TMT/Internet

• 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 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 (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

• 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, 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 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 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.

• 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 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

• BABA’s app, SDTao, has been taking active users from Pinduoduo.
• We believe BABA’s physical store chain, Freshippo, will go public.
• We believe BABA will stop investing in unprofitable Ele.me as it underperforms Meituan.

• Byju’s (Byju) is the largest edtech company in India. It offers online and offline courses.
• As per media reports, its latest funding round on Nov 21 was done at a valuation of US$21bn.
• Byju is rumored to be in talks with Churchill Capital VII SPAC to go public in the US.

• On the 2 February, Playtech Plc (PTEC LN)‘s shareholders voted down Aristocrat Leisure (ALL AU)‘s £2.1 billion Offer.
• The Offer failed after Playtech was unable to engage with a block of Asia-based investors who owned ~28% of the company.
• As a developer of online casino games, Playtech is an obvious target. Reportedly its second-largest investor and two Playtech CEOs – former and current – are piecing together a deal. 

• Revenue grew strongly due to the new game, Harry Potter.
• We believe NTES has confidence in the growth of cloud music.
• We believe the stock has an upside of 32% for the year end 2022.

• In this insight, we discuss the end of the one month lock up period and more block selling ahead by major investors for LG Energy Solution in the weeks ahead.
• There are 1.75 million shares under the one month lock-up period, representing 0.7% of outstanding shares. 
• At current price of 416,500 won, we believe there is an additional 11% downside risk to LG Energy Solution shares over the next 3-6 months (using the base case valuation).

• Intel’s Analyst Day last week set forth unhittable revenue growth targets
• Capex and Gross Margin guidance make no sense…Intel should’ve reset gross margin expectations…why it is still a good short.
• Neutral (meaning 0) FCF through 2025 is a BS…if Western governments don’t cover capex, FCF will be negative, potentially hitting the dividend since buybacks are eliminated for the near future. 

• Fazz Financial Group is looking to raise a series C funding round this year, and it has already drawn the interest of several “top-tier US tech investors.”
• The Southeast Asian fintech firm also said that its monthly revenue jumped 2x to US$2.6 million in December 2021
• Its monthly transactions also hit over US$800 million, a threefold increase from the same period the previous year.

• One 97 Communications’ (OCL or Paytm used interchangeably in the report) two-sided digital ecosystem of 64.4mn average monthly transacting users (MTUs) (as at Dec’21) from >350mn consumer base and over 24.9mn merchants is core to its unit economics.
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• SEA has undergone a severe decline but is showing some light at the end of the falling wedge tunnel with physical support approaching near the 110/102 zone.
• RSI compelling bull divergence stands out  as the upside energy driver. Align a buy entry with noted support at the 20-25 level that should nail down divergence.
• 170 is our initial recovery target if the 100 level holds.

• The 4Q21 revenue is HK$6.2bn (US$796.3mn), a 43.9% increase YoY. GM 41.3% is a 1,051bps increase YoY. 
• Some memory market customers, like Samsung and Hynix, are adopting ASMP’s mainstream wire bond and advanced packaging tools for high volume manufacturing requirements. 
• Full year 2021 dividend per share of HK$3.90, a 44.4% YoY increase.

• On 23 February, LG Electronics announced that it will exit the solar panel business due to lack of competitiveness as it has been losing money in this business. 
• This restructuring will have a positive impact on LG Electronics. We applaud its strategy of focusing on what it does best and exiting businesses where it is not competitive. 
• Assuming operating loss of 80 billion won and a 9% cost of capital, this would result in perpetuity value losses of 889 billion won.

• 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 company plans to raise US$650m through issuing new shares while existing shareholders will offer US$3120m worth of shares at the IPO.
• The company plans to use proceeds from the IPO for funding growth (both organic as well as inorganic growth through acquisitions and strategic initiatives) and for other general corporate purposes.

• SEPI will increase its stake in Indra Sistemas Sa (IDR SM) by 9.25% (22.2 days of trading volume) up to 28%, which should have a positive impact on the share price.
• Indra has dropped 9.4% on market fears that the Government might interfere in the company’s strategy. Nevertheless, this in my view, provides an entry point.
• My DCF valuation of Indra is €12.12/share, which implies 44% upside. I believe share purchases should act as a short-term catalyst for the share price.

• Razer Inc (1337 HK) has announced the remaining pre-conditions have now been fulfilled.
• The next step is the Scheme vote, which may be held in early May, with possible completion in early June.
• Despite SAMR approval last month, this transaction continues to trade wide to terms on concerns retail investors will disrupt the headcount test.

• Noritsu Koki (7744 JP) just sold two-thirds of its stake in subsidiary JMDC Inc (4483 JP) to Omron Corp (6645 JP) for ¥112bn – pretty good for a ¥61bn marketcap.
• This is the payday for those who have been long NK as a proxy for JMDC and possibly short JMDC against it. Now the shape of the company is different.
• A closer look at the pro-forma financial profile is warranted. It’s a lot of money. BUT… if you look today and buy today you do NOT get the special div!

• JMDC Inc (4483 JP) or formerly Japan Medical Device Corp was incubated then IPOed by Noritsu Koki (7744 JP). Noritsu Koki is now selling two-thirds of its stake to OMRON. 
• OMRON’s heft should help JMDC grow better with larger clients. That’s the bet OMRON is making too.
• The sale by Noritsu Koki reduces potential overhang from a share sale which heretofore had been a possibility. 

• Meituan (3690 HK) share price is down more than 20.0% from Thursday’s close following announcement on new regulations for food delivery platforms.
• New regulation states that food delivery platforms should further reduce the service fee charged from restaurants to lower operating costs for food and beverage businesses.
• Meituan’s food delivery business makes about 88% of its revenues from commissions while the remainder comes from online marketing services.

• On 22 February, the KRX announced that LG Energy Solution (373220 KS) will be included in numerous local indices including KOSPI 200, KOSPI 100, and KRX 100 effective 3/11/2022.
• This has been widely expected by the market. Due to the inclusion in KOSPI 200, investors will be able to short LG Energy Solution starting 11 March. 
• Once Dongwon F&B is excluded from the KOSPI 200 index, this could be a key buying opportunity on this stock, given the company’s solid fundamentals. 

• Razer Inc (1337 HK) announced that all the pre-conditions were fulfilled. The scheme document will be released after the FY21 results (scheduled on or before 17 March).  
• The headcount test is a key challenge. While the deal’s success benefits from the de-rating of technology shares, it is also undermined by Logitech International SA (LOGN SW)’s strong 3Q. 
• The shares are broadly fairly valued at last close both on a SoTP and deal probability basis. We would be buyers up to HK$2.5 per share (implies 65% deal probability).

• We spoke to Hoya today to understand market trends in both the semi and healthcare areas. 
• Overall, business conditions remain strong although momentum appears stronger for the Life Care segment. 
• More pertinently, we interpret some of the commentary on the semi capex side as suggesting some downside risk to overall spend.

• Despite the elevated valuation, KPIT remains a high conviction idea for us as we see potential for 21%+ earnings CAGR over the next decade. 
• Given the strong growth visibility, KPIT can sustain its current elevated valuation of 12x P/B and thus an investment in it can offer 21%+ CAGR over the next decade.
• Even if its exit valuations were to decline by 1/3rd at the end of the decade, it can still offer 16%+ CAGR.

• This model uncovers companies facing recent sharp cuts in estimates. These shorts can have very disparate characteristics.
• The key judgement involves whether the negative revisions are temporary or if they are indications of ongoing weakness in the business.  
• Breaking Estimates stocks often continue to decline after the cuts.  This week we flag Robinhood Mkts, Seagen, Zimmer Biomet, Cerence

• Employment Hero, an Australia-based human resources tech platform, has raised US$130 million
• With this round, the startup’s valuation has nearly reached unicorn status at AU$1.25 billion (US$901.5 million).
• Employment Hero helps businesses manage their workforce through the changing nature of work by helping teams stay connected through fully integrated HR solutions.

• SK Square (402340 KS) was inexpensive after its November listing. Now it’s even cheaper. 
• Preceding my comments on SK Square – and LG Chem Ltd (051910 KS) – 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%.

• China Banking and Insurance Regulatory Commission warned on Friday against fund-raising and investment products related to the metaverse concept given the speculative nature of these investments.
• The Office of the United States Trade Representatives (USTR) announced on Thursday that e-commerce sites operated by Tencent have been placed on US government’s “notorious markets” list of entities.
• Tencent’s shares have dropped 5.2% during today’s trade following speculation that fresh regulatory crackdowns are possible following the warning on metaverse.

• NTES is exploring overseas market by starting studios and selling games.
• We believe NTES has the experience in dealing with the license suspension for new games.
• We believe the stock has an upside of 48% for year end 2022.

• We spoke to Yaskawa today to understand recent trends and the detailed outlook on demand going forward. 
• There were no major surprises with the company still relatively positive on demand remaining strong across the board though only robots seem to offer strong growth potential. 
• Profitability for robots should also improve going forward creating a nice story, but valuations are still too dear.

• GRAB exhibits overhead sell pressure with a new low in sight. Basing for a key low as selling pressure diminishes and the stage sets up for a cycle trough.
• RSI bull divergence (squeezing out latent sellers, as sell volumes/ downside momentum diminish). RSI near sub 30 should set up a key low as a counter marker.
• Ping the long side near 4.60, a weak bounce would place an emphasis on the 4.0 ideal low projection. 7.55/64 is the level to clear for bull traction.

• Both management and consensus seem to think that BASE Inc (4477 JP) will be able to maintain the COVID-19 growth trajectory beyond the COVID affected years.
• However, investors seem more circumspect with shares currently trading around 90% below the peak level.
• With the company likely failing to meet revenue targets and losses expanding exponentially, we think Base Inc could fall another 25-30% towards the pre-COVID level.

• Lg Innotek (011070 KS), a leading global producer of optical electronic parts, has one of the most attractive fundamentals in Korea. 
• LG Innotek has become one of the critical suppliers for Apple’s smartphones. For example, LG Innotek accounted for more than 70% of the camera modules used for Apple’s iPhone 13.
• In the intermediate term, LG Innotek is expected to benefit from higher demand for metaverse related cameras, 3D sensing modules, and autonomous vehicle cameras. 

• High redemption De-SPAC low float “squeezes” have returned in a big way, apparently.
• Starting with Inspirato (ISPO) on Thursday with seemingly all other low float (due to very high redemptions) De-SPACs following suit
• Software Acquisition Group Inc. III (SWAG) & Nogin (Valuation: $646M EV)

• While crypto is definitely banned in China, the treatment of NFTs is somewhat unclear in China with state-sponsored backers like the Metaverse Industry Committee and the National Team’s Blockchain
• This weekly explores possible creations of NFTs with Chinese characteristics based on China’s own “permissioned” blockchain technology  to be launched in March
• Meanwhile, China sponsored NFTs like the popular Olympics mascot Bing Dwen Dwen is now straddling unchartered territories as both an officially endorsed product as well as an official banned product 

• To our understanding, UMC and Samsung have dealt the 28nm wafer demand and have lifted 28nm wafer price in 2Q22.
• We think it’s possible to lift the wafer price again in 2H22 if TSMC decides to further lift wafer price recently.
• Entering the 5G era, there could be more demand in several aspects, like data storage, data transmission and processing, smartphone, and PC/NB upgrade and etc.

• The US Trade Representative (“USTR”) office added Tencent and Alibaba Group to the US government’s latest “notorious markets” list; 
• Similar to being implicated in running afoul of regulators in mainland China, Tencent “strongly disagrees” with the USTR label; and
• *We look forward to Tencent’s 4Q21 results announcement on March 23, 2021 where management will continue to refuse to discuss anything meaningful.

• This year the market presents investors with opportunities, especially in the technology sector, and we believe VC-backed Amplitude is one of them. 
• The market cap of the leading product and data analytics unicorn fell to ~$2.3B, keeping in mind last private round valuation was ~$4B in June of 2021. 
• $21 valuation, based on ~10x 2022E EV/Revenue and ~8x 2023E EV/Revenue, applies to our bear case revenue estimates of $226M in CY22 and $287M in CY23.

• SK Hynix has lost slight market share in DRAM, but gained significantly in NAND to become a strong #2 contender
• Revenue growth expectations seem conservative given Intel consolidation, market growth expectations, and the current pricing environment
• The company is still trading at discount valuation multiples despite improved market positioning and medium-term dividend clarity

• We are moving our PT to $26 by applying a 14x multiple to CY22 revenue estimate of $491M, which we believe is fair given lower implied CY22 growth. 
• Freshworks has resolved the litigation filed by Zoho Corporation regarding trade secret misappropriation against Freshworks, eliminating key risk factor for investors.
• Freshworks crossed the $400M ARR mark in the quarter ended Dec-21, and quarterly revenue exceeded $100M for the first time. 

• Results above expectations; maintain BUY
• 2QFY22 results takeaways
• Revised earnings estimates for FY22-24
• China to be the next growth driver?

2QFY22 core NP of MYR113m was above expectations, as 1HFY22 core NP of MYR226m came in at 56%/58% of our/the street’s FY22E estimates. We have raised our FY22-24E earnings assumptions by 17%/23%/24%, but lower our valuation peg to 35x FY23E PER, at +1.5SD to the LT mean (from 44x at +2.5SD), to account for the accelerated inflation-induced rate increase cycle. Imputing for both, our TP is nudged marginally higher to MYR4.77 (+1%). Inari remains our top OSAT pick, underpinned by its RF division’s strength/robust volume loading and the potential onboarding of new customers

• We speak to a B2B e-commerce consultant who onboards companies looking to sell on platforms like Amazon, Flipkart, Meesho & Shopee. 
• Shopee’s approach to a deal based app is seeing encouraging responses both from customers and sellers. 
• Indian E-Com has its own nuances, and there is a possibility that growth projections companies operating in the Industry may be overstated. 

• We believe TSMC shall decide whether to raise wafer price in one, or two month.
• To our understanding, Intel has gotten the wafer allocation from TSMC for the next two years.
• To our understanding, MediaTek is the first client to perform 4nm production, although the booking quantity is less than Apple iPhone.

• Meituan short near 300 and on the  bear wedge break has paid off. Friday’s price action is disturbing and warrants a downgrade.
• The breakdown below flat range/triangle support is a big negative on the back of sell volume. Bear triangle breaks are often volatile affairs.
• 142 is the fresh downside projection. 200 represents the sell barrier to work with.

• Palantir’s ongoing SPAC investment strategy is driving an increasing bifurcation between reported and underlying results… which continues to be ignored by sell side and retail investors. 
• Revenue growth missed ex-SPAC, while Billings Growth collapsed 31% YoY ex-SPAC investments…unheard of for a software company.
• Margin guidance for 1Q22 well below consensus as sales headcount continues to ramp. Stay short.

• With Spotify’s newfound all-things-audio ambition, we can take note of some noticeable happenings within the broad media category as a whole
• Starting off high-level, the company offers users access to its platform in two distinct manners, with a free membership or through a premium counterpart
• In short, Spotify is on a quest to capture the opportunity provided by an industry that is rapidly expanding in all directions

• SenseTime Group (20 HK), Li Auto (2015 HK) and XPeng (9868 HK) replace Autohome (2518 HK), Weimob Inc. (2013 HK) and Tongcheng-Elong Holdings Ltd (780 HK) in the HSTECH INDEX. 
• A few changes have been made from the way stocks are treated to ensure the inclusion of Li Auto (2015 HK) and XPeng (9868 HK) in the index.
• SenseTime Group (20 HK) has been included at a much higher float than what it should be and this could take the stock higher in the next couple of weeks.

• Japan-Based AI company Appier Group Inc (4180 JP) announced they had resolved to prepare to apply to change its listing on the Tokyo Stock Exchange to the Prime Market.
• Appier has confirmed that it meets the criteria for the TSE Growth Market but if they move to the Prime Market, that would trigger a TOPIX Inclusion Event.
• Below is a look at Appier’s potential to satisfy the Section Transfer Requirements and the upside potential of this event.

• This piece continues our series to show how to use the least amount of codes to create practical solutions for investors
• With 20 lines of codes, we show how to create charts using crypto, equities, and other macro indicators and their relative performances
• We also illustrate how to construct ratio charts for mean reversion pair trading between similar securities like Microstrategy Inc Cl A (MSTR US) and Bitcoin (XBTUSD CURNCY) 

• Safie reported 2021 results on Monday and beat slightly with revenue 1.6% above guidance and an operating loss of ¥76m, better than guidance of a ¥225m loss. 
• The stock is rated neutral by the sell side despite offering perhaps the best growth prospects in Japan and demonstrating numerous signs of exceptional management.
• We consider the name to be potentially Japan’s best growth story in the small cap space.

• The world’s largest electric-vehicle battery maker Contemporary Amperex Technology Co. Ltd. (CATL) has announced that it’s considering building more factories overseas
• The news came as CATL (300750.SZ +0.72%), based in East China’s Fujian province, has been trying to ease investor concerns about the recent sell-off of its stock
• The statement also disclosed that the company has been talking with U.S. clients about the possibility of building production lines in the country to bring supplies of CATL products closer to home

• Latent View Analytics is the leading pure play data analytics services companies in India.
• It provides expertise on the entire value chain of data analytics from data and analytics consulting to business analytics and insights
• It engages to provide services to blue chip companies in technology, BFSI, CPG & retail, industrials and other industries

• TCS Buyback: An Opportunity For Retail Investors.

• Gungho on Monday announced results, with both revenues and earnings up.
• They also announced a buyback, which at current price means about 2.8% of shares out. 
• That doesn’t sound like a lot, but context matters. It may matter a great deal. 

• Pan Jit International (2481 TT) appears to have launched an unsolicited/hostile partial Tender for 5.0-30.0% of the shares out of power management IC maker Champion Microelectronic Corp (3257 TT). 
• The price is near but not at a medium-term (and all-time) high, and is made “for investment purposes but hoping for more.”
• Insiders officially hold ~13.7% of the target. It would seem done, which means a defence effort and/or white knight is not out of the question. We will watch it develop.

• Delhivery is looking to raise US$1bn 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 positive aspects of the deal.

• Appier reported 4Q21 results on Monday with revenue beating consensus by 5% and EBITDA beating by 323%. 
• The company guided for ¥17.5bn in revenue, above consensus at ¥16.2bn but significantly below our guesstimate of ¥20.8bn. 
• However, a close look at trends in the US suggest that our initial estimate remains reasonable enough.

• Revenue growth is slowing and would require additional capacity and new products to re-accelerate core segment growth
• Gross margin expectations are high, leaving very little margin of error
• The near-term revenue growth visibility and medium-term demand outlook remain robust

• BILI’s stock price has plunged significantly over the past year.
• We believe the revenue growth will be stable in 4Q21.
• We believe all business lines remains promising except for advertising.

• Transaction is expected to be immediately accretive to Intel’s non-GAAP EPS. The stock market reacted exciting for Tower raised 42% to reach $47.07 and Intel raised with ~1.8% respectively.
• Tower Semiconductor is emphasized on analog semiconductor specialty foundries. Namely, it’s different from TSMC, UMC and GlobalFoundries, which are focusing on digital products original, and expand into analog afterward. 
• Intel wants to march into foundry business and have to count on Tower to bring in such operation know-hows, but Intel has to tolerate a completely different system.

• Green World FinTech Service (6763 TT) is one of the leading third-party payment solution providers in Taiwanese market.
• The Covid-19 pandemic has accelerated digitisation of the payments industry in Taiwan. This has helped strong growth in top line and margin improvements for the company.
• Though the company seems fairly valued compared to regional and global players, we think further upside is possible given its strong market dominance and demand for fintech in Taiwan.

• Delhivery is looking to raise US$1bn 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 not so positive aspects of the deal.