In today’s briefing:
- Travelsky (696): Time to Fly
- KOSPI Size Indices – Plenty of Overlap With Other Index Flows
- FXI Rebalance Preview: One Potential Change in September
- Infineon Technologies: Top European Semi Player At A Discount.
- [Bilibili(BILI US, SELL, TP US$12.3)Update]: Still Struggling to Balance Growth and Monetization
- Taiwan Tech Weekly: Japan Semi Restrictions Take Effect; Apple IPhone Volumes; Hon Hai Acquisition
- Pounding the Table on EPAM
- GS AM Consortium/ Kahoot!: Agreed Fair Offer
- Robosense Technology Pre-IPO – The Positives – A Whole Lot of Potential
- Qiniu Pre-IPO – Widening Losses and Dwindling Market Share
Travelsky (696): Time to Fly
- Share price of Travelsky Technology Ltd H (696 HK) is still down YTD as investors are still overly cautious on Chinese travel data.
- YTD operational data shows that the number of flights processed is very close to the pre-COVID era.
- The company announced a profit alert recently, that should help to boost share price.
KOSPI Size Indices – Plenty of Overlap With Other Index Flows
- The review period for the September rebalance of the KOSPI Size Indices started 1 June and will end 31 August. The changes will be implemented at the close 7 September.
- We see 8 migrations from MidCap to LargeCap, 7 migrations from LargeCap to MidCap, 6 new adds to MidCap, and 16 migrations from SmallCap to MidCap.
- Historically, stocks migrating from SmallCap to MidCap have outperformed stocks that are migrating between other categories.
FXI Rebalance Preview: One Potential Change in September
- As of 24 July, there could be one set of changes for the iShares China Large-Cap (FXI) (FXI US) in September.
- There should be less than 1x ADV to buy on ZTE Corp H (763 HK) while there will be nearly 2x ADV to sell on Anhui Conch Cement (914 HK).
- Short interest has been inching higher on ZTE Corp H (763 HK) while it is barely moving on Anhui Conch Cement (914 HK) as the stock trades near its lows.
Infineon Technologies: Top European Semi Player At A Discount.
- Infineon benefits from a strong market position in an industry with high barriers to entry.
- The Company’s backlog of €36bn, representing over 2x annual revenues, reduces the impact of end-market volatility.
- Silicon carbide, the material for semiconductor wafers, is becoming more prevalent. Infineon is well on track to have a material cost advantage and better technology versus its silicon carbide competitors.
[Bilibili(BILI US, SELL, TP US$12.3)Update]: Still Struggling to Balance Growth and Monetization
- We were invited to BILI’s 2023 investor day, during which BILI management presented several catalysts.
- However, most of these catalysts appear to be minor. BILI management is fully aware of the challenges in the industry.
- We maintain a SELL rating, and investors may consider shorting BILI after <Uma Musume> is launched.
Taiwan Tech Weekly: Japan Semi Restrictions Take Effect; Apple IPhone Volumes; Hon Hai Acquisition
- Japan’s semiconductor technology export restrictions took effect on Sunday and are unlikely to ease for China any time soon.
- Apple is reportedly telling suppliers that its flagship iPhone volumes will be similar to last year.
- Hon Hai acquires 50% stake in German auto chassis maker, marking a significant expansion in its EV manufacturing efforts.
Pounding the Table on EPAM
- As most AI heavyweight stocks (e.g. Nvidia, Microsoft) have already soared, some investors may be left feeling that they have missed the AI bandwagon.
- We believe there’s a delayed “AI winner” which the market is still sleeping on: EPAM Systems.
- With the stock back at ~$230, the risk-reward here is highly attractive in our view.
GS AM Consortium/ Kahoot!: Agreed Fair Offer
- Kahoot! ASA (KAHOOT NO) saw better times on the stock market during the pandemic. To revive fortunes, GS AM has enlisted top shareholders and offers NOK 35/share “best and final” price.
- This represents 29.1x EV/Fwd NTM EBITDA, 3.3% FCF yield. I believe the offer price is fair. Interloper risk seems low: a competing bid should come above NOK 38.5, surely overpaying.
- Spread is 0.74%/2.15% (gross/annualised, assuming settlement by 30 November). With better opportunities elsewhere, I would wait for the share price to come under NOK 34.5 to open a position.
Robosense Technology Pre-IPO – The Positives – A Whole Lot of Potential
- Robosense Technology (ROBO HK) (RT) is looking to raise around US$400m (estimated) in its upcoming Hong Kong IPO.
- As of Mar 23, it had earned design wins for mass production of LiDAR for 52 vehicles with 21OEMs and Tier 1 suppliers, ranking No. 1 globally, according to CIC.
- In this note, we talk about the positive aspects of the deal.
Qiniu Pre-IPO – Widening Losses and Dwindling Market Share
- Qiniu Limited (1045102D CH) is looking to raise about US$200m in its upcoming Hong Kong IPO.
- Qiniu is an intelligent audiovisual service provider. According to iResearch, the firm is the third largest audiovisual platform as a service (PaaS) provider in China in terms of FY22 revenue.
- Qiniu’s revenue has primarily been driven by its MPaaS segment over the track record period. However, the firm’s losses are still widening while its balance sheet health deteriorates.
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