TMT/Internet

• Late last month, Shinko Electric Industries (6967 JP) announced that the JIC consortium Tender Offer due to be launched by end-August would be delayed. Next update? January 2025.
• Everyone was expecting a delay, but that caused the stock to fall. Then tech/AI fell out of bed, Ibiden crashed, then China export restrictions noise/pushback caused further delay.
• I saw a 9% gross spread yesterday and thought “Geez”, that’s a buy.” A day later, it’s 6%. Still wide, still interesting. And that has set a boundary.

• When Bain came out saying they would bid more, with preparation to launch in November, KKR launched early to see if they could get the jump, discussed here.
• The stock popped when the Bain’s bid was obviously serious, and supported by the Founding Family, but it went to Bain’s “5% higher” plus another 5%. I was bearish.
• But I signalled willingness to change my mind if the stock price dropped. It has dropped. 

• GitLab’s Q2 Fiscal Year 2025 results showcase a blend of growth and strategic enhancements, particularly in its DevSecOps platform enriched with AI capabilities.
• Revenue grew substantially by 31% year-over-year, totaling $183 million, a testament to the adoption of new accounts alongside expansions in existing clientele including notable names like Delaware North and Guild Mortgage.
• 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.

• Hong Kong market is range bound with conglomerates showing strength over the last few weeks.  As the CNY/HKD strengthens the A/H premium should narrow.
• SUNeVision Holdings (1686 HK) reported good results on the back of increased demand driven by the AI sector. 
• Yum China Holdings (9987 HK),Yum China Holdings (YUMC US) reported flat sales and an increase in operating profit in a difficult fast food retail environment in China.

• Hewlett Packard Enterprise Co (HPE) demonstrated a strong financial performance in the third quarter of fiscal 2024, reporting substantial year-over-year revenue growth and a marginal increase in non-GAAP diluted net earnings per share.
• As delineated in their earnings call, the company continues to navigate a dynamic market environment, focusing on growth sectors such as AI, hybrid cloud, and networking.
• Revenue reached $7.7 billion, a 10% increase from the previous year, which is attributed to notable growth in AI systems revenue and other portfolio enhancements.

• Asana’s second quarter fiscal year 2025 earnings presentation highlighted several fundamental aspects of the company’s financial health and strategic direction.
• The overall tone indicated cautious optimism, marked by a cautious stabilization in revenues with indications of accelerating growth in the foreseeable future.
• Financially, Asana reported a revenue increase of 10% year-over-year, surpassing its own projections and signaling subtle strength within certain operational segments.

• Revenue increased by 4.4% YoY to JPY3.4bn, operating profit rose by 40.8% YoY to JPY848mn.
• Revenue from desknet’s NEO Cloud grew 7.5% YoY, while AppSuite Cloud revenue surged 30.6% YoY.
• Total license revenue declined 27.8% YoY, with desknet’s NEO licenses decreasing 22.7% YoY.

• Credo’s Q1 fiscal 2025 results suggest a mixed yet promising growth trajectory.
• The company reported total revenue of $59.7 million, with product revenues significantly marking a 30% increase at $57.3 million in comparison to previous quarters.
• This growth highlights the effectiveness of Credo’s strategy in expanding its product offerings across high-speed connectivity solutions such as active electrical cables (AEC), optical digital signal processing (DSP), and line card physical layer devices (PHYs).

• i-mobile reported FY07/24 revenue of JPY18.7bn (+14.1% YoY) and operating profit of JPY3.5bn (+0.7% YoY).
• Consumer Service business FY07/24 revenue was JPY16.0bn (+20.1% YoY) and segment profit JPY3.4bn (+15.8% YoY).
• FY07/25 projections: revenue JPY23.0bn (+22.8% YoY), operating profit JPY4.5bn (+26.8% YoY), net income JPY3.0bn (+21.9% YoY).

• Zscaler is actively expanding and executing within the rapidly evolving cybersecurity market.
• Recent developments highlight the company’s strong financial performance and strategic positioning as it continues to capitalize on growing demand for advanced security solutions.
• Zscaler posted robust financial results, showcasing a 30% year-over-year growth in revenue, underscoring the increasing market demand and customer adoption of its solutions.

• Samsung’s preferred shares lagged significantly behind the common shares yesterday, showing the largest daily sigma move we’ve seen in a while.
• Samsung’s delayed value-up announcement, despite regulatory pressure, has fueled speculation about a potential Biologics stake purchase from C&T.
• It’s time to pause the trade on Samsung’s preferred discount narrowing that I highlighted in early August. The main inflection point will be when Samsung makes its value-up announcement.

• Back on the 26 August, Goh Peng Ooi, the executive chair and founder, made a voluntary unconditional general Offer for the 25.9% in Silverlake Axis (SILV SP) not held.
• The Offer Doc is now out for this S$0.36/share cash Offer. The first close is the 7th October.
• There was no IFA opinion in this Doc. This will appear in the Response Doc within a fortnight. It’ll be interesting how the mixed consideration alternative is assessed. Or not.

• Spatial display market focuses on distribution optimization, demographic targeting, and visibility enhancement to boost sales and engagement.
• Panel makers shift to chip packaging as consumer electronics industry slows down, while Taiwan plans its own Starlink due to satellite launch delay.
• Texas offers incentives to attract Taiwan chip giants, Apple Intelligence foresees revenue growth, and MediaTek anticipates an upturn with Dimensity 9400.

• 1Q FY2025/3 results review: On August 9th, 2024, Geechs Inc. (hereafter, the “Company”) announced its 1Q FY2025/3 earnings results.
• Net sales fell 2.0% YoY to ¥5,825 mn, EBITDA rose 7.2% YoY to ¥107 mn, and operating profit rose 175.8% YoY to ¥80 mn.
• The sharp rise in operating profit was attributable to the sale of G2 Studios (previous Game business) at the end of FY2024/3, which prevented 1Q FY2025/3 operating profit from being dragged down by the business as it did in 1Q FY2024/3, when it recorded an operating loss of ¥74 mn. 

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess TDC NET’s ESG as “Adequate”, in line with its Social and Governance scores, while the Environmental score is “Strong”. Controversies are “Immaterial” and Disclosure is “Strong”.

• KT’s foreign room is likely staying below 3.75% for November, setting up an ETF recall play. We’ve seen short-term buying pressure in similar past index reshuffles.
• The ETF recall impact peaks right after the announcement. KT’s May downweight saw a 5% spike in two trading days post-announcement.
• KT’s price moves more with downweights than SK Telecom’s because of higher overseas borrowing demand. This trend should hold, so setting up a position before the November announcement makes sense.

• 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.
• SUNWELS Co (9229 JP) and Macbee Planet (7095 JP) moved to the Prime market in July 2024 and their TOPIX Inclusion events took place at the end of August 2024.
• We currently have CELSYS (3663 JP), Japan Eyewear Holdings (5889 JP), and Core Concept Technologies Inc (4371 JP) in our TOPIX Inclusions pre-event watchlist.

• On the 18th June, personal computer parts and accessories play PC Partner (1263 HK) (PCP) announced a SGX listing was under consideration; and a possible withdrawal of the HKEx listing.
• PCP’s 30th August announcement provided clarity on a step-by-step approach for the HKEx withdrawal. I recently held zooms with the SFC and SGX for added clarification.
• PCP’s exchange relocation is predicated on PCP’s operational expansion into new markets, in particular, Southeast Asia. How and when the SGX becomes the preferred trading exchange  remains an unanswered question. 

• Nextdc Ltd (NXT AU) aims to raise around US$366m via a fully underwritten institutional placement, along with another US$133m via a non-underwritten SPP.
• The company has undertaken a number of deals in the past, most of which have done ok. Although this one appears to be a bit opportunistic.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• TSMC: +15.9% Premium; Sales Rose 33% YoY in August & Headroom Increased
• UMC: +1.8% Premium; Largest Monthly Decrease in ADR Headroom, Has Consistently Been Decreasing Since May
• ASE: +2.0% Premium; At Current Level Can Consider Going Long the Premium

• Last Friday, the S&P Index Committee announced the changes to the S&P500, S&P400, S&P600, and other indices, along with the result of a recent consultation on capping methodology.
• The result is about US$23bn a side of flows for the major indices
• In the S&P500, DELL, PLTR, and ERIE are ADDs. AAL, ETSY, and BIO are DELETEs. But as always, just knowing the names is deceptive. The history matters more.

• Welcome back to the portfolio updates series! This month, I enjoyed a long vacation with my family, spending three weeks traveling through Italy by car.
• We began our journey from our home near Munich, which allowed us to traverse the entire country from north to south and back again.
• We entered Italy through South Tyrol and drove down to Tuscany, where we spent a week. Afterward, we continued our journey all the way down to Puglia, where we stayed for ten days before making the return trip.

• Global smartphone sales are anticipated to rise in Q2 2024, presenting an opportunity for Taiwanese firms to act quickly.
• IBM’s Kyndryl spinoff is focusing on addressing India’s cybersecurity talent shortage, signaling the need for immediate action.
• Apple is prioritizing user privacy in its slow launch strategy, while Huawei revolutionizes mobile innovation with a triple-fold smartphone.

• TSMC Extends Global Foundry Dominance Amid 33% Sales Surge – A Buy on Weakness Despite Market Concerns
• Apple ‘Glowtime’ AI Announcements: Mixed Analyst and Media Reactions May Overlook Key Advantage — Apple Is Best Positioned to Seamlessly Integrate AI Into Your Smartphone Experience
• Taiwan Market Gainers & Losers: Consumer Electronics & Memory Names Some of the Hardest Hit

• CYND Co., Ltd. is a dominant player in the reservation management software for beauty salons in Japan, with 90% of its revenue coming from recurring contracts
• The company has high barriers to scale and has acquired its second largest competitor, effectively eliminating competition
• CYND has the potential to significantly increase its revenue over the next decade, led by its co-founders with strong insider ownership, and is currently valued at JPY 4.1bn with a projected net 10-year IRR of 24.1% for Sun Mountain.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Constituent changes to the S&P 500 INDEX and weight changes as a result of the market consultation proposals being adopted will result in a round-trip trade of US$31.5bn.
• The largest one-way turnover is expected in the Consumer Staples Select Sector SPDR Fund, Technology Select Sector SPDR, Materials Select Sector SPDR and Communication Services Select Sector SPDR Fund.
• The inflows to Apple (AAPL US), Palantir Technologies (PLTR US) and Dell Technologies (DELL US) will add to the buying from the S&P 500 INDEX (SPX INDEX) trackers.

• Via Technologies (2388 TT) is looking to raise US$220m in its upcoming global depository receipts (GDRs) offering.
• In July 2024, Via Technologies (Via Tech) announced its board’s resolution to issue up to 75m common shares via a GDR offering.
• Similar to previous GDR listings, the deal is a long drawn out process with the firm required to jump through a number of board/shareholder/regulatory approval loops.

• SLMs aiming to expand presence in GenAI business opportunities, while Joinsoon Electronics plans for 50:50 production split in Thailand by 2025.
• European carmakers face challenges from potential Chinese retaliation against tariffs; South Korean equipment makers benefit from Chinese companies targeting OLED technology.
• Global gaming subscription market expected to reach US$19 billion by 2024, with ITRI, SIIQ, MOEA collaborating to develop resilient semiconductor industry ecosystem. Taiwan’s offshore wind farm installation signals industry shifts.

• NVIDIA recently reported stellar financial achievements for its second quarter of fiscal 2025 with total revenue reaching $30 billion, marking a significant 122% increase year-over-year.
• This surge was primarily driven by unprecedented growth in the Data Center segment, which reported revenues of $26.3 billion, reflecting a 154% increase from the previous year.
• The strong demand for NVIDIA’s latest Hopper GPUs, coupled with the advancing deployment of Blackwell platforms, has significantly contributed to this uptrend.

• Dell Technologies Inc. showcased robust performance in the second quarter of fiscal year 2025, driven mainly by solid advancements in artificial intelligence (AI) technology and strong server sales (a staggering 80% jump).
• The company reported revenue of $25 billion, reflecting a 9% increase year-over-year, and diluted earnings per share (EPS) also rose by 9% to $1.89.
• This growth was supported by significant demand in their infrastructure solutions group, particularly from Tier 2 cloud service providers, and an increasing engagement in AI server solutions from enterprise customers.

• RaaS has published an update report on ‘Know Your People’ regtech company, Kinatico (ASX:KYP) following its 5 September webinar in which it highlighted for the first time the annual recurring revenue being generated across the group.
• Total ARR for the group was 76% of revenue or $21.7m, comprising $12m in transactional ARR and $9.7m in SaaS revenue.
• • Kinatico is targeting 80% of its revenues from SaaS (currently 34%) within three years, which is well ahead of our forecasts for 60% by FY27.

• There are 3 changes for the S&P 500 INDEX, 8 changes for the S&P Midcap400 Index and 15 changes for the S&P SmallCap600 Index at the September rebalance.
• Dell Technologies (DELL US) and Palantir Technologies (PLTR US) were finally added to the S&P 500 INDEX (SPX INDEX) and there is huge size to trade in the stocks.
• There will also be big buying in Apple (AAPL US) following a float increase driven by Berkshire Hathaway Inc Cl A (BRK/A US) selling last quarter.

• We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
• Highest spreads: Yichang HEC Changjiang Pharma (1558 HK), Canvest Environmental Protection Group (1381 HK), Shinko Electric Industries (6967 JP), Malaysia Airports Holdings (MAHB MK), Greatview Aseptic Packaging (468 HK). 
• Lowest spreads: Fuji Soft Inc (9749 JP), Tohokushinsha Film (2329 JP), Second Chance Properties (SCE SP), Fancl Corp (4921 JP), Descente Ltd (8114 JP), C.I. TAKIRON Corporation (4215 JP). 

• Pharmaessentia Corp (6446 TT) will replace Nanya Technology (2408 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the close of trading on 20 September.
• Shorts have been covering positions in Pharmaessentia Corp (6446 TT) while there has been a surge in new short positions in Nanya Technology (2408 TT). 
• Cumulative excess volume in Pharmaessentia Corp (6446 TT) has flattened out as momentum has stalled while there has been a surge in cumulative excess volume for Nanya Technology (2408 TT).

• Nuvoton Technology (4919 TT) will be deleted from the Yuanta/​P-Shares Taiwan Dividend Plus ETF at the close on 20 September. That was expected.
• Passive trackers will need to sell 20.3m shares of Nuvoton Technology (4919 TT). That is 7x ADV, 4.8% of shares outstanding and 10.4% of float.
• With no change in cumulative excess volume over the last few weeks and only a tiny increase in short interest, there could be more positioning in the stock near-term.

• Elastic N.V. reported an 18% year-over-year growth in total revenue, with cloud revenue experiencing a 30% increase.
• The non-GAAP operating margin was 10.7%, aligning with the company’s performance exceeding its revenue and profitability guidance.
• A key strategy highlighted was their “land, expand, and consolidate” approach, which has led to growth in customers spending over $100,000 to more than 1,370.

• Autodesk, Inc. concluded its second quarter of Fiscal Year 2025 with robust results, characterized by a 13% revenue growth in constant currency, which has led to an upward revision of the full-year guidance.
• This reflects not only the success of the recent launch of their new transaction model in North America but also anticipates a similar introduction in Western Europe come September.
• 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.

• Nutanix’s fourth quarter and fiscal year 2024 earnings results mark a period of solid performance and strategic progress.
• During the fourth quarter, Nutanix exceeded its financial guidance, achieving revenue of $548 million, which represents an increase of 11% year-over-year.
• This growth was supported by substantial free cash flow generation and the acquisition of significant new customers, the highest in three years.

• HashiCorp, a leading software company specializing in multi-cloud infrastructure automation software, reported a robust fiscal 2024 fourth-quarter performance.
• The company successfully exceeded its top and bottom line guidance, with total revenues achieving $156 million, up 15% year-over-year.
• This uplift was bolstered by solid non-GAAP remaining performance obligations which grew by 21% year-over-year to stand at $483 million, showing strong forward revenue visibility.

• MongoDB reported a commendable performance in its second quarter for fiscal year 2025, displaying resilience and adaptability in a complex market environment.
• The company announced a revenue of $478 million, marking a 13% year-over-year increase which was above the upper limit of their provided guidance.
• This increase was buoyed significantly by the 27% growth in Atlas revenue, which now constitutes 71% of total revenue.

• Box, Inc. reported its second-quarter fiscal 2025 earnings with a focus on operational discipline, driving higher revenue growth and improved gross margins.
• The results demonstrate the company’s ability to adapt to the evolving technological landscape, particularly through its integration of AI into service offerings.
• 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.

• Buy dips on the possibility that 3DIP would not agree to Bain. Otherwise, at ¥9,000 Fuji Soft (9749 JP) is a buy, and at ¥9,500, it’s probably a sell near-term.
• Drilling down into its balance sheet uncovers additional value for Jardine Matheson Holdings (JM SP); but not enough to move the needle
• Exedy Corp (7278 JP) completed its buyback. Murakami Group bought more. The stock (pro-forma) is at 0.62x book, 0.54x book for the non-cash portion. There’s LOTS of cash left.

• Intel’s CFO says the company is going to “kind of skip over productizing 20A”
• This decision removes an important, looming milestone from Intel’s roadmap, i.e. the ramp of Arrow Lake later this year
• The decision to outsource all Arrow Lake tiles, apart from final packaging, strongly suggests that Intel 3 and Intel 18A are not capable of a cost-competitive volume ramp

• The acquisition positions AMD to capitalize on the booming AI infrastructure market, which is expected to grow to $372.9 billion by 2029, leveraging ZT Systems’ hyperscale computing and integration capabilities.  
• AMD will use ZT Systems’ experience in AI infrastructure deployment for cloud providers like AWS and Azure, helping it compete with NVIDIA’s 70% market share and Intel’s data center push.
• Analysts expect the acquisition to be financially accretive by 2025, with ZT Systems enabling AMD to provide comprehensive AI solutions, boosting its presence in the cloud, AI, and enterprise sectors.

• The latest recessionary signal we see: WTI and Brent crude oil prices violating 1.5-year supports, only adding to our prior concerns about a weakening labor market (Sahm rule, SRI triggered)
• We also discussed last week (August 29) how we were expecting the S&P 500, Japan’s TOPIX, and Europe’s EURO STOXX 50 to “roll over near current or marginally higher levels.”
• Ongoing belief (since July 25) is that $ACWI is going through a 1- to 4-month pullback/consolidation that could end up being a topping pattern. All have since reacted lower.

• 1H24 results was above expectation and showing good signs of cost control and topline recovery. We expect the momentum to continue. 
• Air traffic in China continues to grow strongly, with domestic travel leading the way. International traffic is picking up momentum, but still 23% gap to pre-Covid’s numbers. 
• Revised fair value of HKD11.10 (+18% UPSIDE) is based on 2025 PE 12.5x (1SD below mean). 

• Revenue’s surged 47% YoY, driven by a 200% increase in infrastructure software revenue. Despite strong revenue growth, the company posted a $1.88B net loss due to a $4.5B tax provision
• AI revenue is projected to grow by 10% sequentially in Q4, surpassing $3.5B, and is expected to total $12B for fiscal 2024. VMware annualized booking value increased 32% QoQ.
• Despite beating Q3 estimates, Broadcom’s Q4 revenue guidance of $14B fell short of the $14.04B expected by analysts. This led to a 7% drop in shares post-earnings.

• The 4Q24 is slightly on the downside, and we are currently adopting a somewhat conservative approach.  
• Visibility extends for no more than 3 months, and any increase in demand is primarily driven by urgent orders.
• As for the upcoming 12″ Fab, which is in collaboration with Nxp Semiconductors Nv (NXPI US), it has commenced local recruitment efforts in Singapore.

• Global semiconductor sales saw a 40% rise in Americas in July, with Acer hitting record highs in India and Indonesia.
• Foxconn is reviewing a European semiconductor plant and investing in technology, as SEMI CEO calls for 10-20 wafer fabs in India.
• Semiconductor giants reveal sustainability plans at Semicon Taiwan 2024, while ASE forms SiPhIA consortium for advancements in silicon photonics. UK auto industry embraces net-zero amid EV revolution, and China’s leading AI chip unicorn faces revenue decline despite sector growth.

• BILL’s fiscal Q4 2024 earnings release and conference call signified a noteworthy closure to its fiscal year, presenting both accomplishments and areas for improvement.
• The company, with its leadership featuring CEO Rene Lacerte and CFO John Rettig, outlined a series of strategic initiatives and financial outcomes that underline its standing in the financial operations sector, particularly for small to midsized businesses (SMBs).
• 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.

• Marvell Technology, Inc.’s Q1 2025 earnings report reflects a strong start to the fiscal year with revenue of $1.16 billion, surpassing the midpoint of guidance.
• The overachievement was largely driven by higher-than predicted results from the company’s data center operations, which reported $816 million in revenue for the quarter.
• The company anticipates such performance and growth to continue throughout the fiscal year, especially in light of initial shipments of their custom AI compute programs.

• iQIYI recently divulged its financial and operational results for the second quarter of 2024, revealing several intriguing aspects about its current business trajectory.
• This analysis aims to distill the substantial information provided during the earnings call and form an even-handed view on iQIYI’s performance and future prospects.
• iQIYI remains a significant player in the long-form video sector in China, holding a competitive edge in the drama and film categories.

• KKR has launched its deal early to make life difficult for Bain, who has Founding Family support, due diligence, and another hearing with the company to make a Binding Bid.
• The combination of Bain’s PR on 3 September and the new documents out late last night from KKR and Fuji Soft show a picture of KKR/3D somehow acting coercively.
• This is something of a mess. It should become a case study for lawyers/advisors of what NOT to do when a large PE firm approaches you. Expect a bun fight.

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• The rankings used for the September 2024 index rebal event will be based on yesterday’s (4th September 2024) opening prices.
• In this insight, we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.

• Taiwan Semiconductor (TSMC) – ADR (TSM US)  will benefit from Intel Corp (INTC US)‘s decision to use their 20A processor, named Arrow Lake.  
• Intel plans to stick with the 18A process and has identified about 5 potential customers.
• As of now, TSMC remains the primary source for technology deliveries.

• Baidu has reported its financial results for the second quarter of fiscal year 2024, showcasing resilience with its Baidu Core which posted a modest revenue growth to RMB 26.7 billion.
• This growth was driven by the accelerating performance in the AI Cloud sector, which somewhat counterbalanced the drag provided by the online marketing segment.
• Notably, there was an 8% year-over-year increase in non-GAAP operating profit for Baidu Core, reflecting continued operational efficiencies.

• Mispronunciations of Nvidia can be a red flag for some investors
• The volatility in Nvidia stock after earnings was not surprising due to high trading volume and options activity
• Buy side expectations and unofficial whisper numbers can impact stock performance in high profile companies like Nvidia

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

• Erajaya Swasembada (ERAA IJ) booked a solid set of 1H2024 results driven by the availability of affordable handsets, with volumes driving growth despite lower prices. 
• The company’s Erablue consumer electronics JV with Mobile World Investment (MWG VN) now has 61 outlets and is set to break even in 2024, with 80 stores expected by year-end. 
• The other growth drivers will come from private-label accessories and its Grand Lucky supermarket expansion. Valuations look attractive will the company trading on a 6x forward PER multiple.

• Workday, a leading provider of enterprise cloud applications for finance and human resources, delivered a mixed set of results in its fiscal 2025 second-quarter earnings.
• The company reported a 17% growth in subscription revenue and a healthy increase in its 12-month backlog, which grew 16%.
• Professional services also saw growth, contributing to a total revenue growth of the same percentage.

• Snowflake Inc. reported a solid financial performance for the fiscal second quarter of 2024, with product revenue increasing by 30% year-over-year to $829 million, surpassing analyst expectations.
• The company raised its full-year revenue outlook to $3.36 billion, reflecting its continued focus on innovation and product development.
• Despite this growth, Snowflake’s stock faced pressure, dropping by 7% in extended trading as concerns over its ability to fully capitalize on AI-related opportunities persisted.

• Nvidia expands beyond chips to offer various AI services, becoming a one-stop AI factory for customers.
• Cobalt recycling gains popularity as speculation grows over export restrictions, driving the trend in the industry.
• India and Singapore sign MoU on semiconductors, while UK delegation pursues closer ties with Taiwan for collaboration.

• NetEase’s 2024 second quarter earnings report revealed considerable strategic progress, although accompanied by some operational challenges typical for a growing enterprise.
• The company reported a total revenue of RMB 25.5 billion, indicating a 6% year-over-year increase, driven largely by the success in its gaming division and expanded efforts in international markets.
• 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.

• Nomura Research Institute (4307 JP) and Ryohin Keikaku (7453 JP) will replace Nippon Paper Industries Co L (3863 JP) and Dic Corp (4631 JP) in the Nikkei 225 (NKY INDEX). 
• Fast Retailing (9983 JP)‘s CPAF will drop from 3 to 2.7 and there will be further selling in March 2025 as the CPAF drops to 2.4 (or possibly even 2.1!) 
• Passives will need to buy 7-15x ADV (13-14% of real float) in the adds and sell 2.7-6.5x ADV in the deletes. There is a big reverse funding trade too.

• In response to the potential Bain competing offer for Fuji Soft Inc (9749 JP), KKR has waived the precondition and launched its offer at unchanged JPY8,800 per share.
• Bain’s due diligence ends on 20 September, and it aims to submit a binding proposal in October. This timeline will thwart KKR’s offer, which closes on 21 October.
• KKR’s offer launch at unchanged terms is delaying the inevitable and will have to bump to succeed. A potential bidding war is likely to push the offer price to JPY10,500. 

• There will be passive buying in Nextdc Ltd (NXT AU) and Charter Hall (CHC AU) and selling in Vital Healthcare Property Trust (VHP NZ) at the close on 20 September.
• Charter Hall (CHC AU)‘s stock price jumped following announcement of results and that was accompanied by big short covering. There should still be more positioning here. 
• Nextdc Ltd (NXT AU)‘s increase in cumulative excess volume came on a drop in the stock price. There could be some covering here as positioning builds up.

• PC Partner showed a significant improvement in its 1H24 results YoY.
• The company will be relocating HQ to Singapore and move its primary listing from HK to Singapore. If this move is successful, it will improve AI chips allocation from Nvidia.
• Why Singapore? PC Partner is preparing itself for a future where China/USA political relationship does not improve.

• China Tower (788 HK) will replace China International Capital Corporation (3908 HK) in the iShares China Large-Cap (FXI) (FXI US) at the close on 20 September.
• The appears to be a lot more positioning and short interest in China International Capital Corporation (3908 HK) compared to China Tower (788 HK). 
• The listing of Midea Group Co Ltd A (000333 CH) H-shares could result in another change for the ETF prior to the next scheduled rebalance in December.

• Intel faces two class action lawsuits, one of which has the potential to be many times worse than the “Pentium Flaw” fiasco in 1994
• The resignation of Lip-Bu Tan from Intel’s BoD is a significant blow particularly in view of his rumoured disagreements with the CEO and other BoD members
• Intel’s below book value market cap presents an attractive opportunity for any consortium with the vision to extract the value that Gelsinger’s IDM 2.0 gambit has failed to unlock

• Apple’s App Store contributed to the $85.2 billion service segment revenue in 2023, with an impressive gross margin of 70.2%, making it a crucial profit driver within Apple’s Services segment.
• The restructuring splits the App Store division into two teams: one to oversee the traditional App Store, and another to manage new, legally mandated alternative app distribution channels. 
• Developers who choose to bypass the App Store may incur a substantial Core Technology Fee, potentially amounting to hundreds of thousands of dollars, reflecting the cost of maintaining Apple’s ecosystem.

• In this insight, we take a look at our final expectations for ADDs/DELs for the F100 and F250 indices during the September 2024 index rebal event.
• Yesterday (3rd September) was the base date for this rebalance event and the index changes will be confirmed after market close today.
• We see one change for F100 and one change for F250 during the regular rebalance but there could be another change triggered by the Network International (NETW LN) deal completion.

• UK car market sees resurgence as electric vehicles gain popularity at LCV Show, driving up sales and interest in sustainable options.
• SAIC Motor struggles with falling profits and tariffs on electric vehicles, putting financial strain on the company’s operations.
• IEDC fosters stronger economic ties between Taiwan and the region through a new office opening, promoting business opportunities and enhancing cooperation.

• Salesforce, a prominent leader in customer relationship management (CRM) solutions, disclosed its fiscal 2025 second-quarter financial results, articulating significant developments and prospects, particularly in AI (artificial intelligence).
• The earnings call, spearheaded by Salesforce executives including Chair and CEO Marc Benioff, illustrated both promising highlights and some challenges that investors need to consider.
• Positively, Salesforce reported a robust quarter with revenue marking $9.33 billion, representing an 8% increase year-over-year and adjusting for currency fluctuations, a growth of 9%.

• The changes to the S&P 500 INDEX (SPX INDEX), S&P400 Index and S&P600 Index will be announced after market close on Friday.
• The conclusions of the market consultation to change the index weighting methodology for the Select Sector Indices to reduce concentration and avoid reverse turnover should also be announced.
• Changes in the index weighting methodology will result in a round-trip trade of US$35bn across the Select Sector indices. The largest turnover is in the XLP and XLK.

• Nikkei reports that Bain will launch a competing tender offer for Fuji Soft Inc (9749 JP) around JPY9,200-9,300 per share, around 5% higher than KKR’s offer. 
• The Board responded that Bain submitted a non-binding proposal on 26 July. The special committee will consider its feasibility if a binding proposal is submitted. 
• KKR has three options to respond to a higher Bain offer: revise it, launch a hostile offer at unchanged terms, or walk away. The first option is the most likely.

• The September rebalance of the HSI, HSCEI, HSTECH and HSIII indices will use today’s closing prices to cap the index constituent weights at 8%/12%. This will lead to large flows.
• The round-trip trade across all stocks across the four indices is estimated at HK$18.1bn (US$2.3bn).
• Kuaishou, ASM Pacific Technology, JD.com, J&T Global, Sunny Optical and New Oriental Education are the largest buys while Alibaba, Tencent, Meituan, Xiaomi and HSBC Holdings are the biggest sells.

• The close of 3 September 2024 was the final price to determine capping for the Hang Seng Index Rebalances which will take place this Friday 6 September 2024 at close.
• The numbers are largely unchanged, though price changes in the interim cause more Kuaishou Technology (1024 HK) to be bought, and more Xiaomi Corp (1810 HK) to be sold.
• The biggest name in flows is, of course, ASM Pacific Technology (522 HK) which sees 15 days to buy.

• South Africa was downweighted in ACW, EM and EM ex China for a second consecutive quarter. 
• Brazil was the largest upweight in ACW, EM and EM ex China.
• Tencent was downweighted in the EM index but upweighted in ACW.

• In this insight, we discuss the potential sale of SK Specialty by SK Inc (034730 KS) which owns 100% stake in the company. 
• If SK Inc could sell SK Specialty at about 3 trillion won to 4 trillion won, this could reduce significantly reduce debt burden of SK Inc.
• Our base case NAV value per share for SK Inc is 203,288 won per share, representing 38% upside from current levels.

• The original Target Opinion Statement for KKR’s bid at ¥8,800/share offered a glimpse at a non-binding, questionably feasible offer at a slightly higher price, which 3DIP might have rejected.
• That was apparently Bain, and now we know Bain has consistently had the higher price. Fuji Soft Inc (9749 JP) handled this whole process badly, perhaps cowed by 3DIP.
• Now the cat is amongst the pigeons. This is less hostile than it looks IMO. The market thinks it will be a bun fight. 

• With 70% of the review period complete, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in December.
• There are overlapping names for the two indices and some of the stocks will also have flows from the CSI Smallcap 500 Index – Shang (SH000905 INDEX) trackers.
• The potential adds have outperformed the potential deletes for both indices on a year-to-date basis, but near-term performance has been lackluster.

• Intel Corporation finds itself at a critical juncture as it heads into its mid-September 2024 board meeting, grappling with a series of severe challenges that threaten the company’s stability and future prospects.
• Once a titan of the semiconductor industry, Intel has been beset by financial difficulties, including continuous losses, declining market share, and an increasingly competitive landscape.
• The situation has been exacerbated by the recent departure of key executives, adding to the uncertainty surrounding the company’s strategic direction.

• CrowdStrike, a leader in cybersecurity known for its AI-driven Falcon platform, now finds itself grappling with significant challenges in the wake of a global IT outage that has shaken its foundations.
• While the company has long been recognized for its robust growth, technological innovation, and a solid client base, the recent incident has exposed vulnerabilities that could impact its future trajectory.
• The outage, which disrupted services across critical sectors, has raised questions about the resilience of CrowdStrike’s operations and the reliability of its platform.