24.0% YoY).
• Toumei’s NEXT GROWTH 2027 plan targets FY08/27 revenue of JPY40.2bn and operating profit of JPY4.6bn.

discoverIE’s H125 trading update confirmed that underlying earnings expectations for FY25 are unchanged. Destocking by industrial customers reduced in H125, with some now starting to place orders, resulting in a stabilisation in group order intake. Design wins in H125 with an estimated lifetime value (ELV) of £205m provide a strong foundation for future growth once destocking is complete. We maintain our FY25 and FY26 EPS forecasts despite reducing our revenue forecasts to reflect FX headwinds and lower organic growth in H125, reflecting continued good cost control and reducing interest rates.

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

• TSMC: +15.6% Premium; Relatively Aggressive Trade is to Long Premium
• ASE: -3.0% Discount; Good Level to Go Long the Premium
• CHT: -2.8% Discount; Good Level to Go Long the Premium

• CSI 300 represents the 300 largest stocks by market cap and liquidity from the Shanghai and Shenzhen Exchanges. CSI 500 is the next 500.
• In this insight, we take a look at the potential ADDs and DELs leading the race for the semiannual index rebal event in December 2024.
• We currently expect 16 ADDs/DELs for CSI 300 and 50 ADDs/DELs for CSI 500. Some of these names are different from what we had in our September 2024 insight.

• Smartphones units sold in 3Q24 increased by +4% YoY. That’s a slowdown from +7% YoY in 1H24.
• Growth comes from low-price Emerging Markets demand. But the Premium segment sees increasing ASP with AI-enabled phones.  
• Hence for Mediatek and Qualcomm, the investment thesis rests on increasing ASP as AI is propagating – not volume growth. MTK had a nice rally, time to take a breather. 

• Horizon Robotics (1395186D CH) is offering 1.355bn shares in its IPO at a price range of HK$3.73-3.99/share. With the overallotment option, the IPO could raise up to HK$6.2bn (US$801m).
• Cornerstone investors will take up a third of the offer. Those shares will be locked up for 6 months and will significantly reduce the free float of the stock.
• Index inclusions will commence with the HSCI in March 2025 – however, as a stock with Weighted Voting Rights, inclusion in Southbound Stock Connect will only take place in May.

• In Q3, Money Forward demonstrated continued strong performance, with consolidated net sales posting 31% growth year-on-year to ¥9.81 billion
• EBITDA for the cumulative nine months stands at ¥1.48 billion, comfortably within the company’s full year guidance range of ¥1-3 billion.
• We now see a very modest 2% upside to our target price of ¥6,440, based on an 8x forward revenue multiple. 

• Taiwan’s defense sector offers competitive advantage with better, faster, and cheaper solutions for securing US contracts.
• Growing tech sector demands secure, local storage solutions due to high energy usage.
• Google boosts investments in Asia-Pacific countries to expand its presence and tap into growing markets in the region.

• Intouch (INTUCH TB)‘s strange journey with Gulf Energy (GULF TB) continues. In April 2021, GULF made a surprising VTO for INTUCH. This past July, the two companies announced an amalgamation. 
• The merger was not fair to INTUCH shareholders, with an estimated earnings value destruction of ~26.5% (for FY24E). But that didn’t stop shareholders overwhelmingly approving the 3rd October EGM resolutions.
• What now? The next step  is the low-balled VTOs for Advanced Info Service (ADVANC TB) and Thaicom (THCOM TB). Then amalgamation. Then, arguably, the next unorthodox development will take place.

• Following AMD AI conference on 10 Oct, many question AMD’s estimate of the AI Accelerators market reaching US$500bn by 2028 (from $45bn in 2023).  
• AI Accelerators market value is increasing by 150% in 2024, reaching US$113bn. Based on TSMC CoWoS capacity, we  think reasonable to expect 115% growth over 2025-26 or US$276bn in 2026.
• TSMC makes all the chips. HBM is dominated by Hynix. Nvidia should remain the dominant vendor for years. AMD and Broadcom should grow faster than NVDA. Outsourcing: Alchip, Marvel, Mediatek. 

• Tencent repurchased 250 million shares and the market has not paid any attention to its significant margin improvements.
• Lalatech updated its IPO file for 1H24, in which both GTV  and revenue were up by 18% YoY.
• Seres expects its revenue will grow by 518% YoY to 559% YoY for 3Q24.

• Arm Holdings plc recently reported its financial results for the first quarter of fiscal year 2025, showcasing a surge in revenue and solidifying its status as a key player in chip design, particularly with its focus on AI and CPU technology.
• The company’s revenue hit $939 million, up 39% year-over-year, a testament to both burgeoning license and royalty streams.
• Licensing revenue, often an indicator of future royalties, climbed by an impressive 72% due to increased demand for Arm’s technology across a multitude of applications including AI, data centers, and mobile devices.

• In a major development that’s turning heads on Wall Street, Super Micro Computer (SMCI) announced it is now shipping over 100,000 GPUs per quarter, specifically targeting the surging artificial intelligence (AI) market.
• This is a significant leap for the company as it seeks to capitalize on the growing demand for high-performance computing power required by AI training models and data-heavy applications.
• With AI dominating conversations across industries, GPUs have become critical components in data centers, and Super Micro’s ability to ship these units at scale, coupled with its competitive pricing, could potentially generate billions in revenue.

• Foxconn increases investments in Zhengzhou, shifting focus to electric vehicles from phones.
• Home solar energy storage options becoming more affordable with incentives.
• Luxgen’s N7 LR deliveries to start in November, Hikvision’s RD department facing layoffs.

• STAR 50 index is a tech-focused, blue-chip index in Mainland China which tracks the top 50 largest and most liquid names in the STAR market of the Shanghai Stock Exchange.
• STAR 100 index tracks the next 100 names (51st-150th ranks) and it represents the mid-cap segment of the STAR market.
• In this insight, we take a look at the potential ADDs/DELs for the STAR 50 and STAR 100 indices for the December 2024 index rebal event.

• Continuing the trend of having a noticeable focus on e-invoicing, I can present the Unifiedpost Group (‘UPG’) business.
• UPG founded in 2001 by existing CEO, Hans Leybaert (12% shareholder) and has scaled up over the years to what is now a business with over 1,000 employees operating in over 30 countries.
• Its products are predominately focused on e-invoicing (80% of revenue) with a base subscription revenue in order to access the platform and transactional component on top which allows the group to benefit from volume through a usage-based fee.

• MicroStrategy, founded by Michael Saylor, has gained attention for its large investment in Bitcoin
• The company’s core business has shown stagnant financial performance with flat revenue and decreasing profits
• Some analysts view MicroStrategy as a speculative bubble, but caution is necessary when taking short positions due to unpredictable market behavior

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.

• In 1H FY02/25, TECMIRA reported revenue of JPY5.6bn, a 34.4% YoY increase, with a net loss of JPY67mn.
• IoT & Devices segment revenue rose 13.9% YoY, with segment profit increasing 12.7% YoY due to improved production efficiency.
• AI & Cloud segment profit surged 594.4% YoY, driven by AI chatbot productization and infrastructure migration to Microsoft Azure.

• As they had announced was their intention, Bain has made a binding offer for Fuji Soft Inc (9749 JP), bidding ¥9,450 against KKR’s ¥8,800. They aim to launch late October.  
• There is no minimum and no maximum. The Founding Nozawa family had thrown their lot in with Bain not KKR and that 18.5% is tied up. 
• There are conditions, and those are ALL-important. And I expect we see in the next week or so how coercive KKR’s “non-coercive” scheme change was. I’ve got 🍿🍿🍿.

• With three quarters of the review period complete, there could be one change for the S&P/ASX 50 Index and two changes for the S&P/ASX 200 (AS51 INDEX) in December. 
• There are two stocks that could be deleted from global indexes in November and that could keep those names under pressure for the next few weeks.
• Passive trackers will need to buy between 4-5x ADV in the forecast adds and sell between 2-8x ADV in the forecast deletes. Shorts have been building up in some names.

• Nearly US$140bn has flowed into mainland China listed ETFs year to date and there have been big creations in the last few weeks as stocks have surged.
• 97% of all inflows are in ETFs benchmarked to the CSI300, CSI1000, CSI500, SSE50, ChiNext and STAR50 indices. But over US$4bn has gone into other ETFs in the last week.
• The large ETF inflows over the last few weeks has led to index rebalance strategies underperforming in China. But that should reverse from now to rebalance implementation.

• Bain’s pre-conditional tender offer for Fuji Soft Inc (9749 JP) is JPY9,450, a 7.4% premium to KKR’s JPY8,800 offer. There is no minimum or maximum acceptance condition.
• The preconditions relate to regulatory approval (Vietnam) and Board recommendation. Bain’s offer is designed to bring KKR to the negotiating table to find a solution to privatisation. 
• KKR can 1) do nothing, 2) work with Bain on a solution, or 3) engage in a price war to prevent the satisfaction of Bain’s Board recommendation precondition.

• The Hang Seng Internet & IT (HSIII) index represents the top 30 stocks related to internet and information technology businesses listed in Hong Kong (HKEX).
• In this insight, we take a look at our capping flow expectations for the December 2024 index rebal event.
• We have also presented our index change expectations for the next semiannual index review which will take place in March 2025.

• Microsoft is projected to report an EPS of $3.10 for Q1 FY2025, reflecting a year-over-year increase, highlighting consistent growth amid evolving market dynamics.
• With a quarterly dividend increase of 10% and a $60 billion share repurchase program approved, Microsoft aims to enhance shareholder value while navigating competitive pressures.
• Amid concerns of slowing AI adoption, analysts are divided on Microsoft’s outlook, balancing high expectations against rising expenses, especially with its significant investments in AI and cloud infrastructure.