In today’s briefing:
- Shinko Electric (6967) – Break/Gap Risk Is Considerably Changed Now
- Quiddity HSCEI Jun 24 Flow Expectations: Many Reasons to Follow the Developments Closely
- Telefonica/Telefonica Deutschland Holding AG: Delisting Offer
- Viavi/Spirent: Management Throw in the Towel but Shareholders Likely to Hold
- Zoom Video Communications: Incorporating AI Capabilities to Improve Customer Engagement and Productivity! – Major Drivers
- TSMC (2330.TT; TSM.US): Sales Should Be Gradually Increasing QoQ in 2024F; IPhone 16 Is on Schedule.
- Snowflake Inc: Can Its Rapid Development & Adoption Of AI Products Grow Its Market Share? – Major Drivers
- salesforce.com Inc: Can The Spiff Acquisition Truly Enhance Their Offerings & Create Synergies? – Major Drivers
- eBay Inc: Increasing Investment in AI & Product Enhancement Is A True Game Changer! – Major Drivers
- Lianlian DigiTech IPO: PHIP Updates
Shinko Electric (6967) – Break/Gap Risk Is Considerably Changed Now
- Seven weeks ago I wrote about Shinko Electric Industries (6967 JP)‘s changing Break/Gap Risk as comps had gained. Shinko was cheap to its main comp and peers vs Announcement Date.
- Since then, Shinko is +4.1% and direct peer Ibiden Co Ltd (4062 JP) is -14.5%. This has erased Shinko’s underperformance since announcement, and shrunk a 9% spread to 3.3% yesterday.
- With the spread tighter and tech showing some weakness, I’d be happy unwinding at yesterday’s closing spread (3.3%).
Quiddity HSCEI Jun 24 Flow Expectations: Many Reasons to Follow the Developments Closely
- The HSCEI serves as a benchmark to reflect the overall performance of the top 50 “Mainland China” securities listed in Hong Kong.
- In this insight, we take a look at the potential index changes and the resultant capping flows for HSCEI index rebal event in June 2024.
- Based on the current data, I see two low-conviction ADDs and two low-conviction DELs.
Telefonica/Telefonica Deutschland Holding AG: Delisting Offer
- Telefonica SA (TEF SM) has decided to make a €2.35/share cash takeover offer to acquire the 5.65% stake in its German unit Telefonica Deutschland Holding (O2D GR) that it does not own.
- The bidder and parent company, Telefonica, have informed Telefonica Deutschland that, except for FY 2023 dividend, they do not plan to support the distribution of dividends for future financial years.
- The Bidder will apply for delisting thus the shares will soon become illiquid. Accept offer.
Viavi/Spirent: Management Throw in the Towel but Shareholders Likely to Hold
- Viavi Solutions (VIAV US) and Spirent Communications (SPT LN) have agreed a cash acquisition via Scheme at 175p (61% premium, 2.5x EV/Fwd Revenue) with just 0.23% irrevocable undertakings.
- The opportunity seems good enough so that Viavi (BB) will stretch even more its balance sheet, although Silver Lake is providing 1/3rd of the funds needed.
- Gross spread is +0.11%. I believe that shareholders are holding for a sweetening; quite possibly this is a target for activists too. Risk/return seems attractive. Long.
Zoom Video Communications: Incorporating AI Capabilities to Improve Customer Engagement and Productivity! – Major Drivers
- Zoom Video Communications, Inc reported financial results for its fiscal Q4 and full-year 2024.
- The company’s revenue for the Q4 reached $1.146 billion, up 3% YoY. Zoom’s Enterprise revenue grew by 5% YoY and formed 58% of total revenue.
- The company’s non-GAAP income from operations grew 10% YoY to $444 million.
TSMC (2330.TT; TSM.US): Sales Should Be Gradually Increasing QoQ in 2024F; IPhone 16 Is on Schedule.
- Taiwan Semiconductor (TSMC) (2330 TT) is ramping up its CoWoS capacity, with the aim of increasing new capacity by 32k wafer/month in the end of 2024F.
- In the second half of 2024F, the Apple (AAPL US) iPhone 16 will contribute to revenue from shipments.
- The semiconductor industry is expected to rebound in 2024F, with TSMC being one of the leaders.
Snowflake Inc: Can Its Rapid Development & Adoption Of AI Products Grow Its Market Share? – Major Drivers
- Snowflake reported strong annual performance for fiscal 2024 with a 38% YoY product revenue growth reaching $2.67 billion, highlighting the company’s continued growth trajectory.
- The company also saw an expansion of its non-GAAP product gross margins to 77.8% and it reported non-GAAP adjusted free cash flow worth $810 million, indicating robust fiscal health.
- The company’s exceptional bookings in Q4 with $5.2 billion of remaining performance obligations mark a significant 41% YoY growth, this along with 14 Global 2000 new customers, underscores strong customer adoption and trust in Snowflake’s offerings.
salesforce.com Inc: Can The Spiff Acquisition Truly Enhance Their Offerings & Create Synergies? – Major Drivers
- Salesforce announced its Q4 and full year results for fiscal 2024, reporting a strong performance across all its key metrics.
- This signifies an exceptional year for the company, with revenue, margin, earnings per share (EPS), cash flows, and current remaining performance obligations (cRPO) all recording increased growth.
- The overall transformation seen in Salesforce and its industry has been noted to be substantive, primarily driven by the surge in artificial intelligence.
eBay Inc: Increasing Investment in AI & Product Enhancement Is A True Game Changer! – Major Drivers
- eBay’s Fourth Quarter 2023 results demonstrated an approximate organic GMV (gross merchandise volume) growth breakdown of roughly 1% for the full year, despite discretionary spending pressure across major markets.
- This resilience was due to an improvement in this metric during each quarter of 2023.
- Focus category GMV indicated a promising upward trend, with growth close to 4%, significantly outpacing the other areas of eBay’s business by around 7 points.
Lianlian DigiTech IPO: PHIP Updates
- Lianlian DigiTech (2104619D CH), a digital payment services provider in China, has begun pre-marketing an HKEx IPO. It previously targeted a US$500 million raise.
- We previously discussed the IPO in LianLian DigiTech IPO: The Bull Case and LianLian DigiTech IPO: The Bear Case.
- The PHIP reinforces the bear case of operating losses, an unconvincing path to profitability, and a volatile FCF with a deteriorating balance sheet.
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