In today’s briefing:
- All Eyes on Nvidia
- Earnings Preview (Nvidia and Marvell)
- IOS18 Unveils Major Updates, Delayed AI Features Paving Path for a Significant Upgrade Cycle
- Misunderstood Takeover Target
- BUY/SELL/HOLD: Hong Kong Stock Updates (August 28)
- Cisco Systems Inc.: Networking and Security Symbiosis
- Tech Supply Chain Tracker (29-Aug-2024): Taiwan’s defense sector missed opportunity in arms race.
- Zoom Video Communications: Focus on Upmarket and Customer Expansion! – Major Drivers
- [iQIYI, Lnc. (IQ US, BUY, TP US$3.7) TP Change]: Take Out Value Is Still the Key Support for IQ
- SVRE: Domestic operations struggled in the first half of 2024. The company’s focus remains on controlling costs.
All Eyes on Nvidia
- This Wednesday, after the Wall Street close, NVIDIA Corp (NVDA US) will release its second-quarter figures, concluding the current earnings season. The stock has returned 155% YTD.
- Nvidia’s results will be crucial in determining whether its stock recovery continues (+25% since its August 5 low and 11.8% below its all-time high of $140.76 on June 20).
- Historically, when Nvidia’s earnings and guidance have been strong, its stock has rebounded by c. 30% and over in four occasions.
Earnings Preview (Nvidia and Marvell)
- It’s about to be primetime for the AI semiconductor trade, and for the first time in a long time (maybe ever), I wanted to write an earnings preview. It might be the first time (ever) and hopefully the last time.
- Two critical companies report this week. I’ll start with Marvell, the less important but the one I like, and then talk about some exciting dynamics at Nvidia that could lead to volatility and why it might not even matter.
- Marvell has always been a favorite of this newsletter. I won’t lie; I root for the hometown on this one. Inphi was my first paid post, and it worked out with a buyout by Marvell only two weeks later.
IOS18 Unveils Major Updates, Delayed AI Features Paving Path for a Significant Upgrade Cycle
- IOS 18 beta offers new Home Screen and Control Centre customization; AI features like Advanced Siri Capabilities delayed until iOS 18.1, set to arrive later this year.
- Morgan Stanley forecasts Apple will ship five hundred million iPhones over two years, driven by the AI-powered Apple Intelligence, with a 4%-5% growth in iPhone average selling prices.
- Only 15% of current Apple devices support new AI features, pushing a significant upgrade cycle; 24% of iPads are compatible, suggesting a mini-upgrade cycle in the tablet market.
Misunderstood Takeover Target
- Allfunds Group, a global WealthTech firm born in Spain, attracts market interest, but no firm offers yet. Its top two shareholders (48.1%) are open to selling at the right price.
- Since listing, Allfunds’ total return has been -59%, driven by interest rate hikes, major distributors shifting to low-risk assets, stock overhang from top shareholders, and low share liquidity.
- ChatGPTAllfunds’ forward P/E of 12.9x (vs. peers at 18.6x) and 9.5% FCF yield undervalue its strong business model, momentum, market share gains, robust cash conversion, and solid balance sheet.
BUY/SELL/HOLD: Hong Kong Stock Updates (August 28)
- Alibaba Group Holding (9988 HK) upcoming inclusion in the Southbound Stock Connect (SSC) platform could provide a tailwind to its share price and the Hong Kong market.
- Tuhu Car (9690 HK) reported good 1H 2024 results with an increase of 23% in new store openings. AAC Technologies Holdings (2018 HK) target price was increased after 1H2024 earnings.
- Canvest Environmental Protection Group (1381 HK) ratings were cut after reporting lower 1H24 earnings. The company omitted its interim dividend.
Cisco Systems Inc.: Networking and Security Symbiosis
- Cisco Systems, Inc. reported its financial results for the fourth quarter and fiscal year 2024, demonstrating solid performance despite a challenging macroeconomic environment.
- The company closed the fiscal year with $13.6 billion in revenue for the fourth quarter and $53.8 billion for the year.
- Both annualized recurring revenue and subscription revenue grew, reflecting Cisco’s strategic pivot towards a more sustainable, subscription-based model.
Tech Supply Chain Tracker (29-Aug-2024): Taiwan’s defense sector missed opportunity in arms race.
- Taiwan’s defense sector is seen as undervalued, representing a missed opportunity in the global arms race.
- Malaysian officials hold a meeting with Tesla, but plans for a factory in the country are considered unlikely.
- Retailers are using ICT and personnel to drive growth in green energy trading, while Samsung leads the gaming monitor market.
Zoom Video Communications: Focus on Upmarket and Customer Expansion! – Major Drivers
- Zoom Video Communications delivered strong financial performance in the second quarter of fiscal year 2025, surpassing market expectations and demonstrating resilience in a competitive landscape.
- The company’s revenue rose by 2.1% year-over-year to $1.16 billion, slightly exceeding analyst forecasts.
- Adjusted earnings per share also impressed, reaching $1.39, which was significantly higher than the anticipated $1.21.
[iQIYI, Lnc. (IQ US, BUY, TP US$3.7) TP Change]: Take Out Value Is Still the Key Support for IQ
- IQiyi reported C2Q24 top line, non-GAAP operating profit and GAAP net income inline, 5.0% and 18% vs. consensus.
- The short-term reason is executional, but long-term reason is sustained competition from well-funded rivals and short video platforms.
- We keep the stock at BUY and cut TP to US$3.7.
SVRE: Domestic operations struggled in the first half of 2024. The company’s focus remains on controlling costs.
- The company released results for the first half of 2024 which were severely impacted by the slowdown of economic activity in Israel.
- The company announced a small acquisition (no upfront cost) of a product line from a business that it attempted to acquire last December.
- We believe this could be a nice addition to the company’s driver safety suite of products.
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