In today’s briefing:
- Alibaba: FY3Q23 Results Presenting An Opportunity In Disguise
- Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy
- Fortinet Inc.: Launch of FortiSP5 & Other Drivers
- Memory Monitor: Long Micron Vs. Short Nanya Technology; Nanya Relatively Over-Valued
- Shopify Inc.: Introduction Of Commerce Components & Other Developments
- Akamai Technologies Inc.: New Cloud Computing Services & Other Drivers
- Synopsys Inc.: Major Drivers
- Cisco Systems Inc.: Major Drivers
Alibaba: FY3Q23 Results Presenting An Opportunity In Disguise
- BABA’s December results highlighted how the performance of this e-commerce giant – as a proxy for China consumption – increasingly tracks Chinese economy.
- The Alibaba that suffered from China’s slump in 2022 should also be the Alibaba that stands to reap the fruits from China’s recovery in 2023.
- Trading at 12x PE on the cusp of economic recovery, the payoff of BABA is much better for bulls than bears. Maintain $500 billion target valuation. Buy.
Hon Hai Precision: Nvidia Chip Partnership Shows Emerging EV Advantage, Apple Issues Improving; Buy
- Latest Nvidia and Apple developments are positive signals for Hon Hai, we continue to view Hon Hai as a Structural Long and also outline a potential Long/Short.
- The Nvidia chips Hon Hai is partnered with to use in its EV autonomous driving systems are based on 7-nm technology, thus restricted for any mainland China competitors.
- On the Apple front, Hon Hai is also reported to have won exclusive production for the iPhone 15, iPhone 15 Pro, and iPhone 15 Pro Max.
Fortinet Inc.: Launch of FortiSP5 & Other Drivers
- Fortinet had a mixed set of fourth-quarter results with revenues failing to meet Wall Street expectations despite market share gains.
- The company succeeded in delivering an earnings beat and held on to its market positioning.
- Its 42% product revenue growth has made the company one of the top product revenue companies in the cybersecurity industry.
Memory Monitor: Long Micron Vs. Short Nanya Technology; Nanya Relatively Over-Valued
- Long Micron vs. Short Nanya – We remain biased to Long Micron vs. Nanya Technology based on multiple factors.
- Relative valuation and inventory management appears to favor Micron. Nanya Technology’s inventory days blow-out increases risk of write-downs impacting its next earnings.
- Potential news flow also appears to favor Micron as the US CHIPS Act rolls out.
Shopify Inc.: Introduction Of Commerce Components & Other Developments
- Shopify delivered an all-around beat in the previous quarter and ended 2022 on a positive note.
- The company introduced Shopify Audiences, Shopify Collabs, POS Go, Tap to Pay, integrated Twitter Shopping and YouTube channels, and continued to expand the Shop app to make it simpler for retailers to interact with and develop relationships with customers.
- They also introduced Shopify Markets and Markets Pro.
Akamai Technologies Inc.: New Cloud Computing Services & Other Drivers
- Despite ongoing difficulties with the global economic environment, Akamai produced strong results in the fourth quarter, exceeding market expectations in terms of both, revenues as well as earnings.
- Their rapidly expanding Compute business, the sustained high demand for their security solutions, and higher-than-anticipated shipping traffic contributed to their revenue growth.
- In this report, we have carried out a fundamental analysis of the historical financial statements of the company.
Synopsys Inc.: Major Drivers
- Synopsys had a strong start to the year and managed to meet the revenue expectations of Wall Street driven by its execution and robust technology portfolio.
- The company saw $6.9 billion in noncancelable backlog despite slower revenue growth in the semiconductor industry and robust, steady, time-based business models.
- Synopsys has a wide IP portfolio and they expect a continuance of designs, requiring more communication bandwidth, processing, storage, and security in ever more sophisticated silicon technologies.
Cisco Systems Inc.: Major Drivers
- Cisco Systems delivered another strong quarter, exceeding the top and bottom line expectations of analysts.
- The company saw consecutive double-digit growth in its customer markets’ commercial and enterprise sectors, and the public sector performed better than usual.
- We give Cisco Systems a ‘Hold’ rating with a revised target price.
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