In today’s briefing:
- [Tencent (700 HK, BUY, TP HK$450) TP Change]: Market Finally Starting to Recognize Tencent’s Value
- Tech Supply Chain Tracker (18-May-2024): AI PC term will be obsolete soon, tech titans predict at pre-Computex event.
- Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners
- KPIT: Stellar Growth Continues
- CyberArk Software: Acceleration of Endpoint Privilege Manager (EPM) Adoption & Other Critical Growth Drivers
- Paylocity Holdings Corp: How Have They Expanded Their Addressable Market? – Major Drivers
[Tencent (700 HK, BUY, TP HK$450) TP Change]: Market Finally Starting to Recognize Tencent’s Value
- Tencent reported C1Q24 revenue, IFRS operating profit, and IFRS net income in-line, 9.1%, 26% vs. our estimates and in-line, 16%, 21% vs. consensus;
- Game revenues were below our expectations while advertising was above, leading to a gross margin beat of 2.73ppt, powered by video account and AI.
- We raised our TP to HK$450 to reflect the shift to better-margin revenue mix and upcoming revenue acceleration.
Tech Supply Chain Tracker (18-May-2024): AI PC term will be obsolete soon, tech titans predict at pre-Computex event.
- Tech titans foresee the obsolescence of AI PC by Computex 2024, sparking anticipation for new technological advancements.
- Disney and Warner’s collaboration in the streaming market introduces fresh competition, shaking up the industry landscape.
- ASML’s thriving in the Angstrom Era credits its success to relentless innovation and adaptability within the semiconductor sector.
Bullish Outlook Intact; EM and China Continue to Bottom; Buys in Comms, Tech, Discretionary, Miners
- Since mid-April we discussed how downside was limited on MSCI ACWI and EURO STOXX 50, and May 2nd discussed it was “quite possible” the lows were in.
- Now, the MSCI ACWI, ACWI ex-US, EAFE, and EM indexes have all broken out to new multi-year highs. Our bullish outlook (since early-November 2023) remains intact; expect higher prices ahead.
- China (MSCI China) continues to lead the EM turnaround, and we remain bullish on the space. We highlight many large-cap EM buys within Communications, Technology, Discretionary; we remain bullish miners.
KPIT: Stellar Growth Continues
- KPIT reported a strong Q4FY24 led by 5.1% QoQ revenue growth in constant currency (CC) terms. EBITDA margin came in better than expected at 20.7%.
- Overall, in line with our projection, KPIT even beat its upgraded guidance by posting YoY revenue growth of 39%+ in CC terms vs 37%+ guided.
- KPIT has guided for a strong FY25 with revenue guidance of 18-22% in CC terms and EBITDA margin of 20.5%+.
CyberArk Software: Acceleration of Endpoint Privilege Manager (EPM) Adoption & Other Critical Growth Drivers
- CyberArk Software Ltd.
- reported strong first quarter 2024 financial results.
- The company provided earnings per share of $0.75, turning around a loss of $0.17 in the prior year period.
Paylocity Holdings Corp: How Have They Expanded Their Addressable Market? – Major Drivers
- Paylocity Holdings Corp reported solid results for Q3 2024, with total revenue growth of 18.1%.
- Paylocity credits this trend to their offerings resonating in the market, particularly among the younger generation, due to their investment in meeting the needs and expectations of the modern workforce.
- The company has released new enhancements to their talent acquisition suite to facilitate recruitment, training, and retention of this demographic.
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