Daily Brief TMT/Internet: Intel Corp, Taiwan Semiconductor (TSMC) – ADR, CELSYS, WRKR, Carta Holdings, Inc., DataTec Ltd, Gorilla Technology Group , Kinatico , POET Technologies and more

• Intel is struggling, with a dismal stock performance and job cuts
• The company’s risky and capital-intensive strategy may not be sustainable
• The core business is no longer sufficient to support their strategic goals, leading to financial challenges and market share loss.

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• The rally of the Asia Tech sector (+24% YTD) is highly concentrated in a handful of stocks. TSMC is up 64% but Samsung is down -22% YTD. 
• With the exception of AI, end-demand isn’t great. Smartphone up 8% but below 2019-21 level. PC flattish. x86 Server flattish. Telecom capex declining. Automotive electronics declining.   
• AI is the most disruptive trend since Cloud in 2010. Years of increasing Capex are in front of us. But short-term, stocks are properly valued to rich, growth is slowing.

• 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.
• Our long-term pre-event candidate CELSYS (3663 JP) has moved to TSE Prime. There will be a TOPIX Inclusion event on 30-Oct-24. The stock has outperformed TOPIX by 43% since July.
• PKSHA Technology (3993 JP) and GENOVA (9341 JP) also moved to the TSE Prime market in September and will be having TOPIX Inclusion events at the end of October 2024.

• Wrkr presented at a RaaS-focused Coffee Microcaps Webinar on 2 August 2024

• Following the upward profit forecast revision announced alongside 2Q FY2024/12 earnings, the CARTA HD’s forward P/E ratio has settled at just over 20x, in line with peer average.
• Over the past one to two fiscal periods, the Company’s share price was underpinned by its proactive shareholder return policy targeting a DOE of 5% while profits were weak, leading to an abnormal P/E ratio.
• However, Sessa Partners believes the Company is entering a phase where further earnings improvement will likely drive a rerate in valuation, as profits have recovered to a reasonable level when assessed on a going concern basis.

Datatec’s trading statement flags a robust performance at group level in H1. Westcon continues to deliver profit growth, Logicalis International delivered a strong increase in profitability while financial performance at Logicalis Latin America has also improved. As a result, management expects H1 underling EPS to be 11–12c, up over 50% year-on-year on a like-for-like basis. Our FY25 estimates are unchanged and look well supported.

• Successes in Thailand give management confidence in significant growth for Gorilla’s revenue and profitability.
• Gorilla has partnered with CS Energy to form an AI-powered strategic alliance aimed at accelerating the development of smart and green cities across Thailand and the broader Southeast Asian region.
• Additionally, Lanner Electronics and Gorilla have announced a joint venture to manufacture next-generation security convergence appliances in Thailand. 

• RaaS has published an update on vehicle subscription business Carly Holdings (ASX:CL8) following the release of its FY24 results which saw a 71% year-on-year increase in revenue to $3.6m, a 40% increase in gross profit to $1.15m and 22% increase in EBITDA loss to $3.57m.
• Carly’s FY24 accounts underline the company’s success in growing fleet and subscriptions but highlights the drag which deploying vehicles as they are acquired necessarily has on the cost base.
• Revenue was again up strongly but so were fleet-related costs, albeit at only slightly over half as much.

• Kinatico presented at a RaaS-focused Coffee Microcaps webinar on 2 August 2024.

• POET Technologies is a startup disrupting the photonics industry with a new technology that eliminates parts of an optical transceiver and replaces them with a single integrated device which is smaller, cheaper, faster, more scalable and with much lower power consumption than the current solutions.
• It has a $50M joint venture with Sanan IC to make and sell optical engines to data centers and telecom.
• Its solution can be produced at wafer scale, eliminating costly manual steps, and allowing it to be easily produced in large quantities and at low cost.