In today’s briefing:
- Brookfield to Buy Network International
- Mobvoi IPO Preview
- NTT: Developing Industry-Specific AI Offerings as AI Becomes One of Government’s Key Focus Areas
- Taiwan Tech Weekly: Hon Hai Breaking Out of Range; Acer/Asustek Subdued Despite PC Upgrade Potential
- Synopsys Inc.: Acquisition of Silicon Frontline Technology & Other Drivers
- Take-Two Interactive Software: Longer Development Timelines A Problem? – Key Drivers
- Cisco Systems: The Lightspin Acquisition Is A Major Boost For Cloud Security – Key Drivers
- Zoom Video Communications: Workvivo Acquisition Needed To Up The Game? – Key Drivers
- Confluent: Upgrade To OW On Consistent Execution And A Clear Path To Profitability. PT Raised To $37
- Microchip Technology: Analog & Data Centre Business Upside Is Strong – Key Drivers
Brookfield to Buy Network International
- Network International Holdings (NETW LN) and a Brookfield Asset Management Lt (BAM US)-led consortium agreed on a 400p/share cash offer (64% premium, 12.9x EV/Fwd EBITDA) to be implemented via a scheme of arrangement.
- Network is no longer grossly undervalued. The 9 June closing share price of 383p represents an 89% chance of completing the deal (based on the 245p close price).
- Synergies have not been quantified, but may explain why Brookfield’s consortium has been able to trump CVC. Spread is 4.25%/8.92% (gross/annualised, assuming settlement by 15 December). Long.
Mobvoi IPO Preview
- Mobvoi is getting ready to complete its IPO in Hong Kong in the coming weeks. Mobvoi is aiming to raise US$200 million to US$300 million in this IPO.
- Given the exceptional interest in AI related companies such as ChatGPT and NVIDIA, the current environment should be an opportune time for Mobvoi to complete its IPO.
- Furthermore, Mobvoi has achieved a strong growth in sales and operating profits in 2022 which is also likely to drive higher interest in this IPO.
NTT: Developing Industry-Specific AI Offerings as AI Becomes One of Government’s Key Focus Areas
- Nikkei reported last week that NTT (Nippon Telegraph & Telephone) (9432 JP) is developing a generative AI and plans to offer services to the company’s corporate clients by Next March.
- Over the recent years, NTT has been extensively investing on AI, robotics and other data-driven products and services to boost its top line growth as its core business is saturating.
- AI and semiconductors are two key policy areas of Japanese government for development as the country is dealing with population and other demographic changes.
Taiwan Tech Weekly: Hon Hai Breaking Out of Range; Acer/Asustek Subdued Despite PC Upgrade Potential
- Hon Hai shares have broken out to near-term highs after news flow regarding its investment agreement in Lordstown Motors.
- PC makers Acer & Asustek’s share prices remain subdued since Nvidia results despite AI’s potential to accelerate the PC upgrade cycle.
- TSMC’s ADR premium went even higher just today; Also, Realtek is suing Mediatek in the U.S., adding to our Long/Short watchlists.
Synopsys Inc.: Acquisition of Silicon Frontline Technology & Other Drivers
- Synopsys delivered an all-around beat in the most recent quarterly result.
- Despite weaker demand for semiconductors overall, Synopsys has been prioritizing research and development to emerge stronger when demand accelerates.
- Collaborations with industry leaders like NVIDIA, TSMC, MediaTek, Renesas, and IBM Research have resulted in impressive results, showcasing the criticality of Synopsys.ai in delivering breakthrough outcomes.
Take-Two Interactive Software: Longer Development Timelines A Problem? – Key Drivers
- Take-Two Interactive Software delivered a mixed set of results in its most recent result, with revenues above Wall Street expectations but below-par earnings.
- Moving forward into fiscal 2024, Take Two expects full-year net bookings from $5.45 billion to $5.55 billion, considering the challenging consumer backdrop.
- We give Take-Two Interactive Software a ‘Hold’ rating with a revised target price.
Cisco Systems: The Lightspin Acquisition Is A Major Boost For Cloud Security – Key Drivers
- Cisco Systems delivered a solid result and managed an all-around beat in the last quarter.
- Cisco also delivered significant quarterly performance, with high revenue and non-GAAP earnings per share, reflecting their solid operating discipline.
- We give Cisco Systems, Inc. a ‘Hold’ rating with a revised target price.
Zoom Video Communications: Workvivo Acquisition Needed To Up The Game? – Key Drivers
- Zoom Video delivered an all-around beat in the most recent quarterly result.
- Total revenue was up, online revenue was up, the enterprise business grew, and online business improved meaningfully.
- Last quarter, Zoom Video reiterated its strong positioning of AI and highlighted its expanded vision to elevate progress across its portfolio and see generative AI permeate.
Confluent: Upgrade To OW On Consistent Execution And A Clear Path To Profitability. PT Raised To $37
- Confluent (CFLT US), a high-growth data streaming vendor, will host Investor Day 2023 in New York City on June 13, 2023.
- Management will provide an update on the company’s vision and strategy. Confluent (CFLT US) shares traded up ~64% in 2023, outperforming the Nasdaq Composite, up ~27%.
- I expect CY24 revenue to exceed $1B, driven by efficient growth at a large scale, strong growth in the cloud segment, and rapid adoption of Apache Kafka.
Microchip Technology: Analog & Data Centre Business Upside Is Strong – Key Drivers
- Microchip Technology had a strong quarter.
- Non-GAAP gross margin exceeded the company’s forecast by 171 basis points to an all-time high of 68.3% in the most recent quarter.
- Additionally, the non-GAAP operating margin, which increased by 292 basis points from the same quarter last year to an all-time high of 47.65%, came in just below the high end of their forecast.
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