TMT: Alibaba Group, HUYA Inc, SenseTime Group, Samsung SDI, Intel Corp, Servicenow Inc, Weibo Corp, Mediatek Inc, United Microelectronics Corp, Lite On Technology and more

• Market Research expects that e-commerce will grow 15% and 13% in following two years.
• Big platforms, such as Alibaba and JD.com will still have advantage in the growth.
• The risk is that consumers care significantly more about product brand than platform reputation.

• Tencent is reportedly considering taking Douyu private, potentially in partnership with a PE fund. 
• Given weak earnings and reports of strategic confusion within management this is not entirely surprising. 
• While the news is positive for Douyu we would prefer to look one connection away at the implications for the less troubled Huya.

• SenseTime Group (20 HK) listed just prior to review cutoff and will be eligible for inclusion in the Hang Seng Tech Index (HSTECH INDEX) at the March rebalance.
• We expect SenseTime Group (20 HK) to be added to the index and replace Autohome (2518 HK) at the close of trading on 4 March.
• The real float of SenseTime Group is much lower than what HSIL is likely to use. Expect a BIG squeeze if the stock is added at a higher float.

• The rebalancing cycle of the KODEX Secondary Battery ETF was changed from semi-annual to quarterly. Also, the rebalancing trading takes place for three trading days instead of one trading day.
• This passive impact will be different from the previous rebalancing. LG Energy and SK Innovation will likely experience a significant passive outflow. Then, most small-cap constituents will receive an inflow. 
• Among the top weighting stocks, Samsung SDI and SKIET deserve attention. Sangsin Energy, E&D, and TSI will face exclusion, while C&I, Sang-A Frontec, and Enchem will likely join the ETF.

• Intel is promising is that it will advance five process nodes over the next four years, recapturing process leadership from TSMC by 2025, but significantly underspending TSMC in capex.
• Overearning in datacenter is unwinding, leading to lower profits…overearning in PCs will unwind in 2022, leading to lower profits.
• Lower profits and higher capex means less buybacks to support earnings growth. 

• Blowout 4Q21 results headlined by (adjusted) 38% subscription billings growth – unbelievable for a company this size. 
• Generated a Rule of 75 Quarter (29% revenue growth + 46% FCF margins)
• Multi-Module adoption continues to ramp, large deal sizes continue to ramp. At 12x forward revenues…incredible entry point.

• News reported that Alibaba is in talks with Shanghai Media Group to sell its 30% stake in Weibo Corp (WB US), which we have expected since Weibo’s Hong Kong listing.
• Since 2013, Alibaba has started to invest in Weibo before its NASDAQ IPO and continued to increase the holdings. Alibaba remains a strategic partner with Weibo on platform advertisement.
• We view the potential transaction net positive for Weibo Corp (WB US) as it will realign Weibo strategic direction and Alibaba impact will be minimized. Weibo valuation is also attractive.

• MediaTek’s 4Q21/1Q22 revenue/GM is NT$128.65bn/49.6% and NT$136.35bn(+/-5.15bn)/49.5%(+/-1.5%) resp. Our previous estimate of 4Q21 is in short of NT$1.05bn/2.1% resp., and 1Q22 revenue/GM is at the low limit of guidance resp.
• MediaTek will keep leading in the smartphone area, including 4G/5G for ~700mn in 2022. The 5G penetration rate will be from 35-40% in 2021 to be 50% in 2022.
• Dividend payout ratio will be 80~85%, and it will be NT$72~76 for 2021. It will be a NT$16 of the special dividend in the coming 4 years.

100% capacity utilization rate; reiterate BUY with TP of NTD74. UMC’s growth momentum may come from 5G, IoT and EV in FY22. In particular, higher shipments of PMIC, transceiver/switch and OLED driver IC and demand for more sensors and controllers in multi-lens handset may boost UMC’s sales. UMC revised up FY22 foundry growth to +20% YoY. FY22 EPS is estimated at NTD6.03. Due to UMC’s 100% capacity utilization rate and higher ASP/earnings, we reiterate BUY with TP of NTD74.

Revenue/earnings momentum may decelerate in the short run; adjust from BUY to TRADING BUY. Catalyzed by growth in core businesses, Lite-On’s overall operations have improved. The company has significantly improved its profitability despite flat revenue in FY21. However, considering the lack of revenue/earnings momentum, we adjust Lite-On from BUY to TRADING BUY with TP of NT70 (11x FY22 EPS estimate).