Daily Brief TMT/Internet: Super Micro Computer, Taiwan Semiconductor (TSMC) – ADR, Tenstorrent, NetEase Inc, SecureWorks Corp, Geniee Inc, Pureprofile Ltd, Hon Hai Precision Industry, Xiaomi Corp and more

• Super Micro Computer Inc. (SMCI) has found itself in the crosshairs of controversy following a recent report from Hindenburg Research and the company’s delayed 10-K filing.
• As the tech giant continues to ride the wave of AI enthusiasm, the latest developments have cast a shadow over its stellar growth narrative.
• While SMCI’s impressive revenue figures and expanding market share in AI-driven solutions have attracted considerable investor attention, the company’s past accounting missteps, unresolved regulatory concerns, and potential internal control weaknesses suggest a need for heightened caution.

• Latest Industry Signals — Nvidia Crashed While Marvell Soared… Custom Silicon a Threat to Nvidia’s Monster Growth? Taiwan AI/Server Exposed Names Were a Mixed Bag of Performance
• Key Events to Watch — SEMICON Taiwan This Week, We Will Be Attending
• Perspective — NVIDIA’s >5x YoY “Singapore” Revenue Growth Is A Red Flag

• Tenstorrent is an AI chip company headed up by its CEO Jim Keller, a chip design legend who has previously worked at AMD, Apple, Intel, and Tesla.
• Tenstorrent has received numerous funding from major Korean conglomerates including  Hyundai Motor Group and Samsung.
• According to Tenstorrent, its Galaxy systems are nearly 1/3 less expensive than Nvidia’s DGX system AI servers. 

• NetEase reported C2Q24 top line, GAAP operating profit and GAAP net income in line, (5.6%) and (7.3%) vs. our estimates, and in line, (4.0%) and (5.5%) vs. consensus. 
• We believe game growth will materially accelerate in C2H24 and 2025, based on our projection for Naraka Mobile, Where Winds Meet and the two Marvel games. 
• We keep TP of US$122 unchanged and maintain BUY .

• SecureWorks has once again caught the attention of the investment community as its parent company, Dell Technologies reportedly explores a potential sale of the company.
• This isn’t Dell’s first attempt to offload SecureWorks; previous efforts to find a buyer have not materialized into a deal.
• However, given the rapidly evolving cybersecurity landscape and the increasing pressure on companies to enhance their digital defenses, SecureWorks could present a compelling acquisition opportunity for the right buyer.

• Earnings rebounding – Q1 FY3/25 results were positive with the company demonstrating sustained double-digit sales growth YoY, and strong underlying OP growth of 53.2% YoY.
• Reported OP grew 633.7% YoY, a positive optic related to a one-time reversal of contingent consideration stemming from the acquisition of Zelto Inc.
• Although the market environment remains challenging Overseas and investment into AI services lowered margins in the Marketing SaaS business, the earnings outlook remains positive given the company targeting positive OP in H2 FY3/25 for the Marketing SaaS business, and strengthening seasonality in advertising demand. 

• RaaS Research Group has published an update report on data analytics company Pureprofile (ASX:PPL) following the release of its audited FY24 accounts which includes confirmation that it delivered a maiden reported NPAT of $0.1m, and an adjusted NPAT of $1.26m, up 25% on the pcp and ahead of our forecast for $1.17m.
• Adjusted EBITDA for FY24 was $4.4m, down 4% on the pcp, but up 8% excluding the impact of cash short-term-incentive (STI) payments to executives.
• We note EBITDA was slightly ahead of our forecast for $4.3m and within the company’s guidance range of $4.1m to $4.5m.

• Post-China supply chain reevaluation in ASEAN offers strategic shifts and growth opportunities for businesses.
• Peak season does not improve 3Q24 memory spot pricing, with overall market trends remaining stable.
• Generative AI market set to reach $1.5T by 2030, with Taiwan leading in hardware development; software & services also show promising future growth.

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.

• Vedanta Resources
• Xiaomi Corp