Daily Brief TMT/Internet: Kioxia Holdings , Xiaomi Corp, AAC Technologies Holdings, Taiwan Semiconductor (TSMC) – ADR, Delta Electronics Thailand , Taiwan Semiconductor (TSMC), Trustpilot Group, Microstrategy Inc Cl A, Hearts United Group and more

• Kioxia Holdings (6600 JP) is aiming to raise around US$700m (including over-allocation) from its Japan IPO.
• It was the world’s largest pure-play NAND flash memory supplier, in terms of both revenue and unit shipments in 2023, according to TechInsights.
• In this note, we talk about the not-so-positive aspects of the deal.

• Tier-2 commodity Memory is a lousy business, which requires high Capex and R&D, generates very low Free Cash Flows. DRAM is more sustainable than NAND as peak margins are higher. 
• Kioxia only makes NAND, has a high market share (16%) but is a Tier-2 supplier with a roadmap lagging SK Hynix by ~2 years, and a high exposure to Consumer. 
• The Memory cycle has recovered, probably close to peak earnings. That’s why stocks have been declining (Micron, Hynix).  Part 2 will cover financials (there’s a bad surprise) and valuations. 

• Xiaomi’s stock price has risen 62% since our buy rating after 2Q24 results.
• We believe vehicle production will bring Xiaomi a revenue of RMB90 billion maximum.
• The sum-of-the-parts valuation suggests significant downside for the next twelve months.

• Hong Kong continued a correction in its Bull market which has lifted the HSCEI to be the best performing Asian index this year.  Southboune buying is strong.
• AAC Technologies Holdings (2018 HK) share price had a breakout relative to the MSCI AC Asia Index.  The company reported solid results benifitting from the smartphone and auto sectors.
• CGN Power (1816 HK) share price relative to MSCI China broke down.  The company reported a disappointing 3Q24 results even as power generation increased by 15% YoY for the period.

• TSMC: +19.2% Premium; Middle of Most Recent ADR Spread Trading Range
• UMC: -1.7% Discount; Local Shares’ Short Interest Continues to Rise
• ASE: +4.0% Premium; Local Shares’ Short Interest Has Finally Stopped Rising

• Delta Thailand Still Grossly Overvalued Even After Recent Correction; Under Market Surveillance Until December 11th
• Delta Taiwan’s Market Cap Remains at Just 57% of Delta Thailand
• Further Valuation Correction Likely Between the Two Names; We Believe Delta Taiwan Should Outperform

• Former TSMC chairman Mark Liu believes Taiwan’s chip industry is unaffected by Trump’s trade policy, showing confidence in the sector.
• DIGITIMES Research predicts a 3.6% CAGR growth in global smartphone shipments from 2024-2029, indicating steady expansion.
• Despite potential US bans and chip supply halts, Huawei remains dedicated to developing advanced technology, including AI chips.

• Trustpilot is a leading online consumer review platform with a strong presence in Europe and North America
• The company is undergoing fundamental improvements following a leadership team upgrade
• Trustpilot has unmatched reputation and scale in the industry with 1.1 million rated businesses, 60 million monthly unique visitors, and a quarter-billion total reviews

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Buffett has famously called Bitcoin a “mirage” and “rat poison squared”.

• If so, then the corporate wrapper masquerading as intelligent leverage of Bitcoin known as MSTR equals that squared — and is perhaps the epitome of late-stage capital cycles expressed

• Before I start, let me just say that I completely get the bull thesis behind Bitcoin. 

• Q2FY3/25 showed strong recovery in OP margins from 3.5% in Q2 FY3/24 to 5.3% in Q2 FY3/25, reflecting stringent cost control and AGEST Group turning to the black.
• Although the performance improved YoY, the company revised its FY3/25 OP guidance down to ¥2.5bn from ¥3.1bn mainly due to a negative impact from a cancellation of a large project for AGEST Group in Q1.
• Nevertheless, the company expects 24.5% OP growth YoY for FY3/25.