Daily Brief TMT/Internet: Hollysys Automation Technologies, Mesh Bio , Amazon.com Inc, Avant Corp, Simplex Holdings, Vanguard Intl Semiconductor, Vection Technologies Ltd, ID Holdings , Meta Platforms (Facebook) and more

• Back on the 26th January, proxy advisor Glass Lewis issued a report recommending Hollysys Automation (HOLI US) shareholders vote against Ascendent’s merger. Two days later, ISS shared a similar view.
• Both proxy advisors should read HOLI’s latest proxy statements. Negotiating with Dazheng is like something out of the wild west. The Special Committee gave the consortium considerable latitude. 
• Passive investors will follow GL/ISS, which could jeopardize the vote on the 8th Feb. It should not come to this. 

• Mesh Bio Co-Founders Andrew Wu and Arsen Batagov Singapore-based chronic disease management startup Mesh Bio has raised US$3.5 million in Series A financing led by East Ventures.
• Elev8, Seed Capital, and other existing shareholders also co-invested.
• The funding will allow Mesh Bio to offer its digital twin technologies to healthcare providers and scale the deployment of these solutions across Hong Kong and Southeast Asia, mainly Indonesia and the Philippines.

• 1P revenue grew HSD and Amazon’s revenue ex 1P increased by high-teens last quarter.
• Since I continue to rate Amazon retail to be relatively overlooked driver for Amazon, let me start with margin discussions on retail.
• North America’s operating margin bottomed at -2.3% 1Q’22 and has since then increased by more than 800 bps to reach 6.1% in 4Q’23, just shy of the pre-pandemic high of 6.4% in 1Q’19.

• Continuing DX tailwinds and developmental hurdles – Q1-2 FY6/2024 results highlighted continued demand for DX solutions, combined with a stable uptick for Consolidated Financial Solutions driven by outsourcing.
• With 11.6% sales growth YoY and operating profit growth YoY at a slower pace of 5.4%, the company is maintaining its course by investing in a software-driven strategy.
• A fundamental element is the development of the Management Solutions segment which currently faces challenges in building up a pipeline, and the company has identified some necessary changes in sales activity. 

• Q1-3 FY3/2024 results were in line with unchanged FY company guidance, with the company displaying 1) sustained growth in Strategic/DX Consulting demand and System Integration, 2) ongoing successful business expansion into new market sectors, and 3) management achieving a delicate equilibrium between actively generating current growth and investing for the long-term success of the business.
• Although DX will remain a structural tailwind for some time to come, the company’s growth potential will be underpinned by access to high-caliber hires at both graduate and mid-career levels.
• We believe the announcement of a business and capital partnership with CIRCULATION (7379) points in the right direction in establishing a channel to a quality talent pool.

• Revenue declined by a single-digit percentage quarter over quarter. However, it is expected to improve in the following quarters. 
• Automotive applications are currently undergoing inventory adjustments, while consumer applications are entering the low season. Electric Vehicle components are expected to continue growing.
• It will still maintain the previous payout level of NTD$4.5.

Vection Technologies’ H124 activity report shows sustained momentum, with the group delivering 37% y-o-y revenue growth to A$11.9m. Total contract value (TCV) of A$16.7m was up 67% y-o-y, providing strong revenue visibility for the rest of FY24. As with Q1, we believe growth has been driven by the expansion of existing low-margin, one-off transactions into large multi-year deals. Expanding deals, rather than relying on new wins, underpin the opportunity for operationally geared growth, with management expecting to see the benefits of recent cost reduction measures in H2.

• Q1-3 FY3/2024 results were ahead of FY company guidance which remained unchanged, positioning the company for a robust year-end in our view.
• The key earnings drivers remain DX-related, having a positive impact on sales growth and profitability improvements in Cybersecurity, Consulting and Training, and IT Infrastructure segments.
• ID Holdings’ objectives of strengthening its DX-related offerings, developing effective vendor partnerships, optimizing administrative operations, and shifting human resources to profit centers continue to yield positive results. 

• Take a look at the Facebook’s DAU or MAU number for the last time because Meta will stop reporting them from next quarter.
• Investors usually assume the worst when any important KPI gets deprecated by the company.
• Thankfully, along with Family “Daily Active People” (DAP), Meta will report YoY changes in ad impressions and average price per ad by region.