Daily Brief TMT/Internet: ASM Pacific Technology, Softbank Group, Tencent, SK Square , DB Hitek Co., Ltd., NVIDIA Corp, LaKeel, BlackBerry , Mediatek Inc and more

• The constituent changes for the Hang Seng China Enterprises Index (HSCEI INDEX), Hang Seng TECH Index (HSTECH INDEX) and HSIII Index will be announced after market close on Friday.
• We forecast 2 changes for the Hang Seng China Enterprises Index (HSCEI INDEX), 1 change for the Hang Seng TECH Index (HSTECH INDEX) and 3 changes for the HSIII Index.
• With same-way and opposing flow on stocks from different passive trackers, the one-way trade is currently estimated at HK$5.2bn (US$672m). That will change with final capping done on 3 September.

• The announcement of JPY500bn share buybacks is a positive for SoftBank group minority shareholders, and confirms the positive impact of the emergence of Elliott as an activist shareholder
• The combination of the big weighting of Arm Holdings in the group’s equity value and the impact of the appreciating JPY has driven the NAV discount to very high levels
• Much bad news seems priced in following the market turbulence; we remain positive on Softbank shares as they trade at a historically high 57%+ discount to the estimated NAV

• The HSTECH Index tracks the performance of the top 30 technology companies listed in Hong Kong that have high business exposure to certain technology themes.
• There could be one index change during the September 2024 index rebal event. The official results will be announced after market close on 16th August 2024.
• In this insight, we take a look at our latest flow expectations based on closing prices on Monday 12th August 2024.

• Last night, MSC published index changes due at the August rebalance. There will be no changes to SA constituents.
• The rebalance is set to take place at the end of the month on Friday the 30th.
• Tomorrow after the HK close, Tencent is expected to report results for 2Q FY24.

• Our NAV analysis of SK Square suggests NAV of 15.6 trillion won or 115,605 won per share, representing 48% higher than current share price.
• SK Square’s market cap is only 39% of SK Square’s stake in SK Hynix. SK Square’s share price has declined by 27% since reaching its recent peak on 11 July. 
• SK Square had excellent results in 2Q 2024, driven by improving results of its affiliates including SK Hynix. 

• DB Hitek’s investment in a golf course operating company is a poor investment, one that destroys shareholder value.
• Most investors would rather have DB Hitek increase shareholder returns through share buybacks/cancellations and dividends as well as invest in its core semiconductor business rather then buy a golf course. 
• Given DB Inc’s lack of cash, there is a growing possibility that it will use the proceeds from selling its DB World shares to increase its stake in DB Hitek. 

• We downgraded our long-term outlook to neutral last week (8/6/24 Compass) after being bullish since early-November 2023. We still believe the SPX is going through a 1-to 4-month consolidation phase.
• It is possible the low for this consolidation has been established within our expected pullback zone of 5100-5191 that we discussed two weeks ago (7/30/24 Compass)
• In terms of upside, the SPX could test its YTD highs or make a marginal new high, or could also see it roll over at the 5400 or 5585 resistances.

• Revenue: JPY4.2bn (+12.3% YoY), EBITDA: JPY653mn (+39.5% YoY), Operating profit: JPY437mn (+49.8% YoY), Recurring profit: JPY424mn (+47.5% YoY), Net income: JPY287mn (+49.3% YoY).
• Product Services revenue: JPY2.4bn (+12.9% YoY), Professional Services revenue: JPY1.8bn (+11.7% YoY), licenses: JPY233mn (+110.6% YoY), subscriptions (LaKeel products): JPY568mn (+22.4% YoY).
• LaKeel product user companies: 344 (+15.8% YoY), ARPU: JPY291,000 (+9.0% YoY), one-time revenue: JPY193mn (+250.4% YoY), recurring revenue: JPY1.6bn (+3.0% YoY).

• Blackberry is viewed as a good investment opportunity with a potential low-teens IRR due to its turnaround story and recent sale of non-core patents
• The company’s new CEO and focus on promising segments like Cybersecurity, IoT, and Licensing make it an attractive option for investors
• The stock is seen as a way to benefit from retail enthusiasm while also appealing to value investors

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Taiwan’s drone sector showcases industry growth with debut expo in October, marking a significant advancement in technology.
• Microsoft makes significant investment of US$308 million in Taiwan to enhance AI technology development, strengthening their presence in the region.
• Samsung plans to establish new CIS lab to compete with Sony in imaging technology, while also investing in in-house chip development for XR market to stay ahead of competition.