Daily Brief TMT/Internet: ROHM Co Ltd, Hon Hai Precision Industry, Toyo Corp, PVA TePla, Sunny Optical Technology Group, LaKeel, Nano Dimension , Shift4 Payments, Alarm.Com Holdings, Unity Software and more

• Rohm’s cyclical turning points in revenue typically lag the turn METI production %YoY less inventory % YoY for electronic devices and components by 12 months.
• Investors were disappointed with Q1 results, but the company cleanly outperformed most peers in the power semiconductor space, and recovery now looks inevitable. 
• We believe the fair value of shares to be around ¥3,300, 2x the current price, but investors should ask, “When?” Not “How much.”

• Silicon Shield 2.0 involves managing risks and building partnerships to secure supply chains in today’s economic landscape.
• AMD collaborates with ZT System engineers to simplify rising AI system complexity, enhancing efficiency and productivity.
• Foxconn leverages AI server trading models to increase profits, while Taiwan’s president calls for regional de-risking and trade partnerships to adapt to supply chain shifts. #Taiwan #trade #partnerships #supplychain. Innodisk’s AI revenue surpasses 20%, foreseeing growth in revenue and profit in the second half of 2024. SK Hynix’s revenue doubles in the US and China, attributed to increased AI demand in the first half of 2024. TSMC’s new fab in Germany is expected to generate jobs and enhance wafer ecosystems in Europe.

• Toyo Corporation announced a share buyback of up to 1.2 million shares or ¥1.5 billion for FY9/24, which equals about 5% of the current shares outstanding in addition to an upward revision of DPS to ¥67 from ¥62.
• This reflects Toyo’s commitment to improving total shareholder returns and ROE. OP margin declined significantly (-6.4% Q3 FY9/23, -6.5% Q3 FY9/24) but it was due to cyclicality.
• Physics / Energies continued to see strong growth (+35.0% YoY) on the back of robust demand for carbon neutrality. 

PVA TePla’s (PVA’s) Q224 results were strong and management reiterated its FY24 guidance and FY25 outlook of moderate growth, despite a weak order intake. The outlook is based on the expectation of increased order momentum in Q4, especially for metrology. PVA has resolved the issue of replacing at short notice two supervisory board members. Two new board members will be up for election at PVA’s AGM on 30 August. Although the company’s share price has appreciated from its recent lows of c €13 (from c €20 earlier this year), there is no meaningful recovery yet. With FY24 and FY25 estimates unchanged, this implies much lower multiples compared to our initiation report in May.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Sunny Optical Technology Group
• Xiaomi Corp

• Q1-2 FY12/24 results were ahead of company guidance for profits, with the company driving earnings through a combination of sales growth for the higher return Product Service segment, and sound cost management with flat SG&A costs YoY.
• We believe quarterly Q2 FY12/24 SaaS metrics for LaKeel Products were positive, demonstrating an acceleration in growth for ARPU (+9% YoY) and MRR (+26.2% YoY).
• This strategically important product line contributed 14% of Q1-2 FY12/24 sales, and continued execution of scaling will allow the company to improve both the sales mix as well as the quality of earnings.

Nano Dimension reported record revenue of $15.0m in Q224, slightly higher year-on-year and 12% higher quarter-on-quarter. The Reshaping Nano initiative continued to reduce cash burn, which was down 64% y-o-y in Q224 and 69% in H124, before share buybacks. Management is focused on completing the Desktop Metal (DM) acquisition by the end of the year. The combined entity will have a broad product offering, supporting the entire value chain from prototyping through to volume manufacturing, along with considerable cash to support organic and inorganic growth. With significant revenue and cost synergies identified, the new group should be able to accelerate the path to profitability.

• Shift4 Payments reported its second quarter results for 2024, reflecting robust growth in several key financial metrics, driven by strategic acquisitions and a significant expansion across various verticals both domestically and internationally.
• The company showcased impressive growth in end-to-end payment volume, ascending by 50% year-over-year.
• Gross profit increased by 38%, and gross revenue led by network fees grew by 41%.

• Alarm.com reported its second quarter 2024 financial results, which have exceeded expectations with significant achievements and strategic advancements outlined during the earnings call.
• The company saw an increase in SaaS and license revenue to $155.9 million and adjusted EBITDA to $42.8 million.
• This can be attributed to organic growth in its commercial, international, and Energy Hub businesses.

• Unity’s leadership, spearheaded by newly appointed CEO Matthew Bromberg and outgoing CFO Luis Visoso, provided a comprehensive overview of the company’s Q2 2024 performance and forward-looking strategies in the recent earnings call.
• Despite facing challenges, Unity’s strategic positioning and operational adjustments have it set towards a path of recovery, albeit with cautious optimism.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.