Daily Brief TMT/Internet: Samsung Electronics, Samsung Electronics Pref Shares, Fidelity National Info Serv, LG Energy Solution, Compal Electronics, US Cellular, Ai Holdings, PVA TePla, QD Laser, Softbank Group and more

• Samsung Electronics (005930 KS) announced a massive share buyback program worth 10 trillion won which represents 3.1% of its market cap.
• Of this total amount, about 3 trillion won will be purchased and cancelled in the next three months. This will include 50,144,628 common shares and 6,912,036 preferred shares.
• We believe that this massive share buyback and cancellation is likely to boost Samsung Electronics’ share price resulting in a strong outperformance relative to KOSPI in the next 6-12 months. 

• The stock’s still below 1x PBR. But with Samsung’s tech gaps and slowdowns, going all-in on an outright long here off the back of this buyback feels way too early
• The key is whether pref discounts tighten like 2015, but with a more balanced buyback this time and narrowing pref discounts, making a pref rally harder to predict short-term.
• The goal’s the same as 2015—boosting the family’s control. If the remaining buyback leans pref-heavy, it could further tighten pref discounts, creating a potential opportunity to play the compression.

• Fidelity National Information Services, Inc. (FIS) reported mixed results for the third quarter of 2024, demonstrating both strengths and potential challenges in their operations.
• The company experienced a steady growth in adjusted revenue, which increased by 4% year-over-year.
• This growth was primarily driven by an acceleration in recurring revenue across its segments, notably in Banking and Capital Markets, with both segments achieving margin expansion.

• With Trump becoming the next President of the United States, we explain why the rechargeable battery sector in Korea is likely to get further battered in the coming months. 
• Trump administration could eliminate or significantly slash the $7,500 consumer tax credit for electric vehicle (EV) purchases, which is one of the key provisions of the Inflation Reduction Act (IRA).
• We expect the sell-side to further cut their earnings estimates on the key key names in the Korean rechargeable battery sector in the coming months.

• Compal and Nvidia form partnership for AI server collaboration in 2025, expanding capabilities in the tech industry.
• Taiwan’s upcoming AI Basic Act in 2025 prompts consideration of four competing versions, highlighting the significance of AI regulation.
• Foxlink launches Taiwan’s largest AI supercomputing hub for SMEs, showcasing the country’s advancements in technology for small businesses.

• The latest update from United States Cellular Corporation, reflected in their third-quarter 2024 earnings, provides key insights into the company’s current standing and strategic direction.
• Several highlights from the reporting period illustrate a combination of potential opportunities and inherent challenges impacting the company’s operations and future outlook.
• On the positive side, United States Cellular Corporation showed substantial progress in monetizing its spectrum assets, despite the broader market challenges.

• Sales decreased by 6.3% YoY, with operating profit down 24.4% and recurring profit down 55.5% YoY.
• Net income attributable to owners increased 470.0% YoY due to a gain on negative goodwill from Iwatsu Electric acquisition.
• Segment sales varied: Design increased 11.7% YoY, while Others decreased 12.5% YoY with profit down 55.9%.

PVA TePla (PVA) reported a 2.3% y-o-y decrease in sales in Q324 and management has set guidance at the lower end of the range for both sales (€270–90m) and EBITDA (€47–51m). Metrology sales held up nicely in the quarter, while sales in the other activities in the semiconductor division showed a decrease. We have lowered our estimates modestly for both FY24 and FY25 given a more challenging expected market environment in wafer fabrication for the semiconductor industry. On our new estimates, PVA trades at an EV/EBITDA FY25e multiple of 3.7x, which we believe is very undemanding.

• In Q2 FY03/25, revenue was JPY559mn (-12.4% YoY), with a gross profit of JPY156mn (-25.5% YoY).
• Full-year FY03/25 forecast: revenue JPY1.2bn (-7.4% YoY), operating loss JPY605mn, recurring loss JPY592mn, net loss JPY596mn.
• FY03/27 forecast: revenue JPY1.9bn, operating profit JPY7mn, recurring profit JPY4mn, net income JPY0mn.

• SoftBank group (SBG) relies mainly on Arm re-rating further for NAV growth, yet Arm’s valuation already discounts, in our view, much growth potential; SBG and Arm shares are highly correlated
• JPY-USD FX has weakened recently, but the potential for BoJ monetary tightening could reverse this trend impacting SBG, given the high skew of USD assets relative to USD liabilities
• The Vision Funds are hampered by few private company exits; SBG’s NAV discount remains high, but its dependence on Arm is a major risk; we turn negative on SBG