Daily Brief TMT/Internet: Kyocera Corp, Tesla Motors, Silergy Corp, Aehr Test Systems, Duolingo, SenSen Networks, Bharti Airtel, QYOU Media and more

• Yesterday, Kyocera Corp (6971 JP) announced Q2 results and lowered its full-year forecast. Then the CEO said it was “reconsidering” what to do with KDDI shares (after an AGM disaster).
• The company had already planned to borrow ¥500bn against the KDDI stake to return capital to shareholders. That was in the price 5+ months ago. 
• The new hope is that Kyocera just got Corporate Governance Religion. I have my doubts, and even if it did, you have to look carefully at their ambitious plans.

• Tesla is facing a dilemma whether to aggressively cut price to boost shipment but lose margins or to keep price stable with a more moderated shipment growth like 10-20% y/y.
• Three challenges ahead: 1. Collapsing margin vs. rising margin for key competitors? 2. Cybertruck is selling at a loss, more margin downside? 3. Valuation reset for lower sales CAGR?
• Cautious on Tesla as its sales/earnings CAGR is falling below 20% with a rich valuation until we see cost cut on Cybertruck, FSD AI breakthrough, and low price model introduction.

• Revenue was up 14.5% QoQ and down 31% YoY in 3Q23, but it could see an increase of about 17% QoQ and 3% YoY in 4Q23F. 
• Silergy Corp (6415 TT) needs to increase another place to its Foundry source out of China and Taiwan.
• The Automotive segment is expected to show significant growth and is likely to reach double digits by the end of 2024F.

• The sickness in Silicon Carbide started at On semi.
• Let’s look through the results and see the drivers, the big deal, and what we should do about it.
• The market freaked out about Silicon Carbide, specifically On semiconductor, saying that automotive demand for the year will be weaker.

• Duolingo shares have outperformed in 2023, with shares up ~115% over the year versus ~26% gain on the Nasdaq. The company priced its IPO at $102 a share in 2021.
• EdTech unicorn achieved the highest-ever MAUs and DAUs in 2QFY23, while paid subscribers reached 5.2M, ~7% of MAUs. Management raised top-line and profitability guidance for FY23. 
• With a market cap of ~$7.4B on a fully diluted basis, Duolingo shares trade at ~13x and ~10x EV/Rev on my FY23/FY24 estimates, a significant premium to comparable companies.

SenSen’s Q1 update signals positive momentum following record FY23 results. Q1 saw customer receipts exceed operating costs on a trailing 12-month basis, a key milestone towards its target to reach profitability this year. Encouraging FY24 lead indicators include a recent tender announcement, potentially one of SenSen’s most significant smart cities deals yet, and the settlement of the Angel dispute, which marks SenSen’s gaming exit. Proceeds from Angel’s investment in SenSen and the ongoing rights issue should support the company to more actively pursue the much larger smart cities opportunity, which is now the group’s sole focus.

Bharti Airtel’s Q2/23-24 results were robust in our view, with solid revenue and earnings growth across the Indian and African businesses. Operational stats were healthy, with strong increases in user bases and ARPU (particularly the 5G customer base). The financial risk profile remains stable. Liquidity is adequate.

• QYOU Media has posted nine consecutive quarters of YoY growth, representing a 33% CAGR using its repeatable content strategy.
• QYOU Media (QYOU:TSXV) produces and distributes broadcast and digital media content featuring leading social media influencers in India and the U.S.
• Across its platforms, QYOU’s content is viewed by over 125M people each week, providing major brands access to loyal fanbases.