TMT: Tencent, Amplitude, SK Hynix, Freshworks, Inari Amertron and more

• The US Trade Representative (“USTR”) office added Tencent and Alibaba Group to the US government’s latest “notorious markets” list; 
• Similar to being implicated in running afoul of regulators in mainland China, Tencent “strongly disagrees” with the USTR label; and
• *We look forward to Tencent’s 4Q21 results announcement on March 23, 2021 where management will continue to refuse to discuss anything meaningful.

• This year the market presents investors with opportunities, especially in the technology sector, and we believe VC-backed Amplitude is one of them. 
• The market cap of the leading product and data analytics unicorn fell to ~$2.3B, keeping in mind last private round valuation was ~$4B in June of 2021. 
• $21 valuation, based on ~10x 2022E EV/Revenue and ~8x 2023E EV/Revenue, applies to our bear case revenue estimates of $226M in CY22 and $287M in CY23.

• SK Hynix has lost slight market share in DRAM, but gained significantly in NAND to become a strong #2 contender
• Revenue growth expectations seem conservative given Intel consolidation, market growth expectations, and the current pricing environment
• The company is still trading at discount valuation multiples despite improved market positioning and medium-term dividend clarity

• We are moving our PT to $26 by applying a 14x multiple to CY22 revenue estimate of $491M, which we believe is fair given lower implied CY22 growth. 
• Freshworks has resolved the litigation filed by Zoho Corporation regarding trade secret misappropriation against Freshworks, eliminating key risk factor for investors.
• Freshworks crossed the $400M ARR mark in the quarter ended Dec-21, and quarterly revenue exceeded $100M for the first time. 

• Results above expectations; maintain BUY
• 2QFY22 results takeaways
• Revised earnings estimates for FY22-24
• China to be the next growth driver?

2QFY22 core NP of MYR113m was above expectations, as 1HFY22 core NP of MYR226m came in at 56%/58% of our/the street’s FY22E estimates. We have raised our FY22-24E earnings assumptions by 17%/23%/24%, but lower our valuation peg to 35x FY23E PER, at +1.5SD to the LT mean (from 44x at +2.5SD), to account for the accelerated inflation-induced rate increase cycle. Imputing for both, our TP is nudged marginally higher to MYR4.77 (+1%). Inari remains our top OSAT pick, underpinned by its RF division’s strength/robust volume loading and the potential onboarding of new customers