In today’s briefing:
- TOPIX Inclusions: Who Is Ready (May 2023)
- Rocket Software (Bain) Ups the Game
- GlobalFoundries Q1’23 Revenue $1.84 Billion, -12% QoQ, -5% YoY. Q2’23 Flat QoQ
- Fujifilm FQ4: Strong Earnings Beat and There’s Further Upside
- XPER: More Design Wins Pathing Revenue
- ATEN: Cycling Thru Revenue Bottom
- UI: Show Me After Results
TOPIX Inclusions: Who Is Ready (May 2023)
- 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.
- CELSYS (3663 JP) (formerly known as “Artspark”) is a name we have been Bullish on in the last few months as it was a high-probability TOPIX Inclusion candidate.
- In the last couple of trading days, the stock has popped more than 30%. In this insight, we take a closer look at this situation.
Rocket Software (Bain) Ups the Game
- Bain goes mildly hostile, with a €34/share indicative offer (20.5x EV/Fwd EBIT on IBES consensus), above 11.1x last-10y average. Further, if it fully succeeded, it’d raise to €36/share (21.6x).
- Software AG dislikes the improved indicative offer. The situation reminds of the battle for Caverion Corp (CAV1V FH), now being played, in which precisely Bain has been the unexpected loser.
- At this point, it seems Silver Lake will have to raise its offer again. I raise my TP to €34. Long (possible upside to Bain’s €36/share, 6.1% gross).
GlobalFoundries Q1’23 Revenue $1.84 Billion, -12% QoQ, -5% YoY. Q2’23 Flat QoQ
- Q1’23 revenues of $1.84 billion, -12% QoQ ,- 5% YoY, but at the high end of the guided range
- Remains on track for >50% wafer capacity growth between 2021 and 2024
- Muted CY’23 outlook sends shares down ~10% by close. Buying opportunity?
Fujifilm FQ4: Strong Earnings Beat and There’s Further Upside
- Fujifilm delivered its 4Q and full-year FY03/2023 results today. Revenue and OP increased 15.0% and 63.2% YoY to ¥764.7bn (vs consensus ¥715.7bn) and ¥70.4bn (vs consensus ¥62.5bn) respectively.
- The company’s full-year revenue and OP were above its own guidance as well as consensus, and we think FUJIFILM Holdings (4901 JP) ’s guidance for FY03/2024E is too conservative.
- The market continues to value Fujifilm as an imaging company and not in line with healthcare peers suggesting there is significant upside to the current valuation multiples.
XPER: More Design Wins Pathing Revenue
- XPER reported new customer wins with the release of first quarter results. Continued expansion of XPER’s customer base in connected TV and cars affirms our thesis
- XPER had already won a major TV OEM in Europe and has now won a second TV producer planning to use TiVo OS
- XPER announced a global program design win with a Japanese automaker for DTS AutoStage
ATEN: Cycling Thru Revenue Bottom
- ATEN had already warned of the shortfall in Q1 revenue and the official release of the results was an update on the improvement the business has seen in recent months
- ATEN’s management used the first quarter earnings call asserting orders have increased in recent months and ATEN would post sequentially higher revenue in the second quarter
- Network security is not an area we would expect much penny pinching over the course of the year
UI: Show Me After Results
- UI reported fiscal third quarter (March) results mostly in line with our lowered estimates. The business climate for network hardware has cooled in recent months and Ubiquiti is no different
- Ubiquiti has spent the past year building inventory to meet demand after many quarters of not having adequate supply
- Simultaneous with revenue growth has been an improvement in gross margin. Gross margin is beginning to revert to prior levels of 45 percent and higher
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