Daily Brief TMT/Internet: Softbank Group, Fuji Soft Inc, Nokia OYJ, Palantir Technologies , KT Corp, Asustek Computer, Black Sesame Technologies, Apple , Airtel Africa PLC and more

• There are 44 adds/41 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
• Based on the adds, deletes and capping changes, we estimate one way turnover of 7.9% and a round-trip trade of JPY 880bn (US$6bn).
• The adds have outperformed the deletes over the last year though that has been faded over the last couple of months. Breaking with history, there could be outperformance near-term.

• Nikkei and Bloomberg report that Fuji Soft Inc (9749 JP) will be privatised through a KKR-sponsored MBO at a price just below JPY9,000, a 21.8% premium to the last close.
• The rumoured privatisation proposal is the culmination of a sale process initiated by 3D Investment Partners, the largest shareholder, in September 2023.
• The Board will meet tomorrow to discuss the proposal. The rumoured offer represents an all-time high and a knockout bid, suggesting a done deal if a binding proposal materialises.

• Cap Gemini SA (CAP FP) is estimated to be excluded from the selection list in the long-run due to being pushed way above 60% coverage in the Technology sector.
• Merck KGaA (MRK GR) switches between in and out of the selection list because it fluctuates close to the 60% coverage of the Health Care sector.
• Nokia OYJ (NOKIA FH) has a higher probability of deletion from SX5E if Merck KGaA (MRK GR)  qualifies to the selection list. Forecasted passive fund supply is  ~15 ADV.   

• Palantir Technologies continues to establish itself as a leading force in the world of data analytics and artificial intelligence.
• The company’s recent financial results reveal a mixed but overall positive picture, showcasing strong revenue growth and solidifying its position as a key player in both the government and commercial sectors.
• Palantir’s focus on leveraging AI to solve complex problems at scale is clearly paying off, with impressive strides in revenue and customer acquisition.

• Last year into early 2024, Fuji Soft Inc (9749 JP) – partially at the prodding of 3D Investment Partners – took in 4 subs and conducted a strategic review.
• In January, I explored the situation here suggesting the stock had run, FujiSoft needed to liquidate more assets, but a PE firm would look at a valuation of ¥600bn.
• Last night, the Nikkei reported that US PE Firm KKR planned to take Fuji Soft private with a TOB valued at ¥600bn. Limit up will take us to ¥560bn+.

• In this insight, we provide an update on the K Bank IPO, which is more likely in 1H 2025. K Bank is one of the largest Internet-only banks in Korea. 
• A successful IPO of K Bank could have a positive impact on KT Corp (030200 KS) which is the indirectly the largest shareholder of K Bank. 
• K Bank had total operating income of 51.5 billion won (up 328% YoY) in 1Q 2024. Operating margin improved materially from 5.7% in 1Q 2023 to 19.5% in 1Q 2024.

• Given market concerns that AI is overhyped and not yet delivering sufficient value, we analyze Microsoft’s Copilot disclosures and examine signs of AI services traction among corporate clients.
• Signs indicate that Copilot is gaining substantial traction with corporate clients, adding value to software development, business operations, and healthcare documentation functions.
• The number of organizations paying for MSFT’s AI services is expanding rapidly. We view this as a promising indicator of increased AI adoption and substantial value creation.

• Black Sesame Technologies (BLACKSES HK) raised around US$133m in its Hong Kong IPO, after pricing its IPO at the low-end.
• Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• Apple achieved a record $85.78B in Q3 revenue, up 5% YoY, and earnings per share rose 11% to $1.40, exceeding expectations and reflecting strong financial health. 
• IPhone revenue was $39.3B, surpassing the $38.81B estimate. Despite a 1% YoY decline, iPhone sales showed growth on a constant currency basis, contributing significantly to overall revenue.
• Services revenue reached a record $24.2B, growing 14% YoY. The gross margin was 46.3%, slightly above estimates, despite challenges from foreign exchange and product mix changes.

• Airtel Africa is undervalued and has potential for upside growth
• Company has shown strong performance in revenue and EBITDA growth despite challenges
• Potential IPO of mobile money business could unlock more value for shareholders

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.