Daily Brief TMT/Internet: Leeno Industrial, Applied Materials, Grab Holdings, KE Holdings Inc, Krafton Inc, Alibaba (ADR), Tencent Music, EQS Group AG and more

• Two SOL sector ETFs are unique in that they only include companies positioned upstream. This results in a group of smaller-sized constituents, which can have a greater flow impact.
• Once the universe is established, constituent selection and weight adjustment are determined exclusively using full/float market capitalization. As a result, flow trading can be highly predictable.
• Although they have lower AUM, the five Semiconductor constituents could still face a significant flow impact during this one-day flow event due to their much lower DTV.

• Q1’23 revenues of $6.63 billion, up 6 % YoY, down 2% QoQ
• Q2’23 revenues of $6.15 billion at the midpoint, down 7.2% QoQ.
• Tool push outs and cancellations are spreading to leading logic customers. That’s not a good sign

• Grab Holdings (GRAB US) ’s share price dropped by about 15% despite reported revenue and adjusted EBITDA losses beating consensus estimates.
• Deliveries’ growth has started falling as more people preferring to dine-out. Grab’s incentive optimisation also has contributed to the fall in growth rates.
• Grab’s aggressive ambitions to turn around profitability is a significant downside risk as it will impact growth going forward and force the company to invest back on growth.

• BEKE (Beike) reported 1Q23 revenue 10.4%/12.2% vs our est./cons. non-GAAP net income 65.6%/60.9% higher than our est./cons.
• Although Beike has stated no intention to lower existing home (EH) commission rate, we still expect EH commission rate to slightly trend down in 2023. 
• We maintain BUY rating and raise the TP by US$1 to US$22 to reflect 1) steady recovery of property sales in China; 2) better outlook on profitability.

• We estimate that the re-approval of PUBG Mobile in the India will contribute to a 5% increase in Krafton’s annual revenue/profit.
• Despite being banned in India for several times, PUBG Mobile is expected to receive a warm welcome from local players due to its high quality gameplay and good device compatibility.
• We upgraded our rating to “Buy” in Feb.2023, citing reasons such as PUBG Mobile stabilizing in key markets and Bluehole’s new product schedule. Currently, we remain optimistic view about Krafton

• BABA reported 1Q23 revenue/non-GAAP net income in-line/17.7% vs. cons. International commerce and local services revenues beat our est., while Cloud missed.
• We expect there is still room for margin improvement in FY24. Although Taobao/Tmall will increase spending, the cost savings of other business groups will lead to an overall improvement; 
• We maintain BUY and US$ 109 TP as (1) Douyin’s impact is becoming less significant; (2) International business is growing quickly; and (3) Positive on the effect of separate listing.  

• TME reported 1Q23 results with topline beat our est. by 5.0% and bottom line beat our est. by 25.2%, due to cost-saving measures. 
• As more offline entertainment activities resume after reopening, it would adversely impact both its online music and social entertainment segments. 
• Maintain SELL and cut TP to US$ 6.0 to reflect concert impact and limited catalysts, which implies 12.5X PE in 2023.

The German Bundesrat has finally transposed the legislation regarding whistleblowing after the unexpected delay, allowing EQS to move at full steam to start converting its sales pipeline. The Q123 figures show a good start to the year, despite the hold-up, as the implementation of similar whistleblowing legislation stimulated demand in markets such as Italy and Spain. Revenues (excluding Russia) were up 15% on Q122 and EBITDA margin recovered to 8.5% from 0.9%, putting the group on track to meet its full-year guidance. The shares continue to trade well below the level indicated by our DCF.