TMT/Internet

• Shift Inc (3697 JP) s share price has been down 65% YTD as the company’s aggressive investment on HR and system reinforcement led to fall in margins which concerned the market.
• However, the company has adopted several measures to improve its margins, and we expect the investment in HR and others to generate results going forward.
• Though share price has moved up slightly, valuation multiples are at a steep discount, and we would look for building a position.

• Diverse AI Portfolio: Microsoft’s diversified AI investments, including partnerships with G42 and Mistral AI, reduce reliance on OpenAI and ensure continued innovation across multiple AI ventures.
• Azure’s Competitive Edge: The partnership with OpenAI strengthens Azure’s position by offering exclusive AI-driven cloud services, boosting demand from enterprises seeking advanced automation and productivity tools.
• Industry Leadership: As AI investment intensifies across the tech sector, Microsoft’s significant spending outpaces peers, positioning the company as a frontrunner while highlighting competitive pressures in the growing AI landscape.

• Singtex’s sustainable dyeing plant aims to boost profits by enhancing eco-friendly practices in textile industry
• Tata Motors partners with Delta Electronics and Thunderplus Solutions to set up fast charging stations in India
• Epson dominates robotic arm market with three key strategies, solidifying their leadership position in the industry

• Xiaomi reported CY2Q24 revenue, non-IFRS EBIT and non-IFRS net income 5.6%, 32.2%, and 40.0% vs. consensus. 
• Despite the limited scale and numerous incentives offered at launch, Xiaomi reported an EV gross margin of 15.4%. Greater scale and reduced incentives provide further margin upside in C2H24;
• Xiaomi’s smartphone and IoT market share gain have accelerated amid the halo-effect stemming from the SU7. We reiterate our BUY rating, and raise  TP to HK$27.0, implying 28.3x CY25 P/E.

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

• AAC Technologies Holdings
• GMR Hyderabad International Airport

• XPER selling Perceive is of greater benefit than the proceeds XPER would immediately receive. 
• The sale of Perceive to AMZN gives clarity as to the value of the technology XPER has been incubating for many years. 
• We estimate XPER recognizes approximately $3.5 million to $4 million in quarterly operating losses from Perceive. The cost savings would be material to XPER’s non-GAAP net income.

• CyberArk Software demonstrated strong financial performance in the second quarter of 2024, exceeding expectations with significant growth in revenue, operating income, and earnings per share.
• This performance solidifies CyberArk Software’s leadership in the identity security space.
• The company’s planned acquisition of Venafi, a leading provider of machine identity management solutions, is expected to further strengthen its capabilities and competitive position.

• KLA Corporation reported its financial results for the June quarter of 2024, reflecting growth and improvement across several key metrics.
• Key highlights from the report include revenue, gross margin, and EPS exceeding their respective guidance midpoints.
• Revenue growth was witnessed both sequentially and year-over-year, indicating a robust market environment that benefits from advanced technology adoption and escalating complexity in semiconductor processes.

• Kuaishou reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, and 5.7% vs.  our estimates; and in-line, 9.0% and 14% vs. the consensus. 
• The bright spot was strong growth in its advertising and stabilization in the regulation-affected live streaming. Our BUY case of AI empowering mid-sized traffic platforms is intact;
• We cut TP to HK$75 to reflect the sustained damage of weak consumption. The stock is trading at only 8.5x PE for 2025.

• CMES AI Robotics is getting ready to complete its IPO on KOSDAQ in October. The expected IPO price is 20,000 won to 24,000 won. 
• CMES provides intelligent robot solutions that combine artificial intelligence (AI) and three-dimensional (3D) vision technology. CMES’s core technologies include 3D vision sensors and image processing algorithms. 
• Robotics related IPOs have generated enormous interest in Korea. Although CMES is a small cap name, this robotics related IPO is also likely to garner high interest as well. 

• Rohm’s cyclical turning points in revenue typically lag the turn METI production %YoY less inventory % YoY for electronic devices and components by 12 months.
• Investors were disappointed with Q1 results, but the company cleanly outperformed most peers in the power semiconductor space, and recovery now looks inevitable. 
• We believe the fair value of shares to be around ¥3,300, 2x the current price, but investors should ask, “When?” Not “How much.”

• Silicon Shield 2.0 involves managing risks and building partnerships to secure supply chains in today’s economic landscape.
• AMD collaborates with ZT System engineers to simplify rising AI system complexity, enhancing efficiency and productivity.
• Foxconn leverages AI server trading models to increase profits, while Taiwan’s president calls for regional de-risking and trade partnerships to adapt to supply chain shifts. #Taiwan #trade #partnerships #supplychain. Innodisk’s AI revenue surpasses 20%, foreseeing growth in revenue and profit in the second half of 2024. SK Hynix’s revenue doubles in the US and China, attributed to increased AI demand in the first half of 2024. TSMC’s new fab in Germany is expected to generate jobs and enhance wafer ecosystems in Europe.

• Toyo Corporation announced a share buyback of up to 1.2 million shares or ¥1.5 billion for FY9/24, which equals about 5% of the current shares outstanding in addition to an upward revision of DPS to ¥67 from ¥62.
• This reflects Toyo’s commitment to improving total shareholder returns and ROE. OP margin declined significantly (-6.4% Q3 FY9/23, -6.5% Q3 FY9/24) but it was due to cyclicality.
• Physics / Energies continued to see strong growth (+35.0% YoY) on the back of robust demand for carbon neutrality. 

PVA TePla’s (PVA’s) Q224 results were strong and management reiterated its FY24 guidance and FY25 outlook of moderate growth, despite a weak order intake. The outlook is based on the expectation of increased order momentum in Q4, especially for metrology. PVA has resolved the issue of replacing at short notice two supervisory board members. Two new board members will be up for election at PVA’s AGM on 30 August. Although the company’s share price has appreciated from its recent lows of c €13 (from c €20 earlier this year), there is no meaningful recovery yet. With FY24 and FY25 estimates unchanged, this implies much lower multiples compared to our initiation report in May.

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

• Sunny Optical Technology Group
• Xiaomi Corp

• Q1-2 FY12/24 results were ahead of company guidance for profits, with the company driving earnings through a combination of sales growth for the higher return Product Service segment, and sound cost management with flat SG&A costs YoY.
• We believe quarterly Q2 FY12/24 SaaS metrics for LaKeel Products were positive, demonstrating an acceleration in growth for ARPU (+9% YoY) and MRR (+26.2% YoY).
• This strategically important product line contributed 14% of Q1-2 FY12/24 sales, and continued execution of scaling will allow the company to improve both the sales mix as well as the quality of earnings.

Nano Dimension reported record revenue of $15.0m in Q224, slightly higher year-on-year and 12% higher quarter-on-quarter. The Reshaping Nano initiative continued to reduce cash burn, which was down 64% y-o-y in Q224 and 69% in H124, before share buybacks. Management is focused on completing the Desktop Metal (DM) acquisition by the end of the year. The combined entity will have a broad product offering, supporting the entire value chain from prototyping through to volume manufacturing, along with considerable cash to support organic and inorganic growth. With significant revenue and cost synergies identified, the new group should be able to accelerate the path to profitability.

• Shift4 Payments reported its second quarter results for 2024, reflecting robust growth in several key financial metrics, driven by strategic acquisitions and a significant expansion across various verticals both domestically and internationally.
• The company showcased impressive growth in end-to-end payment volume, ascending by 50% year-over-year.
• Gross profit increased by 38%, and gross revenue led by network fees grew by 41%.

• Alarm.com reported its second quarter 2024 financial results, which have exceeded expectations with significant achievements and strategic advancements outlined during the earnings call.
• The company saw an increase in SaaS and license revenue to $155.9 million and adjusted EBITDA to $42.8 million.
• This can be attributed to organic growth in its commercial, international, and Energy Hub businesses.

• Unity’s leadership, spearheaded by newly appointed CEO Matthew Bromberg and outgoing CFO Luis Visoso, provided a comprehensive overview of the company’s Q2 2024 performance and forward-looking strategies in the recent earnings call.
• Despite facing challenges, Unity’s strategic positioning and operational adjustments have it set towards a path of recovery, albeit with cautious optimism.
• 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.

• From early June until yesterday, local pension funds have purchased nearly 4% of DB HiTek’s SO. This places DB HiTek in a dominant first position in their net buying list.
• The timing of local pension funds beginning to buy DB HiTek coincidentally aligns with May 22, when DB Inc was requested by the KFTC to transition into a holding company.
• Focus on potential price impact from DB Inc.’s buying and value-up index inflows. Considering a relative overweight in DB HiTek may be strategic despite some risk.

• Excluding the new business electrical vehicle, total revenue increased by 23% YoY in 2Q24.
• Smartphone shipments grew faster than Samsung and Apple in 2Q24.
• We believe electrical vehicle will bring significant gross profit in following two years.

• TSMC Foundry 2.0 more than doubles its addressable market and resets its market share to 28%, down from the ~60% share it has long enjoyed in the “traditional” foundry market
• The lion’s share of this new market will come from IDM, a combination of increased outsourcing (e.g. Intel) and new JV deals (e.g. Germany and Japan)
• Foundry 2.0 reflects the reality of how the semi industry is evolving and it’s the polar opposite of Intel’s IDM 2.0 

• 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.
• In this insight, we take a look at the upcoming constituent changes in the run up to the September 2024 index rebal event.
• We expect two regular changes in September 2024. There are also several live M&A events which could trigger intra-review index changes in the late-2024/early-2025.

• Taiwan Tech Stocks Rally, But Lag Nvidia’s Massive Rally; Prepare for Nvidia, Dell, HP Results Next Week
• Hon Hai & Zhen Ding Show No Major AI Slowdown; Taiwan AI Supply Chain Names Lag Nvidia’s Rebound 
• TSMC Foundry 2.0: Strategic Shift Or Brand Tinkering? Why It Is Significant

• SE Asia & India deploying semi supply chains for efficiency & cost reduction, with focus shifting to automotive & mobile ventures.
• Taiwan leveraging strong semiconductor industry to attract foreign students & enhance industry leadership.
• Wiwynn suing Musk’s X over unpaid server bills, UK reassessing semiconductor strategy amid US & China influence. Apple’s Foxconn to manufacture iPhone Pro in India, AMD entering AI market with $4.9 billion investment. TSMC building EUR10B fab in Dresden to boost semiconductor industry.

• Hon Hai’s Latest Key Take Aways — No Slowdown for AI Server or Mobile Demand Indicated
• Zhen Ding — Delivers Higher Than Expected 2Q24 Growth; No Indication of AI Server or Mobile Slowdown
• Taiwan AI Supply Chain Names Have Lagged Nvidia’s Massive Rebound Since August 9th

• IonQ’s second quarter financial and operational performance for 2024 reveals a mix of significant technological advancements and robust commercial progress, underscoring both opportunities and challenges as the company advances in the quantum computing sector.
• Starting with the financial metrics, IonQ reported a revenue of $11.4 million, surpassing the upper range of its guidance.
• This indicates effective contract execution and perhaps a growing demand for their quantum computing solutions.

• The Trade Desk reported a robust performance for the second quarter of 2024, with notable year-over-year revenue growth of 26%, totaling $585 million.
• This growth considerably surpasses the growth rates experienced by peer companies within the digital marketing sector, emphasizing The Trade Desk’s consistent ability to capture increased market share.
• This trend is particularly highlighted in areas like Connected TV (CTV), which continues to be a strong driver of the company’s expansion.

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

• Murakami’s entities, City Index Eleventh and Aya Nomura, reported a 5.06% position in Iriso Electronics (6908 JP). The purchases were from 25 July to 13 August.
• Murakami’s average buy-in price over the last 60 days was JPY2,378.90 per share, a 7.8% discount to the last close price.
• Murakami’s disclosure suggests two possibilities: the start of an activist campaign or a short-term pump-and-dump play. The former is likely as Iriso is cash-rich with a P/B less than 1x.

• The gross margin improved 5 pp (percentage points) YoY and the operating margin improved 7 pp YoY in 2Q24.
• In 2Q24, total revenue grew by 12% YoY, with the main business up by 22% YoY.
• Three cross-sectional comparisons reach similar stock upsides about 100%. Buy.

• With the start of the review period around the corner, there could be two changes for the FnGuide Semiconductor Top10 Index at the October rebalance.
• Wonik Ips (240810 KS) and Techwing Inc (089030 KS) are potential adds while ISC Co Ltd (095340 KS) and Dongjin Semichem (005290 KS) are potential deletes.
• Passives will need to trade more than 2x ADV on two potential changes and more than 1x ADV on another potential change.

• SDC closes Slovakia branch due to declining competitiveness in European market, experiencing challenges in the region.
• SSFC remains optimistic about growth in China’s auto market despite market slowdown, seeing potential for expansion.
• Global semiconductor industry strengthens in 2Q24, as per SEMI report, with Taiwanese IPC maker showcasing at Automation Expo 2024 in India.

• Base case valuation of Lumir is target price of 18,542 won per share. Given the low upside relative to IPO price range, we have a Negative view of this IPO. 
• Our net profit estimates in 2025 and 2026 are 38% and 63.3% lower than the company’s estimates.
• Lumir provides key technologies for satellite systems, including small synthetic aperture radar (SAR) satellite systems and payloads.

• Sales increased by 7.4% YoY to JPY49.8bn, with operating profit up 4.4% YoY to JPY9.9bn.
• Recurring profit rose 88.8% YoY to JPY19.9bn, driven by a JPY9.4bn equity method investment gain from Iwatsu Electric.
• FY06/25 forecasts include sales of JPY68.0bn (+36.5% YoY) and operating profit of JPY10.5bn (+6.6% YoY).

• ODDITY’s Q2 2024 earnings report shows substantial growth and operational efficiency, indicating strong performance and an aggressive growth trajectory.
• The company posted a 28% increase in first-half revenue, reaching $404 million, alongside an impressive $110 million in adjusted EBITDA and $104 million in free cash flow.
• Such figures not only indicate potent financial health but also highlight ODDITY’s strategic efficiency, outpacing legacy incumbents significantly.

• Lumir is getting ready to complete its IPO on KOSDAQ in September. The IPO which is expected to raise between 49.5 billion won to 61.5 billion won.
• Lumir specializes in the development of observation satellite technology including image data processing devices and onboard computers for a number of government satellite series.
• Lumir had sales of 12.1 billion won (up 90.5% YoY) in 2023. Its sales surged by 477% YoY to reach 8.2 billion won in 1H24.

• With the review cutoff done, we expect just one change for the iShares China Large-Cap (FXI) (FXI US) ETF in September.
• China Tower (788 HK) is a high probability inclusion while China International Capital Corporation (3908 HK) is a high probability deletion.
• There has been an increase in cumulative excess volume for both stocks in the last few months, but the pace has slowed noticeably in the recent past.

• Foxconn benefits from regionalized production with improved efficiency, reduced shipping costs, and better supply chain integration.
• AMEC is confident in their lawsuit against the US Department of Defense, showing strong belief in the merit of their legal case.
• Japan’s economy faces uncertainty with financial resources at risk after Kishida’s resignation, raising concerns amidst the country’s economic landscape and supply chain players cautiously optimistic about AI server boom.

• Eltek Ltd is an established manufacturer of Printed Circuit Boards (PCBs) that is entering a new growth phase due to increases in manufacturing capacity and potential M&A transactions.
• The company has the potential to grow both revenues and earnings at double-digit growth rates for the foreseeable future if they can execute on their accelerated investment program and maintain technological superiority.
• The company maintains a strong balance sheet and generates free cash flow.

• Global Payments delivered mixed results in its second quarter of 2024.
• The company reported a 6% adjusted net revenue growth or 7% excluding the impact from the divestiture of Netspend’s consumer assets, with adjusted earnings per share growing by 12%.
• Operationally, Global Payments advanced its market positioning through strategic expansions and solution rollouts across varied verticals.

• HubSpot, in its Q2 2024 earnings presentation, portrayed a complex yet promising landscape, balancing solid growth with strategic adjustments in response to market conditions.
• The company reported a 21% year-over-year revenue growth in constant currency, backed by a surge in its customer base to 228,000, marking an addition of over 11,200 net customers within the quarter.
• This growth trajectory was underpinned by enhanced operational efficiencies resulting in a notable improvement in operating margins, expanded by 270 basis points year-over year to 17%.

• Revenue reached JPY3.7bn (+47.5% YoY), with increases in Global Telecommunications but declines in Domestic Telecommunications and Medical & Healthcare.
• Operating profit was JPY760mn (+84.0% YoY), with cost ratio falling 7.1pp YoY and SG&A ratio rising 3.0pp YoY.
• Foreign exchange gains of JPY350mn were booked in Q1 FY03/25 due to valuation of foreign currency-denominated receivables and payables.

• Kulicke and Soffa Industries Inc., a global provider of semiconductor assembly equipment, reported its fiscal third quarter 2024 results with a focus on strategic growth initiatives and progress in various sectors.
• The company has been actively working in areas such as advanced packaging, advanced dispense qualifications, and adopting new ball bonding solutions.
• During the earnings call, the company highlighted its involvement with the U.S.-Joint semiconductor consortium, aiming to foster collaboration in advanced packaging production solutions.

• Viasat, Inc. recently delivered its Q1 FY 2025 earnings results, reporting an encouraging uptick in year-over-year revenue and adjusted EBITDA growth, reflecting a positive development.
• The company showcased a strategic focus in strengthening its capital structure and continues to make significant investments to set the stage for a promising future.
• Specifically, the enhancements include expected activations in aviation, robust defense and advanced technology orders, and a strong existing and prospective order pipeline, which have collectively allowed Viasat to elevate its fiscal year outlook.

• In the second quarter of 2024, Warner Bros. Discovery navigated a mixed environment marked by significant achievements and prevailing market challenges, reflecting the complex visibility of its transition phase two years post its launch.
• The direct-to-consumer (DTC) segment exhibited robust performance, highlighted by impressive international subscriber growth initiated by the strategic timing of Max’s launch in Europe to coincide with the Olympic Games.
• This geographical expansion has fundamentally bolstered Warner Bros. Discovery’s position as a formidable player on the global streaming scene, leveraging large-scale live events to drive subscriber engagement and growth.

• There will be 3 changes for the Hang Seng Internet & Information Technology Index (HSIII) at the September rebalance. There are some surprises.
• Estimated one-way turnover at the rebalance is 3.4% resulting in a round-trip trade of HK$2.04bn (US$262m). 7 stocks will have over 1x ADV to trade.
• Weimob Inc. (2013 HK) is a surprise add. There is 6x ADV to buy from passive trackers and shorts are 12% of shares out and 24x ADV to cover.

• As expected, ASM Pacific Technology (522 HK) will replace Ping An Healthcare and Technol (1833 HK) in the Hang Seng TECH Index (HSTECH INDEX) at the close on 6 September.
• Estimated one-way turnover at the rebalance is 3.2% resulting in a round-trip trade of HK$6.5bn. Passives need to buy over 7x ADV in ASM Pacific Technology (522 HK). 
• Positioning appears light in both stocks. Expect ASM Pacific Technology (522 HK) to move up and Ping An Healthcare and Technol (1833 HK) to move lower near-term.

• The Hang Seng Index Committee its slow move (lack of movement) towards 100 names and sector rebalancing to tech and healthcare. This is really disappointing.
• This time? We get nothing. No name changes. Some capping flows. 6 FAF changes. 
• Minimal flows on the HSI rebalance to be effective on 9 September. 

• In a surprise (maybe should not have been!), there are no constituent changes for the Hang Seng Index (HSI INDEX) in September. However, there are float and capping changes.
• Estimated one-way turnover is 1% and estimated round-trip trade is HK$3.73bn (US$478m). There are no stocks with over +/-0.5x ADV to trade but flows could add to/offset other index flows.
• We remain at 82 index constituents and the road to 100 constituents appears to be a long drawn out torturous one. At this glacial pace, could be an eternity away.

• Berkshire Hathaway Inc Cl B (BRK/B US) held over 5% of Apple (AAPL US). Nearly half of that was sold in the June quarter to take the holding to 2.63%. 
• Berkshire’s selling should result in an increase in Apple (AAPL US)‘s free float in the S&P 500 INDEX (SPX INDEX) and other related indices.
• There will also be large buying in Apple (AAPL US) from the Technology Select Sector SPDR (XLK US) ETF if the proposals in the market consultation are implemented.

• HSTECH sees one ADD, one DELETE and several capping and re-capping actions. One of the re-caps is already an un-recap (i.e. a new capping), to be updated.
• The ADD is ASM Pacific Technology (522 HK), as expected, with significant ADV impact to buy. The DELETE is Ping An Healthcare and Technol (1833 HK), also a big sell.
• Across the three major indices, Alibaba Group Holding (9988 HK) is the big dollar sell and HSTECH changes are the biggies in terms of ADV impact.

• 1H 24 net profit is expected to grow by 54%, a similar amount to FY 23 with a consistent message that revenue growth helps and cost control is in place. 
• Wasion Group Holdings (3393 HK) benefits from the One Belt One Road policy as many of the EM countries do not have smart power meters yet. 
• Wasion’s holding on Willfar Information Technology (688100 CH) is worth around USD 970 million, double the current market capitalization of Wasion.

• TSMC: +16.3% Premium; Can Continue to Consider Shorting the Spread Here
• UMC: +0.7% Premium; Wait for Higher Levels Again Before a Fresh Short
• ASE: +4.6% Premium; Breakdown of Spread Could Persist Since History Indicates It’s Now a Normal Level

• Long Lastertec after a solid set of numbers and the easing of concerns raised by the recent Scorpion Capital short sellers report.
• Short 6525 Kokusai Electric over continuing concerns over the US upcoming trade restriction announcement in September.
• This was previously seen as a dangerous short due to its high outstanding short interest, although it has now unwound to almost zero.

• The ChiNext Index represents the performance of the 100 largest and most liquid A-share stocks listed on the ChiNext Market of the Shenzhen Stock Exchange.
• The ChiNext 50 index is a subset of the ChiNext Index and it consists of the top 50 names in the ChiNext index with the highest daily average turnover.
• In this insight, we have presented our updated rankings for Potential ADDs and DELs for the upcoming index rebal event in December 2024.

• SOUTHBOUND was again a net buyer, for HK$16.6bn this week (now 28wks in a row of net buying), on VERY LOW two-way volumes. 
• Gross volumes were very low. Net volumes were decent. There were three ETFs in the top 5 SOUTHBOUND net buys this past week suggesting position unwinding.
• Top net buys other than the ETFs were China Mobile and Tencent (now 14 out of 15 days seeing net SOUTHBOUND buying)

• PropertyGuru (PGRU US) entered into a definitive merger agreement with EQT (EQT SS) at US$6.70 per share, a 51.9% premium to the undisturbed price of US$4.41 (21 May).
• The shareholder vote is done (two-thirds voting threshold) due to TPG Inc (TPG US)/KKR & Co (KKR US)’s support and drag-along rights relating to REA Group Ltd (REA AU)’s shares.  
• This is a clean deal as there is no dissenting condition or requirement for country antitrust approvals. At the last close and for end-of-year payment, the gross/annualised spread is 2.3%/6.4%.

• A weekly summary of key developments across ECM and Event-Driven names tracked by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Thailand, Korea, India and Chinese ADRs.
• ECM developments: WeRide (WRD US) aims to raise up to US$119 million through a Nasdaq IPO and US$321 million through a concurrent private placement.
• Event-Driven developments:China Traditional Chinese Medicine (570 HK), CPMC Holdings (906 HK), JTower (4485 JP), Piolax Inc (5988 JP), Fancl Corp (4921 JP), PropertyGuru (PGRU US). 

• ASPEED’s July revenue amounted to NTD 601 million,  up 159% YoY 
• ASPEED’s YTD revenue of NTD 2,970 million, is up 88% YoY
• This bodes well for H224 server shipments, both general purpose and AI accelerated and should be reflected in NVIDIA’s earnings/outlook scheduled for August 28

• Tencent reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, 10% vs. our estimates and in-line, in-line, 19% vs. consensus;
• Weak fintech revenue, due to weak consumption, dragged down overall growth. But we see structural revenue acceleration and margin leverages in advertising, game and AI;
• We raise TP to HK$485 and keep Tencent as our TOP PICK.

• Fortinet’s second quarter 2024 financial performance presents a mixed but fundamentally robust picture.
• Starting with the positive facets, the company achieved record operating margins at 35%, a significant improvement by 820 basis points year-over-year.
• This financial efficiency was underpinned by a strategic blend of operational prowess and thoughtfully channeled investments toward high-growth markets such as Unified Security Access Service Edge (SASE) and Secure Operations (SecOps).

• The latest earnings announcement by Fidelity National Information Services (FIS) reflects a company leveraging its core strengths and strategic initiatives to navigate through a competitive and dynamic financial technology landscape.
• Under the leadership of CEO Stephanie Ferris and CFO James Kehoe, the company has demonstrated a sustained focus on accelerating profitable revenue growth and has reported a notable improvement in both revenue and profit margins.
• 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.

• Fox Corporation recently concluded its fiscal year 2024, reporting significant financial stability and operational successes.
• The company highlighted a revenue of nearly $14 billion and an EBITDA of $2.88 billion for the fiscal year, exemplifying strong performance even in the absence of high-profile events like the Super Bowl or the FIFA Men’s World Cup.
• The adaptations and growth in Fox’s various segments, especially Tubi, Fox News, and Fox Sports, underscore the company’s strategic execution and market adaptability.

• GlobalFoundries reported its financial results for the second quarter of fiscal year 2024, which showed a performance exceeding the midpoint of the company’s guidance ranges.
• Revenue for the quarter reached $1.632 billion, marking a sequential increase of 5% but representing a 12% decline year-over-year.
• This revenue performance was attributed to various dynamics across different market segments the company serves.

• Trimble’s recent financial results reflect a dual narrative of ongoing strategic execution and areas necessitating cautious optimism.
• Their Q2 2024 earnings evidenced some robust aspects of their business model as well as areas that are currently more stagnant, or in the process of readjustment and scrutiny.
• The company used the earnings call to highlight the actions it’s taking towards overcoming specific challenges while capitalizing on its strategic initiatives.

• ZoomInfo Technologies Inc. reported its financial results for the second quarter of 2024, revealing some challenging areas as well as positive strides in specific segments of its business.
• The report included details about a significant one-time charge due to prior period sales write-offs, particularly with SMBs. This led the company to revise its full-year guidance downward.
• Nonetheless, there were also considerable improvements and highpoints, particularly in new business contributions and product launches such as ZoomInfo Copilot.

• Sea Ltd‘s 2Q2024 results reflected both the success of its bold strategies to drive growth in areas such as live-streaming whilst at the same time increasing take rates and profitability.
• Its core focus on competitive pricing, content, logistics, and especially advertising will help to drive growth, retention, and profitability as unit economics improve, whilst it rolls out its lending products.
• Competitive intensity has stabilised which should allow for take rates to rise higher, whilst Shopee is well positioned to further increase its lead. Valuations look reasonable given Sea Ltd’s profitable status.

• Freee KK (4478 JP) reported 4QFY06/2024 and full-year results today. Earnings were in line with guidance, but operating losses have declined significantly beating consensus by a huge margin.
• The company has issued guidance which calls for a break-even or an adj. OPM of 3% for FY06/2025E suggesting freee’s investments in marketing and client acquisition have finally paid off.
• Freee’s share price has moved up slightly during the last few weeks, but still trading at a discount to its own multiples and at a steep discount to Money Forward.

• Istyle Inc (3660 JP)’s share price surged 17% after strong FQ4 results, surpassing expectations and signaling a potential turnaround.
• Despite past challenges, iStyle’s ambitious mid-term plan promises increased monetization and stronger growth ahead.
• With mid-term revenue and profit far exceeding expectations, istyle’s future looks brighter, with it’s share price potentially rising by more than 200%.

• Visionstate is a rapidly growing SaaS provider for the facilities management industry across the globe.
• The Company is targeting a largely untapped market across hospitality, education, and healthcare.
• The Company has hit an inflection point in its financial results, as revenue is growing >100% and costs are declining dramatically.

• JTower (4485 JP) IPOed itself Dec-2019 at ¥1,600/share. An 8-bagger in a year, fell by half, doubled, fell 70%, then doubled, fell 35%, up 50%. That’s the first 3yrs.
• Since then, the trend has been lower. The stock is down 80+% in 2 years, especially painful after an equity raise at just under ¥5,000 6 months ago.
• But the stock today closed at ¥1,430, and the Tender Offer is at ¥3,600. A 150% premium. That’s big, but it may be “too low.” An interesting case.

• JTower (4485 JP) has recommended a tender offer from DigitalBridge Group (DBRG US) at JPY3,600, a 161.8% premium to the undisturbed price of JPY1,375 (13 August). 
• Despite the hefty takeover premium, the offer is light (compared to historical trading ranges and the recent placement) and opportunistically timed (the share price has fallen 61% since 9 May). 
• Nevertheless, barring a spurt of activism, the offer should succeed as the required 40.7% minority acceptance rate is not onerous and should be comfortably met by Japanese cross-holders.    

• Appier achieved 32% YoY sales growth in Q2, driven by strong US market performance and balanced revenue from both new and existing customers.
• The company’s EBITDA margin improved to 13%, reflecting strong operating leverage despite ongoing investments in growth initiatives.
• Trading at a 2.9x EV/FY25 revenue multiple, Appier is undervalued relative to peers, with significant upside potential from sustained growth and strategic initiatives.

• Total revenue increased by 8% YoY in 2Q24, lightly higher than 1Q24 and 4Q23.
• The gross margins of all business lines Improved significantly YoY.
• We set the upside at 35% and the price target at HK$506 for the end of 2025. Buy.

• On the 25th July, SkyLake Equity Partners acquired a 46.9% stake from Praxis Capital Partners in BusinessOn Communication (138580 KS), Korea’s leading B2B SaaS company; plus 24.3% from BusinessOn’s management. 
• SkyLake has now launched a Tender Offer for 28.94% of BusinessOn. The Tender offer price is ₩15,849/share.
• Super clean deal. SkyLake will acquire all shares tendered. There is no minimum tendering % condition. 

• Tencent (700 HK) reported 2Q2024 results today which beat consensus. Domestic gaming resumed growth driven by the successful launch of DnF Mobile which continues to dominate charts in China.
• All three business segments saw improvement in margins driven by Tencent’s high-margin businesses incl. mini-programs, video accounts, short-videos, etc.
• We expect continued recovery in Tencent’s earnings, however, remain cautious given slowdown in consumption spending and macroeconomic uncertainties.

• Taiwan Semiconductor (TSMC) (2330 TT) has significantly outperformed this year, driven by a global AI-driven tailwind resulting in substantial revenue growth acceleration and a significant earnings upgrade cycle.
• Record levels of FCF generation have supported dividend increases, and whilst future DPS expectations seem conservative, the current dividend yield suggests future increases have been priced in.
• TSMC trades just above its 5-year historic average trading levels and at a premium to its key competitors, other smaller listed foundries, its main customers, and large suppliers.

• On 14 August, Shift Up (462870 KS) reported its 2Q 2024 results, which was the first earnings report post its IPO. 
• Shift Up reported sales of 65.2 billion won (up 65.4% YoY and 19.5% below consensus) and OP of 45.1 billion won (up 49% YoY and 21.4% below consensus) in 2Q24. 
• The company is preparing for a PC release of Stellar Blade in the near future to continue its strong popularity and it expects better results on PC than on console.

• Squarespace’s First Quarter 2024 Earnings revealed a strong performance, with revenue up by 19% and bookings increasing by 23%, surpassing the provided guidance on both metrics.
• The unlevered free cash flow margin stood at 32%, contributing to a positive outlook for the fiscal year 2024 in terms of both revenue and free cash flow.
• Throughout the quarter, growth was primarily fueled by consistent organic momentum in the company’s core business, particularly in website services which experienced robust retention and an uptick in new customer growth both domestically and internationally.

• Revenue: JPY6.5bn (+6.5% YoY), Operating profit: JPY727mn (-15.6% YoY), Recurring profit: JPY697mn (-31.7% YoY).
• Number of recurring revenue customers at end-Q2: 127 companies (+9.5% YoY), Monthly ARPU in Q2: JPY5,080,000 (-4.5% YoY).
• Revenue for Creative & Engineering service line: JPY5.7bn (+7.4% YoY), Talent Platform service line: JPY451mn (+3.2% YoY).