Daily Brief TMT/Internet: Hang Seng China Enterprises Index, Money Forward, Taiwan Semiconductor (TSMC) – ADR, Micron Technology, BlackBerry Ltd, Vection Technologies Ltd, Ethereum, Paycom Software, Pinterest Inc and more

• At TMA we deliver high probability outcomes by focusing on our 3 pillars of technical analysis. 1) Response to key levels. 2) Price action. 3) Momentum confirmation.
• A prominent bottom below 5000 in Q4 2022 set up an impulsive multi-month uptrend and LT uptrend bias. Our 2023 target at 9450/70 reflects this major bottom.
• 2023 has delivered a tangible downward correction. Since mid-February a Head and Shoulders Bottom has formed. A break above the neckline at 7085 targets 7770/80 in Q2 2023.

• MF reported 1QFY11/2023 results on Friday. Revenue increased 43.0% YoY to ¥6.8bn (vs consensus ¥6.5bn) while operating losses dropped to ¥1.59bn vs ¥1.65bn in 1QFY11/22 (vs consensus ¥2.0bn).
• The company’s S&M spending is the lowest during first quarter of the year, which drove losses down. However, the company has guided for higher S&M spending in 2Q.
• Our analysis on Money Forward (3994 JP) BO SAAS vs Non-BO SAAS shows that non-BO businesses’ GPM has continued to decline suggesting that these non-BO businesses only help inflate revenues.

• TSMC is cutting its 2023E capex plans by 12% according to Taiwan’s EDN. The company will also report earnings this Thursday.
• TSMC suppliers ASML and Lam Research will also be reporting this week. Realtek will report this week as well.
• Delta Thailand valuation still precarious relative to Delta Taiwan. Apple has continued to outperform the Quanta & Pegatron pair.

• Micron Technology’s results in the quarter were disastrous as the company failed to meet the revenue expectations of Wall Street and reported wider-than-expected losses.
• Total fiscal revenue was down, whereas DRAM revenue represented 74% of the total revenue.
• Revenue from the Mobile Business Unit was up and Embedded Business Unit revenue was down.

• BlackBerry delivered a mixed result in a challenging macro environment.
• Blackberry IoT closed out with strong year-over-year revenue growth.
• In the quarter, Blackberry secured an overall 36 new design wins and in multiple auto domains, QNX is winning.

Vection Technologies reported a 60% uplift in its total contract value (TCV) to A$16m from the TCV metric announced at the half year, driven by new contract wins, upsells from existing clients and recognising delayed contracts from Q223. Delivering rapid contract growth in H223 instils further confidence in management’s FY23 revenue guidance of A$24–26m for its IntegratedXR technology stack, reflected in the 9% rise in share price following the announcement. As illustrated by our previous note, promising pilot projects, including a potential A$30m tender in the defence sector, should bolster the company’s growth trajectory. A proven track record of converting c 100% of TCV into revenue by year-end further de-risks the group’s FY23 growth target and our forecasts, which are unchanged.

• Last week, the Shapella upgrade went live without a hitch, enabling millions of staked ETH to be withdrawn.
• While Ethereum’s Merge upgrade last September was more of a “buy the rumor sell the news” type of event, Shapella appears to have had the opposite impact on price.
• ETH spot prices dropped by nearly 18% post-Merge while they are up 11% since Shapella, despite fears of mass selling. 

• Paycom reported strong financial results in 2022, with four consecutive quarters of revenue growth of 30% or more.
• The company’s Q4 revenue was up 30% year-on-year, bringing the full-year 2022 revenue to $1.375 billion, also up 30% year-on-year.
• Paycom is poised to take advantage of the upward market trend in 2023, as its revenue growth is predominantly driven by clients with more than 2,000 employees.

• Pinterest ended 2022 on a mixed note as its revenues were below Wall Street expectations.
• Given the softening ad market, Pinterest delivered revenue of $877 million in Q4 but it did manage an earnings beat.
• Overcoming pandemic challenges and achieving increased user engagement, Pinterest has achieved MAUs of 445 million, higher than in the third quarter.