In today’s briefing:
- Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet
- Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side
- Taiwan Tech Weekly: TSMC 2NM Yield Jump Rumors; Seeing Taiwan’s Starlink Alternative Firsthand in KS
- HK Connect SOUTHBOUND Flows (To 6 Dec 2024); SB Trading Volumes Up, US/China Trade Volleys Up Too
- Rubrik 3QFY25 Wrap: Solid Outlook, Improving FCF and $1B+ In Subscription ARR
- Tech News: Semi Revised Up, TSMC CoWoS up 3x, Hynix Speeding up for Nvidia, Intel 18A Behind TSMC N2
- Potential Take Private of Worldline
- Intapp Inc.: Cloud Transition & Expansion As A Key Growth Catalyst! – Major Drivers
- Taiwan Dual-Listings Monitor: TSMC Spread At Decent Short Level; UMC Short Interest Rises Again
- DigitalOcean Holdings: These Are The 7 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers
Merger Arb Mondays (09 Dec) – HKBN, ESR, Lifestyle China, GA Pack, Latin Res, De Grey, SG Fleet
- We summarise the latest spreads and newsflow of merger arb situations we cover across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads: Lifestyle China (2136 HK), Arcadium Lithium (ALTM US), Shanghai Henlius Biotech (2696 HK), ESR Group (1821 HK), Get Nice Financial Group Ltd (1469 HK), Canvest.
- Lowest spreads: Renewable Japan (9522 JP), Macromill, Inc (3978 JP), Fuji Soft Inc (9749 JP), Nec Networks & System Integr (1973 JP), Capitol Health (CAJ AU), Elematec Corp (2715 JP).
Quiddity Leaderboard Mar25 Nikkei 225 Rebal: 2 IN, 2 OUT, $5.5bn+ Fastie to Sell, $7bn a Side
- The Sep24 Nikkei 225 Rebal was odd. They could have done 3. They did 2. For now, I still see 2 IN and 2 OUT for the Mar25 Nikkei225 Rebal.
- There is also a DOUBLE-capping event for Fast Retailing which on 8% outperformance could become a TRIPLE-capping event. For now, the trade is shaping up to be US$7bn a side.
- There is still a tech bent to potential ADDs. Some Consumer Goods stocks need stock splits to get in. Longer-term, the TOPIX Methodology Rejig is an interesting problem set.
Taiwan Tech Weekly: TSMC 2NM Yield Jump Rumors; Seeing Taiwan’s Starlink Alternative Firsthand in KS
- TSMC’s N2 Progress Sparks Buzz Amid Yield Improvement Rumors; If True Then 2nm Will Become Even More Successful Than 3nm
- Hon Hai & TASA Showcase Homegrown Space Technologies Including an Alternative to Starlink
- Himax: Buyback Program Lifts Shares; Auto Display Controllers, AR Displays & WLO for AI Progressing
HK Connect SOUTHBOUND Flows (To 6 Dec 2024); SB Trading Volumes Up, US/China Trade Volleys Up Too
- SOUTHBOUND gross trading activity rebounded about 20% this week vs the previous week. Net buying was a little lower but still strong. Market volumes overall in HK remain weak.
- Alibaba Group Holding (9988 HK) was again the top buy and EV names XPeng (9868 HK) and BYD (1211 HK) were bought, but tech as a whole was sold.
- I continue to expect HK-listed tech to see ongoing buying. Alibaba, Tencent, Xiaomi, etc are safe havens against Trump tariffs as they don’t compete in the US.
Rubrik 3QFY25 Wrap: Solid Outlook, Improving FCF and $1B+ In Subscription ARR
- Rubrik, cybersecurity company and leader in the segment of enterprise backup and recovery software solutions, delivered a high quality beat and raise in 3QFY25.
- Stock indicated up 20%+ during regular trading session on heavy volume. Rubrik raised guidance for FY25 total revenue to $861M at the midpoint, implying ~37% growth.
- Moreover, the company generated positive FCF, achieved strong growth at scale and surpassed $1B+ in subscription ARR, a big milestone.
Tech News: Semi Revised Up, TSMC CoWoS up 3x, Hynix Speeding up for Nvidia, Intel 18A Behind TSMC N2
- WSTS is revising up Semiconductor demand for 2024 and 2025, AI demand higher than expected. Taiwan AI Server ODM revenues are still booming, impressive numbers.
- Samsung and SK Hynix expediting new LPDDR “In Memory Processing” for Nvidia in 2026. TSMC forecast AI demand 3x increase to 2026.
- Intel 18A low yield and low density brings new light on management reshuffle. TSMC N2 is ~20% ahead. Apple trying its own 5G modem, again.
Potential Take Private of Worldline
- Private Equity Interest: Worldline has attracted early-stage interest from private equity firms, including Bain Capital, driven by its discounted valuation and extensive market presence in Europe.
- Market Challenges: Worldline’s stock declined over 50% in 2024, with Q3 revenues dropping 1.1% organically, reflecting struggles in Merchant and Financial Services and the need to stabilize growth.
- Valuation and Takeover Potential: Worldline’s current valuation at 4.61x EV/EBITDA offers upside potential, with a €9.00/share target implying an 18.4% return, though profitability recovery remains uncertain.
Intapp Inc.: Cloud Transition & Expansion As A Key Growth Catalyst! – Major Drivers
- Intapp, Inc. concluded its fiscal first quarter of 2025 on a strong note, showcasing substantial growth in cloud annual recurring revenue (ARR) and laying a strong foundation for future expansion.
- A key highlight was the 27% year-over-year growth in cloud ARR, reaching $309 million, which now comprises 74% of the company’s total ARR of $417 million.
- SaaS revenue also increased by 30% year-over-year to $77 million, driving total revenue up by 17% to $119 million.
Taiwan Dual-Listings Monitor: TSMC Spread At Decent Short Level; UMC Short Interest Rises Again
- TSMC: +23.5% Premium; Decent Level to Short Relative to Historical Trading Range
- UMC: +0.1% Premium; Middle of the Historical Trading Range; Short Interest Rises Again
- ASE: +3.5% Premium; Near Middle of Recent Range, Wait for Better Levels
DigitalOcean Holdings: These Are The 7 Biggest Factors Impacting Its Performance In 2025 & Beyond! – Major Drivers
- DigitalOcean, a cloud infrastructure provider aimed at developers, startups, and SMBs, achieved steady progress in its third quarter of 2024.
- The company reported revenue growth of 12% year-over-year, propelled by the success of its core cloud offerings and substantial gains in its AI/ML platform.
- Despite facing challenges from earlier price adjustments and acquisitions, DigitalOcean demonstrated robust growth in annual run rate revenue of $798.3 million, marking a consistent 12% increase year-over-year.
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