Daily Brief TMT/Internet: Vertex Technology Acquisition Corporation, Samsung Electronics Pref Shares, Micron Technology, Hewlett Packard Enterprise , AAC Technologies Holdings, Hewlett Packard Co, IAC and more

• Temasek-Backed Vertex Technology Acquisition Corporation (VTAC SP), the first of three SPACs (so far) to list on the SGX, has announced a transaction to buy Taiwanese live-streaming platform, 17Live.  
• Assuming the deal completes, potentially by year-end, the merged entity would be valued at ~S$1.16bn.
• All independent shareholders are entitled to redemption rights. That is, you’ll get ~$5 back if redeeming against $4.96/share now. But liquidity is not great. Plus this appears a related-party transaction.

• Vertex Technology Acquisition Corporation (VTAC SP) agreed to a De-SPAC transaction with 17LIVE, the top pure-play live streaming platform (by revenue) in Japan and Taiwan combined.
• Industry data and the financials suggest that 17LIVE does not have a sustainable competitive advantage to translate its position into high earnings quality. 
• The purchase consideration of 17LIVE in the De-SPAC transaction is S$925.1 million (US$682.2 million). Our valuation analysis suggests that this consideration is full.

• In this insight, we discuss numerous gap trades involving Korean preferred and common shares in 4Q 2023. Typically, fourth quarter is when pref stocks are emphasized the most in Korea.
• The excessive gaps in the preferred and common shares of Samsung Electronics (005930 KS), Hotel Shilla (008770 KS), and Amorepacific Corp (090430 KS) could reverse in the next several months.
• We see some attractive longer-term opportunities for Amorepacific, Doosan Fuel Cell, LG Electronics, and Hyundai Motor which have especially high discounts for the preferred shares versus their counterpart common shares.

• Micron has Outperperformed Nanya Tech & Hynix since our pre-earnings trade. Micron’s valuation has reverted vs. Nanya’s.
• Nanya Tech has recently reported a 15% YoY drop in its latest monthly revenue. Micron just had a US$1.3bn subsidy approved by the Japanese government.
• We are now agnostic on the upcoming relative performance between the three Memory names Micron, Nanya Tech, and SK Hynix. Nanya will report its results on October 11th.

• Hewlett Packard Enterprise Company delivered a positive result and managed an all-around beat last quarter.
• HPE produced significant free cash flow while increasing its revenue, gross margin, as well as earnings per share year over year.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• Despite a challenging market environment, HP increased net revenue, non-GAAP EPS, non-GAAP operating profit, and free cash flow quarter over quarter.
• With $13.2 billion in net revenue, the company’s annualized revenue was down 10% or 7% in constant currency.
• Despite not being immune to the end market concerns, these businesses combined produced strong sequential growth in the quarter.

• IAC/InterActiveCorp delivered a disappointing set of results as it could not meet the revenue and earnings expectations of Wall Street.
• The company experienced 1% growth in the digital space in June, driven largely by effective performance marketing, and it maintained sessions and traffic across the board for the entire month.
• IAC is pleased with the location of such assets in the migration and growth plans.