TMT: Kakao Pay, WT Microelectronics, Mindtree Ltd, Apple Inc, Gogo Inc, Amkor Technology and more

• Kakao Pay’s six months end of the lock-up period comes up on 3 May, which could further put negative pressure on its share price. 
• Other factors including heightened competition, lack of margin improvement in 2021, and lifting nearly all social distancing measures in Korea are likely to further negatively impact Kakao Pay. 
• We expect additional 20 to 30%+ downside risk for Kakao Pay from current levels over the next 6-12 months. 

• WT Microelectronics (3036 TT) is looking to raise approximately US$190m in its Primary GDS offering to repay foreign currency denominated debt and for procuring raw materials in foreign currencies. 
• While we can’t explicitly state that the deal is well-flagged, the firm has seen its gearing ratio increase and CFO was negative in its latest financial year.
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• On Monday, Bloomberg reported that Larsen & Toubro (LT IN) was planning a merger between its public-listed subsidiaries Mindtree Ltd (MTCL IN) and Larsen & Toubro Infotech (LTI IN). 
• The companies have responded by saying that the news reports of a merger between MINDTREE and LTI are “speculative in nature“.
• Below is a closer look at the likelihood of this Deal and the valuations of the two companies involved in this event.

• The Oakmark Select Fund declined 6% in the first quarter of 2022 compared to a 5% decline in the S&P 500.
• The Oakmarks Select Fund is based on a disciplined quantitative and qualitative screening process, according to the company’s research process.

• This model seeks short-sale candidates among companies that use aggressive accounting and/or exhibit deteriorating quality of earnings.  
• They are typically highly idiosyncratic shorts and require thoughtful analyses of upcoming catalysts.  When the company’s issues become well-known, there is often multiple compression as well as a rerating.
• These shorts can have high or low betas, valuations based on artificial earnings and exhibit good short responses to subsequently disappointing earnings.

• Amkor Technology manufactures and sells advanced semiconductor equipment.
• They make semiconductor packaging and test services for leading semiconductor companies such as Intel, Samsung, AMD, and etc
• The overall semiconductor industry has been growing, and Amkor’s revenue has been growing nicely as well.

• Mindtree reported strong revenue growth of 5.4% QoQ and stood at Rs 2,897 Cr in Q4FY22, reporting revenue growth of 49.1% YoY.
• The company posted operating profits of Rs 608 Cr, registering a growth of 2.7% QoQ, demonstrating the company’s superior execution and better service mix
• We recommend a BUY on the stock and assign 35x P/E multiple to its FY24E earnings of Rs 135.8/share to arrive at a TP of Rs 4,830/share, implying an upside potential of 22% from CMP.

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