Daily Brief TMT/Internet: Topcon Corp, Talabat Holding, LG CNS, Tencent, Taiwan Semiconductor (TSMC), Intel Corp, Samsung Electronics, Gartner Inc, Qorvo Inc, Poletowin Pitcrew Holdings and more

• A Bloomberg article today said Topcon Corp (7732 JP) is weighing takeover bids received from KKR and EQT. ValueAct has been pressuring the company for 18mos (5+% in May23)
• ValueAct has apparently been pushing the company to divest assets and concentrate on core ops, or go private (and have someone else do it). 
• This is further evidence of the METI-enabled “Bad Cop-Good Cop Routine” which could expand M&A and governance activity dramatically. 

• Talabat Holding (TALABAT UH) is expected to be listed on 10 December 2024, on the Dubai Financial Market at a valuation of ~$10.3bn.
• Fast-Entry is forecasted to be announced for the one Global Index at the close of 10 December and traded on 20 December in conjunction with the review.
• Uncertainty regarding the Fast-Entry arises due to lack of shareholder information in the Institutional Offering which can result in the float market cap being determined as invalid.

• According to our valuation analysis, it suggests a base case implied market cap of 7.9 trillion won for LG CNS, representing target price of 81,095 won per share.
• Therefore, our base case valuation target price of 81,095 won is 31% higher than the high end of the IPO price range.
• We estimate LG CNS to generate sales of 5.99 trillion won (up 6.8% YoY) and net profit of 356.1 billion won (up 7.1% YoY) in 2024.

• Consistent compounders, stocks with steady earnings growth and excess returns over a long period of time, are difficult to find. It’s even more difficult to find reasonably valued compounders.
• From the universe of large Asian companies, we screen those with steady profit growth (>10%) and excess returns in each of last 10 years and over next three forecast years.
• Our list of 20 inexpensive compounders comprises 10 from onshore China, 5 from HK, 3 from India and 1 each from Japan and the Philippines.

• The Semiconductor industry associations report re-accelerating Semi sales, and increase 2024-25 forecasts. This is due to higher AI / Accelerators, HBM Memory but the rest of the market remains sluggish
• TSMC remains on its high growth plateau at 34% YoY, driven by AI and 3nm. UMC remains on a sluggish recovery at 7% YoY.
• AMD, Nvidia, SK Hynix, TSMC: stocks are not expensive on PE relative to earnings growth. Non-Consensus: we think AMD and SK Hynix are worth a serious look.

• The Circuit podcast discusses the uncertainty surrounding Intel’s future leadership and strategic direction
• Ben and Jay analyze the board’s role in Intel’s challenges and debate the company’s path forward
• The podcast ends on a hopeful note, with Jay expressing optimism about Intel’s 14A technology and the potential for success in the future

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• TSMC’s November revenue decline was better than expected, poised for nearly 30% annual revenue growth.
• SK Hynix restructures CIS organization to replicate HBM success model, aiming for improved performance.
• TSMC founder sheds light on reasons behind Samsung and Intel’s setbacks, pointing out core issues. YMTC refutes backdoor listing rumors, facing industry scrutiny; while Samsung explores using discrete LPDDR for AI-driven iPhones and China investigates Nvidia amid US-China chip tensions.

• Gartner, Inc.’s financial performance in the third quarter of 2024 showed resilience amidst a complex economic landscape.
• The company’s contract value grew by 7% year-over-year and revenue figures exceeded expectations, with a total Q3 revenue of $1.5 billion representing a 6% increase on an FX-neutral basis.
• Gartner exhibited robust performance across its business segments, leading to raised guidance for revenue, EBITDA, EPS, and free cash flow for the year 2024.

• Qorvo, Inc. has reported its financial results for the second quarter of fiscal 2025, revealing a mixed performance across its various business segments.
• During the quarter, Qorvo achieved a revenue of $1.047 billion, marking an 18% sequential increase and exceeding their guided midpoint.
• This growth was driven by double-digit increases across all three operating segments: Advanced Connectivity and Sensors Group (ACG), High Performance Analog (HPA), and Connectivity Systems (CSG).

• Revenue grew 10.8% YoY to JPY37.3bn, driven by Overseas Solutions order growth and yen depreciation impact.
• Operating profit decreased 9.7% YoY to JPY634mn due to business liquidation expenses and additional game co-development costs.
• Revenue from animation production increased YoY, but Media Contents faced a loss due to joint game development costs.