TMT/Internet

• 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.
• This insight is a follow-up to TOPIX Inclusions: Who Is Ready (Jan 2023) 
• Our top pick from the last insight CELSYS (3663 JP) (previously known as Artspark) has gained ~14% in roughly a month.

• The rapid adoption of cloud computing has led to China boasting the world’s second-largest cloud computing market.
• This migration to the cloud is in lock-step with global customer needs: scale, greater efficiency, and availability; together with a reduction in capex and infrastructure complexity.
• The big three PRC telcos are firmly in the mix, with each announcing 100%+ growth in revenue for their cloud businesses in 1H22. Expect that trend to continue.

• We expect that Kuaishou’s 4Q22 top line and bottom line would be 0.2%/3.7% vs cons, as major business lines are recovering with stimuli of CNY promotion campaigns. 
• However, we estimate that its 2023 top line/bottom line would miss cons. by (0.9%)/(14.2%) due to our concerns of increasing competition and internal restructuring.
• Maintain SELL rating but raise TP to HK$ 56 to reflect on-track recovering trend as the macro improves. 

• Naver plans to launch its own Korean version of ChatGPT in 1H 2023.
• We believe that this will act as an important catalyst that is likely to further fuel Naver’s share price higher. 
• Naver has been our high conviction call in 2023 and we continue to have a Positive view of Naver. 

• Nitro Software Ltd (NTO AU) has finally granted Potentia due diligence access until 22 February. Subject to satisfactory due diligence, Potentia could increase its offer from A$2.00 to A$2.20-2.30 per share.
• Alludo’s A$2.15 off-market takeover offer is its best and final offer. Alludo’s offer is subject to a 50.1% minimum acceptance condition (currently at 12.53%) and closes on 3 March.
• Potentia’s dogged pursuit despite the Board’s stonewalling suggests a desire to get a deal done. At the last close, the gross spread to Potentia’s potential offer is 2.3% to 7.0%.

• UBTech Robotics is trying to complete its IPO in Hong Kong in the coming weeks. UBTech Robotics is a leading artificial intelligence based robotics company headquartered in China.
• UBTech Robotics received very fat valuations in the past couple of years. Back in January 2021, it was reported that the company’s valuation reached as high as $7 billion.
• In China’s smart education robot based solution market, UBTech Robotics is the number one player. 

• Adobe rival Nitro Software Ltd (NTO AU) has granted Potentia Capital due diligence through to the 22 February on the possibility it sweetens its Offer to A$2.20-A$2.30/share. 
• Alludo’s hands are tied to its A$2.15/share Offer price, which it has declared ‘best and final’ and will not be increased – even if a superior proposal emerges.
• But Potentia pitching an Offer A$0.01/share above Alludo’s Offer won’t be sufficient for Alludo and other shareholders to tender. 

• IIJ delivered double-digit revenue growth for a third consecutive quarter as corporate demand for digitization remains robust
• In addition the expected expansion of cloud (+15%) and security service (+21%) sales, mobile sales grew 9% as IIJ moved clearly past the impact of industrywide rate reductions
• Quarterly EBITDA reached a record high even with modest margin contraction YoY

• FUJIFILM Holdings (4901 JP) delivered 3QFY03/2023 results today. Revenue and OP increased 13.5% and 4.1% YoY respectively to JPY744.4bn (consensus JPY717.1bn) and JPY81.8bn (consensus JPY80.0bn).
• Covid-19 related projects running its course had a slight impact on  healthcare segment but we would not be too worried as new product launches and markets will offset that decline.
• Market continues to value Fujifilm as an image company and not a healthcare stock and there is more than 30% upside to the current share price.

• ATEN reported better than expected fourth quarter results, but it was the lack of quantitative revenue guidance that garnering all the attention
• We had highlighted increased macro risks in our January update leading to 2023 becoming dependent on the second half of the year.
• The first quarter is seasonally the slowest period of the year for ATEN, which could be the reason for management taking a conservative approach with 2023 guidance.

• Nintendo reported operating profit of 190b yen (-8% YoY), falling far short of Street expectations
• The Nintendo Switch is now a six-year old console and demand is exhausted. A normalization of chip/supply chain issues benefits the newer PS5
• Our thesis is that the hardware cycle has peaked and that the share price will head lower in tandem with the dwindling top line

• Management pushed a conservative / defensive line for Q3 as markets remain uncertain and investment losses continue
• Revenue growth at ARM was better than expected as licensing revenues rebounded strongly. Guidance for the timing of an IPO (sometime in 2023) remains unchanged
• This was a slightly disappointing quarter but hopes were not high heading into the print with the discount hovering around 35%

• ZHD F3Q22 (C4Q22) net revenue slightly missed our est. and cons. by (2%) and (1%). Adjusted EBITDA margin was in line with our est. excluding impact from PayPay consolidation. 
• PayPay will continue to be the growth driver for ZHD with increase in unit spending supported by premium credit card offering and deepening integration with group’s other services.
• We upgrade ZHD to BUY and raise our TP to JPY 435 to reflect beat in profitability and upsides in PayPay

• China Balloon Incident — Negative news for China semiconductor restrictions; Up to 45nm may now be hobbled by Japan & Netherlands joining.
• Hon Hai — January sales results strong, could help market look forward to Hon Hai’s future growth.
• Mediatek Results & Upcoming Results — Signs of slight smartphone stablization, also we highlight key Auto & Industrial Semiconductor related results ahead.

• While OP margin remains flat, ROE increased moderately due to higher in total-asset-turnover. Going forward, the drivers of ROE growth are likely to continue through reductions in cash and cross-shareholdings.
• It would be more likely to find it in a company that already has high operating profit margin and where ROE can be improved by improving the total asset turnover.
• Based on my analysis so far, I assume that companies that raised their stock price valuations did so by clarifying their cash allocation policies and engaging in communication with investors.

• Since our Long Apple vs. Short Quanta & Pegatron piece, Apple has outperformed by 11.7% in USD-adjusted terms.
• Apple has reported results recently, thus the next major events could be Quanta and Pegatron results.
• Given Apple has outperformed by a significant amount, we believe the best of Apple’s relative outperformance is done for the near-term. One can thus look for levels to unwind.

Vection Technologies (VR1) reported A$4.6m in Q223 receipts, up A$0.2m q-o-q. Recent announcements of the company’s selection to develop virtual reality (VR) and metaverse technologies to promote space travel underpin the vital role partnerships play in the company’s strategy. VR1 also reported progress in commercial opportunities in defence, aerospace and service agencies, among others, all expected to bear fruit in the latter half of the current fiscal year. As such, management reiterated its FY23 revenue guidance of A$24–26m. We are encouraged by the Q223 results and maintain our FY23 forecasts.

• MAUs grew just 5M or 1% QoQ while ARPU was flat. Little turnaround traction evident despite lots of empty statistics offered.
• Longtime CFO Todd Morgenfeld departing, offers vague margin expansion promises.
• Revenue and opex guidance for 1Q23 below consensus…not good for a consensus long.

• Soluna’s flagship Project Dorothy has now entered ERCOT’s operations phase, putting it on the cusp of energizing and generating revenues. 
• Texas electric grid operator ERCOT, which has held up the project while it created and implemented its Large Flexible Load approval process, has now moved the project through both of its multi-month-long planning and modeling phases where the project was evaluated for its impact on the Texas electric grid.
• A key milestone that allows Soluna to finalize the financing and set operational plans to energize.

• In May 2022, I wrote about ebay, and how they were ‘skating to where the puck is going’ after they announced an exclusive deal to sell Ice Hockey legend Wayne Gretzky NFTs, at the time.
• We haven’t seen much of (2) from Ebay so far, but it looks like they’re trying to push hard on the natively digital front.
• One of the things that I also wrote about was how important a place Ebay became for the reselling of physical collectables during the Covid pandemic.

• WeChat Usage increased by 23% YoY in physical store during Chinese New Year holidays.
• JD.com will close its e-commerce platforms in Indonesia and Thailand in March.
• Microsoft denies a layoff plan in China, but the details of the plan are spreading.

• Jeio (418550 KS) announced its IPO price of 13,000 won, which was at the high end of the recently revised down IPO price range of 10,000 won to 13,000 won.
• There were 1,174 institutional investors that participated in this IPO survey. The demand ratio was 352.6 to 1.
• Our base case valuation of JEIO is target price of 12,575 won per share, which is 3.3% lower than the IPO price 13,000 won.

• Com2us Corp (078340 KS) is the most likely corporate activist target in Korea’s game industry.
• Our base case valuation of Com2uS suggests a target price of 97,321 won which is 49% higher than current price.
• Finally, the company is expected to launch at least 3-4 promising new games this year. All in all, we have a positive view of Com2uS Corp. 

• Delta Electronics Thai (DELTA TB) is now the largest stock in Thailand by market cap. The recent SET50 INDEX inclusion has set the stock on fire.
• The Delta Electronics Thai (DELTA TB) / Delta Electronics (2308 TT) spread is very wide now, but still well within the historical highs.
• We’d put on a placeholder position and monitor the spread for an entry once there is a clearer indication of a reversal in the spread.

• Meta announced its Q4 earnings, exceeding expectations on the top line by 1.5%, but falling short on the bottom line by 20.8%.
• The key highlights from the announcement included an increase in share buybacks, reductions in capital expenditures, and a lowered outlook for operating expenses.
• Since the release of new earnings by Meta (NASDAQ:META), we have been following up on our last report, which got a very positive response.

• AMD had a strong quarter and managed an all-around beat despite the fact that the company navigated quite a challenging macro environment.
• The company also launched the Ryzen 7000 mobile APUs, RX 7000 laptop GPUs, and V-cache chips.
• For the company’s Xilinx data center as well as networking products, AMD had strong sales in the quarter.

• We are initiating coverage of Immersion (IMMR) with a Buy Rating and $11 target
• IMMR is a haptics technology developer that has undergone a management change that could further result in a series of material developments
• IMMR naming Eric Singer as its CEO suggests there is more to come from IMMR than the cost cuts IMMR undertook two years ago when Mr. Singer joined the Board

• Ubiquiti (UI) reported fiscal second quarter (December) results affirming our expectations of the enterprise segment being the source of growth
• Ubiquiti has introduced several new products lines over the past two years, which we believe are becoming an important part of the revenue story
• The product mix and reduced shipping costs resulted in Ubiquiti reporting gross margin of 40 percent. This is the first time in four quarters gross margin reached 40 percent

In December, Light Science Technologies Holdings (LSTH) noted that high input costs have resulted in strong interest in the group’s controlled environment agriculture (CEA) products because they help growers operate more efficiently. This demand has generated a sales pipeline for the group of quoted work worth more than £60m (as of December 2022), including forward orders and contracts of £18m (contingent on meeting certain milestones). However, high input costs have caused growers to defer capital investment decisions, resulting in longer sales cycles. This has adversely affected FY22 trading because some anticipated revenue streams for the CEA division are now more likely to materialise in FY23 rather than FY22. Based on this information, we are introducing estimates for FY22 and FY23.

• Our base case valuation of Hesai Group is implied market cap of US$3.4 billion or target price of US$27.1 per share.
• Our target price is 43% higher than the high end of the IPO price of US$19 per share. Given the solid upside, we have a positive view of this IPO. 
• The company’s superior technology in the LiDAR product segment along with its global market leadership should help Hesai Group to successfully complete this IPO despite political risks related to China. 

• Hesai Group (HSAI US) is getting ready to complete its IPO in the next several weeks in the United States, planning to raise as much as $171 million.
• The ADAS penetration rate in China is expected to surge from 4.6% in 2022 to 11.2% in 2024 and 87.9% in 2030.
• The company is a leading maker of laser-based LiDAR sensors in China. The company’s major customers in the ADAS segment include Li Auto, Jidu, and Lotus.

• 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

• L3Harris finished the year on a high note and delivered an all-around beat while continuing to build momentum going into 2023.
• The RL10 is a high-end upper-stage engine that the ELA has ordered well over 100 of for the new Vulcan launch vehicle.
• We remain optimistic about the company’s future growth and maintain our ‘Hold’ rating with a revised target price.

• In C4Q22, We expect Grab to report total revenue 2% higher than cons., and non-IFRS net loss narrower than cons.. 
• With competitors cutting back on heavy incentives, Grab has gained share under easing competitive environment in food delivery market in 2022. We expect this trend to sustain in 2023.
• Mobility is expected to benefit from rebound of tourism and generate stable margin. Pullbacks from off-platform financial services continue to support improvement. Maintain BUY and raise TP to US$ 4.0.

• Back on the 28 October, church donor management play Pushpay Holdings (PPH NZ/PPH AU) announced a Scheme with BGH/Sixth Street at NZ$1.34/share,  a 30.1% premium to undisturbed.
• The Scheme Booklet is now out. The shareholder meeting will take place on the 3 March. The independent advisor concluded the Offer price is within its valuation range. 
• Assuming 11 April payment, this is trading at a gross/annualised spread of 3.0%/18.0%.

• Pushpay Holdings (PPH NZ)’s NZ$1.34 offer from Sixth Street/BGH is barely within the IE’s valuation range of NZ$1.33-1.53 per share. There is no “fair and reasonable” statement from the IE.
• Astonishingly, Sixth Street/BGH wrote to the Takeovers Panel to raise concerns about the IE’s report. The Takeovers Panel concluded that the IE report is not misleading or deceptive. 
• A relatively concentrated register poses a risk, particularly considering the IE’s valuation range and the re-rating of a key peer. While possible, the probability of a bump is low. 

• Consumer mobile revenue fell 7% but that partly reflects how sales were reported a year ago. Reported ARPU was down 5% whilst price cut erosion narrowed
• Operating income YTD is 94% of full-year targets leaving room for Softbank to achieve its goal even with increased investment spending
• This was a relatively uneventful quarter and we remain at Buy

• Intel delivered a weak result, failing to meet Wall Street expectations in terms of revenues as well as earnings given the persisting macroeconomic headwinds in the semiconductor industry.
• Intel continues to integrate AXG into CCG and DCAI to deliver a more effective go-to-market capability, accelerating the scale of these businesses while further cutting costs.
• The management believes their first EUV-deploying modes, Intel 4 and 3, will significantly improve transistor performance per watt and density.

• Amazon’s share price has fallen 25% since April of last year, sparking a fear of missing out.
• The pressure for cost-cutting measures will likely increase as profitability and free cash flow remain elusive, according to Amazon.
• Amazon has seen a 25% drop in its share price in January.

• AWS revenue grew 20% YoY to $21.3B, about $400M or ~2% below consensus…and a 700bp deceleration.
• AWS margins of 24% were down 200bps QoQ / 600bps YoY as continued optimization of customer contracts continues to weigh on margins.
• Amazon advertising continues to dramatically outpace all other online platforms, highlighting the moat of first party data at the point of purchase, unimpacted by Apple.

• SAP delivered a mixed set of results in the final quarter of 2022 as it surpassed the revenue expectations of Wall Street but missed out on earnings.
• This year, cloud revenue also surpassed support revenue to become SAP’s single-largest revenue stream.
• Their overall SaaS and PaaS portfolio grew significantly, with SaaS cloud revenue increasing by 25% and PaaS cloud revenue increasing by 45%.

• Snap continued to encounter massive challenges due to increased competition and macroeconomic headwinds.
• In the quarter, the company released communities to expand its content offerings and onboarded several new media partners.
• The company has also launched new Snapchat+ features to increase audience engagement on the platform in the quarter.

• The Hang Seng Index (HSI INDEX) is a blue-chip index that represents the performance of the large cap stocks listed in the Hong Kong Stock Exchange.
• The index is undergoing some significant composition changes and the index provider currently uses a highly subjective constituent selection process which is quite challenging to decode.
• In this insight, we take a look at Quiddity’s approach to solving this Hang Seng constituent selection puzzle and the historical performance of past rebalance events.

• Likely new 4G restrictions will delay Huawei’s ability to launch mid-range offerings at volume. Xiaomi stands to gain 1.2ppts of share in 2024 vs. our prior forecast. 
• However, new limits are long-term negative, as it (1) raises the chance for cascading limits on China 3Cs; (2)  triggers reduced 3C electronics demand; (3) weaker industry electronics demand.
• The impact of the latest set of restrictions will likely prove net negative, in our view, as a result we re-iterate our SELL rating and HK$7.3 TP.

• At the EGM held on January 31, O2Micro International (OIIM US)’s shareholders voted in favoor of the Merger Agreement.
• The Offerors didn’t have the necessary two-thirds for the voter to be a foregone conclusion, therefore the outcome wasn’t assured. Although it was an okay offer. With proxy advisor support.
• Yet even after the vote, this is still trading 7.1% below terms. The drawn-out completion of Glory Star New Media Group Holdings (GSMG US) is evidently uppermost in investors’ minds. 

• Meta lowered 2023 expense guide by $5B (or 5%)  to $89bn-$95bn and capex guide by $4B (or 11%) to $30bn-$33bn
• Metaverse spending continues, META lost $4.3B on $700M in revenue this quarter and losses are expected to accelerate in 2023. 
• Zuck said the word efficiency 18x and AI 15x…Evidently, these are his priorities!

• Indonesian cybersecurity-as-a-service startup Peris.ai has raised an undisclosed sum in funding led by East Ventures, with participation from Magic Fund.
• The startup will use the money to build and enhance its cybersecurity platform, train Machine Learning and AI capabilities, and nurture the ethical hacker community.
• Peris is supported by a community of more than 1,200 ethical hackers.

• Visa’s performance in the last quarter was solid and it managed an all-around beat as a result of consistent domestic volumes and transactions, as well as a persistent improvement in international travel.
• Therefore, they are working to position Visa favorably for the future, whether with conventional issuers or co-brand partners.
• 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.

• Core mobile revenue fell 4% but that is an improvement from 7-8% declines over the last few quarters and including value-added sales (VAS), retail mobile spend is up
• Competitive challenges remain with elevated churn and visible declines in roaming revenue from Rakuten (although sequential change has been modest)
• KDDI has kept guidance for FY22 operating income growth unchanged despite unanticipated expenses for rising fuel costs and the July network failure

• Oh Baby Games said it’s working on an arcade racer that features recognizable figures. Called What The Kart, the company’s first blockchain-powered game will feature personalities from Crypto Twitter
• The startup said What The Kart will also feature streamers and different communities across the Crypto Twitter sphere.
• The game aims to mix recognizable characters with the tried-and-tested Mario Kart racing formula

• Mastercard delivered a decent result in the last quarter as consumer spending has been steady.
• Mastercard has strengthened and expanded its long-standing relationship with Citi and Bank of America.
• Mastercard’s open banking initiatives are supported by connections to over 3000 banks and other financial institutions in 18 markets.

• WeMo Corp, an e-scooter rental company based in Taiwan, has completed its US$15 million Series A+ round of financing led by AppWorks.
• WeMo will use the money to expand its service to Southeast Asia, mainly in Indonesia and Thailand.
• It is building partnerships with governments, investors, businesses, and transportation providers throughout the region to offer green transportation and fleet management services.

• The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation. 
• For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation. 
• Every April, the application of this liquidity factor is reviewed by the TSE. In this insight, we take an early look at what could happen in April 2023.

• In this deep dive report, we initiate coverage on Softbank Group with a ¥6,300 target price and Neutral recommendation
• We are cautious on global tech and consider that the main risk to the story but a recovery in China sentiment provides some offset
• For Q3 results next week, we expect the defensive theme of the last two quarters to continue

• Konan Technology is one of the competitors to Open AI (Chat GPT) in Korea. 
• Konan Technology’s share price is up more than 4x this year. We would not chase the stock at current levels. We provide a framework of valuing Konan Technology. 
• Four large Korean companies that could be long-term winners in AI space in Korea include Naver, Kakao Corp, SK Telecom, and KT Corp. SK Telecom owns 20.8% of Konan Technology. 

• O2Micro International (OIIM US)‘s US$5.00 per ADS privatisation offer from FNOF Precious Honour Limited was overwhelmingly approved by shareholders.
• The key remaining condition precedent is obtaining the required regulatory approvals related to the listing rules of NASDAQ and the Cayman Islands. There are no Chinese regulatory approvals required.
• The conditions precedent should be satisfied shortly. At the current price and for an end-March close, the gross and annualised spread to the offer is 6.4% and 45.6%, respectively. 

• We expected the market to react positively to the Q3 beat. There are clouds on the order horizon, but that is well-known
• A big management shuffle was also announced. We think the new CEO and CFO will follow the same LT Vision, but need to do more to meet rising capital costs
• Our core bullish thesis rests on growth in Industrial Automation.  As expectations for interest rate hikes fade, we think investors will start to price in a 2023/4 order recovery

• IBM delivered a strong result for the last quarter and managed an all-around beat as a result of excellent execution with respect to its AI and hybrid cloud strategy.
• It delivered decent revenue growth in its business across geographies, infrastructure segments, consulting, and software.
• The company added a series of innovative IBM software offerings in the AWS marketplace available as-a-Service.

• Lam Research ended the previous year on a strong note and posted an all-around beat in the last quarter.
• The CSBG revenues in the company’s installed base business expanded faster than its growth in the installed base units.
• We provide the stock of Lam Research with an ‘Underperform’ rating with a revision in the target price.

• ServiceNow continues performing well as its recent quarterly result met market expectations in terms of the reported revenues.
• The company exceeded its subscription revenue guidance and drove strong expansion and renewal rates.
• The free cash flow was above its guidance, and it beat the guidance with the growth in subscription revenue and also managed an earnings beat.

• Lumen with a Buy Rating: Anticipating Near-Term Rally. Lumen’s new CEO Brings a Track Record of Growth.
• The company’s focus is on Fuel Core Business Development.
• Lumens’ new CEO has a track record of growth and a track Record of growth for the company.

CLIQ Digital’s FY22 update showed strong year-on-year growth across all KPIs, as it continues to roll out its subscription-based bundled-content streaming services. The results were broadly in line with our expectations and CLIQ finished the year with a stronger-than-expected net cash position of €10m. Looking ahead, driven by continued investment into marketing and content, management expects FY23 revenue and EBITDA to exceed €345m and €50m, respectively, reflecting growth of at least 25% and 15%. We will update our numbers following the publication of the annual report, scheduled for 21 February.

• Delta Thailand has surged post SET50 re-inclusion and the stock has dramatically outperformed both Delta Taiwan and Thailand’s SET Index.
• For both stocks, forward growth rates are expected to be similar for 2023E and 2024E.
• Delta Taiwan’s stake in Delta Thailand alone is now worth nearly 90% of its market cap.

• GoTo’s share price lost more than 75% last year following its weaker-than-expected performance and lock-up expiry despite the company entering into a coordinated secondary offering of shares with pre-IPO shareholders.
• The company’s share price has moved up 24% YTD partially driven by cost cutting measures that is expected to improve the company’s profitability.
• Nevertheless, we expect this share price rebound to be temporary with e-commerce and food delivery market in Indonesia slowing down.

• Hon Hai’s upcoming results date hasn’t yet been publicly announced, but last year it was 16 March.
• Gross margin could come in well below consensus, and net profit could be minimal for 4Q22E. Look for reiteration of its longer-term margin target from management.
• We remain structurally bullish on Hon Hai and see it as positioned favorably relative to U.S. China semiconductor restrictions. Our TP for Hon Hai is $155, over 50% above today.

• Samsung reported 4Q22 detailed results – Semiconductor earnings evaporated and its memory subsegment likely lost money.
• Samsung re-iterated that it would NOT cut capex despite the market downturn – Samsung appears ready to endure losses which is negative for Nanya Tech, SK Hynix, and Micron.
• Japan and the Netherlands have joined the U.S. with chip technology restrictions for China – Hon Hai is a net winner.

• In this insight, we take a look at the potential index changes and the resultant capping flows for the Hang Seng Tech Index (HSTECH INDEX) in March 2023.
• According to our estimation, there could be two changes for the HSTECH in March 2023 and there could be one-way index flows of US$365mn.
• The final index changes along with indicative capping and index weights could be published in Mid/Late-February 2023 and implemented in early-March 2023.

• We believe total revenue growth rate will accelerate from 4Q22 and grow by 9% in 2023.
• We believe the operating margin will be stable from 4Q22 to 2Q23, but the margin will climb up from 3Q23.
• We believe that EPS will increase by 16% and the stock will have an upside of 21%~44%.

• Inventory levels rose to highs in 3Q22 — Now increased margin pain may come through as we move through the latest earnings season.
• Forecasts still assume relatively strong margins vs. history and thus appear at risk of disappointment.
• Earnings forecasts, while assuming a down-cycle, are still assuming a relatively benign down-cycle.

• We remain bullish on NEC as we believe that the company is one of the key beneficiaries of the shift to standalone 5G
• NEC’s Network Services registered double-digit revenue and profit gains in Q3 on the back of growth in 5G equipment sales and IP income.
• We believe that the current share price (+4% over the past 12m) and valuation (10x PE, 0.8x PB) do not reflect the positive mid-term outlook

• Bukalapak (BUKA IJ)  is one of Indonesia’s most differentiated digital economy players plus it is unusual in that it has one of the longest runways amongst peers at 15 years. 
• Despite operating a marketplace model, the platform uses this to generate traffic for its other businesses including its O2O Mitra Bukalapak business and its growing online speciality store business. 
• Bukalapak (BUKA IJ) also has strong ESG credentials, the most obvious of which is in the empowerment of MSMEs through its Mitra business. It is also making headway toward profitability.

• This is our second Insight into Tobila Systems – the absolute dominator in the niche of fraud/spam call and message filtering services in Japan;
• We like the high-quality, unique assets owned by the company, although capital allocation appears to stand out as a wild card in our formula of long-term shareholder-value creation;
• At the current level, we would hold the shares firmly and wait patiently for more opportunistic offerings from Mr. Market to accumulate more shares.

• Texas Instruments delivered a strong set of results in the quarter, with revenue of $4.7 billion and a gross profit of $3.1 billion resulting in an all-around beat.
• The company’s gross profit fell from a year ago due to lower revenue, higher capital expenses, and the conversion of LFAB-related charges to the cost of revenue.
• However, given the strong earnings, the company distributed $1.1 billion in dividends during the quarter and spent $848 million on stock repurchases.

• Microsoft delivered a mixed set of results for the last quarter as its revenues failed to meet Wall Street expectations but the company managed an earnings beat.
• Revenue for the Microsoft Cloud surpassed $27 billion, increasing 22% and 29% in constant currency.
• Besides, the company made its Azure OpenAI widely available and has already been used by over 200 clients, ranging from KPMG to Al Jazeera.

• Highly leveraged mobile-games developer Playtika goes mildly hostile in its pursuit for Angry Brids creator Rovio, albeit with a generous possible offer at €9.05/share (11.1x EV/Fwd EBITDA).
• The stakes controlled by the Heds total c.32% (source: Rovio), making a hostile offer prone to failure. The shares aren’t succeeding though, and trade 36% below its 2017 IPO price.
• The shares are trading at a 19.3% discount to the possible offer (and 14.6% discount to my DCF-based fair-value estimate). At this level, they do not seem expensive.

• X2M Connect Limited (ASX:X2M) has updated several key variables in conjunction with its December quarter 4C release.
• Most key variables were in-line or ahead of RaaS expectations including a cash-flow positive Q2, device growth of 23% on September 2022 to 361k (RaaS 345k), H1 FY23 revenue +96% to $9.0m (RaaS $9.2m), cash costs of ~$4.3m (RaaS $4.6m) and a cash balance of $3.05m.
• Post-month end we estimate a cash balance closer to $3.5m on receipt of a $1.3m R&D credit offset by the repayment of a related R&D loan.