In today’s briefing:
- 2024 High Conviction: Buy Hollysys
- StubWorld: Rumoured Interest In PCCW’s Fibre
- CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon
- ChiNext/ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now
- [Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future
- Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)
- TSMC (2330.TT; TSM.US): 2024 High Conviction for Upside >15% YoY
- Taiwan Dual Listings Monitor: Spreads Generally Trading in the Middle of Their Ranges
- Wavemaker Partners joins Indian astrology app VAMA’s US$1.5M seed round | e27
- EB: Brightening Up the Portfolio, Initiating with Buy
2024 High Conviction: Buy Hollysys
- Despite Hollysys Automation (HOLI US) receiving a myriad of proposals over the past three years, nothing moved forward. Calling an SGM to spill the board would change that status quo.
- But Hollysys’ board stonewalled the SGM, pinning its reason – and a proposed injunction – on the subjective ownership of Ace Lead, and in turn, its 6.7% holding in Hollysys.
- That injunction was dismissed last week. An SGM will now be held late January. A firm merger proposal is expected in the middle of next month. This is a buy.
StubWorld: Rumoured Interest In PCCW’s Fibre
- Reportedly, Chinese investors, as well as Middle Eastern sovereign wealth funds, have expressed interest in acquiring a “significant ” minority stake in PCCW Ltd (8 HK)‘s fibre ops.
- Preceding my comments on PCCW are the current setup/unwind tables for Asia-Pacific Holdcos.
- These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.
CNI Semiconductor Chips Index Rebalance: Yet Another Index Inclusion for Hygon
- There are 3 changes for the CNI Semiconductor Chips Index that will be implemented at the close on 8 December.
- This is yet another index inclusion for Hygon Information Technology C (688041 CH) – the stock continues to move higher on expected passive buying over the next two weeks.
- Over the last 6 months, the adds have underperformed the deletes but there has been a significant improvement in performance over the last 2 months.
ChiNext/ChiNext 50 Index Rebalance: Adds Outperforming Deletes Now
- There will be 6 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index. Implementation is at the close on 8 December.
- There is a lot of overlap between the adds and deletes across both indices with the one-way trade across both indices estimated to be CNY 2.4bn.
- The adds and deletes have drifted lower over the last few months. However, the adds have outperformed the deletes significantly in the last month.
[Baidu, Inc. (BIDU US, BUY, TP US$157) TP Change]: C4Q/2024 Ads Upswing Bridge Gap to the Future
- Baidu reported revenue/non-GAAP operating profit/GAAP net income inline/7.72%/66.1% vs. our estimation.
- We believe short term cyclical and medium term AIGC-led upswing in advertising can bridge Baidu’s long-term business, which we do see them difficult to monetize.
- We maintain a BUY rating and adjusted TP to US$157, implying a 14.6x PE. It is currently trading at 11.4x PE in 2024.
Another Day Ending in Y, Another Low-Balled Takeover – This Time Glosel (9995)
- Today, Macnica Fuji Electronics Hol (3132 JP) (Macnica Holdings) announced that it would launch a tender offer to buy 100% of Glosel (9995 JP), a semiconductor trading company.
- Glosel is special because it has three main assets. 1) 61% of net assets are inventory (<3mo), 2) 34% of net assets are net receivables (<3mos), 3) 8+% is securities.
- For that, Glosel’s Board decided 0.71x book was OK. Nah. The register is reasonably wide open, and this is a delayed start. Someone might get noisy, but < 50/50 bet.
TSMC (2330.TT; TSM.US): 2024 High Conviction for Upside >15% YoY
- TSMC is expected to experience growth of ~15% YoY in 2024F.
- TSMC’s N3 is expected to dominate the market in 2024F, with applications in CPU, GPU, smartphone SoC, and more.
- We also estimate that the N2 pilot run will begin in 4Q24.
Taiwan Dual Listings Monitor: Spreads Generally Trading in the Middle of Their Ranges
- TSMC: 8.2% Premium — Still Best to Wait for Better Levels
- ASE: 6.4% Premium — Wait for 5% as the Level to Go Long the Spread
- ChipMOS: -0.5% Discount — Stay Long the Spread if You Started at -2.0%
Wavemaker Partners joins Indian astrology app VAMA’s US$1.5M seed round | e27
- Singapore-based early-stage VC firm Wavemaker Partners has led the US$1.5 million seed extension investment round for VAMA, a one-stop virtual platform providing easy access to an array of services for one’s religious and spiritual journey.
- This marks Wavemaker’s maiden investment in an India-incorporated startup.
- The deep-tech investor infused US$1.1 million into the startup, while the rest came from existing investors, such as Lisa Gokongwei-Cheng and Harit Nagpal.
EB: Brightening Up the Portfolio, Initiating with Buy
- We are initiating coverage of Eventbrite (EB) with a Buy Rating and $12 target.
- Eventbrite benefits from social change where in-person meet ups are celebrated more so than virtual events.
- Eventbrite fills the void of online dating apps. The popularity of online dating apps is dwindling, and Eventbrite should benefit from this growing trend.
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