In today’s briefing:
- Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
- Block Deal Sale of HYBE by Netmarble
- Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
- Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline, 58% Upside
- China Consumption Weekly (6 Nov 2023): Kuaishou, Bilibili, Midea, Baidu, Yum China
- UMC. Automotive Weakness Prolongs Downturn
- Taiwan Tech Weekly: Positive Signs for Memory, PC, Smartphones; Key Autos & Display Color This Week
- 5 in 5 with Procurri – Advancing Sustainability in IT
- UI: Surprise Revenue Miss, PT to $160
Tencent (700 HK): Board Meets Next Week; In-Specie Dividend Candidates
- Tencent (700 HK) announced in-specie dividends of JD.com (9618 HK) (US$15bn+) in 2021 and Meituan (3690 HK) (US$20bn) in 2022.
- With the Tencent (700 HK) Board meeting on 15 November to approve Q3 results and considering the payment of a dividend, the pattern could repeat this year.
- Tencent (700 HK) owns stakes of US$1bn+ in 10 listed companies. We take a look at the stocks that could be next in line to be paid as in-specie dividends.
Block Deal Sale of HYBE by Netmarble
- After the market close on 6 November, Netmarble announced that it will sell 2.5 million shares of HYBE which represents 569 billion won in amount at current price.
- The actual block deal amount is likely to be less than 569 billion won as there will likely be a block deal discount rate.
- We would avoid this deal, mainly because we think HYBE is overvalued relative to its peers.
Will Semiconductor GDR Listing – Well Flagged and Short Interest Has Been on the Rise
- Will Semiconductor Shan (603501 CH) is looking to raise US$450m in its Switzerland GDR listing. The bookrunners on the deal are UBS and JP Morgan.
- In its base deal, the firm is offering 31m GDRs (1 GDR to 1 ordinary A-share) for sale, at a 5.4-17.2% discount to last close on its A-share leg.
- The base deal would be a relatively small one for the firm to digest, representing just 3.8 days of three month ADV on its A-share leg.
Tencent (700 HK) 3Q23 Earnings Preview: No Concern on EPS Decline, 58% Upside
- We believe advertising revenue will grow rapidly and game revenue will accelerate.
- We also believe EPS will decrease YoY due to high “other gains” in 3Q22.
- We expect the stock price will have an upside of 58% for year end 2024.
China Consumption Weekly (6 Nov 2023): Kuaishou, Bilibili, Midea, Baidu, Yum China
- All major Chinese e-commerce companies set up live broadcasting channels on Bilibili at the beginning of Singles’ Day sales.
- Kuaishou chairman’s resignation will not change the business strategy, as he stepped down from CEO two years ago.
- Baidu begins to sell ChatGPT-like service for CNY49.90 per month.
UMC. Automotive Weakness Prolongs Downturn
- Q323 revenues of NT$57 billion, up 1.4% QoQ but down 24.3% YoY. For 2023 YTD, revenues have amounted to NT$167,575 billion, down 20.5% YoY.
- Net income was NT$15.97, essentially flat QoQ. Gross margin came in at 35.9%, also flat QoQ. Utilisation for the quarter was 67%, down from 71% in the prior quarter.
- Utilization set to further decline to low 60% levels in Q423, the lowest since the downturn began.
Taiwan Tech Weekly: Positive Signs for Memory, PC, Smartphones; Key Autos & Display Color This Week
- Last week global heavyweights AMD, Samsung, and Qualcomm delivered good news, including for the Memory, PC, and Smartphone industries. Taiwan company results supported their views as well.
- Looking ahead, Novatek, Asustek, and Himax are set to release in Taiwan. Combined with NXP abroad, this will provide color on display demand, automotive, and servers/PCs.
- A new Chinese memory chip maker just received major government investment, with an IPO of its related company planned.
5 in 5 with Procurri – Advancing Sustainability in IT
5 in 5 with Procurri – Advancing Sustainability in IT
UI: Surprise Revenue Miss, PT to $160
- UI fiscal first-quarter results (September) fell short of consensus estimates, primarily due to underperforming sales in the enterprise segment.
- Our initial expectations included the anticipation of soft demand for Ubiquiti, which was compounded by our belief in the enterprise spending momentum continuing
- Ubiquiti’s fiscal first-quarter revenue came in at $463.1 million, falling short of our estimate of $547.9 million. Historically, the quarter has been a strong period, making this deviation particularly noteworthy
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