Daily Brief TMT/Internet: Venture Corp, Taiwan Semiconductor (TSMC) - ADR, AvidXchange Holdings and more

In today’s briefing:

Venture Corporation – A Dialogue from the Past Might Give Some Insight on the Future
TSMC Analyst Call Take-Aways: Signs of Industry Stabilization & 2H23E Recovery
AvidXchange: How Mid-Market Can Save Money. Attractive Valuation and Low-Risk Entry Point

Venture Corporation – A Dialogue from the Past Might Give Some Insight on the Future

After a gap of over fifteen years from formal coverage of Venture Corp (VMS SP), I took a look again this week, not much seems to have changed.
Venture Corp’s management hankering for “charm” in its contracts, with respect to NOT just return on investment but also return on effort will be the primary risk for growth
Excellent anchor customers have boosted margins. The tech slowdown might entice larger EMS to be more aggressive and chase these businesses placing margins at risk.

TSMC’s comments during its 4Q22 analyst call indicate the company expects an industry recovery in 2H23E, adding further confirmation to this view expressed by other firms.
TSMC grew faster than the industry in 2022 and expects to grow faster than the industry in 2023E again.
Based on our cycle-adjusted PE valuation metric, TSMC my not be super cheap vs. history, but it is also inexpensive.

AvidXchange is one of the leading providers of AP automation software and payment solutions for mid-market businesses and their suppliers. The company was founded in 2000 in the United States.
With a large $20B+ TAM and valuation at ~5x FY23 revenue estimate of $392M – significantly below the average for software and payment peers – we believe shares are undervalued.
Management raised the FY22 revenue outlook and expected a strong FY23. AvidXchange is two years from GAAP profitability, likely making the stock volatile in the coming years.

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