TMT/Internet

• Some low liquidity stocks in the TOPIX Index carry a liquidity factor of 0.75x resulting in their actual index weights being smaller than their default weights.
• These names are reviewed every April and if the liquidity factor of a stock gets removed, the stock will enjoy buying flows from passive trackers of TOPIX.
• In this insight, we take a look at Quiddity’s final predictions for the names that are likely to see their Liquidity Factors removed in April 2023.

• Bloomberg reportedHKBN Ltd (1310 HK) has received a takeover offer from HGC Global Communications at a valuation of more than US$1 billion (implies around HK$6 per share).
• The shares rose 11.6% to HK$5.59 before entering a trading halt. The rumoured price is underwhelming compared to historical multiples and share prices. 
• HKBN has a relatively concentrated shareholder register which suggests that the rumoured takeover premium of around 20% is not going to cut it.

• Another valuable long-short opportunity has arisen this time with K-New Deal rebalancing. The pair consists of Douzone Bizon and KMW, which have switched places in the Internet Index’s top three.
• Due to their relatively low trading volume, the passive flow size (x ADTV) that this pair will face at the closing price on March 9th is expected to be significant.
• This creates sufficient opportunities for a Long-Short setup in terms of day or swing trading. As KMW is a constituent of the KOSDAQ 150, it is possible to short KMW.

• We discuss end of the mandatory lock-up periods for 35 stocks in Korea in March 2023, among which 8 are in KOSPI and 27 are in KOSDAQ.
• These 35 stocks on average could be subject to further selling pressures in March and could underperform relative to the market. 
• Among these 35 stocks, the top 5 market cap stocks include Nh Investment & Securities, WCP, Bionote, Jeio, and Dreamtech. 

• IQIYI Inc (IQ US) ‘s share price is up 30.8% YTD primarily driven by upbeat 4Q2022 results. The main highlight was strong increase in members alongside improvement in OPM.
• The company’s aggressive cost cutting measures have helped reach operating profits, however, we don’t think this is sustainable given user growth depends on content.
• We expect iQiyi’s 1Q2023E results to be strong driven by the launch of The Knockout series, however, further cutting down costs will impact the company’s long-term prospects.

• The recently announced Meta Verified could generate an incremental $2.2B in revenues.
• Incremental layoffs being reported could amount to $5B in incremental savings this year.
• Between the two reports, we could easily see 10% upside to EPS.

• Share buybacks and stock-based compensation also will be an important part of the upcoming earnings release.
• GAAP operating profitability will be in the spotlight as the company lays off a significant amount of its workforce.
• The level of share buybacks will be a key part of Salesforce’s growth strategy.

• ChipMOS results missed expectations with capacity utilization falling, dragging down profitability.
• The company sees 1Q23E as the bottom for its performance, followed by a 2Q23E rebound. However, it says it believes the Memory industry may take longer to recover.
• We believe ChipMOS is cheap if one looks through the cycle, and it is relatively unloved by the Street hence the expectations bar is set low.

• SHEN reported better than expected fourth quarter revenue as more customers subscribe to faster broadband speeds
• Our focus is on the seasonally low number of customer additions in the quarter even though SHEN was building out its optical fiber network.
• Our negative bias has been built on SHEN’s capital expenditure plans requiring the Company to build debt and the timing of when SHEN would reach free cash flow positive

• We conducted interviews with Temu and Shein merchants. We expect Temu to be more aggressive in expansion. Most metrics of Temu are improving, and it creates increasing pressure on Shein. 
• Yet, investors should be aware about Temu’s widening losses and the possible margin drag in the domestic eCommerce business due to the subsidy campaign launched by JD.
• We revised our forecasts on Temu’s GMV/non-GAAP net loss in 2023 from USD 2bn/(1)bn to USD 5bn/(3)bn. We cut PDD’s TP to US$100.

• Grab Holdings (GRAB US) 4Q2022 numbers late last week made encouraging reading with revenues exceeding expectations significantly despite slow GMV growth in the quarter, as it maintained regional category leadership.
• The company saw continued improvement in segment-adjusted EBITDA margins in 4Q2022 versus 3Q2022 for both mobility and deliveries, with the latter making significant progress towards steady-state margins. 
• Grab‘s relatively high regional cost remains a drag but should stabilise here and outside this, it looks to be firmly on track to accelerate profitably. 

• PCCW Ltd (8 HK)‘s FY22 revenue, EBITDA, and profit increased by 2%, 6%, and 11% to HK$36.1bn,  HK$12.4bn, and HK$834mn.
• HKT Ltd (6823 HK)‘s revenue, EBITDA, and profit increased by 0.5%, 3%, and 0.4% to HK$34.1bn,  HK$13.1bn, and HK$4.7mn.
• The dividend pass-through is 100%. PCCW’s current discount to NAV is in line with its 52-week average.

• BABA reported F3Q23 (C4Q22) total revenue largely in line with our est. and cons. Non-GAAP net profit beat our est. and cons. by 5% and 13% YoY.
• Taobao will face pricing pressure against JD and PDD. We expect BABA to focus on user content, which leads to improvement in app time spent and advertising. 
• We cut TP from US$130 to US$110 to reflect intensified competition in eCommerce. Maintain BUY rating due to recovery in CMR and international retail, and rebound in cloud business. 

• Vision Fund II private companies accounted for 87% of the fund’s 3QFY22 fair value; versus investment cost, private companies’ downward valuation revisions have been more modest than the public companies
• Vision Fund II accounted for 22% of the group’s 3QFY22 equity value of holdings, so any further downward valuation revisions would hurt group NAV and add to Masa’s Softbank liabilities
• Softbank currently trades at a 42% discount to its stated NAV; we believe that the stated NAV is likely to be overstated, with private company valuations needing further scrutiny

• Baidu delivered 4Q22 results with top line beating cons. by 3.2% and non-GAAP net income beating cons. by 13.4%. 
• We expect both its ads and AI cloud businesses to recover with accelerated pace, which could partially offset the increase of R&D investment in AI related technologies.
• Reiterate BUY rating and slightly raise TP to US$ 172 to reflect the on-track recovery and AIGC synergy. Our TP implies 17.9x PE in 2023.

• NetEase’s 4Q22 revenue was in-line with cons., while its non-GAAP net income missed cons. by (8%) because of a one-off, non-renewal contract with Blizzard.
• We still see NetEase as a BUY because of <Eggy Party>’s overseas publishing and <Justice Mobile>, which we estimate will contribute about 1-2bn/3-4bn RMB for annual gross billing, respectively. 
• We maintain BUY and TP US$ 87, which implies 16.0X PE in 2023.

• Chinese food delivery giant Meituan launched a recruitment campaign in Hong Kong signaling a push into the Asian financial hub dominated by foreign on-demand service leaders foodpanda and Deliveroo.
• Meituan is hiring delivery workers including motorcycle and bike riders as well as so-called foot soldiers who can dispatch orders by foot, a recruitment document showed.
• As an incentive, Meituan said new riders who complete a certain volume of orders will receive a bonus of HK$2,500 ($319).

• Microsoft is improving its search market share, according to analysts.
• The arrival of ChatGPT hammered Alphabet stock may be ahead as revenue effects sink in, says analyst.
• The company is also improving its market share and improving its search market share.

• The U.S. is reportedly working to implement China semiconductor restrictions with South Korean firms, after doing the same with Japanese and Dutch firms.
• Nanya management sees a bottom for Memory prices in 1Q23E; we look at Long Micron vs. Short Nanya.
• Firms are significantly expanding semiconductor capacity in Singapore, with the latest being Applied Materials and French firm Soitec.

• IceKredit, a Chinese AI-focused credit risk and management company, plans to export its AI-powered products and solutions to financial institutions in Southeast Asia.
• Founded in 2015, IceKredit helps lenders to establish an automated end-to-end digital lending process – from application pre-screening to collections – by providing risk mitigation products and services.
• In the past two years, the firm has raised over US$58 million in series C funding, a large part of which will be used for its Southeast Asian expansion, the company says.

• The index committee has continued to use a 6-month minimum listing history leading to five changes to the SSE STAR50 (STAR50 INDEX) in March.
• One way turnover is estimated at 4.95% and will result in a one-way trade of CNY 4,413m. The estimated impact on the deletes is higher than that on the adds.
• The inclusions have outperformed the deletions over multiple time periods. There will be pre-positions on the stocks and those could be unwound over the next week or two.

• Meituan has been hiring delivery workers in Hong Kong since February 20.
• JD will provide a subsidy of RMB1.5 billion to customers to compete with Pinduoduo (PDD) in early March.
• Four companies released financial performance for 4Q22, including Baidu, iQiyi, NetEase, and Sohu.

• Intel cut its dividend by 2/3rd, freeing up $4B in cash.
• The company revised own capital intensity guidance for 2023 to low 30s% from 35%, while maintaining 24/25 guidance.
• Recent $11B debt raise and Mobile eye shares should provide enough capital for the next year.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China Jinmao Holdings
• Lenovo
• China Datang Corp Renewable Power

• BABA’s December results highlighted how the performance of this e-commerce giant – as a proxy for China consumption – increasingly tracks Chinese economy.
• The Alibaba that suffered from China’s slump in 2022 should also be the Alibaba that stands to reap the fruits from China’s recovery in 2023.
• Trading at 12x PE on the cusp of economic recovery, the payoff of BABA is much better for bulls than bears. Maintain $500 billion target valuation. Buy.

• Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a potential Long/Short.
• The Nvidia chips Hon Hai is partnered with to use in its EV autonomous driving systems are based on 7-nm technology, thus restricted for any mainland China competitors.
• On the Apple front, Hon Hai is also reported to have won exclusive production for the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max.

• Fortinet had a mixed set of fourth-quarter results with revenues failing to meet Wall Street expectations despite market share gains.
• The company succeeded in delivering an earnings beat and held on to its market positioning.
• Its 42% product revenue growth has made the company one of the top product revenue companies in the cybersecurity industry.

• Long Micron vs. Short Nanya – We remain biased to Long Micron vs. Nanya Technology based on multiple factors.
• Relative valuation and inventory management appears to favor Micron. Nanya Technology’s inventory days blow-out increases risk of write-downs impacting its next earnings.
• Potential news flow also appears to favor Micron as the US CHIPS Act rolls out.

• Shopify delivered an all-around beat in the previous quarter and ended 2022 on a positive note.
• The company introduced Shopify Audiences, Shopify Collabs, POS Go, Tap to Pay, integrated Twitter Shopping and YouTube channels, and continued to expand the Shop app to make it simpler for retailers to interact with and develop relationships with customers.
• They also introduced Shopify Markets and Markets Pro.

• Despite ongoing difficulties with the global economic environment, Akamai produced strong results in the fourth quarter, exceeding market expectations in terms of both, revenues as well as earnings.
• Their rapidly expanding Compute business, the sustained high demand for their security solutions, and higher-than-anticipated shipping traffic contributed to their revenue growth.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Synopsys had a strong start to the year and managed to meet the revenue expectations of Wall Street driven by its execution and robust technology portfolio.
• The company saw $6.9 billion in noncancelable backlog despite slower revenue growth in the semiconductor industry and robust, steady, time-based business models.
• Synopsys has a wide IP portfolio and they expect a continuance of designs, requiring more communication bandwidth, processing, storage, and security in ever more sophisticated silicon technologies.

• Cisco Systems delivered another strong quarter, exceeding the top and bottom line expectations of analysts.
• The company saw consecutive double-digit growth in its customer markets’ commercial and enterprise sectors, and the public sector performed better than usual.
• We give Cisco Systems a ‘Hold’ rating with a revised target price.

• Grab reported 4Q2022 results yesterday. Q4 revenue more than quadrupled to $502m (vs consensus $403.48) while reported a negative adjusted EBITDA of $111m (vs consensus $137m) vs $305m in 4Q2021.
• Deliveries business went on to report positive adjusted EBITDA driven by improvement in take rate coupled with reduction in total incentives.
• Grab Holdings (GRAB US) share price dropped 8.29% at the end of yesterday’s trade despite the company accelerating its profit timeline to breakeven in 4Q2023 vs 2H2024 previously.

• American Tower stated during FY 2022 results presentation that debt reduction is its main priority. The probability of a takeover bid for Cellnex by American Tower and Brookfield is reduced.
• Cellnex on 14.7x EV/NTM EBITDAe is trading cheaply vs. AMT on 19.5x and below private equity deals at 25-30x. I believe that Cellnex’s fundamentals are solid, and would be long.
• Cellnex is the undisputed European leader in telecommunications towers with both high cash flow visibility (growth forecasted at 18% for the period 2021-2025e) and trading at 7.3% 22e FCF yield.

• Zee Entertainment Enterprises (Z IN) have yet again been bombarded with a corporate hurdle since the NCLT has admitted the company into CIRP relating to Siti Cable Network (SITINET IN).
• It is found that ZEEL has created provisions in the balance sheet, however it should be noted that the CRIP might lead to cash outflow in future. 
• Apart from the current CIRP, ZEEL also has other litigation risks that should not be overlooked.

• Nvidia’s risk-reward profile remains unattractive, according to the company’s recent earnings report.
• Nvidia’s stock-based compensation also highlights some problems related to inventory levels and the amount of stock- based compensation.
• The company’s share price has risen 14% following recent earnings, the report says.

• Tencent faced formidable resistance at 385 where old lows and old highs coincided and was our short level outlined on January 17.
• 300 is our base line downside target. March will be a bearish month. Buy zone at sub-300.
• Macro is constructive if 270 holds. Current decline is labeled a deep correction of the October to late January rally.

• Airbnb had a solid year in 2022 with revenues growing 40% year-over-year.
• Moreover, they saw that guest bookings for trips continued to rise, maintaining a robust backlog for Q1.
• Excluding all of the Mainland China listings, the team increased supply by 900,000 listings, or 16%, in comparison to a year ago.

• Gartner drove a strong performance with double-digit growth in contract value, revenue, EBITDA and EPS.
• Its research business continues to be its greatest and most lucrative segment, with a 9% year-over-year increase in revenue.
• In addition, they helped 9 of their top 10 countries experience double-digit growth, with the tenth experiencing high single-digit growth.

• A rather unusual price movement came out on February 20 for HLB. On the first trading day after the board of directors’ decision, the price reached the upper daily limit.
• The short covering got to a temporarily excessive level in the process of securing appraisal rights should be the reason that led to the upper limit.
• We should design a trading setup targeting excessive short covering-triggered price overheating in split-off events. At this point, the most likely candidate to pursue a split-off is DB Hitek.

• Following several years of sustained revenue share loss, Search’s digital advertising revenue market share has stabilised, having seemingly retained its core advertising customers.
• With China’s economic growth recovery, Baidu is perfectly positioned to accelerate its core marketing revenue growth, which is also a high-margin operation.
• Baidu is set up for significant group margin expansion as the higher-margin core marketing business returns to positive annualised growth and it continues to expand AI Cloud margins.

• Potentia has returned with an improved three-part offer for Nitro Software Ltd (NTO AU). The base offer of A$2.17 is 0.9% higher than Alludo’s A$2.15 offer. 
• The offer could rise to A$2.20 or A$2.25 per share based on hitting additional conditions. There is a clear path for the final offer to reach A$2.20 per share. 
• A A$2.25 per share offer is unlikely due to the onerous 25% scrip acceptance condition. At the last close, the gross spread to the likely final A$2.20 offer is 0.5%.

• We’re now two-thirds through the Taiwan Semiconductor earnings season and about one-third through the Taiwan Hardware earnings season.
• Semiconductor gross margins declines have been relatively large, and we believe are tracking to be worse than what consensus expected going into the earnings season.
• There have been few examples of inventory situations improving for semicondcutor companies; results data released so far indicates a potentially deeper trough than previously expected.

• The three companies Nvidia, TSMC, and ASML are all key global leaders in the AI industry chain.
• Nvidia’s latest results indicate that the company could be returning to a period of multi-year growth and an inflection point for AI demand.
• One can consider going Long a basket of Nvidia, ASML, and TSMC based on a structural growth thesis for AI demand.

• U.S. Commerce Secretary gave a new speech providing additional public detail about the U.S. CHIPS Act aimed at re-shoring the manufacture of semiconductors in the U.S.
• Emphasis on national security means that financial cost is now secondary for the U.S. and we should not expect any loosening of chip restrictions for China.
• Taiwan companies are straddling a “sweet spot” given they are not restricted, can invest in the U.S. expansion, maintain local non-U.S. advantages, and have had their China-based competition weakened.

• Kratos Studios, a Web3 gaming venture based in India, has raised about US$20 million in seed funding at a valuation of US$150 million.
• The round was led by Accel and saw participation from Prosus Ventures, Courtside Ventures, Nexus Venture Partners, and Nazara, among others.
• Kratos was built by Manish Agarwal, previously CEO of gaming company Nazara, and Ishank Gupta, a former executive at multinational firms like Belgian brewing firm Anheuser-Busch InBev.

• NVIDIA yesterday reported Q4 2022 revenues of $6.05 billion, in line with their forecast, down 21% from a year ago and up 2% sequentially.
• Interestingly, NVIDIA’s current downturn is playing out almost exactly like their previous downturn back in 2019 as can clearly be seen in the above chart.
• We expect to see this same recovery pattern continue throughout the remainder of 2023.

• Although the sell-side has lowered their immediate and medium-term targets, our analysis points to another surprise to the downside for Sea Ltd (SE US) in 4Q22.
• Having exhausted pretty much all the cost-cutting in the past few quarters, we don’t see much room for Sea Ltd to further reduce its losses in the e-commerce business.
• With the sell-side optimistic once again expecting a narrower loss, a big miss in the fourth quarter could send Sea Ltd shares back towards their Nov 2022 lows.

• Alibaba (BABA US) is set to report earnings tomorrow on the 23rd
• Stock has pulled back from the highs but earnings could be the next catalyst to determine direction
• We use the derivatives market to extract market expectations and suggest some suitable trades

In the upcoming webinar, Datuk William will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.

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• IQ released a set of clean-beat 4Q results, marking the end of turnaround and the start of high-quality growth.
• Years of investments in original content production capabilities paid off and solidified IQ’s leadership in China’s long form video industry. 
• Successful refinancing removed debt overhang. We expect IQ to generate RMB3.5 billion net profit out of RMB32 billion revenue for 2023 and see further upside to share price.  

• Huge operating margin and FCF beat as PANW is maintaining efficiency with slower headcount growth and supply chain issues abating supporting gross margins. 
• Deal sizes continue to grow dramatically: $1M deals grew 20% YoY, and  transactions size grew nearly 60%. $5M+ deals grew 84% YoY and $10M+ deals grew 140%.
• Prisma’ Access’ SASE product continues to be the catalyst driving 2.5x revenue lift vs. legacy firewalls.

• GoTo (GOTO IJ)  announced last week that it is accelerating its profit targets and aims to achieve positive adjusted EBITDA by 4QFY2023, advanced by five quarters.
• The company also expects Group’s contribution margin to become positive within the first quarter of 2023 accelerated by four quarters compared to the company’s previous guidance.
• Having analyzed the company’s revenue and cost base, we think this is too much to ask for as aggressive cost cutting would lead to giving up future growth opportunities.

• Results have come out for both companies. Delta Thailand has delivered massive growth in 2022 however in 2023 consensus expects Delta Taiwan to grow faster.
• One way to outperform the Thailand SET Index in 2023E could be to simply hold the index stocks but exclude Delta Thailand.
• By essentially any fundamental metric, Delta Thailand is over-priced relative to Delta Taiwan and it’s hard to see what the next outperformance driver could be in 2023E.

• After Alludo stated its $2.15/share Offer price was ‘best and final’, even if a superior proposal emerges, the ball was in Potentia’s court to just sneak in above those terms.
• And so they have, with a $2.17/share unconditional Offer for Nitro (NTO AU), increasing to $2.20 if they get to 75% interest, and $2.25 if ≥25% tendering opt for scrip.
• Expect Nitro’s board to announce its unanimous support for Potentia’s revised Offer. Expect Alludo to cash in as tendering nears 75%. 

• Lattice Semiconductor had a solid 2022 and ended the year on a positive note with an all-around beat.
• The company increased its product portfolio and its core strategic markets for industrial, automotive, communications, and computing had a 28% increase in annual revenue.
• Besides, the industrial and automotive market experienced double-digit growth for the third year as full-year revenue grew by 41%.

• Fiserv had a decent 2022 and managed to surpass the revenue expectations of Wall Street in its last result.
• The company’s better-than-expected growth against the challenging backdrop was a result of growth in organic revenue, improvement in operating margin, and adjusted earnings per share.
• Fiserv also advanced its core banking cloud roadmap for its new and existing clients with the acquisition and integration of Finxact.

• Looking at the recent pattern, SKT’s fast-rising is quite noticeable. Its foreign room rose to 12.08%. On the other hand, KT’s foreign room growth seems to be slowing somewhat.
• SKT’s pace is fast. If the current pace continues, there will be even the possibility of inclusion with a full adjustment factor of 1.0, exceeding 25%, by the August review. 
• We should design a momentum trading setup targeting the point when SKT’s foreign room decline trend will be reflected into an MSCI re-inclusion momentum.

• Alibaba Group (9988 HK)‘s 3QFY23 results scheduled to release this Thursday is yet again going to be somewhat disappointing with our analysis indicating around RMB35.0bn OP cf. RMB49.7bn in 3QFY21.
• Nevertheless, 3QFY23 results could beat the conservative consensus revenue estimate by 2.8% while the OP is likely to be in line with consensus.
• Having risen 100%+ in few months, a small beat is unlikely to drive-up the share price any longer. Renewed US-China tensions are likely going to be a much bigger driver.

• The Scheme Meeting for BGH/Sixth Street’s NZ$1.34/share Offer for church donor management play Pushpay Holdings (PPH NZ) will take place on the 3 March.
• Accident Compensation Corporation (ACC), holding 6.2% of shares out, said it will vote against the Scheme. Nikko Asset Management (1.4%) also said they will reject the Offer. 
• Shares have wobbled and are now 5.5% adrift of terms. BGH/Sixth Street still has the flexibility to bump.

• Alludo has declared its Offer of A$2.15 cash per Nitro Software Ltd (NTO AU) share free from all remaining conditions.
• Separately, Potentia’s due diligence is expected to conclude tomorrow, the 22 February, with the expectation it bumps its current offer of A$2.00/share.
• Currently trading at A$2.20 per share suggesting limited upside from here. 

• Shareholders representing around 12.6% of outstanding shares have stated that they will vote against Pushpay Holdings (PPH NZ)’s NZ$1.34 offer from Sixth Street/BGH (scheme vote on 3 March). 
• The NO votes will need a less than 63% turnout to block the scheme. A 5% bump (NZ$1.41) would be in line with the IE’s valuation mid-point at current FX.
• Sixth Street/BGH have taken issue with the IE’s valuation (unsuitable FX rates and optimistic forecasts) and have got proxy advisors’ support. Therefore, a bump is not a sure thing. 

• Kuaishou Technology (1024 HK) will report 4Q2022 and full-year results on 23rd March 2023.
• The company’s livestreaming revenues have made significant progress since 4Q2021 while its domestic business reported an operating profit for the first time in 3Q2022.
• Though the company’s share price has not moved up yet, we think there is further upside to the current share price driven by improved earnings.

• The index constituent weights of the TWSE Div+ Index will be capped during the upcoming March 2023 Index quarterly index review. 
• Previously, it looked like there were going to be no flows. However, now my expectations have changed, as of Monday’s close (they weren’t going to change as of Friday).
• In this insight, we take a look at Quiddity’s expectations for index flows resulting from these events. 

• Contemporary Amperex Technology Co. Ltd. (CATL), the world’s largest electric-vehicle (EV) battery-maker, is in talks to offer automakers steeply discounted prices in exchange for sourcing the vast bulk of their power cells from the company in a bid to stave off growing competition from smaller rivals, Caixin has learned.
• If the plan goes ahead, CATL will sell the strategic clients EV batteries made from self-manufactured lithium carbonate at a low price.
• In return, they will be required to sign a contract committing them to buy 80% of their EV batteries from CATL over the next three years, a person close to the company told Caixin on Sunday.

Lenovo has posted weak Q3/22-23 results. Revenue dropped 24% y-o-y to USD 15.3 bn, with gross profit down 22% at USD 2.6 bn and operating profit declining 20% to USD 750 mn. Net profit fell 32% to USD 437 mn. Positively, liquidity remains sound, with over USD 5 bn of cash and USD 20 bn of undrawn credit facilities. OCF stayed positive at USD 74 mn.

• Singapore-headquartered last-mile internet connectivity startup Transcelestial Technologies has received US$10 million in a Series A extension round.
• Existing investor Airbus Ventures led the round, with participation from Kickstart Ventures, Genesis Alternative Ventures, Wavemaker, Cap Vista, and SEEDS Captial. In-Q-Tel had also joined in a previous undisclosed round.
• The new round brings Transcelestial’s total investment raised to date to US$24 million.

• Berkshire’s TSMC U-Turn. Berkshire’s TSMC stake was sold down by 86.2% just months after acquiring it. One had to wonder what the about-face on the investment was based on.
• Applied Materials results well received by the market, however provided some caveates in terms of how fast the Memory chip industry recovery will come. (Readthrough: Nanya Tech, Micron, SK hynix)
• TSMC believes that the automotive chip crunch is now easing, which should be good news for the auto industry, especially EV.

• TY Holdings (363280 KS) is the 19th company in our Korea Small Cap Gems series.
• Our NAV analysis of TY Holdings suggests NAV of 925.5 billion won or NAV per share of 18,172 won per share, which is 47.4% higher than current share price.
• The key catalysts include earnings improvements at SBS and Ecorbit, potential corporate activism on SBS, and potential change in regulation to allow foreigners to invest in SBS (terrestrial broadcasting company). 

• This weekend at the NBA All-Star weekend, we saw the NBA commissioner Adam Silver unveil an in-game streaming experience which had the internet in awe.
• Many have decided to brand the ‘Metaverse’ a sham, a dystopian digital experience or something that just plain won’t work.
• When Mark Zuckerberg changed Facebook’s name to ‘Meta’ to indicate the direction of travel he thinks the world is heading in — we should probably have sat up and said “there might be something there”

• Arista delivered an all-around beat in the last quarter to finish 2022 on a positive note.
• Renewals of services and software support made up about 15.8% of the total revenue in the year.
• Arista added SONiC functionality to its high-volume switches to further strengthen its collaboration with Microsoft.

• Cloudflare had another strong quarter despite a challenging macroeconomic environment.
• The company delivered an all-around beat and its revenue increased by 42% year over year to $274.7 million.
• They had 2,042 major customers at the end of the quarter, up 134 over the previous quarter and 44% over the same period last year.

• Motorola’s Q4 results were an all-around beat as the company is seeing a strong demand for its business security products.
• In the quarter, the company increased operating margins by 150 basis points, revenue by 17%, and profits per share by 26%.
• They experienced 14% revenue growth in their Products and Systems Integration business, led by strong growth in both LMR and video security.

• Srisawad Power 1979 (SAWAD TB) is likely to join the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) in early March following the DTAC/TRUE merger.
• Then there should be one change in June with Thai Life Insurance (TLI TB) replacing Jaymart PCL (JMART TB) in the index.
• There is one stock close to failing the liquidity test and that could lead to another change with a few stocks vying for index inclusion.

• Chinese online game revenue decreased year over year for the first time since the statistic started.
• From 2018, the Press and Publishing Administration had significantly reduced the number of new game license.
• Short video has been gradually taking time on site from online game.

• The Chinese online game market shrank for the first time in 2022.
• Tencent’s WeChat plans to launch a cooked food delivery platform.
• Douyin dismissed 15% employees in PICO, which is Douyin’s virtual reality team.

• TSMC – Premium holding up despite Berkshire investment sale news. We maintain a model on the company.
• UMC – ADR now trading at a discount. Pretty clear opportunity for a reversion back to a premium.
• ChipMOS – At parity, results coming February 23rd. We maintain a model on the company.