Daily Brief TMT/Internet: Korea Stock Exchange Kospi Index, Roland DG Corp, Singtel, Microsoft Corp, Angel Robotics , Broadcom , Silergy Corp, Crowdstrike Holdings , MongoDB and more

• KRX considers a comprehensive change to the Value-up Index scoring system. Weightings emphasize ROE, PER, and FCF while reducing PBR weight.
• KRX considers adopting scoring-based constituent weighting to prevent JPX Prime 150’s issues, but NPS opposes. Float market cap weighting like JPX Prime 150 is contemplated to address concerns.
• Momentum trading in the Value-up initiative will favor low PER and high ROE stocks over low PBR. The semiconductor sector is anticipated to benefit significantly from float market cap-based weighting.

• Brother Industries (6448 JP) has disclosed an unexpected competing hostile offer for Roland DG Corp (6789 JP) at JPY5,200 per share, a marginal 3.3% premium to the Taiyo-sponsored MBO (JPY5,035).
• Unlike the Taiyo offer, the Brother offer is pre-conditioned on regulatory approvals and has a proposed start date of mid-May. The Board is evaluating the Brother offer. 
• The Board’s three options with declining probability are to ask Taiyo for a bump, continue to recommend an unchanged Taiyo offer or recommend the Brother offer. 

• Reportedly (AFR), Singtel (ST SP) is in advanced talks to sell Optus, Australia’s second-largest telco, to Brookfield for A$16bn-A$18bn. 
• SingTel quickly countered there is no impending deal; and “Optus remains an integral and strategic part of the Singtel Group and we are committed to Australia for the long term.”
• Optus’ EBITDA in 3Q24 and 9M24 fell 1.8% and 8.3% in S$ terms. Extrapolating out for FY24E suggests pricing under this (very) indicative Offer of around 7.6-8.6 turns of EBITDA.

• A month ago, Engagement Investor Taiyo Pacific Partners launched an MBO on Roland DG Corp (6789 JP) after having done a takeover of their former sub years ago.
• I said it was too cheap. Machinery company Brother Industries (6448 JP) has decided the same, and has announced a hostile/unsolicited overbid 3.3% higher. Tender to start in May. Fun!!!
• This will almost certainly get bid even higher as people would expect the MBO bidders won’t simply give up. More below.

• The speaker reflects on the excitement and nervousness of facing a new platform shift in technology and the need for continual innovation
• They consider the broader economic impact of technological advancements, like AI, and the potential for breakthroughs in various industries
• The decision to partner with OpenAI was driven by Microsoft’s history of seeking out ambitious technology innovators to collaborate with, even when the outcome is uncertain.

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• Angel Robotics reported exceptional IPO bookbuilding results. Angel Robotics’ IPO price has been determined at 20,000 won, which is 33% higher than the high end of the IPO price range. 
• A total of 2,067 institutional investors participated in this IPO book building. The demand ratio was 1,157 to 1. Angel Robotics will start trading on 26 March 2024. 
• We remain positive on Angel Robotics. There is likely to be a sharp overshooting of its share price relative to its intrinsic value on the first day of trading. 

• Broadcom reported consolidated net revenue of $12 billion, a 34% increase year-on-year, with semiconductor solutions contributing $7.4 billion, up 4% from the previous year.
• Infrastructure software revenue saw a significant increase of 153% year-on-year, totaling $4.6 billion.
• These improvements are due in part to the contribution from VMware, which has resulted in a sequential jump in revenue by 132%.

• The short-term recovery momentum observed in China and consumer markets.
• The Gen 3 in 4Q23 accounts for about 50% of the production, expected to increase to around 60-70% in 4Q24F.
• Expecting to improve quarter by quarter after reaching the bottom in 1Q24F, and the growth is expected to recover to around 20%+ YoY in 2024F.

• CrowdStrike Holdings, Inc., a leader in the cybersecurity sector, reported an impressive fourth quarter and fiscal year for 2024 during its latest earnings conference call.
• The call highlighted several positive aspects of the company’s performance such as a record net new Annual Recurring Revenue (ARR) of $282 million, reflecting a year-over-year increase of 27%.
• Furthermore, the company achieved a record operating margin of 25%, an improvement of 10 percentage points when compared to the previous year.

• MongoDB reported robust Q4 results, with revenues reaching $458 million, marking a 27% YoY increase and exceeding the high end of the company’s guidance.
• MongoDB’s Atlas product line grew by 34% YoY, accounting for 68% of the company’s total revenue.
• The company also reported a healthy business quarter, owing much of this success to acquiring new workloads from existing Atlas customers.