In today’s briefing:
- Sea Will Release Its Q4 2023 Earnings Report Soon
- Quiddity Leaderboard S&P 500 Mar 24: Big Index Flows Possible for Workday and KKR
- Nvidia: A Quality Stock that Shows Human Investors Are Unable to Discount Exponential Growth
- FnGuide Semiconductor Top10 Index Rebalance Preview: One Change Likely; Close Among Potential Adds
- SUMCO’s Sobering Outlook For Silicon Wafers
- [NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Strong In-House Game Performance Drives Margins
- Datadog Inc: Can The Acquisition Of Actiondesk Be A Game Changer? – Major Drivers
- Finding the Sweet Spot: Nvidia’s Goldilocks Quarter
- Cadence Design Systems: A Solid AI Infrastructure & Product Positioning Changing Its Growth Story? – Major Drivers
- Lattice Semiconductor: A Tale Of An Expanding Market & An Increasing Client Base! – Major Drivers
Sea Will Release Its Q4 2023 Earnings Report Soon
Shopee – Sea’s largest business unit and Southeast Asia’s largest e-commerce platform – has reported negative EBITDA for most of the 8 or so years since its launch.
Investors now however appear to be looking for earnings growth. In 7 of the last 9 quarterly earnings reports, investors have rewarded the company every time it has reported earnings growth (its share price has gone up in the day after the release), and penalized when it has not.
Based on our analysis (and subject to the disclaimer included below), we expect Shopee’s GMV and Revenue to improve in Q4 2023 (as compared to the previous quarter) along with its EBITDA, although earnings will likely remain in negative territory.
Quiddity Leaderboard S&P 500 Mar 24: Big Index Flows Possible for Workday and KKR
- The S&P 500 index tracks the 500 largest names listed in the US and it is one of the most highly-tracked indices in the world.
- The index is reviewed quarterly. The next review will be in March 2024 and the evaluation date for the rankings for the constituent selection process is 29th February 2024.
- In this insight, we take a look at Potential ADDs and Potential DELs for the rebalance. We estimate US$13.1bn one-way flow on 3 ADDs and 3 DELs.
Nvidia: A Quality Stock that Shows Human Investors Are Unable to Discount Exponential Growth
- Nvidia’s blowout earnings number is another example of how grasping exponential growth trends is extremely difficult for human investors.
- Unlike what is often assumed, Nvidia, for now, qualifies as a quality stock, revealing relentless competitive power, low debt, and reasonable valuation.
- Nvidia’s weight with Quality ETFs is bigger than its weight in the MSCI World Index, adding to quality stock outperformance.
FnGuide Semiconductor Top10 Index Rebalance Preview: One Change Likely; Close Among Potential Adds
- ISC Co Ltd (095340 KS) could replace Wonik Ips (240810 KS) in the FnGuide Semiconductor Top10 Index at the April rebalance.
- Jusung Engineering (036930 KS) is ranked just behind ISC Co Ltd (095340 KS) and could be added to the index instead depending on relative price performance.
- Shorts on ISC Co (095340 KS) have been stable over the last few months while there has been big covering on Wonik Ips (240810 KS) and Jusung Engineering (036930 KS).
SUMCO’s Sobering Outlook For Silicon Wafers
- Q423 revenues of ¥105.1 billion, about 5% better than forecasted, up 5% QoQ but down ~10% YoY.
- Q124 revenues forecasted to decline 17% QoQ to ¥87 billion. Not surprisingly, EBITDA will also decline 33% QoQ to ¥22.1 billion.
- On a brighter note, demand growth driven by generative AI will roughly double wafer demand for servers (AI+General) by 2027
[NetEase, Inc. (NTES US, BUY, TP US$118) TP Change]: Strong In-House Game Performance Drives Margins
- We expect NetEase to report C4Q23 revenue, GAAP op. profit and GAAP net income 4.9%, 5.7% and 8.5% vs. consensus.
- The robust topline growth was mainly contributed by revenue recognition of <Justice Mobile> in the peak summer season.
- The grossing of legacy titles like <FWWJ> is also growing steadily due to the low-price strategy. We raise our TP to US$118 to reflect the rich and diversified pipeline…
Datadog Inc: Can The Acquisition Of Actiondesk Be A Game Changer? – Major Drivers
- Datadog Inc., in its Q4 2023 earnings, revealed that it ended the year on a high note.
- With continued innovation and high customer adoption rates, the company’s revenue was $590 million, a 26% increase year-over-year, exceeding its guidance range.
- The company’s customer growth was significant, moving from around 23,200 last year to about 27,300 currently.
Finding the Sweet Spot: Nvidia’s Goldilocks Quarter
- Nvidia’s earnings are akin to my Super Bowl.
- There is no more significant event in semiconductors and AI, and each quarter, we tune into Nvidia’s results to see precisely what quarter we are in the AI hype cycle (and potentially bubble).
- There is no better signpost for the entire AI ecosystem than the company making the most of the revenue so far: Nvidia.
Cadence Design Systems: A Solid AI Infrastructure & Product Positioning Changing Its Growth Story? – Major Drivers
- Cadence Design Systems reported outstanding performance for Q4 and FY 2023, achieving 15% revenue growth, a non-GAAP operating margin of 42%, and over 20% non-GAAP EPS growth.
- The company exited the year with a record backlog of $6 billion.
- Cadence attributes this success to their innovative solutions and customer commitments to their chip to system integrated design and analysis platforms.
Lattice Semiconductor: A Tale Of An Expanding Market & An Increasing Client Base! – Major Drivers
- Lattice Semiconductor Corp.
- achieved solid financial results in 2023, with robust revenue growth and record gross margins.
- The semiconductor industry’s cyclical correction had a slight impact on the company’s 2023 Q4 progress, which could continue into early 2024.
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