Daily Brief TMT/Internet: Socionext, SK Hynix, Kakao Corp, Doosan Robotics, Kuaishou Technology, ASICLAND , Telefonica SA, Sap Se Sponsored Adr, Solid State PLC, Texas Instruments and more

• In March 2024 Nikkei 225 Rebal – Look for Zozo, Ryohin Keikaku, and Maybe a Socionext Split I suggested Socionext (6526 JP) needed a stock split to get in.
• Today after the close, Socionext reported H1, guided up full-year earnings (still too conservative), raised its div, and announced a 5:1 stock split for Jan1 2024. 
• DISCO Corp (6146 JP) is now likely to be a top 75, which leaves the question of which Consumer Goods stock would likely be added. 

• SK Hynix reported Q323 revenues of 9.066 trillion won, up 24% QoQ but still down 17% YoY
• Net income was -2.185 trillion won, a 27% improvement on the losses in the prior quarter.
• While DRAM has turned profitable, NAND remains stubbornly loss making and is likely to remain so for the foreseeable future

• It was reported in numerous local media in Korea that FSS is investigating Kakao Mobility for a potential accounting fraud. 
• There are suspicions that Kakao Mobility may have artificially inflated its sales from 2020 to 2023 to enhance the value of the company prior to its IPO listing. 
• Given that the regulators are unlikely to make a final decision on this matter until next year, this is likely to be negative on both Kakao Mobility and Kakao Corp. 

• We discuss the end of the mandatory lock-up periods for 48 stocks in Korea in November 2023, among which 6 are in KOSPI and 42 are in KOSDAQ.
• These 48 stocks on average could be subject to further selling pressures in November and could underperform relative to the market.
• Among these 48 stocks, top five market cap stocks include Doosan Robotics, Fadu, CanariaBio, Enchem, and Gigavis. 

• We believe Mr. Su’s resignation as chairman is not a concern, because Mr. Cheng, the CEO, has been operating the company for two years.
• We believe the 3Q23 YoY growth will be lower, as 2Q23 had a lower comparison base.
• We believe the operating margin can be negative in 3Q23 as Q3 is always a weak season, but operating profit will break even for 2023.

• Asicland completed an excellent IPO book building results. IPO price has been determined at 25,000 won which is 17% higher than the high end of the IPO price range.
• A total of 1,906 institutional investors participated in this IPO book building results. The IPO demand ratio was 490 to 1. Asicland IPO will start trading on 13 November. 
• Our base case valuation of Asicland is implied market cap of 434 billion won or target price of 40,571 won per share, which is 62% higher than the IPO price.

• The public holding company SEPI, controlled by the Spanish Treasury, has confirmed to the CNMV that it is studying the possibility of acquiring a stake in Telefonica SA (TEF SM).
• Market speculates with a 5% stake to counterbalance the current 4.9% stake of STC (which could execute an option to acquire another 5% pending Government authorisation).
• At current market prices, it is equivalent to 22.04 trading sessions. Q3 results and Capital Markets Day, the first major strategic update in years, will take place on 8 November. 

• SAP SE delivered a disappointing set of results as the company could not meet the revenue and earnings expectations of Wall Street.
• In Q3, SAP achieved impressive cloud growth.
• The transformative potential of business AI, driven by SAP, is just beginning and promises to reshape the business world.

Solid State has made an excellent start to FY24 with strong continuing organic growth in H124 enhanced by a full period contribution from Custom Power. As a result, management anticipates better-than-expected revenues and PBT for the full year with market consensus rising by c 5% to £155m and £12.5m, respectively.

• Texas Instruments Incorporated delivered a disappointing set of results as the company was unable to meet the revenue and earnings expectations of Wall Street.
• Despite these challenges, Texas Instruments maintained its effective capital management, with substantial cash reserves and a resilient balance sheet.
• While the company faced headwinds in revenue and profitability during the quarter, Texas Instruments’ strategic focus on economic resilience and efficient capital management remains evident.