TMT/Internet

• Delhivery (1058656D IN) is looking at raising INR 52,350m (US$685m) in its IPO by selling up to 113.3m shares at a range of INR 462-487/share.
• At the mid point of the IPO range, Delhivery (1058656D IN) will be valued at INR 344.8bn (US$4.5bn) while the free float market cap will be much lower.
• Delhivery (1058656D IN) could get entry to the FTSE All-World Index at the December QIR, while inclusion in the MSCI India Index could take place at the May 2023 SAIR.

• AEM reported strong 1Q22 results (+226% YoY) and raised its FY22 revenue guidance to 700-750M SGD. AEM management continues to believe they are in a multi-year ramp-up. 
• While the US tech sector is imploding left and right AEM is a very specific story linked to Intel’s CAPEX binge. Expect momentum to remain in FY22 and into FY23.
• Fair Value of 8 SGD remains unchanged (based on 20x 0.40 FY22 EPS), or 62% upside from the current 4.92 SGD share price.

• Delhivery is now looking to raise around US$700m in its upcoming India IPO, the company is backed by a host of financial investors, the largest being Softbank
• Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
• We have covered various aspects of the deal in our earlier notes. In this note, we talk about valuation. 

• Hoya’s 4Q beat slightly with revenue beating consensus by 2.2% and PBT beating by 7.0%. 
• Those beats were better than peers such as Advantest and Lasertec and qualitative guidance suggests that YoY growth is likely driven by the Lifecare segment in particular. 
• That contrasts with our negative outlook for peer momentum and we expect Hoya’s recent underperformance to reverse in short order.

• Elon Musk got 19 friendly investors to pledge $7.1 billion toward his buyout of Twitter. 
• He also persuaded his bankers to slash his margin loan—as I projected…
• In exchange for increasing his equity commitment. So still $20+ billion to go.

• Delhivery is now looking to raise around US$700m in its upcoming India IPO, the company is backed by a host of financial investors, the largest being Softbank.
• Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
• We have covered various aspects of the deal in our earlier notes. In this note, we will undertake a peer comparison. 

• Keep Inc (KEEP HK) is looking to raise around US$500m in its upcoming Hong Kong IPO.
• Keep is an online fitness platform, offering online fitness content, smart fitness devices and fitness products. 
• The firm aims to develop a closed-loop system where its offerings are complementary, thus servicing an individual’s entire fitness life cycle.

• DAX is a German blue-chip index that tracks the 40 largest companies listed on the Regulated Market of the Frankfurt Stock Exchange. 
• The DAX Index is reviewed on a quarterly basis in March, June, September, and December. 
• In this insight, we take a look at the potential constituency changes for the June 2022 review. This is a follow-up insight to DAX Index: Quiddity Leaderboard for June 2022 

• Delhivery (1058656D IN) is a fully integrated logistics player in India. The company’s application for a listing has been approved by the regulators.
• The IPO will be open from 11-13th May and the company has downsized the IPO from INR7,460 crore to INR5,235 crores, with existing shareholders offloading shares worth of INR1,235 crores.
• This insight focuses on new data points from the company’s Red Herring Document (RHD).

• Vanguard’s revenue is NTD$13.49bn, which is falling at the high-end of guidance NTD$13.2~13.6 in 1Q22. 
• Vanguard is likely to further raise price in 2Q22, and we expect revenue/GM could be NT$14.67bn/49.2% in 2Q22.
• Further price increase could hold in 2H22 because 1) the smartphone growth expectation is reducing in 2Q22, and 2) the US Federal Reserve increased interest rate to control the inflation.

• ATEN continued to experience double-digit growth in the first quarter by reporting better than expected results. 
• The security first approach ATEN has taken to its sales efforts started to show its advantages last year and has continued in 2022. 
• The momentum from the first quarter is resulting in ATEN affirming revenue growth outlook towards the high end of the 10 percent to 12 percent range provided earlier 

• India’s quick commerce market is estimated to grow 15x by 2025 to hit a market size of nearly US$5.5 billion – large enough to propel prominent investors’ interest and gain the early-mover advantage.
• One of the companies at the helm of this nascent yet flourishing industry is Zepto, a startup launched by two Stanford University dropouts, Aadit Palicha and Kaivalya Vohra.
• The Y Combinator-backed startup promises 10-minute grocery deliveries, outpacing the delivery speeds of several ecommerce companies

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• Microstrategy Inc Cl A (MSTR US) reported a net loss of $155.6mn in the fourth quarter, compared to the net loss of $124.3mn in the 4Q21. 
• MSTR took a non-cash digital asset impairment charge of $170.1mn in the first quarter, up from $146.6mn in the 4Q21. 
• A bet on MSTR is a bet on bitcoin. Yet MSTR is down 37% YTD, compared to ~20% for bitcoin. 

• In this insight, we provide an updated SoTP valuation analysis of LG Corp (003550 KS) and discuss some of the key upcoming catalysts including the IPO of LG CNS.
• Our base case valuation analysis of LG Corp suggests an implied price of 107,664 won per share, representing 45.5% upside from current levels.
• The IPO of LG CNS is likely to be a positive catalyst in the next 6-12 months for LG Corp. 

• Delhivery is now looking to raise around US$700m in its upcoming India IPO, the company is backed by a host of financial investors, the largest being Softbank.
• Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
• In this note, we talk about the updates from its RHP.

• Delhivery is the largest and fastest-growing 3PL express parcel delivery player in India. It has cut its IPO raise from Rs74.6 billion ($1 billion) to Rs52.4 billion ($0.7 billion).
• In Delhivery IPO Initiation: Can It Deliver?, we noted that the fundamentals are mixed as it has been unable to leverage strong growth to deliver profits or cash generation.  
• In this note, we look at the RHP which discloses 9MFY22 results. We continue to believe the negatives outweigh the positives. We are inclined to give the IPO a pass.

• We expect the maximum permitted 30 changes at a single review to take place at the June rebalance. Most changes are high probability.
• We estimate a one-way turnover of 4.25% at the rebalance leading to a one-way trade of CNY 10.677bn.
• Industrials, Information Technology and Materials sectors are expected to have the most net inclusions, while Health Care and Financials are expected to have the most net deletions.

• Samsung Electronics (005930 KS)’s underperformance to SK Hynix (000660 KS) just part of the cycle or company specific?
• Does the supply constraint issue help or hurt Samsung?  Who is better off? 
• Key points to focus on to see where Samsung is vs. their blueprint of technology roadmap

• LG CNS is getting ready to complete its IPO in 2023. LG CNS is one of the largest system integration (SI) companies in Korea. 
• LG Corp owns 49.95% stake in LG CNS. Local media mentioned the LG CNS value could reach about 4 trillion won to 5 trillion won after it completes its IPO. 
• If LG CNS is valued at 5 trillion won, a 50% stake would be valued at 2.5 trillion won which is more than 12x book value on its balance sheet.

• KPIT Tech reported strong Q4FY22 revenue growth (5%+ QoQ in constant currency [CC] terms). It also reported margin improvement, despite supply-side headwinds; with EBITDA margin at 18.6% vs 18.5% QoQ.
• FY23 guidance came in optimistic with revenue growth expected to be in 18-21% range in CC terms and EBITDA margin projected to remain stable in the 18-19% range.
• Demand environment continues to be robust with high visibility for growth. Q4FY22 total deal win was healthy at USD 200mm; including a large deal of Euro 70mm value.

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Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

• SenseTime Group (20 HK) currently has a float of 1.4%. That will increase to 46% at the end of June as pre-IPO and cornerstone investor lock-ups end.
• The Hang Seng Tech Index FAF increase and potential inclusion in the Hang Seng China Enterprises Index will require passive trackers to buy 700m shares early September.
• Economic stimulus in China, outlook for China tech, lock-up expiry, inclusion in Southbound Connect and flows from passive trackers will drive the stock for few months and provide trading opportunities.

• Square Enix announced the of sale Eidos Interactive, Crystal Dynamics, Square Enix Montreal and associated IPs to Embracer for $300m. 
• We had been puzzling over Square Enix’s strangely low guidance despite excellent momentum in its MMO business for some time. 
• Considering the underperformance in HD Games profitability and this sale we think we can now put two and two together.

• Novatek’s revenue was NT$36.512bn in 1Q22, which was 38.5% YoY and 62.6% QoQ. It was 50.73%/36.73%/30.5% GM/OPM/NM in 1Q22, which was higher than our prior expectation of 43.6%/27.3%/22.3% in GM/OPM/NM.   
• In our views, we revise up to be revenue/GM as NT$38.7bn/50.98% in 2Q20.
• As the inflation, 5G, Russia-Ukraine war did change the landscape, the outlook seems not that so much worse in 2022.

• AXTI continues to experience an increase in demand for substrates with indium phosphide (InP) and gallium arsenide (GaAs) growing in the first quarter
• AXTI has shifted away from the seasonality it would find itself since making the move to multiple new facilities two years ago. Customers have continued to increase their spending 
• AXTI reported first quarter revenue of $39.7 million compared to $37.7 million reported in the fourth quarter. We had been forecasting revenue of $39.6 million

• Hitachi Ltd (6501 JP) results were salutary but noisy and the year to March 2023 is forecast similar (salutary but noisy). Service integration and growth to external customers is key.
• Forecast growth in main businesses ex- to-be-sold listed subs is decent, but could be better. 
• A SEMI-Bigly buyback will help cushion any selling, but it has recently outrun Siemens on a like-for-like basis.

• Promised operating leverage is pushed out until likely 3Q22, but only higher employee RSUs is a permanent inflationary impact.
• Overcapacity is almost certainly transitory, as long as the retail business grows, this will be soaked up in a quarter or two.
• AWS backlog is booming again. Amazon’s current valuation = 12x forward AWS sales.

• The weekly & monthly close on NDX gives a notable sell signal
• Losses over the medium term towards 11k are expected to be seen
• The Stocks/Bonds ratio also indicates a turn in trend in favour of Bonds here

• We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore and the US (Chinese ADRs only).
• This week, the highest gross spreads are Dongzheng Automotive Finance (2718 HK), Yashili International Holdings (1230 HK), 21Vianet Group (VNET US), Sezzle Inc (SZL AU), Link Administration Holdings (LNK AU). 
• The lowest gross spreads are Beijing Enterprises Urban Resources (3718 HK), Virtus Health (VRT AU), 51 Job Inc Adr (JOBS US), China Logistics Property Holdings (1589 HK), Uniti Group.

• Bukalapak (BUKA IJ) 1Q2022 results were all about execution, with significant improvements in take-rates for its Mitra business, and even more so for its marketplace segment. 
• The launch of AlloFresh and Allo Bank Indonesia will add some further depth and breadth to the platform’s product offering and help to accerlate the move towards profitabilty.
• Bukalapak (BUKA IJ) looks like an increasingly interesting way to play the Indonesian digital economy with an expanding ecosystem and increasing take-rates at the same time. 

• Growth in number of subscribers on the back of increased workforce, it may be temporary spike
• Cost pressure visible as per our expectation and the margins continue to be at lower level on Y-o-Y basis
• Buyback of shares within a year of QIP meets more than the eye

• Lasertec’s 3Q disappointed as revenue of ¥16.6bn materially undershoot consensus estimates of ¥26.6bn but given quarterly volatility in deliveries and acceptances that is understandable. 
• What is more concerning is the emerging picture of gross margin decline which the company had previously warned about. 
• Given inflated valuations these small negatives together with no guidance raise could drive a continued correction.

• Caixin reported on Wednesday that Meituan (3690 HK) has shut down community-group service (Meituan Select) in Beijing following news that the company plans to shut down operations in loss-making cities.
• Community-Group buying (CGB) became popular in China in 2020 and Meituan entered the market in 3Q2020 and continues to spend heavily on the biz.
• The market became heavily competitive in the form of price war, which attracted regulatory scrutiny and led to large players like Alibaba and JD.com opting out of the market.

• In this insight, we discuss end of the mandatory lock-up periods for 40 stocks in Korea in May 2022, among which 4 are in KOSPI and 36 are in KOSDAQ.
• These 40 stocks on average could be subject to further selling pressures in May and could underperform relative to the market. 
• Among these 40 stocks, the following stocks such as Kakao Pay, Enchem, DearU, and 4by4 could face further selling pressures in the coming weeks.

• Inline quarter, though margins continue to decline on market share loss and ramping new nodes. 
• Intel is overly optimistic about PCs rebounding in the 2H; 2021’s 15% growth is not sustainable.
• Intel maintained its full year revenue guidance and increased its EPS despite lowering 2Q’s guidance. This implies an acceleration in the back half. We find that overly optimistic

• SEA sell volumes are deteriorating into new lows with two buy tranche levels outlined to align with the RSI near 25 as the primary long trigger.
• Selling exhaustion is noted as the descending price wedge matures. Sell volumes deteriorating into new low sets up the entry.
• 102 is the key hurdle to clear with macro targets at 132 and 170. Buy probe near 70 with a higher conviction buy near 54.

• For 2Q22 guidance, the revenue declines high single digits % QoQ, and GM falls between high twenties to low-thirties.
• The current China smartphone inventory digestion won’t influence WinSemi’s expansion plan because it’s in construction phase now.
• It is due to cellular for 2Q22 decline, which is not easy to clarify whether it’s 4G, or 5G.

• Mercari’s 3Q results underwhelmed with both revenue (-4.5%) and OP (¥2.9bn loss vs. a predicted ¥1.0bn profit) missed. 
• Guidance was also weak and problems with rising fraudulent transactions in Japan and low tax reporting thresholds for sellers in the US are headwinds. 
• Nevertheless, the drastic fall in the stock price appears to have gotten far ahead of these problems and ignores the bright future of the company in our view.

• In the 2Q22 guidance, the revenue for ATM/EMS is ~NT$76.7bn/NT$61.2bn, the GM for ATM is ~27.5% and OPM for EMS is ~8.8%.
• In the first quarter, ASE Holding already surpassed the historical peak of 27% gross margins. And ASE Holding will see that trend continue.
• It’s a normal phenomenon that ASE Holding is seeing inventory level being higher than before.

• Persistent Systems Ltd (Persistent) reported strong and broad-based growth in Q4FY22 and beat our expectations on all key parameters.
• The company’s revenue stood at Rs 1,638 Cr, up 9.8% QoQ and 42.2% YoY. Its operating profits registered a growth of 14% QoQ to Rs 230 Cr and operating margins marginally expanded by 40bps QoQ to 14%
• We recommend a BUY rating on the stock and assign a 38x P/E multiple to its FY24E earnings of Rs 126.8/share to arrive at a TP of Rs 4,820/share, indicating an upside potential of 18% from CMP.

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• About 9 days I ago I wrote Renesas (6723 JP) – On Top of Peer-Beating Growth, and Valuation… Watch for Buybacks. Today with Q1 earnings, they announced a ¥200bn buyback. 
• What appears to be a quite strong Q1 in automotive in both revenues and margins, and decent incremental margins, sees a stronger Q2 forecast (but less good incremental margins).
• The Street is well behind guidance, and a buyback at the high end of potential guidance and coming earlier than expected is all to the good. 

• Renesas’ 1Q numbers blew away guidance and consensus as revenue beat by 3.4% and adjusted OP beat by 16%. 
• Revenue growth was strong for both Auto and Industrial with Industrial margins also improving noticeably vs. last Q. 
• Renesas also announced a rather large buyback which is effectively a repurchase of the INCJ’s stake.

• Another quarter another Keyence beat as revenue beat by 5.3% and OP beat by a more modest 4.7% due to high SG&A costs. 
• Sell side analysts on the conference call remain confused by the outperformance vs. peers because they fail to realise that Keyence gonna Keyence. 
• Despite this strength we remain cautious as Keyence is now a truly exceptional company that is being priced like a magical one.

• Twitter suddenly decided to accept Elon Musk’s hostile $54.20 bid (no one else was even interested).
• Now they have to sell billions in pricey & yet likely still underpriced bonds vs Twitter’s already weak ops & truly ugly pro forma credit quality & dicey prospects.
• Does that make Elon a winner or a bagholder? And will he stay or will he go? We’re going to find out.

• Church donor management tech play Pushpay Holdings (PPH NZ) said it “recently received unsolicited, non-binding and conditional expressions of interest or approaches from third parties“.
• No price was mentioned. Shares promptly gained 24% on the news. 
• Separately, Pushpay reaffirmed its EBITDA guidance for FY22. Those results will be announced on the 11 May.

• Advantest results were relatively uneventful with a marginal beat at the top line and a marginal miss at the OP level. 
• Guidance was decent however with both revenue and OP above consensus and some lowballing on margins suggesting some upside to guidance. 
• The company also said that it would no longer disclose orders because changing lead times made them less comparable because of course they do…

• The 1Q22 revenue beat the prior guidance, GM was in-line the guidance. The guidance is within our expectation in 2Q22.  
• MediaTek believes they shall be on the right track to grow revenue 20% and the GM 48-50%, and MediaTek has a 3-year target to grow mid-teens percentage from 2022.
• For shareholders, the board had approved NTD$37 for cash dividend in this year.

• UMC delivered a shining GM and outlook. The GM outlook is 45% in 2Q22, which beat our forecast.
• UMC believes 22/28 nanometer will be a long-lasting node driven by applications, such as Wi-Fi 6, 6E, networking and OLED driver IC.
• The overall business covered by LTA is close to 30%-40%.

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