Daily Brief TMT/Internet: SenseTime Group, Taiwan Semiconductor (TSMC) – ADR, Cellnex Telecom Sau, Ubiquiti Inc., MotorK Ltd, Harvest Technology Group Ltd, Acal PLC and more

• SenseTime Group (20 HK) was added to the Non-SDN Chinese Military-Industrial Complex Company (NS-CMIC) list on 10 December 2021. So, the stock is not a part of any global indices.
• There is a possibility that the stock is no longer restricted to U.S. investors and that could lead to multiple index inclusions over the next few months.
• Inclusion in the MSCI China Index could take place in February or May while inclusion in the FTSE All-World Index could take place in March.

• ASML and Lam Research’s latest guidance implies extremely different near-term revenue outlooks but shows an industry pulling back near-term while investing for long-term.
• Results show the much weaker situation for Memory chips vs. Logic chips, and little discussion of a recovery for Memory from the firms so far.
• Firms servicing long-term strategic, specialized demand from customers are indeed performing better than those servicing more commoditized demand.

• Press reported (20 January) that American Tower and Brookfield are preparing to launch a takeover bid for European towerco leader Cellnex with the intention of delisting the business.
• Cellnex on 16.9x EV/22e EBITDA is trading cheaply vs AMT (21.6x) and a diversified unique asset. Its towers would come at €350,000/tower vs. recent deals at €500,000.
• Top ten shareholders own 57.41%. The last rights issue was done at €36.33/share. At what price those shareholders could be bought out? Unlikely at less than a 25% premium, €45.5/share.

• The enterprise segment has fueled revenue growth at Ubiquiti (UI) and it should remain the same in the fiscal second quarter
• Ubiquiti has expanded its product offering for enterprise customers where it includes a complete solution down to the EV charging station
• We have made several adjustments to our earnings model. We continue to assume gross margin rising sequentially due to lower costs

For FY22, MotorK reported a record Q4, driven by its focus on higher-value enterprise contracts, the launch of its SparK platform and the continued migration of acquired companies onto the platform. Annualised recurring revenue (ARR), management’s main metric for tracking performance, was €26.9m, falling short of our €28m forecast and management’s guided range of €28–30m. FY23 and beyond looks set to benefit from a large pipeline of contract opportunities, with €5.2m of additional ARR committed as at 31 December 2022. Growth should be supported by maintaining low customer churn and high net revenue retention.

• Harvest Technology Group Limited (ASX:HTG) licenses its proprietary video compression and encryption technology for low-bandwidth, high-latency applications needing secure real-time streaming video communication.
• The company delivers solutions for data transfer from anywhere via satellite or congested networks.
• Harvest offers a solution which enables real-time monitoring of remote locations, real-time feedback for field technicians, and secure video conferencing. 

discoverIE’s Q323 trading update confirmed continued good momentum, with FY23 underlying earnings tracking ahead of board expectations. The company has completed the previously announced acquisition of Magnasphere, adding a high margin sensor business to the Sensing & Connectivity division. We have upgraded our forecasts to reflect better trading and the accretive acquisition and note that gearing remains below the company’s target range, providing headroom for further M&A.