Daily Brief TMT/Internet: Sea Ltd, Alibaba (ADR), Audience Analytics, iQIYI Inc, Palo Alto Networks, GoTo, Delta Electronics, Nitro Software Ltd, Lattice Semiconductor, Fiserv Inc and more

• Although the sell-side has lowered their immediate and medium-term targets, our analysis points to another surprise to the downside for Sea Ltd (SE US) in 4Q22.
• Having exhausted pretty much all the cost-cutting in the past few quarters, we don’t see much room for Sea Ltd to further reduce its losses in the e-commerce business.
• With the sell-side optimistic once again expecting a narrower loss, a big miss in the fourth quarter could send Sea Ltd shares back towards their Nov 2022 lows.

• Alibaba (BABA US) is set to report earnings tomorrow on the 23rd
• Stock has pulled back from the highs but earnings could be the next catalyst to determine direction
• We use the derivatives market to extract market expectations and suggest some suitable trades

In the upcoming webinar, Datuk William will share a short company presentation after which, he will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. The Corporate Webinar will include a live Q&A session.

About Audience Analytics

Audience Analytics is a well-established business enabler with a presence in Singapore,
Cambodia, China, Hong Kong, India, Indonesia, Macau, Malaysia, the Philippines, South Korea,
Sri Lanka, Taiwan, Thailand, United Arab Emirates and Vietnam. With products ranging from
printed publications and online portals to exhibitions and business award programs, Audience
Analytics partners with business owners to grow their businesses. The Group’s portfolio
includes SME Magazine, HR Asia, Capital Asia, Mega Career Fair, SME Solutions Expo,
Malaysia Career & Training Fair, Post Graduate Education Fair, ITX Asia, SME 100 Award,
Golden Bull Award, HR Asia Best Companies to Work for in Asia Award and CXP Best
Customer Experience Award.

• IQ released a set of clean-beat 4Q results, marking the end of turnaround and the start of high-quality growth.
• Years of investments in original content production capabilities paid off and solidified IQ’s leadership in China’s long form video industry. 
• Successful refinancing removed debt overhang. We expect IQ to generate RMB3.5 billion net profit out of RMB32 billion revenue for 2023 and see further upside to share price.  

• Huge operating margin and FCF beat as PANW is maintaining efficiency with slower headcount growth and supply chain issues abating supporting gross margins. 
• Deal sizes continue to grow dramatically: $1M deals grew 20% YoY, and  transactions size grew nearly 60%. $5M+ deals grew 84% YoY and $10M+ deals grew 140%.
• Prisma’ Access’ SASE product continues to be the catalyst driving 2.5x revenue lift vs. legacy firewalls.

• GoTo (GOTO IJ)  announced last week that it is accelerating its profit targets and aims to achieve positive adjusted EBITDA by 4QFY2023, advanced by five quarters.
• The company also expects Group’s contribution margin to become positive within the first quarter of 2023 accelerated by four quarters compared to the company’s previous guidance.
• Having analyzed the company’s revenue and cost base, we think this is too much to ask for as aggressive cost cutting would lead to giving up future growth opportunities.

• Results have come out for both companies. Delta Thailand has delivered massive growth in 2022 however in 2023 consensus expects Delta Taiwan to grow faster.
• One way to outperform the Thailand SET Index in 2023E could be to simply hold the index stocks but exclude Delta Thailand.
• By essentially any fundamental metric, Delta Thailand is over-priced relative to Delta Taiwan and it’s hard to see what the next outperformance driver could be in 2023E.

• After Alludo stated its $2.15/share Offer price was ‘best and final’, even if a superior proposal emerges, the ball was in Potentia’s court to just sneak in above those terms.
• And so they have, with a $2.17/share unconditional Offer for Nitro (NTO AU), increasing to $2.20 if they get to 75% interest, and $2.25 if ≥25% tendering opt for scrip.
• Expect Nitro’s board to announce its unanimous support for Potentia’s revised Offer. Expect Alludo to cash in as tendering nears 75%. 

• Lattice Semiconductor had a solid 2022 and ended the year on a positive note with an all-around beat.
• The company increased its product portfolio and its core strategic markets for industrial, automotive, communications, and computing had a 28% increase in annual revenue.
• Besides, the industrial and automotive market experienced double-digit growth for the third year as full-year revenue grew by 41%.

• Fiserv had a decent 2022 and managed to surpass the revenue expectations of Wall Street in its last result.
• The company’s better-than-expected growth against the challenging backdrop was a result of growth in organic revenue, improvement in operating margin, and adjusted earnings per share.
• Fiserv also advanced its core banking cloud roadmap for its new and existing clients with the acquisition and integration of Finxact.