In today’s briefing:
- Hoya (7741) | A Visionary Company with a Blurry Future
- CUBox IPO Bookbuilding Results Analysis
- Sweetened Offer and Bain Interloping
- Globalwafers Q1’23 Revenues up 1% QoQ, 14.2% YoY
- Corning Incorporated: Is The Drop In Revenues A Point Of Concern? – Key Drivers
- Verizon Communications Inc.: A Mixed Performance For The Telecom Giant – Key Drivers
- Fiserv Inc.: Major Deals with Walmart
- International Business Machines (IBM): Launch of AI-Powered Security QRadar Suite & Other Drivers
- Lam Research Corporation: Major Drivers
- Texas Instruments: A Mixed Performer Across Different End Markets – Key Drivers
Hoya (7741) | A Visionary Company with a Blurry Future
- Hoya has an impressive business model that results in high Returns on Invested Capital
- Hoya reported strong Q4 results but there is little for investors to get excited about in the outlook
- We see a lack of catalysts and an expensive valuation as working against the stock in the short term
CUBox IPO Bookbuilding Results Analysis
- On 8 May, CUBox (340810 KS) announced its IPO price of 15,000 won, which is 13% lower than the lower end of the IPO price range of 17,200 won.
- Our base case valuation of CUBox is implied target price of 22,719 won per share, which represents 51% higher than the IPO price of 15,000 won.
- CUBox claims that it has one of the world’s best technologies in the field of AI face recognition.
Sweetened Offer and Bain Interloping
- Bain has a 10.01% stake (likely acquired <€32/share) and could play nasty: its stake is enough to block a squeeze-out, and if it launches a €34/share offer, it will be hostile.
- Meanwhile, Silver Lake (5% recently acquired+25.1% from the foundation) has sweetened to €32/share (19.4x EV/Fwd EBIT, well above 11.1x last-10y average). The Board could change sides (as recently with Caverion).
- The shares trade 3.5% above Silver Lake’s, but at a discount of 2.5% to Bain’s possible offer. The market believes Bain will bid. I raise my TP to €32.
Globalwafers Q1’23 Revenues up 1% QoQ, 14.2% YoY
- Q1’23 revenues of NT$18.6 billion, up 14.2% YoY and up ~1% QoQ.
- No specific Q2’23 forecast provided but we fully expect a sequential decline and the end of a 13 quarter growth streak
- YTD silicon carbide revenues have already exceeded full year 2022 revenues, albeit coming from a low base.
Corning Incorporated: Is The Drop In Revenues A Point Of Concern? – Key Drivers
- Corning saw a sequential drop in its total revenues of around 7% in the recent result but this was still better than analyst expectations.
- Despite the lower sales, Corning’s actions to raise prices and restore productivity ratios resulted in gross margin expanding 160 basis points.
- Although multiple markets remain weak, the company expects results to improve in the second quarter.
Verizon Communications Inc.: A Mixed Performance For The Telecom Giant – Key Drivers
- Verizon Communications delivered a mixed quarter with below-par revenues despite continued growth of the business across the private and broadband networks, as well as mobility.
- It grew overall postpaid phone gross adds by 5% and achieved 3% wireless service revenue growth.
- Growth is seen for fixed wire access, and it continues to scale and increasingly contributes to revenue performance.
Fiserv Inc.: Major Deals with Walmart
- Fiserv is off to quite a strong start in the year with adjusted revenue growth and an increase in adjusted earnings per share resulting in an all-around beat.
- Adjusted operating margin was up and organic revenue growth was higher than expected, demonstrating the company’s ability to sustain accelerated growth.
- Clover revenue growth stays strong and Fiserv continues to add merchants at quite a healthy pace.
International Business Machines (IBM): Launch of AI-Powered Security QRadar Suite & Other Drivers
- IBM had a decent start to the year with a mixed result.
- The company’s revenues were below market expectations though it did manage an earnings beat, with free cash flow increasing well.
- Revenue in the data and AI sector increased due to data management, business analytics, asset, and supply chain management growth.
Lam Research Corporation: Major Drivers
- Lam Research Corporation delivered strong quarter results with revenues, operating margins, and earnings per share above Wall Street expectations.
- The company’s revenue for the quarter was $3.87 billion, a 27% decrease from the prior quarter, witnessing the classic cyclicality associated with the semiconductors industry.
- Foundry-related system revenues reached new highs, indicating the company’s continued success in both cutting-edge and specialty technology categories.
Texas Instruments: A Mixed Performer Across Different End Markets – Key Drivers
- Texas Instruments managed to deliver an all-around beat in the last quarter even though revenue decreased sequentially.
- Analog revenue declined, embedded processing grew, and its other segment declined in line with the cyclicality in the semiconductors market.
- The industrial market was flat this quarter, the automotive market was up, and personal electronics declined.
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