Daily Brief TMT/Internet: Fuji Soft Inc, Workday Inc Class A, Taiwan Semiconductor (TSMC) – ADR, Baidu, NVIDIA Corp, Erajaya Swasembada, Snowflake , Zhen Ding Technology Holding, NetEase and more

• KKR has launched its deal early to make life difficult for Bain, who has Founding Family support, due diligence, and another hearing with the company to make a Binding Bid.
• The combination of Bain’s PR on 3 September and the new documents out late last night from KKR and Fuji Soft show a picture of KKR/3D somehow acting coercively.
• This is something of a mess. It should become a case study for lawyers/advisors of what NOT to do when a large PE firm approaches you. Expect a bun fight.

• The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
• The rankings used for the September 2024 index rebal event will be based on yesterday’s (4th September 2024) opening prices.
• In this insight, we take a final look at the potential ADDs and DELs leading the rankings for the upcoming review.

• Taiwan Semiconductor (TSMC) – ADR (TSM US)  will benefit from Intel Corp (INTC US)‘s decision to use their 20A processor, named Arrow Lake.  
• Intel plans to stick with the 18A process and has identified about 5 potential customers.
• As of now, TSMC remains the primary source for technology deliveries.

• Baidu has reported its financial results for the second quarter of fiscal year 2024, showcasing resilience with its Baidu Core which posted a modest revenue growth to RMB 26.7 billion.
• This growth was driven by the accelerating performance in the AI Cloud sector, which somewhat counterbalanced the drag provided by the online marketing segment.
• Notably, there was an 8% year-over-year increase in non-GAAP operating profit for Baidu Core, reflecting continued operational efficiencies.

• Mispronunciations of Nvidia can be a red flag for some investors
• The volatility in Nvidia stock after earnings was not surprising due to high trading volume and options activity
• Buy side expectations and unofficial whisper numbers can impact stock performance in high profile companies like Nvidia

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• Erajaya Swasembada (ERAA IJ) booked a solid set of 1H2024 results driven by the availability of affordable handsets, with volumes driving growth despite lower prices. 
• The company’s Erablue consumer electronics JV with Mobile World Investment (MWG VN) now has 61 outlets and is set to break even in 2024, with 80 stores expected by year-end. 
• The other growth drivers will come from private-label accessories and its Grand Lucky supermarket expansion. Valuations look attractive will the company trading on a 6x forward PER multiple.

• Workday, a leading provider of enterprise cloud applications for finance and human resources, delivered a mixed set of results in its fiscal 2025 second-quarter earnings.
• The company reported a 17% growth in subscription revenue and a healthy increase in its 12-month backlog, which grew 16%.
• Professional services also saw growth, contributing to a total revenue growth of the same percentage.

• Snowflake Inc. reported a solid financial performance for the fiscal second quarter of 2024, with product revenue increasing by 30% year-over-year to $829 million, surpassing analyst expectations.
• The company raised its full-year revenue outlook to $3.36 billion, reflecting its continued focus on innovation and product development.
• Despite this growth, Snowflake’s stock faced pressure, dropping by 7% in extended trading as concerns over its ability to fully capitalize on AI-related opportunities persisted.

• Nvidia expands beyond chips to offer various AI services, becoming a one-stop AI factory for customers.
• Cobalt recycling gains popularity as speculation grows over export restrictions, driving the trend in the industry.
• India and Singapore sign MoU on semiconductors, while UK delegation pursues closer ties with Taiwan for collaboration.

• NetEase’s 2024 second quarter earnings report revealed considerable strategic progress, although accompanied by some operational challenges typical for a growing enterprise.
• The company reported a total revenue of RMB 25.5 billion, indicating a 6% year-over-year increase, driven largely by the success in its gaming division and expanded efforts in international markets.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.