In today’s briefing:
- YAGEO and Shibaura Still Fighting, Minebea Likely to Bid Up, The Question Is Another YAGEO Overbid
- SK Telecom’s Block Deal Sale of 10.8 Million Shares of Kakao Corp
- China Mobile (941 HK) Tactical Outlook Following Q1 2025 Results
- Capgemini: Initiation of Coverage- Strategic Acquisitions & 4 Pivotal Growth Levers!
- Deepexi Technology Pre-IPO Tearsheet
- STMicroelectronics: Initiation of Coverage- An Insight Into Its Cost-Saving Initiatives & Financial Resilience!
- Synopsys: Harnessing Complexity
- STMicro: Ugly but Mngt Says 1Q25 Is the Bottom. Restructuring Has to Start, Horrendous Inventories.
- Alphabet 1Q’25 Update
- Sopra Steria Group SA: Initiation of Coverage- Why Its Shift towards Digital Services & Consulting Is Driving Our Optimism?
YAGEO and Shibaura Still Fighting, Minebea Likely to Bid Up, The Question Is Another YAGEO Overbid
- Yageo Corporation (2327 TT) bid ¥4,300 for Shibaura Electronics (6957 JP). Minebea Mitsumi (6479 JP) overbid at ¥4,500. YAGEO overbid Minebea at ¥5,400 on 17 April (expected to start 7-May)
- Apparently, YAGEO was a bit upset by the public comments by Shibaura regarding custom/mass-market/online different ways of doing business. YAGEO responded with receipts. Shibaura will respond later.
- On the 22nd, Minebea noted they would delay their intended 23rd start date. Now they have more irrevocables. In the end, I expect YAGEO’s, not Minebea’s, top price defines this.
SK Telecom’s Block Deal Sale of 10.8 Million Shares of Kakao Corp
- Prior to market open on 25 April, SK Telecom announced that it plans to sell 10.8 million shares of Kakao, representing 2.4% of outstanding shares in a block deal sale.
- The sale of Kakao Corp shares and using the proceeds to further acquire shares in SK Broadband and invest in AI businesses is a solid move by SK Telecom.
- We believe that this trading down gap of Kakao Corp is likely to be covered soon in the next several days/weeks so it represents a short term buying opportunity.
China Mobile (941 HK) Tactical Outlook Following Q1 2025 Results
- On April 22, 2025, China Mobile (941 HK) reported its Q1 2025 financial results, revenues substantially unchanged, but increase in net income and subscriber growth indicates resilience in its operations.
- The initial market reaction suggests mild disappointment, the stock retreated to a low <80 intra-week, then closed the week down at 80.85.
- Our price model shows an oversold state, while the time model indicates there is room for another week down, possibly a buy-the-dip opportunity (3 weeks down should be the limit).
Capgemini: Initiation of Coverage- Strategic Acquisitions & 4 Pivotal Growth Levers!
- Capgemini’s full-year 2024 results reflect a mixed performance against a backdrop of continued market challenges.
- The company’s revenues saw a decline of 2% at constant currency to EUR 22,096 million, evidencing the broader economic pressures and restrained client spending, especially in sectors like Manufacturing and regions such as France.
- This drop was somewhat mitigated by resilience in segments such as Financial Services and Public Sector, and geographic improvement in North America, the U.K., Asia Pacific, and Latin America.
Deepexi Technology Pre-IPO Tearsheet
- Deepexi Technology (1843779D CH) (DT) is looking to raise atleast US$100m in its upcoming Hong Kong IPO. The deal will be run by CITIC, CMBC, Guotai, Bocom International and SPDB International.
- The firm specializes in delivering AI solutions to enterprises to integrate their data, decisions and operations efficiently at scale.
- DT ranked first among specialized providers of large model AI application solutions in China’s enterprise large model AI application solution market in terms of revenue in 2024, according to F&S.
STMicroelectronics: Initiation of Coverage- An Insight Into Its Cost-Saving Initiatives & Financial Resilience!
- STMicroelectronics reported its financial results for the fourth quarter and the fiscal year 2024, showcasing notable operational challenges within a volatile market environment.
- The company experienced significant revenue declines amidst broader industry downturns particularly in its Industrial and Automotive segments.
- For the fourth quarter, STMicroelectronics saw a year-over-year decline in net revenues by 22.4%, landing at $3.32 billion, but managed a slight sequential increase of 2.2%.
Synopsys: Harnessing Complexity
- Chip design has long been a paradoxical craft.
- On one hand, engineers must trust sophisticated software to help them craft circuits of mind-boggling complexity; on the other, they maintain a healthy skepticism, knowing a single flaw can doom a chip.
- The old mantra “trust, but verify” could well have been coined for this process.
STMicro: Ugly but Mngt Says 1Q25 Is the Bottom. Restructuring Has to Start, Horrendous Inventories.
- Very poor 1Q25, operating profit close to zero. 2Q a bit better with lower revenue decline, but OP still close to zero.
- Management claims 1Q is the bottom for revenues, its possible, but 2 large risks: restructuring costs and very high inventories.
- Consensus expects a slow recovery into 2026, the stock looks cheap at 11x 2026 EPS. However, given the firm’s track record and the risks mentioned, lets wait 1 more quarter.
Alphabet 1Q’25 Update
- On an FX adjusted basis, Alphabet increased its revenue by 14% in 1Q’25 (~200 bps headwind from FX).
- For the 11th consecutive quarters, Google network’s revenue went down.
- Just when regulators are lambasting Google for their network business in court, it keeps dwindling to oblivion.
Sopra Steria Group SA: Initiation of Coverage- Why Its Shift towards Digital Services & Consulting Is Driving Our Optimism?
- Sopra Steria, a European leader in digital services and consulting, reported mixed outcomes in its 2024 financial results.
- Despite an overall challenging market environment, the company delivered notable achievements and faced several obstacles that could shape its future trajectory.
- Positively, the company witnessed a sturdy operating margin, reaching 9.8%, a milestone marking the highest since 2007.
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