Daily Brief TMT/Internet: SK Hynix, Asustek Computer, Vanguard Intl Semiconductor, Simplex Holdings, Liberty Puerto Rico, Japan System Techniques Co, Smart Eye, Mitsubishi Research Institut and more

• We screen for stocks at the extreme ends of their positioning or momentum ranges among active Asia Ex-Japan equity funds.
• High Positioning, Negative Momentum: AIA Group Limited, Shenzhen Inovance Technology 
• Low Positioning, Positive Momentum: New Oriental Education & Technology Group, Shinhan Financial Group

• PC Maker Shares Under Pressure — PC makers’ share prices fell by mid-to-high single digits during July. However, pure PC exposure outperformed as shown by HPQ’s gain during the month.
• Latest PC Industry Data is Promising — Latest IDC data shows that global PC shipments increased 3% YoY in 2Q24, and are up 5% YoY ex-China.
• Microsoft & Taiwan PC Maker Earnings Ahead — Microsoft reports July 30th U.S. time. We expect Taiwan PC makers to report earnings within the first two weeks of August.

• 3Q24 guidance: Shipment: up 9-11% due to higher customer demand. ASP: down 0-2% QoQ. GM: 28-30%, up 3ppts QoQ.
• Pricing hit bottom in 2Q24. Anticipates UTR in 2025 returning to 70-80%.
• Effective tax rate for 2H24 is expected to be 20%.

• Q1FY3/25 results indicated a slow start for earnings, despite a robust profile for sales growth at 16.5% YoY and both quarterly orders and backlog at record highs.
• The key takeaways are: 1) although reported OP fell 4.8% YoY, underlying OP growth was 4.6% YoY when restating for one-time expenses for a new office, 2) quality of earnings remains sound despite cases of project cost overruns, and 3) the sustained strong outlook for orders provides high earnings visibility.
• We believe that the direction of travel remains positive for earnings growth, given strong order visibility and as the company’s operations continue to scale.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Liberty Puerto Rico’s ESG as “Adequate”. The score mirrors our assessment of parent Liberty Latin America (LLA), which discloses ESG-related information on a consolidated basis, without meaningful details on the bond-issuing credit pools that we cover (C&W Communications and Liberty Costa Rica). 

We assess LLA’s Social and Governance pillars as “Strong” and “Adequate”, respectively, offsetting the “Weak” Environmental score. Controversies are “Immaterial” and Disclosure is “Adequate”. 

• Japan System Techniques Co., Ltd. (hereafter, the “Company”) posted an increase of sales and profits in all four business segments for FY2024/3.
• In particular, operating profit of the Medical Big Data business and the Global business in total, increased sharply by 49.5% YoY.
• Net sales saw an increase for 13 consecutive years, and ordinary profit for 9 consecutive years with a record high, leading to 17.8% of ROE. 

• Smart Eye, a provider of eye tracking and driver monitoring systems for the automotive industry, has seen significant growth and potential upside
• The company has secured over 100 new design wins and a capital raise, improving the risk-reward profile
• With upcoming regulations in the EU driving demand for their technology, Smart Eye is expected to experience further revenue and profitability growth.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• Adoption of new revenue recognition standards increased FY09/22 revenue by JPY2.6bn, operating profit by JPY1.0bn, and reduced order backlog by JPY11.2bn.
• FY09/23 revenue decreased by 6.8% YoY to JPY90.3bn, with operating profit down 15.8% YoY to JPY7.1bn.
• Revised FY09/24 forecast predicts revenue of JPY116.0bn (-5.0% YoY) and operating profit of JPY7.5bn (-13.7% YoY).