Daily Brief TMT/Internet: CELSYS, Meituan, JD.com Inc (ADR), Advantest Corp, AiSpeech, Media and Games Invest, Alteryx Inc, Ncr Corporation, PTC Inc and more

• Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
• In February, names which appeared in our “B” list such as Amvis Holdings Inc (7071 JP) and AXXZIA Inc (4936 JP) announced they would be moving to the Prime Market.
• In this insight, we take a look at updated lists, the price performance history of those baskets, and other interesting trades in the TOPIX index space.

• On 16th Nov 22, post-market close, along with its 3Q22 results Tencent declared an interim dividend by way of distribution in specie of Class B Ordinary shares of Meituan.
• At the time of declaration, the dividend amounted to US$20bn or 15.5% of Meituan’s outstanding shares. Its value has since declined to US$17bn.
• In this note, we talk about the implications of the deal and what one can glean from looking at the previous dividend payout for JD.com.

• From the time of Tencent (700 HK) announcement of the in-specie dividend, Meituan (3690 HK) has underperformed Tencent (700 HK) and Alibaba Group (9988 HK) by around 35%.
• Surprisingly, short interest on Meituan (3690 HK) has dropped in the last few months as the stock has continued to drop.
• As with JD.com Inc. (9618 HK), Prosus (PRX NA) could sell Meituan (3690 HK) in the months following settlement. Or they could remove the overhang by placing a block.

• JD launched “10bn subsidy” campaign on March 5th. Smartphone and electronics is the main product category and the prices for comparable products are relatively the same as PDD. 
• We estimate that total GMV generated from subsidized products may reach to about 1.5% in 2023, and the incremental cost will be about RMB5bn in 2023.
• We cut our forecast of JD’s non-GAAP net income to RMB21bn in 2023, which is 34% below cons. Maintain SELL with an updated TP of US$42, which implies 22x P/2023E.

• Advantest is a market leader in semiconductor testing and will be a major beneficiary of a multi-year AI tailwind
• Catalyst: News flow around new AI applications, increased investment dollars flowing into the space and visible acceleration in Nvidia’s data centre GPU growth
• Market concern over near-term correction in semiconductor market is giving investors an opportunity to buy Advantest at a 15% discount to its intrinsic value

• AISpeech is a high-tech start up specializing in computer speech recognition and AI chip design in China.
• The company is developing intelligent voice interaction technology designed to improve human-machine interaction. It is also developing human-computer dialogue operating system and artificial intelligence chip modules to improve speech recognition.
• AISpeech is in the process of listing in the Shanghai Star Market, aiming to raise about US$1.5 billion.

MGI – Media and Games Invest (MGI) is increasingly focused on its vertically integrated multichannel advertising platform, retaining a core of games that serve to generate first-party data and provide an efficient sandpit for developing new services. FY22 results were at the top end of guidance (as revised upwards at Q322), despite the headwind of lower market advertising rates. This scenario has continued in Q123, and we have taken a cautionary approach to our revised FY23 forecasts, which will be reviewed when management issues guidance for the year at the Q1 update. Medium-term guidance remains for a revenue CAGR of 25–30%. The shares are valued well below peers and the level indicated by a discounted cash flow (DCF).

• Alteryx delivered a strong Q4, exceeding Wall Street expectations in terms of revenues and earnings as well as its management outlook.
• It also adjusted its go-to-market strategy to concentrate on the biggest global companies with the best growth potential.
• Alteryx Analytics Cloud platform has spurred corporate support for Alteryx’s long-term goals.

• NCR Corporation ended 2022 with a mixed result, surpassing the revenue expectations of Wall Street on account of a healthy business environment and robust demand.
• NCR achieved overall revenue growth of 13%.
• Besides that, they continue to see significant demand in the hotel sector from both their business and SMB clients.

• PTC produced a mixed set of results for the first quarter of fiscal 2023.
• The 14% organic ARR growth was followed by the additional point of inorganic growth from Codebeamer.
• They achieved this so rapidly by utilizing Windchill+’s out-of-the-box functionality, which PTC provided to the user as a secure preconfigured service.