Daily Brief TMT/Internet: Kokusai Electric , PCCW Ltd, Freelancer Ltd, Waystar Holding, ASE Technology Holding and more

• Kokusai Electric (6525 JP) priced its IPO at JPY1,840 per share to raise secondary proceeds of US$723 million. The shares will start trading on 25 October.
• We previously discussed the IPO in Kokusai Electric IPO: The Bull Case, Kokusai Electric IPO: The Bear Case and Kokusai Electric IPO: Lower Price Range Is Reasonable.
• The peers have modestly derated since the lowered IPO price range was announced on 10 October. However, the IPO price remains attractive. Our DCF valuation is JPY2,058. 

• Malaysian conglomerate YTL Corp Bhd (YTL MK) is coming up “cheap” versus YTL Power International (YTLP MK). And Richard Li chips away at PCCW Ltd (8 HK).
• Preceding my comments on YTL and PCCW are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

Freelancer achieved a key profitability target in Q323 by delivering positive operating EBITDA across divisions, leading to positive operating cash flow generation and an uplift in gross cash. Despite lower group gross merchandise value (GMV), revenue likely grew given the higher take rate of the marketplace division, where GMV increased. Near-term pipeline highlights include accelerating Enterprise momentum from US expansion and a Chinese retailer partnership, Loadshift’s ongoing marketplace transition and new Escrow.com partnerships to drive diversification.

• Waystar Holding will be valued like other unprofitable healthcare IT unicorns on a multiple of forward revenue. I used EV/Revenue valuation methodology and FY23 EV/Revenue multiples to value the Waystar. 
• In 2019, CPPIB and EQT acquired a majority stake in Waystar, valuing the company at $2.7B, which implies an EV/FY23E revenue multiple of ~ 6x, including a debt of ~$2.3B. 
• My ~$3.6B IPO valuation contemplates a ~5x EV/Revenue on my FY23E revenue of $795M and is supported by my analysis of healthcare IT comps. 

• We estimate that the outlook is still moderate downward in 4Q23F, which is a typically seasonality.
• SPIL, in ASEH group, is serving only limited on-Substrate (oW) of Chip-on-Wafer-on-Substrate (CoWoS).
• We note that the major big clients of ASEH are not changing at all during this time downturn.