In today’s briefing:
- Infocom (4348 JP): Rumoured Tender Offer as Teijin Seeks to Exit
- AEM Holdings: More Short-Term Pain; Highly Attractive Valuation for Long-Term Investors
- TOPIX Inclusions: Who Is Ready (May 2024)
- Tech Supply Chain Tracker (10-May-2024): Samsung and LG launch new gaming/ AI monitors in market recovery.
- Netmarble Plans to Sell 2.6% Stake in HYBE Through PRS (Price Return Swap).
- Shouhui Tech Pre-IPO – Profitability Recovered but Hardly Stands Out as a Middleman
- TSEM: Tower’s Revenues May Have Bottomed Sequential Improvement is Expected Going Forward
- SMIC (981.HK): 1Q24 Outlook Was Improved, and The 2Q24 Outlook Appears to Be Better than 1Q24.
- XPER: Design Wins into Revenue
Infocom (4348 JP): Rumoured Tender Offer as Teijin Seeks to Exit
- Bloomberg reports that Teijin Ltd (3401 JP) wants to sell its 55% stake in Infocom Corp (4348 JP). The rumoured bidders are Sony Corp (6758 JP), Blackstone and KKR.
- Based on precedents, the offer structure will likely be structured such that Teijin provides an irrevocable NOT to accept but vote in favour of share consolidation at the EGM.
- Bloomberg suggests that Infocom could be valued at JPY200 billion. If this refers to market cap, the tender offer is JPY3,472, a 16.5% premium to the last close.
AEM Holdings: More Short-Term Pain; Highly Attractive Valuation for Long-Term Investors
- AEM (AEM SP) published dismal 1Q24 results and kept its modest guidance for 1H24.
- AEM has announced new customer wins going into FY25 which should improve results materially next year. The sell-side has downgraded estimates aggressively making room for upside surprises next year.
- AEM has seen an implosion in investor confidence because of the inventory issues, and slow orders from its key customer Intel Corp (INTC US). Long-term investors should accumulate here.
TOPIX Inclusions: Who Is Ready (May 2024)
- Quiddity’s “Who is Ready” series of insights aims to objectively identify names listed on the Tokyo Stock Exchange that are potential additions to the TOPIX Index in future.
- Dozens of companies have been able to meet the key Section Transfer requirements on paper for several months but there have been no TOPIX Inclusions announcements in 2024 so far.
- However, there are some pre-event candidates we believe are worth monitoring as they have previously confirmed their desire to move to the Prime Market.
Tech Supply Chain Tracker (10-May-2024): Samsung and LG launch new gaming/ AI monitors in market recovery.
- Samsung and LG are launching new gaming and AI-focused monitors to take advantage of the recovering market.
- Tata Elxsi is collaborating with Arm on self-driving vehicle solutions, while Saudi fund considers cutting ties with China for US chips and AI.
- Samsung and SK Hynix are competing in the HBM market, driven by demand for high-bandwidth memory solutions. Toyota plans to invest JPY2 trillion in supply chain, EV, and SDV, with Tata making progress in semiconductor manufacturing.
Netmarble Plans to Sell 2.6% Stake in HYBE Through PRS (Price Return Swap).
- After the market close on 9 May, Netmarble announced that it plans to sell 2.6% stake in HYBE for 219.9 billion won.
- The transaction is based on PRS (price return swap) basis. Previous to this deal, Netmarble sold 2.5 million shares (about 6%) of HYBE shares in November 2023.
- We continue to remain negative on HYBE including on this deal involving Netmarble’s plan to sell additional 2.6% stake in HYBE.
Shouhui Tech Pre-IPO – Profitability Recovered but Hardly Stands Out as a Middleman
- Shouhui Tech (SHOU HK) is looking to raise around US$200m in its upcoming Hong Kong IPO.
- Shouhui Tech (Shouhui) is an online life and health insurance intermediary service provider in China.
- In this note, we talk about the firm’s historical performance.
TSEM: Tower’s Revenues May Have Bottomed Sequential Improvement is Expected Going Forward
- Tower is a pure-play analog semiconductor wafer foundry that manufactures SiGe, MEMS, RF, embedded flash-based memory, analog/mixed-signal, and CMOS image-sensor devices in the US, Israel, and Japan.
- It is serving markets in mobile such as RF High Position analog, as well as in CMOS image sensors, and power management.
- It also added a new fab in Italy in partnership with STMicro that has just started shipping product and whose capacity will continue to ramp over the next two years.
SMIC (981.HK): 1Q24 Outlook Was Improved, and The 2Q24 Outlook Appears to Be Better than 1Q24.
- It’s an exciting 1Q24 result that revenue and GM beat the prior guidance.
- The 2Q24 outlook appears to be better than 1Q24, with revenue expected to increase by 5% to 7% QoQ and GM by 9% to 11%.
- We consider the primary bottleneck is the embargo of EUV machines to China from the Netherlands.
XPER: Design Wins into Revenue
- XPER made further progress on product placement in the first quarter contributing to expecting revenue acceleration heading into the second half of 2024.
- XPER reported first quarter results that included the announcement of a new Japanese TV brand that would begin using TiVo in a line of its TVs
- Over the last couple of quarters XPER has announced several wins for its connected car and media platform segments. These wins have developed into revenue for XPER
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