TMT/Internet

We expect that the revenue/GM is about NT$5.95bn/54% in 1Q22 respectively. We expect it shall come to NT$6.14bn/56.5% for revenue/GM in 4Q21 respectively.
Given strong demand of those could not be digested, Silergy has to choose high premium orders, which means Silergy can enjoy better prices.
The domains of Server, Datacenter and 5G are Silergy’s main targets to grow in the next 3~5 years.

Before it’s here, it’s on Smartkarma

Mar 06

TMT: Nexon, Softbank Group and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Last Week in Event SPACE: Russia/Indices, Prosus, Virtus, Crown, Nexon, Hitachi Metals
Softbank Group – Tough Week for VF as Public Portfolio Falls $6bn over Two Days

Last Week in Event SPACE: Russia/Indices, Prosus, Virtus, Crown, Nexon, Hitachi Metals

Major global indices have relegated Russia to the “standalone” and “unclassified” market status. Talk of significant flows into major non-Russia EM markets such as China, Taiwan, Korea, etc is misguided.
Even if OLX and VK Group are written down to zero, the fall in Prosus (PRX NA)‘s implied stub has overshot the mark
The founder and former chairman and CEO of Nexon (3659 JP) has passed away. The estate may wish to sell Nexon shares, or its entire stake, at some point near-term.

Softbank Group – Tough Week for VF as Public Portfolio Falls $6bn over Two Days

By Kirk Boodry

Valuation losses in the public portfolio have increased by $6bn over two days on weakness at Coupang, Grab, DoorDash and WeWork. Total losses for the quarter stand at $17bn.
With Alibaba shares still weak, NAV/share has moved decisively below ¥10,000/share and is back to where it in May/June 2020 when tech was first rebounding from the Covid shock.
The discount to NAV stands at 49% but is likely to expand when markets in Japan have a chance to respond to how stocks traded in the US on Friday.

Before it’s here, it’s on Smartkarma

Mar 05

TMT: Sea Ltd, Samsung Electronics Pref Shares, Razer Inc, Nexon, iQIYI Inc, Visa, Tencent, Datadog Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Sea Ltd (SE US) – Leaning Towards Profitability and Sustainability
Russian Impact on MSCI Korea: Total Inflow Size & Top 20 Inflow (X ADTV) Stocks
Razer’s Offer Spread Risk/Reward – Takeaways from Logitech’s Investor Day
Three Ways of Settling Nexon Inheritance Tax Payment: Each Way’s Ramifications
IQiyi: Huge Drop in Operating Losses Despite Flat Revenues; Path to Profits Becoming Clear
Visa: Don’t Mind The Disruptors
Tencent Support to Give Way
Datadog ($DDOG): The Dog in the SaaS Fight

Sea Ltd (SE US) – Leaning Towards Profitability and Sustainability

By Angus Mackintosh

Sea Ltd (SE US) results were in line but given a slow down in gaming and bearish guidance partly with India ban on FreeFire, the stock was sold off aggressively.
Strong performance from e-commerce and digital financial services was ignored, with improving take rates in core markets and comments on impending profitability overlooked, with hardly a mention in press commentary.
The risk for Sea Ltd (SE US) is squarely on the upside with valuations now looking attractive, trading at a discount to MercadoLibre (MELI US) despite its broader footprint.

Russian Impact on MSCI Korea: Total Inflow Size & Top 20 Inflow (X ADTV) Stocks

Korea’s local market estimates an inflow (resulting from the Russian departure) to Korea at ₩1T
Most of the preferred stocks in MSCI Korea top the list with the highest passive buying ratios to the 30-day average trading value.
Other than that, S1 Corp, Coway, Samsung SDS, C&T, and KT&G are the others that sit high on the list.

Razer’s Offer Spread Risk/Reward – Takeaways from Logitech’s Investor Day

By Arun George

Razer Inc (1337 HK)‘s scheme document will be released after the FY21 results, which are on 17 March. The headcount test is a key challenge.
Logitech International SA (LOGN SW)’s investor/analyst day on 3 March underscores Razer’s opportunity and adds to minorities’ grievances that the offer price is unattractive.
Current deal probability implies broadly a 50/50 chance of success with a gross spread of 19%. We would be buyers up to HK$2.5 per share (implies 65% deal probability).

Three Ways of Settling Nexon Inheritance Tax Payment: Each Way’s Ramifications

There are three ways families can settle inheritance tax: 1. payment in Kind, 2. direct sale of the NXC stake, and 3. NXC sells its stake in Nexon Japan.
They have different ramifications from an investment point of view, and the third option is probably the one that the market desires most.
If the family goes for the third option, they will likely sell all of NXC’s Nexon Japan stake (47.89%), which will lead to a TOB to Nexon Japan minority shareholders.

IQiyi: Huge Drop in Operating Losses Despite Flat Revenues; Path to Profits Becoming Clear

IQIYI Inc (IQ US) reported 4Q and full-year 2021 results on Tuesday. Revenue for the quarter declined 0.9% YoY to RMB7.39bn (vs consensus RMB7.31bn).
Operating losses for the quarter was RMB975.2m (vs consensus RMB1.33bn), about 13.2% of revenues compared to RMB1.31bn (17.5% of revenues) in 4Q2020.
IQiyi’s ADRs jumped 21.5% at the end of Tuesday’s close as the company mentioned that it expects quarterly non-GAAP operating break-even as soon as possible.

Visa: Don’t Mind The Disruptors

By Vladimir Dimitrov, CFA

Well-established digital payment platforms, such as Visa, are enjoying renewed interest from long-term investors.
In spite of certain narratives, rotation to value stocks has little to do with Visa’s recent outperformance.
The impact of short-term headwinds will likely remain muted due to Visa’s increased penetration in certain markets and new flow channels.

Tencent Support to Give Way

By Thomas Schroeder

Tencent is commencing a fresh down leg below 413 support. We have been bearish/short from the 500 handle with a projection of 370.
Tencent’s breakdown is lagging the HK tech index which raises conviction for Tencent weakness/follow through to the downside.
320 macro support attracts in Q3 as long as we stay below 413.

Datadog ($DDOG): The Dog in the SaaS Fight

By MT Capital

The origin story of the company I am delving into today arguably started more than 10 years ago, when Oliver Pomel and his co-founder Alexis Lê-Quôc were working at Wireless Generation
The company is likely to benefit from the continued digital transformation, mainly spurred by further cloud penetration
Observability and IT Operations Management is a significant opportunity for Datadog to capitalize on

Before it’s here, it’s on Smartkarma

Mar 04

TMT: Taiwan Semiconductor Sp Adr, Prosus , Grab, Snowflake Inc, Renesas Electronics, Mediatek Inc, Bilibili Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

TSMC (TSM/2330 TT): Position for ADR Premium Expansion
StubWorld: Prosus’ Move On Russian Exposure Overdone
Grab 4Q2021: Heavy Spending on Customer and Driver Incentives Hurts Earnings
Snowflake 4Q22 Earnings: What a Buying Opportunity
Renesas – Synergies Outperform and Some Potentially Bad News for Arm
MediaTek (2454.TT): We Expect High-End 5G Smartphone Chipset Will Aim at 10-14% Shipment in 2022.
Bilibili (BILI): 4Q21, Slow Than Expected, But Many Positive Signals

TSMC (TSM/2330 TT): Position for ADR Premium Expansion

By Brian Freitas

The premium of Taiwan Semiconductor Sp Adr (TSM US) to TSMC (2330 TT) has dropped from 10% to nearly parity in slightly less than a month.
There is still no headroom available on the ADR and we expect the premium to move higher once the selling on the ADR is complete.
The SGX has recently launched single stock futures on Taiwan Semiconductor Sp Adr (TSM US). There could be market makers willing to provide liquidity which would make trade entry easier.

StubWorld: Prosus’ Move On Russian Exposure Overdone

Prosus (PRX NA) shares have nose-dived in light of its exposure to Russia via its classified ads business Avito, and social media operator, VK Group. This move appears overdone.
Preceding my comments on Prosus, are the current setup/unwind tables for Asia-Pacific Holdcos.
These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Grab 4Q2021: Heavy Spending on Customer and Driver Incentives Hurts Earnings

Grab (GRAB US) reported 4Q2021 results yesterday (before market). IFRS revenue decreased 44.29% YoY to $122m (vs consensus $219m) compared to $219m in the same quarter a year ago.
Adjusted EBITDA (loss) for the quarter was -$305m (vs consensus -$206m) compared to -$102m a year ago as the company heavily spent on incentives to attract and retain drivers.
Grab’s shares have lost almost 40.0% during intra-day trading as its growth story did not bode well with the investors.

Snowflake 4Q22 Earnings: What a Buying Opportunity

By Aaron Gabin

Snowflake dropped another monster quarterly result, with product revenues growing 102%, with rising margins and FCF generation.
The 30% after hours drop was insane due to a misunderstanding of revenue guidance.
An incredible entry point for those who wanted to buy Snowflake but were waiting for it to return to the low $200s

Renesas – Synergies Outperform and Some Potentially Bad News for Arm

By Mio Kato

Renesas’ investor day today focused on providing more details on existing themes such as the progress of synergies from Dialog.
The strong overall growth outlook and progress offering integrated solutions was also emphasised.
However, what we found most interesting was some of their commentary on RISC-V developments.

MediaTek (2454.TT): We Expect High-End 5G Smartphone Chipset Will Aim at 10-14% Shipment in 2022.

We expect MediaTek Dimensity 8000/8100 and 9000 are targeting shipment of ~30-40mn and 5-10mn sets respectively, which means high-end 5G smartphone chipset will aim at 10-14% 5G shipment in 2022.
We consider the inventory argument raised for China smartphone could be a kind of fake issue.
In 5G era, the PMIC is about 2~3 times of 4G in size with the mature nodes.

Bilibili (BILI): 4Q21, Slow Than Expected, But Many Positive Signals

By Ming Lu

The paying user base continued growing in 4Q21 and has space to grow further.
Game revenue recovered for the second quarter, as the games launched last year began to earn money.
BILI’s advertising revenue grew significantly faster than the market size of Chinese online advertising.

Before it’s here, it’s on Smartkarma

Mar 03

TMT: Sea Ltd, 51 Job Inc Adr, Gigabyte Technology, Samsung Electronics, King Yuan Electronics Co, Ltd., Hana Microelectronics, Mindtree Ltd, Arlo Technologies Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Sea Ltd: Something to Think About if You Are Starting to Lean Towards the Bullish Side
51job’s Improved $61 Offer Gets the Board Onside
The Current Huge Gap of VGA Card Demand over Supply May Reverse in 2H22/2023
Will Samsung Follow Apple and Be Forced to Stop Selling Smartphones in Russia Due to FDPR Rule?
KYEC (2449.TT): A Slow 1Q22 Is Likely to Occur, Which Could Present an Entry Point.
HANA: 2022 Net Profit to Grow Despite Additional Costs
Mindtree: Robust Multi-Pronged Strategy To Capitalize On Healthy Demand
ARLO: Accelerating Growth Story, PT to $15

Sea Ltd: Something to Think About if You Are Starting to Lean Towards the Bullish Side

By Oshadhi Kumarasiri

Sea Ltd (SE US)’s outperformance ended abruptly yesterday following the 4Q21 earnings release with the share price giving away 2/3rd of the gains made during the last five days.
The company’s share price rallied around 30% in the last week of February, alongside rallying markets following a steep correction leading up to the Ukraine crisis.
With the fundamentals continuing to deteriorate and interest rates expected to continue trending upwards, we expect Sea to continue its downtrend until its valuation multiples reach the pre-pandemic low level.

51job’s Improved $61 Offer Gets the Board Onside

By Arun George

The consortium has improved the offer price by 6.6% to $61.00 in cash per ADS. The consortium represents 54.9% of the voting rights.
The Board intends to recommend shareholders vote in favour of the transaction. The transaction is expected to close during the first half of 2022.
The combination of the improved offer price and the tech shares sell-off improves the chance of meeting the two-thirds shareholder approval threshold. At last close, the gross spread is 7.0%.

The Current Huge Gap of VGA Card Demand over Supply May Reverse in 2H22/2023

By Henry King

1H22 is likely the peak for VGA card. Our checks with VGA card makers indicate VGA card price fell in January/February and likely to continue for the rest of 2022.
Potential supply surge, demand decline, and price drop will all lead VGA market to trend south in 2H22.
VGA makers will be negatively impacted in 2H22. Gigabyte may be hit the most whereas Asustek may hit the least. Nvidia should also be hit at a certain degree.

Will Samsung Follow Apple and Be Forced to Stop Selling Smartphones in Russia Due to FDPR Rule?

By Douglas Kim

On 2 March, it was reported in numerous media that Apple Inc will stop all product sales in Russia. This is a measure in response to Russia’s invasion of Ukraine.
The US-led Foreign Direct Product Rule (FDPR) regulation may force a more stringent sanction that could force Samsung to stop selling smartphones in Russia.
Despite these concerns about FDPR, the decision as to whether to totally block Samsung’s smartphone sales to Russia has not been finalized.

KYEC (2449.TT): A Slow 1Q22 Is Likely to Occur, Which Could Present an Entry Point.

By Pi Securities PCL, Thailand

It is usually the low season in the 1st quarter, and we expect the revenue/GM is about NT$8.55bn/25.5% in 1Q22 respectively.
KYEC’s main clients are MediaTek, NVDA, XLNX and etc., and some demands in Automotive also rising up quickly.
In real terms, the shareholder might receive the same dividend amount of about NT$2.5+ for 2021. We think it likely targets a 5% dividend yield.

HANA: 2022 Net Profit to Grow Despite Additional Costs

Analyst meeting came out with negative tone. The company’s Korean SiC segment will continue to incur costs throughout 2022.However, the 45% tumble in share price since Nov’21 factored in negative
We expect 22E core profit will remain flat YoY at Bt2.3bn. Additional costs and microchip shortages will offset the growth from capacity expansion.
Bleak outlook until 3Q22. Additional costs will drag core earnings until 3Q22. Current share prices are cheap and provide opportunity for share accumulation.

Mindtree: Robust Multi-Pronged Strategy To Capitalize On Healthy Demand

By Axis Direct

Mindtree has a focused strategy to capitalize on the demand scenario. The company intends to focus on five verticals
The management also has a strong focus on developing expertise in four service lines including Customer Success, Data Intelligence, Cloud, and Enterprises IT
We recommend a BUY on the stock and assign 38x P/E multiple to its FY24E earnings of Rs 140.2/share to arrive at a TP of Rs 5,310/share, implying an upside potential of 39% from the CMP

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.

ARLO: Accelerating Growth Story, PT to $15

By Hamed Khorsand

ARLO has proven its service business model can be profitable and is now planning to invest more in growth initiatives to drive market share gains to add paid subscribers faster
The faster than expected pace has given ARLO the means to strategically invest in its business to accelerate its service revenue.
Looking ahead to the end of 2022, ARLO could be on the cusp of nearly 2 million paid subscribers before realizing the benefits of the increased marketing

Before it’s here, it’s on Smartkarma

Mar 02

TMT: Nexon, Carousell, Bitcoin, Trend Micro Inc, Horizon Robotics, Money Forward, Mindtree Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Nexon – Founder Kim Jung-Ju Passes, Raises Question if Nexon Deal Is Back In Play
Carousell Tearsheet – Singapore’s Resale Unicorn
Quick Post: Russia’s Capital Outflow into Crypto
Japan Cybersecurity: Frequent and Sophisticated Cyber-Attacks Drive Demand
The Passing of Nexon Founder KJJ & Controlling Stake Sale Event 2.0
Horizon Robotics – Riding on Partnerships and a Strong List of Backers
Money Forward (3994): Announced Upward Revision of 1Q Guidance
Investor meet reinforces strong demand visibility

Nexon – Founder Kim Jung-Ju Passes, Raises Question if Nexon Deal Is Back In Play

By Travis Lundy

The founder and former chairman and CEO of Nexon (3659 JP) passed away according to both Nexon and his holding company NXC. Both announced it late afternoon 1 March.
NXC – the near-parent (47+% stake) of Nexon tried to sell Nexon/NXC in H1 2019 to no avail. Since then, profits have rebounded somewhat, and investments have multiplied.
The estate may wish to sell Nexon shares, or its entire stake, at some point near-term.

Carousell Tearsheet – Singapore’s Resale Unicorn

By Clarence Chu

Carousell is a Singapore based platform serving the C2C and B2C marketplace for purchase and resale of second hand goods.
In its latest funding round in Sept 2021, the company raised US$100m at a valuation of US$1.1bn. As per Crunchbase, Carousell has raised just over US$280m since inception.
Carousell is expected to list in the US via a SPAC Merger with L Catterton Asia Acquisition.

Quick Post: Russia’s Capital Outflow into Crypto

By Josh Du

The Ruble has collapsed due to sanctions placed on Russia for the invasion of Ukraine
Onchain metrics signals sizable assets moving from Russia into crypto to potentially avoid sanctions or to salvage Ruble denominated assets
BTC/RUBLE is now up significantly since the war has started

Japan Cybersecurity: Frequent and Sophisticated Cyber-Attacks Drive Demand

The demand for cybersecurity products and services has been expanding in Japan amidst an increase in frequent and sophisticated cyber-attacks in the country.
Due to shortage of in-house IT professionals with knowledge on cyber security, there has been growing demand for outsourced managed security services in Japan.
We have identified Trend Micro Inc (4704 JP) as our top pick in the Japanese cyber security market as there is further potential for top line and margins to expand.

The Passing of Nexon Founder KJJ & Controlling Stake Sale Event 2.0

We should pay the most attention to what choices and decisions the bereaved family will make concerning the stakes and management rights of the deceased in NXC.
This opens the possibility that the KJJ’s stake sale event in 2019 will happen again in the foreseeable future.
Under these circumstances, there is a possibility that short-term momentum trading aimed at tender offers to minority shareholders following the sale of Nexon’s major shareholder stake will surge.

Horizon Robotics – Riding on Partnerships and a Strong List of Backers

By Clarence Chu

Horizon Robotics is an artificial intelligence chips developer for automobiles, specifically smart vehicles, and robots.
Its latest Series C funding round in late 2020-early 2021, raised a combined total of US$900m, led by Great Wall Motors, Hillhouse, Baillie Gifford, CATL, CPE, Yunfeng Capital and others.
There were news reports doing the rounds that the firm had aimed to look at a potential US listing, in a deal that could raise up to US$1bn.

Money Forward (3994): Announced Upward Revision of 1Q Guidance

By Mita Securities

Upward revision of sales and profit guidance. A mix of good and bad news
The company raised its sales guidance by 350m yen and raised its EBITDA and OP guidance by 800m yen.
The upward revision of sales guidance is due to 1) higher recurring and non-recurring revenue in the Business domain and 2) higher non-recurring revenue in the Finance domain

Investor meet reinforces strong demand visibility

By Motilal Oswal

We attended MTCL’s annual investor meet, where the management reiterated its strong demand outlook and detailed the six strategic levers for FY23. It sees scope for continued performance in their 4x4x4 strategy and investments required to boost long-term.
.

Before it’s here, it’s on Smartkarma

Mar 01

TMT: Money Forward, ByteDance, Activision Blizzard, Sezzle Inc, Tencent, Grab, Pine Labs, Phison Electronics, Arqit Quantum, Infosys Ltd and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)
Bytedance Tearsheet – Doesn’t Need Much of an Introduction
MergerTalk: Microsoft/Activision Blizzard-Why We Think This Transaction May Not Be Such A Gamble
Zip To Merge With BNPL Rival Sezzle
Tencent (700 HK): Besieged Game Business
Grab Earnings Preview: Recovery Ahead
Pine Labs Tearsheet – Driving a PoS Payment Revolution
Phison (8299.TT): Insistence in NAND Flash Technology
The Battle Between Quantum Supremacy and Encryption
Pick of the Week – Infosys Ltd.

TOPIX Index Upweights: The Big April Basket 2022 (Pre-Event)

By Janaghan Jeyakumar, CFA

The Tokyo Stock Exchange (TSE) calculates Free-Float Weight (FFW) for each listed company and uses this value as a key component of TOPIX Index Calculation.
For companies with “low liquidity” the FFW will be multiplied by a fixed liquidity factor of 0.75 to derive the final FFW used for index calculation.
Every April, the application of this liquidity factor is reviewed by the TSE for all TSE1 constituents. This situation opens up interesting opportunities for a basket trade.

Bytedance Tearsheet – Doesn’t Need Much of an Introduction

Bytedance doesn’t need a whole lot of introduction as it runs one of the most popular global apps, TikTok, and one of the largest domestic apps in China, Douyin.
The company undertook a funding round in Dec 2020, which valued the company at around US$180bn. Its valuation has touched US$425 bn in June 2021 in private market transactions.
Rumours about listing have been doing the rounds since as far back as 2019. Although there are no confirmed listing plans.

MergerTalk: Microsoft/Activision Blizzard-Why We Think This Transaction May Not Be Such A Gamble

By Robert Sassoon

Microsoft’s all cash acquisition of video game publisher Activision Blizzard is the biggest in the former’s history and the largest ever transaction in the video gaming sector.
While intense regulatory scrutiny of the deal is expected, the arguments favoring high odds for eventual deal approval are reasonable.
We believe the 17% merger spread offers the prospect of double-digits annualized return over the next 12 to 18 months.

Zip To Merge With BNPL Rival Sezzle

Zip (Z1P AU) is offering 0.98 Zip shares for every Sezzle (SZL AU) share, a 22% premium to last close. Zip is raising $148.7mn to fund the deal.
Sezzle is incorporated in Delaware, therefore the merger is subject to those takeover rules, not ASX rules.
Zip reported a $214.3mn today. As Quinlan Associates put it, the Asia Pacific BNPL industry is more like “Buy Now, Pray Later”.

Tencent (700 HK): Besieged Game Business

By Ming Lu

Short video has been taking time on site from game players.
Main games are shrinking, but the authorities have not been granting license to new games.
The authorities also banned Chinese players from playing with overseas game players.

Grab Earnings Preview: Recovery Ahead

Grab (GRAB US) is currently trading at US$5.80 per share, more than 50.0% below its IPO price of US$13.06 per share.
The company’s mobility business was severely impacted due to the pandemic and has not yet recovered to pre-pandemic levels. Grab is reporting 4Q2021E results on Thursday (03rd March).
As most of the countries in the SEA region opens up economies with Omicron-related fears fading, we expect gradual recovery in mobility business which should help re-rate Grab’s shares upwards.

Pine Labs Tearsheet – Driving a PoS Payment Revolution

Pine Labs is a leading merchant commerce platform. It provides a merchant platform and software for point of sales machines.
Its Feb 22 round was said to have been done at a rumored valuation of over US$5bn.
In Jan 2022, the company filed confidentially for an initial public offering worth $500m with the US Securities and Exchange Commission.

Phison (8299.TT): Insistence in NAND Flash Technology

We estimate Phison could reach NT$14.1bn sales and GM 25% outlook in 1Q22.
For 2022, it stars with a good beginning for 5~10% NAND price lifted, and Phison’s insistence on NAND Flash controller technology and allied with AMD.
Phison would maintain its solid dividend policy and it’s 80% in the past. It was ~NT$63 EPS in 2021.

The Battle Between Quantum Supremacy and Encryption

By subSPAC

The recent invasion of Ukraine by Russia was preceded by a wave of cyberattacks that took down the country’s Websites, Wiped Data, and Blocked Access to Key Communication Tools.
Cryptography and Encryption standards that are currently used industry-wide can be easily brute-forced by quantum computers
Arqit aims to combat the rise in quantum computing by offering a quantum encryption platform as a service.

Pick of the Week – Infosys Ltd.

By Edelweiss

Infosys is India’s second-largest provider of consulting and IT services to clients across the globe
It is also among the fastest-growing IT services organization in the world and leader in the offshore services space having pioneered the Global Delivery Model
The company provides business consulting, application development and maintenance, and engineering services to 1,738 active clients

Before it’s here, it’s on Smartkarma

Feb 28

TMT: Douzone Bizon and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

KRX K-New Deal Rebalancing: Latest Weight/Flow Update & LG Chem’s Complete Deletion

KRX K-New Deal Rebalancing: Latest Weight/Flow Update & LG Chem’s Complete Deletion

The biggest story should be LG Chem’s complete deletion from the entire indexes. It’s been said locally that KRX finally decided to remove LG Chem from the battery index.
AfreecaTV and Douzone Bizon will have the largest passive impacts, +1.72x and -3.89x ADTVs. The Chunbo and SoulBrain combo also seems in a sweet spot for a quick long/short setup.
LG Energy’s inflow should be at least 0.33x ADTV. Yes, LG Chem’s outflow deserves special attention. The combined impact is 0.6x ADTV, enough to make a splash on the price.

Before it’s here, it’s on Smartkarma

Feb 27

TMT: SenseTime Group, Samsung Electronics, LINE Corp, KnowBe4, Razer Inc and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

Index Rebalance & ETF Flow Recap: FTSE AW/AC, FTSE CH50/A50/TW50, KS200, NIFTY, STAR50, Russia
The Conundrum for Samsung – What to Do Foundry?
LINE Gift up 330% in 2021
KnowBe4: Hidden Gem Growth Stock In the Cybersecurity Space
Asia-Pac Weekly Risk Arb Summary: CIMIC, AGL, Razer, Z Energy, G J Steel, Mapletree North Asia

Index Rebalance & ETF Flow Recap: FTSE AW/AC, FTSE CH50/A50/TW50, KS200, NIFTY, STAR50, Russia

By Brian Freitas

Changes to the FTSE All-World/All-Cap were announced over the previous weekend, NIFTY was announced Thursday and STAR50 on Friday. LG Energy’s inclusion to the KOSPI200 was also announced.
21 February was the review cutoff for the March rebalance of the FTSE China 50, FTSE China A50, STI, FTSE TWSE Taiwan 50 and the FTSE EPRA Nareit.
On Friday, FTSE announced that two of the previously announced inclusions would not be added, while there would be 10 new additions to the All-World/All-Cap indices.

The Conundrum for Samsung – What to Do Foundry?

By Ken S. Kim

Samsung Electronics (005930 KS) goal to be the #1 semi player in the world in danger
An internal business audit being performed which is an indication of what to do with strategy
TSMC (2330 TT) has always been the benchmark; does the focus change ?

LINE Gift up 330% in 2021

By Michael Causton

LINE Gift is fast becoming the most popular way to send gifts of all kinds, even traditional gifts sent at mid-year and New Year.
This is good news for Z Holdings (4689 JP) and Softbank, as well as LINE, as the gifting platform acts as a unifying point for their disparate e-commerce platforms.
Although the corporate gift market is in decline, personal gift giving remains a growth market, offering further upside.

KnowBe4: Hidden Gem Growth Stock In the Cybersecurity Space

By Andrei Zakharov

KnowBe4 (KNBE US) is the world’s largest security awareness training platform, teaching people how to recognize bad phishing, bad social engineering scenarios and report to management.
The most notable ransomware attacks began with social engineering, and social engineering has remained a top threat for the last five years, according to a report released by Verizon.
We like the company’s cash generating SaaS model, strong balance sheet, and multi-product approach targeting SMBs and the enterprise market worldwide.

Asia-Pac Weekly Risk Arb Summary: CIMIC, AGL, Razer, Z Energy, G J Steel, Mapletree North Asia

There are currently 42 – mostly firm – transactions currently being discussed and analysed on Smartkarma.
Two new deals this week: Hochtief AG (HOT GR) for CIMIC Group Ltd (CIM AU); Brookfield Asset Management (BAM US) for AGL Energy Ltd (AGL AU).
Key updates took place for: Razer (1337 HK), Apollo Tourism (ATL AU), Aventus (AVN AU), Z Energy (ZEL NZ), G J Steel (GJS TB), and Mapletree North Asia Commercial (MAGIC SP).

Before it’s here, it’s on Smartkarma

Feb 26

TMT: AEM, Canva, Softbank Group, Avast PLC, GoTo, Samsung SDI, Mindtree Ltd, Xperi and more

By Smartkarma Daily Briefs | Daily Briefs, TMT/Internet

In today’s briefing:

AEM Holdings: 2H21 Revenue Acceleration to Continue into FY22. Fair Value Maintained at 8 SGD
Canva Tearsheet – The US$40bn Startup that You Have Probably Not Heard Of
Softbank Group – Alibaba Remains the Key Share Price Driver as VF Diversification Stalls
NortonLifeLock/Avast: Deal Progress & Spreads
GoTo Tearsheet – Accounts for 2% of Indonesia’s Economy
FnGuide Samsung Group Index Rebalancing Preview
Mindtree: Robust Multi-Pronged Strategy To Capitalize On Healthy Demand
Investor meet reinforces strong demand visibility
XPER: Growth Year on Track

AEM Holdings: 2H21 Revenue Acceleration to Continue into FY22. Fair Value Maintained at 8 SGD

By Nicolas Van Broekhoven

AEM (AEM SP) released record 2H21 results which indicate Intel Corp (INTC US) ramp continues as expected. Management expects more of the same in FY22.
Intel Corp (INTC US) has a variety of issues but it will spend massive amounts of cash to keep up with rivals. AEM (AEM SP) remains a major beneficiary.
Fair value unchanged at 8 SGD, or 78% upside from current 4.5 SGD share price.

Canva Tearsheet – The US$40bn Startup that You Have Probably Not Heard Of

Canva is an Australia based online design and publishing tool with a mission to empower everyone in the world to design anything and publish anywhere.
In Sep 2021, Canva raised US$200m and announced a valuation of US$40bn. The round was led by T. Rowe Price.
It hasn’t announced any plans for listing, but its soaring valuation and involvement of late stage funds means that listing is likely to be in the next year or two

Softbank Group – Alibaba Remains the Key Share Price Driver as VF Diversification Stalls

By Kirk Boodry

Softbank Group (9984 JP) shares have fallen 46% since 31 March v a 52% decline for Alibaba Group (9988 HK) with little daylight between the two since August
That reflects fading influence from Vision Fund which is shed $12bn in value Q4 to date and c. $30bn this fiscal year.
The discount remains in the 50% range as tailwinds from the share buyback depend on a successful IPO of ARM, where the magnitude and timing remain uncertain

NortonLifeLock/Avast: Deal Progress & Spreads

By Jesus Rodriguez Aguilar

On 24 February, the Spanish antitrust regulator, the National Markets and Competition Commission (CNMC) approved the proposed merger.
All Regulatory Conditions have now been satisfied, other than approval by the UK’s CMA. The deal advances to completion but the Effective Date has been pushed to 4 April 2022.
As of now, the majority cash option ($7.61 + 0.0302 NortonLifeLock shares/Avast share) should be preferred vs. the majority stock option. The spread on the majority cash option is 1.4%.

GoTo Tearsheet – Accounts for 2% of Indonesia’s Economy

GoTo, is an Indonesian holding company, was formed in May 2021 as a result of a merger between Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
GoTo raised more than US$1.3bn in its pre-IPO funding which was reported in November 2021, see here. Valuation was said to be between US$28.5-30.0bn.
The company had already announced that it would look to undertake a dual listing in Indonesia and the US.

FnGuide Samsung Group Index Rebalancing Preview

FnGuide Samsung Group has the most AUM among locally themed indexes. As of last Friday’s closing price, AUM is ₩1.52T.
The share price movements of Samsung Group affiliates basically show high cointegration. Therefore, a small differential impact on the flow significantly affects the short-term price direction of these stocks.
So, we should consider a long/short setup on a swing trading window. Particularly, we need to focus on the first two trading days, when the rebalancing impact is relatively significant.

Mindtree: Robust Multi-Pronged Strategy To Capitalize On Healthy Demand

By Axis Direct

Mindtree has a focused strategy to capitalize on the demand scenario. The company intends to focus on five verticals
The management also has a strong focus on developing expertise in four service lines including Customer Success, Data Intelligence, Cloud, and Enterprises IT
We recommend a BUY on the stock and assign 38x P/E multiple to its FY24E earnings of Rs 140.2/share to arrive at a TP of Rs 5,310/share, implying an upside potential of 39% from the CMP.

Investor meet reinforces strong demand visibility

By Motilal Oswal

We attended MTCL’s annual investor meet, where the management reiterated its strong demand outlook and detailed the six strategic levers for FY23. It sees scope for continued performance in their 4x4x4 strategy and investments required to boost long-term.
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XPER: Growth Year on Track

By Hamed Khorsand

XPER is setting the course for revenue growth after reporting fourth quarter 2021 results. Aiding the process to revenue growth is an increase in baseline IP license revenue for 2022
XPER disclosed it has signed a hybrid bonding IP licensing agreement with Micron Technologies (MU)
XPER is broadening its presence in the automobile space. During the fourth quarter earnings call, XPER disclosed Toyota Motor (TM) will include HDRadio in all its car models

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