TMT/Internet

• On April 11, Prosus (PRX NA) made an Update on Repurchase Programme that it had repurchased shares in the market from the 3-7 April. They do so every week.
• This one said they would move 96 million shares of Tencent (700 HK) currently held in non-transferrable shares into CCASS so they could be sold. 
• The ADRs dropped in New York time. Tencent shares fell hard today. If the share price fell because of a block offering, that would be unwarranted. 

• In KOSPI 200 IT Sector Index rebalancing in June, we should consider using Samsung SDS as a hedge for short positions on KakaoPay from a day trading perspective.
• The expected performance of traditional flow trading based on passive impact has become uncertain due to flexible rebalancing trading by local pensions and short selling resumption on K200 new entrants.
• As such, flow events on these sector indices that are still pretty much under the radar in the market could be a meaningful alternative for us.

• Tata Technologies (TATATECH IN) (TT) is looking to raise around US$600m in its upcoming India IPO.
• 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 positive aspects of the deal.

• Shift Inc (3697 JP) reported 2QFY08/23 results on Monday. Revenue increased 34.7% YoY to ¥21.0bn (vs consensus ¥21.3bn vs guidance ¥21.1bn) while OP grew 74.8% YoY to ¥3.3bn (vs consensus ¥2.4bn).
• Both GPM and OPM improved significantly reaching record highs as unprofitable projects came to an end with cost optimisation initiatives removing previous concerns over declined margins in 1QFY08/23.
• Shift’s share price closed at ¥25,870 closing 15.8% higher than the previous close at the end of yesterday’s trading following its strong set of earnings.

• Founded in 2014, Hangzho Rokid Technology (2004144D CH)  is a Chinese developer of AR glasses and AI robotics software products, and the company operates across 10 countries.
• Rokid’s glasses are mainly used for industrial purposes including in oil & gas, electric power, aviation, rail transport and others thereby creating its own niche in the AR/VR glasses sector.
• The company has just expanded into North America with further global expansion on the cards and may likely to seek an overseas listing.

• NTGR has been going through a product transition cycle in a soft demand environment for more than a year, but recent promotion activity suggests an end could be near
• The scale of promotions seems to have abated in the first quarter of 2023 even though demand has yet to return.
• NTGR had been projecting the first quarter would be the low point of the year with sequential revenue growth in the second quarter. 

• This is our first report on the renowned domain name registry services and internet infrastructure provider, VeriSign.
• It produced solid financial results throughout 2022 while bolstering its vital Internet infrastructure.
• This was made achievable by conservative expense management, restricted pricing flexibility, and minimal domain name base expansion.

• VeriSign is one of the largest domain name registry services and internet infrastructure providers in the world.
• It produced solid financial results throughout 2022 while bolstering its vital Internet infrastructure.
• Baptista Research looks to evaluate the different credit strengths and credit risks of the company as well as a line-by-line analysis of the financial statements of the company for the past four years.

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• In the last two months, Amvis Holdings Inc (7071 JP), AXXZIA Inc (4936 JP), and Sosei Group (4565 JP) have confirmed their moves to the Prime Market.
• These names appeared in our lists (A or B) of candidates with high “readiness” for TOPIX Inclusions in our recent insights.

• Overall, the sentiments are extremely negative with most sell-side analysts having a Sell/Neutral rating on the stock.
• We believe either A) Revenue and earnings growth will pick up under the new management team, or B) Temenos will be taken over by some private equity firm.
• While revenue growth has remained subdued, the company’s moat remains intact in our view.

• Zhejiang Supcon Technology (688777 CH) is looking to raise around US$347m in its Swiss GDR listing. Huatai and CLSA are bookrunners on the deal.
• The firm is offering 12.5m GDRs (1 GDR to 2 ordinary A-shares) for sale, at a 8.1-10.8% discount to last close on the A-share leg.
• The deal is a relatively small one for the firm to digest, representing just 5.9 days of three month ADV on its A-share leg.

• The company has announced a restructure of its domestic retail business following a review that identified excess resourcing levels.
• The result is an estimated 20 redundancies and annualised cost saving of $2m at the EBITDA line
• We have upgraded our forecasts from FY24 and our valuation has increased as well.

• Comms Group Ltd (ASX:CCG) has announced a restructure within its domestic retail business following a review that identified excess resourcing levels.
• The result is an estimated 20 redundancies and an annualised cost saving of $2m at the EBITDA line.
• Guidance for FY23 EBITDA of $5.0m+ (RaaS $5.1m) remains intact for FY23.

• Tencent authorized video editing right to Douyin, one of its main competitors.
• Some of Bilibili’s video uploaders cannot survive the hard time.
• Both Alibaba and Baidu launched their ChatGPT-like apps, but Baidu’s app was .

• Keep Inc., the sports technology unicorn and the largest fitness app in China, has renewed its application proof in Hong Kong. Goldman Sachs and CICC are leading the upcoming IPO.
• With a mission to make the world move, the fitness app has been making waves in the fitness industry with its innovative approach to online fitness.
• Keep fitness app has been downloaded over 300M times since inception and there were 370M+ fitness users in China in 2022, the world’s largest market globally.

• We expect BABA to report C1Q23 (F4Q23) top-line and non-IFRS net income (5.0%) and (5.9%) vs. consensus, respectively, 
• Due to: 1) weak sales of Taobao, Tmall and 1P sales; 2) the on-going move of a key Cloud client; 
• We maintain US$109 TP as: 1) Taobao and Tmall sales shows recovery trend; 2) near-term benefit of unveiling its LLM AI; and 3) benefit from the new business unit structure.

• Naver Z Corporation, a subsidiary of NAVER Corporation, focuses on developing VR and AR technologies. The company can be regarded as one of the promising players in the Metaverse market.
• The company’s flagship product, ZEPETO, has become particularly popular among younger users and has been downloaded over 300 million times worldwide.
• Naver Z (1838597D KS) ‘s VR and AR technologies have a variety of use cases, and the company has worked with businesses and brands in a variety of industries.

• SmartRyde, a Japan-based marketplace for pre-booked airport transfers, has raised around 450 million yen (US$3.4 million) through a third-party allocation of shares and a subordinated loan from Japan Finance Corporation.
• NVenture Capital led this series A+ funding round, which also saw participation from investors such as SMBC Venture Capital, Yamaguchi Capital, and Hiroshima Venture Capital.
• SmartRyde provides its transfer services to over 700 airports worldwide.

• Huawei Technologies Co. posted its lowest profit margin ever for 2022 but managed a slight revenue gain in the third year of U.S. sanctions that forced the Chinese electronics giant to diversify its business into new sectors from cloud computing to automobiles.
• The company reported net profit of 35.6 billion yuan ($5.18 billion) for 2022, a 69% decline from 2021, on revenue of 642.3 billion, up 0.9% from a year ago.
• Its profit margin fell to a record low of 5.5%.

• Soft Space, a fintech-as-a-service company in Malaysia, has completed its Series B extension round at US$31.5 million led by Southern Capital Group.
• Returning investor transcosmos, strategic investor JCB, and Hibiscus Fund (jointly managed by RHL Ventures and South Korea’s KB Investment) also participated.
• “Building on our strong momentum, the new funds will help expand our global footprint and widen our customer base by accelerating the innovation of our full-stack payments platform while expanding into next-generation technological solutions,” said Soft Space CEO Joel Tay.

• Singapore-based Horizon Quantum Computing has secured US$18.1 million in a Series A investment from Sequoia Capital India, Tencent, SGInnovate, Pappas Capital and Expeditions Fund.
• The investment will allow the startup to strengthen its science and engineering teams to accelerate product development, establish its new engineering centre in Europe, and bring its technology to the market.
• This round takes Horizon Quantum’s total funding to approximately US$21.3 million.

• SDI was founded in 2008 with two subsidiaries, Atik Cameras and Synoptics, both engaged in digital imaging.
• SDI got listed on AIM in 2008 itself, with the intention to use the listing as a means of doing acquisitions in the digital imaging space.
• At the time of the initial listing, it had a market capitalization of £5 million. SDI did not raise any money through the listing.

• In a dealbreak, ANZ (ANZ AU) will either have enough capital in a downturn or excess capital it could use to buy back stock. If behavioural remedies, SunCorp is cheaper. 
• Jardine Cycle & Carriage (JCNC SP)‘s implied stub value is around its highest-ever level, dating back to 2004.
• There is no good reason to be long Adani names, even if GQG is up 25% on his money so far.

• Samsung announced that it would reduce memory chip production in light of crashing profits, this is after the company had previously said it would not reduce production. Memory names rallied.
• Hon Hai announced a $820m investment plan for EV manufacturing in southern Taiwan.
• Japan’s semiconductor manufacturing equipment export restrictions targeting China will take effect starting in July.

• In Part 1 of this series, we emphasized that despite the considerable hype and fear-mongering surrounding it, ChatGPT and recent development in the field of AI deserves a closer look.
• Then we explored ChatGPT’s basic capabilities.
• If you just look at the summary of what it can do, you might conclude that we have just invented a magical unicorn that spews rainbows across the sky as it flies.

• Unlike every other (far larger & richer) social media site, Elon Musk has declared war on Substack and anyone who dares post there as well as on Twitter. 
• It’s the kind of petty retaliation he’s well known for, and a stunt he could repeat against any publishing platform that displeases him for any reason.
• His bullying will continue until morale improves. Or until he achieves universal adoration, whichever comes first.

• In this insight, we discuss a pair trade between KT Corp (030200 KS) (go long) and LG Uplus Corp (032640 KS) (go short).
• The three major reasons for going long on KT Corp include a) the potential inclusion in MSCI Korea Standard index, b) attractive valuations, and c) a new CEO. 
• KT Corp is a potential inclusion candidate for MSCI Korea Standard index in May 2023. With foreign room at 17%, it is comfortably above the 15% level threshold requirement.

• SPX met the 4,100 long target and NDX turned higher off of 13,000 support that are expected to induce a secondary April rally.
• A push back toward SPX 4,200 will put the final touches on the buoyant April recovery cycle toward SPX 4,200/20. There is risk the rally falters below 4,200.
• US 10yr yield hovering above 3.20% lower wedge support per call for an undershoot below 3.35%. 

• Our base case valuation of Gigavis IPO is target price of 61,755 won per share, representing 56% higher than the high end of the IPO price range.
• We estimate the company to generate sales of 126.6 billion won (up 27% YoY) in 2023 and 150.9 billion won (up 19.2% YoY) in 2024.
• Our base case valuation is based on 21.8x P/E using our estimated net profit of 35.9 billion won in 2023.

• X2M Connect (ASX:X2M), which is focused on digitising the utilities sector across APAC,  has secured $1.8m in hardware water quality sensor sales in China with three new contract.
• The contracts bring the contribution from China to $3.4m this financial year which exceeds the revenue generated from China in FY22;
• While this announcement is in our numbers, it provides comfort for both near-term and longer-term estimates as units in the field support future recurring subscription fees.

• X2M Connect Ltd (ASX:X2M) has developed and is commercialising a patented proprietary Internet of Things (IoT) solution predominantly focused on the utilities sector across the Asia Pacific region, converting legacy meters into smart meters.
• The company has announced it has secured $1.8m in hardware water quality sensor sales in China with three new contracts.
• The contracts bring the contribution from China to $3.4m this financial year to date which exceeds the revenue generated from China in FY22.

• There is only one factor that could have affected KT’s foreign flow in mid-February, and that is the repurchase of its shares.
• If KT continues its buyback at the current pace, which is highly likely, we can bet that the foreign room will not fall below 15% until MSCI’s review period.
• This implies an essential premise for us to set up a more aggressive preemptive position on KT.

• Xiaomi Corp (1810 HK) ’s share price has been down more than 10% over the last 12-months with weakening of the company’s earnings particularly the smartphone business.
• Xiaomi’s entry into premium segment has not much helped its smartphone biz as it faces stiff competition from Apple and Samsung in the premium segment.
• The company spends aggressively on EVs to drive growth, however, with EV subsidies not renewed and intense competition, this may not help Xiaomi in the near term.

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 2Q 2023. 
• The excessive gaps in the preferred and common shares of CJ Corp, Samsung Electronics, and LG 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 SDI which have especially high discounts for the preferred shares versus their counterpart common shares.

• This is our first report on a telecommunication giant, Vodafone Group ADR.
• The company produced a resilient financial performance in 2022.
• We initiate coverage on the stock of Vodafone Group with a ‘Buy’ rating.

• In this insight, we discuss another very interesting situation brewing which is the potential family feud at the DB Group.
• One of the scenarios of the Kim family at DB Group is a sibling conflict between Nam-Ho Kim (Chairman) and his sister Ju-Won Kim.
• Our base case valuation of DB Inc is target market cap of 488 billion won or 2,428 won per share, which is 36% higher than current price.

• At the 3rd March Scheme Meeting, just 55.5% of Pushpay Holdings (PPH NZ) shareholders voted for BGH/Sixth Street’s NZ$1.34/share Offer. At first glance, that was that.
• But uniquely in the M&A world, BGH/Sixth Street returned on the 16 March with a NZ$1.42/share Offer, a bump of 6%, around the mid-point of the independent expert’s valuation range.
• The revised Scheme Booklet is now out with a new vote to take place on the 27 April.  Key shareholders and the IE are supportive. Implementation is estimated late-May.

• Taiwan ADR premiums have continued to decline; a long holiday in Taiwan has opened up some rare opportunities given U.S. markets kept trading.
• UMC ADR’s are trading at a rare relatively deep discount and represent an opportunity.
• ChipMOS ADRs are also trading a rare relatively deep discount and are another opportunity to long the ADR spread.

Light Science Technologies Holdings has conditionally raised £1.5m (gross) through a placing and private subscription at 1p/share. The company also intends to raise up to £0.5m (gross) at 1p/share via the Winterflood Retail Access platform. The proceeds will predominantly be used for product development and intellectual property protection in the company’s controlled environment agriculture (CEA) division, as well as for general working capital purposes.

• ATEN continued to experience a slowdown in orders management had cited when the Company reported fourth quarter 2022 results
• ATEN is forecasting first quarter revenue of $56 million to $58 million compared to our estimate of nearly $67 million
• We are making changes to our earnings model including lowering our full year revenue estimate.

Solid State’s trading update confirms that trading continued strongly during H223, resulting in record revenues of c £125m and adjusted profit before tax of at least £10.5m in FY23. Consensus PBT estimates for FY23 and FY24 have not been changed, but consensus revenue estimates have been raised by 4% and 2%, respectively, for FY23 and FY24.

• Hon Hai reports start of production for electric tractors in the U.S., and separately its founder is seeking the support of Taiwan’s KMT party to run for Taiwan president.
• The extreme Delta Thailand vs. Delta Taiwan valuation disconnect has finally reverted hard; Delta Thailand shares have crashed recently relative to Delta Taiwan not trading.
• The long holiday has opened up some rare ADR discounts for Taiwan dual-listed names.

• Our base case valuation of CUBox is target price of 34,172 won per share, which is 47% higher than the high end of the IPO price range of 23,200 won. 
• Our base case valuation uses our estimated sales of 24.5 billion won for the company in 2023 and P/S multiple of 17.2x.
• Given that CUBox is a leading player in the AI technology driven facial recognition in Korea, many investors are likely to pay higher premium for its technology. 

• Pushpay Holdings (PPH NZ)’s NZ$1.42 revised offer from Sixth Street/BGH is around the midpoint of the IE’s unchanged valuation range of NZ$1.33 to NZ$1.53 per share.
• Class 3 shareholders are the key vote. On the assumption of a similar voter turnout to the last scheme, 81.3% of Class 3 shares will vote for the scheme.
• This is a done deal. At the last close and for the 17 May payment, the gross and annualised spread is 2.2% and 21.4%, respectively.

EQS remains in the frustrating position of having a strong commercial proposition in digital whistleblowing still awaiting the impetus of full legislative implementation in its home market of Germany. The timing of this boost remains uncertain, so some caution is built into current year guidance, which is predicated on the law coming into full force in Q323. Financial results will therefore be weighted to H223. The strategy remains sound, in our view, in establishing a much wider pool of customers for cross- and up-selling of other corporate compliance cloud-based services. Upcoming EU regulation on ESG monitoring and reporting should provide substantial further opportunities. Despite the delays, the shares continue to trade well below the level indicated by our DCF.

• This is our first report on the American software giant, Pegasystems Inc.
• The company ended 2022 on a positive note with an all-around beat and a 16% ACV growth.
• Pega Cloud innovation has sped up adoption, and they have made great strides toward modernizing its clients.

• Pegasystems Inc is a major player in the enterprise software fomain.
• Pega Cloud innovation has sped up adoption, and they have made great strides toward modernizing its clients.
• Our credit report caters to all forms of stakeholders, particularly lenders and fixed income or yield investors in the company.

• Time spent on apps increased by 15% in China in 2022.
• In 2022, total advertising market decreased by 9%, but online advertising market increased by 1%.
• We believe online advertising market will grow significantly higher than total advertising market in 2023.

• Gigavis is offering 2.22 million shares in this IPO. The expected market cap of the IPO is from 436 billion won to 503 billion won.
• The maximum IPO offering amount is 88.1 billion won. The IPO price is between 34,400 won to 39,700 won.
• Gigavis makes automatic optical repair equipment (AOR) for the semiconductor industry. 

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. •1) Response to key levels. •2) Price action. •3) Momentum confirmation.
• LT RSI’s typically maintain a 40-80 range in sustainable uptrends and a 20-60 range in sustainable downtrends. Quarterly RSI has maintained a 45-85 range since 2001 (LT uptrend bias).
• The material correction of 2021/2022 has produced a high probability confirmation of a renewed LT uptrend (quarterly Morning Star pattern). Minimum target range at 74300/79610 (+15-25%) in the coming year.

• In Q1 2023, 86 different Hong Kong-listed companies bought back shares either locally or on foreign exchanges. Total buybacks were HK$22.856bn.
• 8 Companies made up 90% of the total. On average, they bought back shares 4 days out of every 10 within the quarter. 
• A lot of the smaller companies doing buybacks were significant portions of their volume.

• The banking crisis and ongoing regulatory crackdown have upended crypto market structure, leaving an uncertain dynamic among the world’s largest exchanges.
• Over the past two weeks, Binance has lost 16% market share of trade volume following a CFTC lawsuit and the decision to end its zero-fee trading program.
• The exchange remains the largest in the world with 54% dominance. 

• One of the greatest things that many believe the blockchain can unlock is a better ticketing experience.
• That’s because this specific user experience across music, sports and entertainment, in general, is yet to enter the 21st century if we’re frank.
• A recent trial by Ticketmaster however seems to show that even the industry’s biggest players are taking blockchain technology and NFTs seriously.