Daily Brief TMT/Internet: Horizon Robotics, Taiwan Semiconductor (TSMC), Taiwan Semiconductor (TSMC) – ADR, Waystar Holding, ASE Technology Holding , CK Solution, Esker SA and more

• Horizon Robotics (9660 HK), a provider of autonomous driving products and services, is seeking to raise up to US$696 million through a HKEx IPO.    
• Horizon ranked fourth among all global ADAS and AD solution providers in China by solution installation volume in 2023 and 1H24, with a market share of 9.3% and 15.4%, respectively.
• The bull case rests on a large TAM, a blue-chip customer base, a robust backlog, a core business in good health, a high gross margin, and a strong balance sheet.

• Q424 revenue forecast of $26.5 billion, up 13% QoQ and the highest Q3 to Q4 revenue jump since Q4 2017
• Demand for AI acceleration is real and just beginning. According to a key customer of theirs, “demand right now is just insane”
• Overseas fabs progressing well with Arizona yielding well and on track for high volume production in early 2025

• TSMC Delivers Strong 3Q24 Revenue and Margin Growth; Margin Guidance Climbs
• Management Says Believes AI Demand is Not Hyped… Companies Extracting ROIs
• TSMC – Structural Long Rating Maintained; NT$1,515 Price Target Suggests 46% Upside

• Horizon Robotics, a Beijing-based fast-growing provider of integrated ADAS and AD solutions for passenger vehicles, plans to raise ~$700M at the high end of the range at HK$3.99/share.
• The IPO is expected to be between HK$3.73 and HK$3.99. However, the offer price may be, but is not expected to be, lower than the lower end of the range.
• I believe that at the high end of the range, the company’s valuation is full, and I would await a share pull-back before becoming more positive on the stock.

• Main positive surprise in 3Q24 is a sharp margins expansion, reflecting Utilization increase. OP 9% above Consensus.
• Main positive surprise in 4Q24 guidance: high QoQ revenue growth at 13%, which suggests further Utilization increase and TSMC could beat its margins guidance again.  
• Net Income growth is accelerating in 2H24 to ~55% YoY. The stock is not that expensive, we estimate trading at 17.2x 2025 and 13.8x 2026 EPS.

• 4Q24 Guidance: Sales will be US$26.1-26.9bn, up 13%; GM outlook will be 57-59%; and OPM outlook is 46.5-48.5%
• AI revenue contribution will triple and reach mid-teens sales contribution this year. Almost every AI innovator cooperates with TSMC.
• APT will grow above the corporate average in the next five years.GM is approaching the corporate average, but it’s not the same currently.

• Waystar Holding (WAY US) is forecasted to pass the mcap and fcap thresholds for the small-cap segment and get added at the November 2024 review.
• The company currently passes the higher regional mcap and fcap thresholds for the small-cap segment at the December 2024 review.
• Waystar Holding (WAY US) risks failing the fcap threshold at the December 2024 review if the stock price falls back to the IPO price levels.

• CoWoS packaging meets global demand for advanced technology, with efficient design for integration.
• Taiwan reveals breakthrough in tiny quantum computer technology, impacting the tech industry.
• LGES secures multi-billion deal with Mercedes-Benz for EV batteries, boosting electric vehicle industry.

• CK Solution is getting ready to complete its IPO in KOSPI in November. Its IPO price range is from 15,700 won to 18,000 won. 
• The IPO offering amount ranges from 49.4 billion won to 56.6 billion won. The book building for the institutional investors lasts from 4 to 8 November. 
• CK Solution specializes in dry room system for the rechargeable batteries manufacturing process. Rechargeable battery sector accounted for 92.9% of total sales in 1H 2024 followed by semiconductor (3.1%).

Esker made further good progress in Q324, with constant currency (cc) revenue growth of 17% y-o-y in Q324 and 14% for 9M24. Guidance was maintained for FY24; we have revised up our forecasts with revenue at the top end of the guidance range and profitability in the middle of the range. Order intake was stable in Q324 and up 34% cc for 9M24, providing support for our FY25 forecasts. The process to acquire Esker is ongoing, with the offer expected to open within the next couple of weeks.