Daily Brief TMT/Internet: Shift Inc, Microsoft Corp, Singtex Industrial, Xiaomi Corp, AAC Technologies Holdings, Xperi, CyberArk Software Ltd, KLA-Tencor Corp, Kuaishou Technology, CMES AI Robotics and more

• Shift Inc (3697 JP) s share price has been down 65% YTD as the company’s aggressive investment on HR and system reinforcement led to fall in margins which concerned the market.
• However, the company has adopted several measures to improve its margins, and we expect the investment in HR and others to generate results going forward.
• Though share price has moved up slightly, valuation multiples are at a steep discount, and we would look for building a position.

• Diverse AI Portfolio: Microsoft’s diversified AI investments, including partnerships with G42 and Mistral AI, reduce reliance on OpenAI and ensure continued innovation across multiple AI ventures.
• Azure’s Competitive Edge: The partnership with OpenAI strengthens Azure’s position by offering exclusive AI-driven cloud services, boosting demand from enterprises seeking advanced automation and productivity tools.
• Industry Leadership: As AI investment intensifies across the tech sector, Microsoft’s significant spending outpaces peers, positioning the company as a frontrunner while highlighting competitive pressures in the growing AI landscape.

• Singtex’s sustainable dyeing plant aims to boost profits by enhancing eco-friendly practices in textile industry
• Tata Motors partners with Delta Electronics and Thunderplus Solutions to set up fast charging stations in India
• Epson dominates robotic arm market with three key strategies, solidifying their leadership position in the industry

• Xiaomi reported CY2Q24 revenue, non-IFRS EBIT and non-IFRS net income 5.6%, 32.2%, and 40.0% vs. consensus. 
• Despite the limited scale and numerous incentives offered at launch, Xiaomi reported an EV gross margin of 15.4%. Greater scale and reduced incentives provide further margin upside in C2H24;
• Xiaomi’s smartphone and IoT market share gain have accelerated amid the halo-effect stemming from the SU7. We reiterate our BUY rating, and raise  TP to HK$27.0, implying 28.3x CY25 P/E.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• AAC Technologies Holdings
• GMR Hyderabad International Airport

• XPER selling Perceive is of greater benefit than the proceeds XPER would immediately receive. 
• The sale of Perceive to AMZN gives clarity as to the value of the technology XPER has been incubating for many years. 
• We estimate XPER recognizes approximately $3.5 million to $4 million in quarterly operating losses from Perceive. The cost savings would be material to XPER’s non-GAAP net income.

• CyberArk Software demonstrated strong financial performance in the second quarter of 2024, exceeding expectations with significant growth in revenue, operating income, and earnings per share.
• This performance solidifies CyberArk Software’s leadership in the identity security space.
• The company’s planned acquisition of Venafi, a leading provider of machine identity management solutions, is expected to further strengthen its capabilities and competitive position.

• KLA Corporation reported its financial results for the June quarter of 2024, reflecting growth and improvement across several key metrics.
• Key highlights from the report include revenue, gross margin, and EPS exceeding their respective guidance midpoints.
• Revenue growth was witnessed both sequentially and year-over-year, indicating a robust market environment that benefits from advanced technology adoption and escalating complexity in semiconductor processes.

• Kuaishou reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, and 5.7% vs.  our estimates; and in-line, 9.0% and 14% vs. the consensus. 
• The bright spot was strong growth in its advertising and stabilization in the regulation-affected live streaming. Our BUY case of AI empowering mid-sized traffic platforms is intact;
• We cut TP to HK$75 to reflect the sustained damage of weak consumption. The stock is trading at only 8.5x PE for 2025.

• CMES AI Robotics is getting ready to complete its IPO on KOSDAQ in October. The expected IPO price is 20,000 won to 24,000 won. 
• CMES provides intelligent robot solutions that combine artificial intelligence (AI) and three-dimensional (3D) vision technology. CMES’s core technologies include 3D vision sensors and image processing algorithms. 
• Robotics related IPOs have generated enormous interest in Korea. Although CMES is a small cap name, this robotics related IPO is also likely to garner high interest as well.