TMT/Internet

• 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.

• The announcement of the changes to the FTSE GEIS was made on Friday post market close. Friday was also the cutoff for the March review of the S&P/ASX indices.
• Monday is the review cutoff for some indices, while Friday is the announcement of the changes to the Hang Seng family of indices and the SSE STAR50 (STAR50 INDEX). 
• There were big outflows from the IShares Edge MSCI Min Vol Emerging Markets ETF (EEMV US) for yet another week taking YTD outflows to nearly US$3bn.

• AMD’s revenue and margins hit an all-time high, and that’s bad news for AMD.
• Investors should pay close attention to decisions regarding capital allocation, according to the product roadmap.
• AMD is no longer the only game in town for semiconductors, and this is bad news to AMD.

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

• PayPal Holdings delivered strong results in the last quarter surpassing Wall Street expectations in terms of revenues as well as earnings.
• In the quarter, eBay Marketplaces revenue fell by 31%, and the take rate on these volumes dropped from 2.29% to 1.95%.
• We give PayPal Holdings a ‘Buy’ rating with a revised target price.

• Qualcomm has been witnessing various short-term challenges impacting the semiconductor industry which is why its revenues in the last result were below Wall Street expectations.
• In handsets, the recently announced Snapdragon Gen 2 mobile platform of the company in order to create AI-accelerated experiences for smartphones.
• Within IoT, multiple end industries and the handset industry continue to experience weaker demand and elevated inventory levels.

• IRDM grew the number of Internet of things (“IOT”) users in the fourth quarter to offset the seasonal maritime service decline.
• Much of the attention is on IRDM’s satellite connectivity partnership with Qualcomm (QCOM) expected to begin generating revenue in the second half of 2023
• IRDM reported fourth quarter revenue of $193.8 million compared to our estimate of $176.0 million

• Microchip had a solid fourth quarter that surpassed Wall Street expectations in terms of revenues as well as earnings.
• Microchip has also increased the raw materials inventory to protect the internal manufacturing chains.
• In terms of new launches, Microchip launched the MIC69303RT, a 3A Low-Dropout Voltage Regulator in the previous quarter.

• At the EGM held on January 31, O2Micro International (OIIM US)’s shareholders approved the Merger Agreement. Completion was subject to satisfying certain conditions, which appeared rudimentary. 
• An equity corporate action notice released yesterday (15 February) indicates the last day of trading will be the 24 February, with an effective date of 27 Feb.
• O2Micro is currently at a 2.7% gross spread. At the other end of the spectrum, Glory Star New Media (GSMG US) is at a staggering 79% spread, despite shareholder approval.

• Trend Micro Inc (4704 JP) is an interesting, but odd little company in an interesting odd little niche. They make cybersecurity products and are good at it. 
• Last summer, well-known activist Value Act Capital showed up on the tape in August with an 8.7% position. 
• What had been good dividend payout ratios are now cemented. Now there is a big buyback to return cash. Look for more. And as always, details matter. 

• We published last November about buying upside via selling call ratios and also about a vol pair trade idea versus AAPL US.
• Buffet has surprisingly exited the bulk of his stake in the chip maker causing concern that the value investor no longer sees value
• We update on the position and consider what to do next

• We expect ACMR to report C4Q22 top-line, non-IFRS operating profit, and IFRS net income in-line, 21% and 96% vs. consensus, respectively. 
• New SPE import limits provide ACMR with a multi category quasi-monopoly. Thus, we raise our FY23 market share estimate for ECD/wafer clean/furnace to 51%/32%/2% from prior 25%/25%/0%.
• ACMR’s quasi-monopoly position in multiple categories sustain its long-run growth, which underlines a 58% TP increase to US$ 30 and continued status as our top hardware pick.

• MSTR US has rallied strongly in 2023 (+138%), peaking at a new 6 month high of 315.00 on 16 February 2023.
• The 315.00 peak was plagued by extreme ST momentum failure and new highs were quick to fail and reverse.
• Our TSS methodology triggered a TSS < 10 at the high and justifies a further 10-13% decline in the coming 1-2 weeks.

• We forecast that Unity’s top line/bottom line would be 2.8% /24.7% vs cons. in 4Q22, with  synergies from ironSource merger to take effect and gaming market to gradually recover. 
• Price increase for Create segment and improved monetization for Operate segment would further boost the company’s 2023 outlook, leading to top line/bottom line beating cons. by 3%/55%.
• Due to our optimism of both industry and company uptrend, we upgrade to BUY and raise TP to US$ 48.2, implying 7.2X PS/ 159X PE in 2023.

• We estimate SEA’s 4Q22 revenue to be largely in line with cons., while non-GAAP net loss to be narrower than cons. 
• We see SEA to continue to experience challenges in top-line growth because of inflation, competition with TikTok, and weak performance of Free Fire. Yet, the losses will be better managed.
• We slightly raise SE’s TP by 6% to US$55 to reflect 4Q22’s margin beat, yet maintain SELL because of the mid-to-long-term challenges.

• We estimate JOYY’s 4Q22 top line/bottom line to miss cons. by (3%)/(12%), as TikTok’s influence in major market expands. 
• We suggest that a much slower recovery in 1Q23 does not bode well for its full year outlook. Our top line and bottom line are (2%)/(14%) lower than cons.
• Maintain SELL and cut TP to US$25.1, implying 12.8X PE in 2023.

EQS has issued a year-end trading update, showing that it achieved its targets for number of new customers and for annually recurring revenues. However, the continuing delays to the full implementation of the whistleblowing legislation in the key German market mean that the group has missed its previously published targets for revenue and for EBITDA by €1.5m and €1.3m respectively. Guidance for FY23 now reflects an abundance of caution on the likely timing of the legislative stimulus, assuming that the law is not transposed until Q323. Our new forecasts align with the lower end of the guided range for now. Despite the delays, the shares continue to trade well below the level indicated by the DCF.

• Alphabet is going through a tough period.
• The company’s stock is losing value given the expected impact of the popularity of ChatGPT on its Search revenues.
• We downgrade the stock of Alphabet and give it a ‘Hold’ rating with a revised target price.

• Amazon delivered a mixed result as its worldwide net sales grew by 12% year over year which was above the expectation of Wall Street.
• The company worked hard to secure millions of deals and offer low prices for customers this quarter, including its foremost Prime Early Access Sale and the Thanksgiving.
• In the quarter, Amazon customers spent more on everyday essentials and shifted to lower-priced and value brands in electronics.

• On 7 November 2022 we published a bullish TSS / tactical recommendation in TSM US. It was trading at 62.49. TSM US rallied 13.4% in 3 days. 
• On 15 February 2023 TSM US peaked at a new Q4/Q1 uptrend high of 98.99 amid similar extreme ST momentum failure and quickly reversed.
• Our TSS methodology triggered a TSS < 10 at the high and justifies a further 8-10% decline in the coming 1-2 weeks.

• T-Mobile has recently been in the news for suffering from a major network outage affecting around 83,000 customers.
• T-Mobile added many new customers but the company ended Q4 on a mixed note.
• Their financial results also enabled them to launch share repurchases earlier than anticipated and speed up network rollouts.

• One constituent change is expected in the BATTERY index rebalancing as Ecopro Co Ltd surpassed Iljin Materials based on the average daily market cap during the review period.
• Ecopro Co Ltd is a pure holding company, so it may not be subject to inclusion. However, KRX recognizes related sales from unlisted subsidiaries as sales from the holding company.
• The actual passive impact of the rebalancing day will likely be 0.15x or more for both. This level can enable a long-short setup for these from a day trading perspective.

• NDX continues to hug lower range support after meeting the 13k short level. 12,050 is the level to break to ratchet lower to 11,800. Ultimately, new lows attract.
• Use an uptick to add to this short and linked assets. USD strength, higher yields will weigh on tech going forward.
• A rotational shift is due that favors a more defensive stance. 

• Due to the recent news by the Malaysian government that aims to in-house the e-government service, My E.G. Services (MYEG MK) share price fell, similar to the 2018 event.
• Revenue from the Philippines business went up 5x and contributed up to USD 91 million, or around 52% of FY 2021 total revenue. 
• It gives a great opportunity for investors who believe in MYEG’s story to start building position.

• freee (4478 JP) reported 2QFY06/2023 results today. Revenue increased 35.3% YoY to JPY4,479m (vs consensus JPY4,469.5m) while operating losses for the quarter widened to JPY1,281m (vs consensus JPY1,574.5m).
• Both ARPU and no. of paying customers continue to increase and the company’s strategy of onboarding large corporates seems to pay off.
• Widening operating loss is no major concern as it is a matter of time before freee cuts down advertising and other costs given the expanding revenue base and excessive GPM.

• Viavi’s result for the second quarter of 2023 performed better than Wall Street expectations as the company delivered an all-around beat, driven by NSE performance aided by stabilization in service provider demand and spending.
• The company’s OSP business increased year over year and performed within the forecast.
• NSE decreased sequentially and year over year due to weaker fiber and wireless lab product demand.

• Monday.com Ltd.’s Q4 earnings report could be the catalyst investors have been waiting for.
• The company’s sustained hyper-growth trajectory is assisted by the successful integration of CRM tools and a synergetic marketplace.
• monday.com Ltd. (NASDAQ:MNDY) released its Q4 earnings report on Monday morning. The company’s quarterly results beat analysts’ estimates comprehensively, which caused MNDY stock to surge.

• Peloton delivered a mixed performance in the quarter as its revenues were well above Wall Street expectations but the company’s losses were wider than expected.
• Peloton’s reserves, related to the stock from their Tonic production facilities, decreased their Connected Fitness gross margin by around $32 million for the quarter.
• FaaS has doubled and expanded quickly in the quarter though it does face significant competitive threats from players like Tonal.

• DXC achieved a decent set of results with strong bookings resulting in $3.57 billion in revenues meeting Wall Street expectations.
• Their organic revenue increased for the second consecutive quarter and the company delivered an earnings beat.
• DXC continues to increase margins and stabilize revenue in GIS.

• Meta Platforms performed a mixed result with earnings below expectations, ending a rather difficult fiscal year.
• The management claims that number of daily users of Facebook, Instagram, and WhatsApp is at an all-time high.
• Facebook’s engagement is decent, and it is expanding globally, with over 2 billion daily and approximately 3 billion monthly active users.

• Qorvo delivered a strong set of results and managed an all-around beat.
• Its power business in particular, reported a successful quarter with active design work for its silicon carbide power products.
• For WiFi products in their Connectivity and Sensors Group, the third quarter showed decreased end-market demand and channel inventory consumption.

• Last week (on 10 February), Canon Inc (7751 JP) announced it intended to delist its ADRs from the NYSE.
• Canon is the third Japanese company to do so in two months, after Eisai Co Ltd (4523 JP) announced in December and Olympus Corp (7733 JP) in January.
• No related investment opportunity but there may be a trade to do.

• Today, Citizen Watch (7762 JP) reported Q3 earnings, and a BIG buyback.
• It is a VERY BIG BUYBACK at up to 75mm shares (25.61% of shares out), with an allocation of up to ¥40bn (which is ~22.1% at last price).
• The buyback is to be executed over the next year. Buyback structure (undisclosed) matters and shareholder structure matters too. There is a big short. This could get really interesting.

• We expect Meituan to report 18% YoY topline growth in C4Q22, in line with cons. Our non-IFRS net margin est. is 1.9ppt higher than cons.
• In-Store would be impacted by Douyin’s category expansion and deepening penetration in lower-tier cities.
• We downgrade Meituan to SELL and cut TP to HK$137 due to pressure from competition for in-store.

• On Tuesday last week, short-video app Douyin announced that it plans to offer its food delivery service in more Chinese cities expanding its current trial in Beijing, Chengdu and Shanghai.
• Following this, on Wednesday last week, Meituan announced that it plans to recruit 10,000 workers in 1Q2023 across a number of its business divisions including technology development and customer services.
• Though we don’t expect Douyin’s entry into food delivery to have large impact, increased competitive pressure and headcount increase would drag down Meituan’s profitability in the near-term.

• We estimate that Weibo’s top line/bottom line would be 1.3%/9.0% vs cons., as the continuous cost-saving measures offset the impacts of temporary disturbance caused by reopening. 
• We remain optimistic about Weibo’s rebound in 1H23 as the macro improves, with top line/bottom line beating cons. by 2.2%/5.5% in 2023.
• Reiterate BUY rating and raise TP to US$ 26.9, implying 11.7X PE in 2023.

• This week we digest key takeaways from some of the latest key industry results that came out (ASE Technologies (TW), Novatek (TW), and Tokyo Electron (JP)).
• ASE and Tokyo Electron exhibited their insulated positions during the current inventory corrections happening, delivering decent margins and beating expectations. Novatek also beat expectations.
• Forward expectations are generally for a worse 1Q23E ahead followed by the beginning of a recovery in 2Q23E. Is this becoming simply the consensus view, however?

• Bitcoin sold off in December and rallied in January for a reason.
• Big banks are coming with a digital payments option. Big banks will have a digital payment option in the coming days.
• Bitcoin sold off last month and rallied again in January, with a rise in popularity in the wake of contagion.

• MSCI announced its MSCI Korea index rebalance on 10 February. Kakao Pay (377300 KS) was the only company to be included in the MSCI Korea index.
• There were also nine Korean companies included in MSCI Small Cap index including Osstem Implant, DearU, and ISC Co. 
• Hanwha Aerospace (012450 KS) and Ecopro Co Ltd (086520 KS) are higher probability potential candidates for inclusion in MSCI Korea Index rebalance in May. 

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, Hesai Group (HSAI US) provided the first Asia linked listing for the year.
• Things were quiet on the placement front owing to the annual earnings reporting season.

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

• Electronic Arts delivered a mixed set of results in the last quarter.
• In the quarter more than 10 million new players entered into the community which drives strong engagement.
• The player network of EA also continues to grow and its flagship, EA SPORTS FIFA delivered strong engagement this quarter across the company’s entire ecosystem.

• Bill.com generated decent second-quarter result with revenues beyond market expectations and narrower-than-expected losses.
• Its extensive and expanding partner and network ecosystem offered a competitive advantage by allowing them to access new firms efficiently.
• With the joint objective of generating additional value for SMBs, they collaborate with an SMB’s most reliable advisors, including their accounting firms and financial institutions.

• KLA Corp managed to deliver an all-around beat in its last quarterly results, demonstrating steady execution despite the supply chain issues.
• Their customers also continue to invest in technological transitions regardless of the business situation which is a good sign.
• Among new launches, KLA Corporation introduced the Axion T2000 X-ray metrology equipment for memory chip producers that could become a good revenue driver.

• Corning faced the impact of a series of pandemic-driven effects during the last quarter but the company managed to deliver an all-around beat.
• The purchase of laptops, tablets, smartphones, televisions, and cars was below the company’s estimation in the last quarter.
• 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.

• Wash trading was at one point a pervasive problem in cryptocurrency markets.
• Today, most major exchanges have strict anti-wash trading measures, which has drastically reduced the problem since the ICO-led trading boom of 2017-18.
• Yet, due to the relatively low barriers to entry for launching an exchange, this type of market manipulation is far from eradicated on lesser-known, unregulated venues. 

• Singapore-based Geolah – a mobility startup – wants to remove commission fees altogether.

• Instead of charging drivers commission fees, Singh said his startup will earn revenue through rebates from digital payments, insurance, and automotive firms. 

• Revenue will also come from ads, with the firm saying that it has onboarded notable names like Shell and Klook.

• LiDAR works by emitting laser beams and measuring the time it takes for the beams to bounce back to the sensor.
• By using this information, LiDAR can create a 3D map of the surrounding environment, including the location and shape of objects, such as buildings, trees, pedestrians, and vehicles.
• One of the main advantages of LiDAR is its accuracy and range.

• The company has expanded to offer watch phones, headphones, drones, and even a social media network for kids.

• Their mission is to help kids aged between three and 12 to “stay connected socially without the usual ills of social media.”

• The startup’s revenue mainly comes from sales of its devices, ranging from a US$20 digital sketchpad to a US$199 watch phone. 

• Singapore-based PixCap, a web-based 3D design platform, has raised US$2.8 million in seed funding led by Sequoia Surge.

• Founded in 2020 by Cyril Nie (CTO) and Looi, PixCap allows users with no 3D experience to find, edit and export 3D content, including images for graphic designs and animations for landing pages and social media.

• Designers, developers and consumers can use PixCap to create 3D content for graphic designs, games and AR/VR.

• CATL (A) (300750 CH) is looking to raise up to US$6bn in its upcoming Swiss GDR listing. Bookrunners on the deal are CICC, China Securities, Goldman Sachs, and UBS.
• The relatively large listing comes after the firm has been undertaking a series of capital raisings, since it’s A-share debut back in Jun 2018, to fund its expansion. 
• In this note, we discuss GDR timelines, and the firm’s recent financial performance/valuations.

• The term of Lee’s trust contract with Hana Bank is from February 2nd to April 28th, and the volume is 1.95% of SO, the total remaining quantity owned by Lee.
• The price movement on the day the previous block deals by the Lee family were executed was substantial. Of particular note is that SDS showed the most significant price impact.
• We should focus on the possibility that a block deal will come to the market much earlier, as SDS is in short-term overbought territory from a valuation perspective.

• TEL 3QF23 operating profit -26% YoY to Y115b, beating analyst estimates
• Full year operating profit guidance revised up Y546->Y580b, ahead of Street estimates
• MAGIC – Metaverse, Autonomous mobility, Greentech, IoT, Communication Services – to drive long-term semicon demand

• Renesas Electronics (6723 JP) today reported full-year 2022 earnings with revenues 0.032% higher than the high end of guidance, which was better than consensus. OP was not as good.
• They have guided Q1 only, with revenues up 0.2-4.6%, and non-GAAP GPM -3.9% to 54.5%, and OPM -6.6% to 32.5%. But they also announced a Tender Offer Buyback. 
• The buyback is smaller than I’d like, but the company has added cash despite last year’s tender offer and repaying bank borrowings. Lots to like here. 

• We estimate that Baidu’s 4Q22 top line/bottom line would miss cons. by (1.6%)/(3.1%), mostly driven by the temporal disturbance of increasing COVID cases after reopening in Dec. 2022. 
• However, we remain optimistic about 2023 outlook: 1) Baidu’s ads would be recovering quickly in 1H23 as macro improves, and 2) leading position in AIGC development gives Baidu more potential.
• Maintain BUY rating and raise TP to US$170, implying 17.2X PE in 2023

• Segment results for DoCoMo and NTT Data were impressive as NTT plans to restructure both businesses start to bear fruit
• DoCoMo is also leading MNOs in moving past the impact of regulatory driven price reductions with Q3 service revenue largely flat YoY supported by 5G upsell and subscriber wins
• Rising utility costs have had a material impact on profitability for NTT East and West but management believes upside in other areas and cost discipline provides some offset

• The local media mentioned that the preliminary book building results of the Oasis IPO were terrible. 
• Therefore, the company is likely to either materially lower the IPO price range or postpone the IPO altogether.
• Our base case valuation of Oasis Corp is target price of 24,847 won per share, which is 18.5% lower than the low end of the IPO price range. 

• Krafton has announced a meaningful shareholder return policy including shares buyback, cancellation, and share based compensation in the next three years.
• The combination of improving shareholder return policy along with new games development and China’s opening up of its game industry to overseas game makers are likely to positively impact Krafton.
• Given Krafton’s current market cap of 8.9 trillion won, the estimated share buybacks of 713 billion won would represent 8% of market cap over three years. 

• Chinese equities have paused for breath this month underperforming most other global indices
• The outlook for the region remains strong as reopening strength gains momentum and the Government continue to announce new supportive measures
• We favour a buy the dip strategy and suggest using derivatives to play it

• New Relic reported a solid quarter pushing shares up ~18% during the regular trading session as y/y revenue growth accelerated while gross margin and operating income continued to expand.
• We like New Relic’s fundamentals and transformation plan driven across the business. The company raised the outlook for FY23 revenue as 3QFY23 results exceeded guidance. 
• New Relic invites investors to an Analyst Day in May, where the company will announce the FY24 financial plan details and give more color about the updated GTM strategy.