Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: OFAC's Longer List, TOPIX Free Float, PCCW, Jardines, Toa, Guoco, Sansan

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<p><em>This week in StubWorld ...</em></p>
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<a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a> outperforms as global carmakers face a chip shortage;</li>
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<a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a> increases its questionable stake in <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a>; and</li>
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<a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>'s ramps up its buybacks.</li>
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<p>Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...




Tokyo Electron (8035 JP) outperforms as global carmakers face a chip shortage;

Gulf Energy Development Public Company (GULF TB) increases its questionable stake in Intouch Holdings (INTUCH TB); and

Jardine Matheson Holdings (JM SP)'s ramps up its buybacks.




Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: TBS/Tokyo Electron, Intouch/Gulf, Jardines' Buybacks

Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p>The rapid growth of remote work and home entertainment caused by COVID-19, 5G mobile telecom, the industrial internet of things and vehicle electrification have pushed the semiconductor industry close to full capacity.</p><ul>
<li>In recent weeks, Volkswagen, Bosch, Continental, Toyota, Nissan, Honda, Subaru, VW, Ford and Fiat Chrysler have announced production cuts or shipment delays due to a shortage of semiconductors. </li>
<li>In December, Nvidia and AMD reported shortages of GDDR6 memory.</li>
<li>Samsung may invest more than $30 billion in its semiconductor business this year. On January 9, Japan's Nikkei newspaper reported that <em>Chipmaking equipment manufacturers say the company has provided order plans for 2021 that point to a further 20% to 30% increase in spending.</em>
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</ul><p>This should support semiconductor pricing, cash flow and capital spending, possibly lifting sales of semiconductor equipment above SEMI's 4.4% growth forecast for 2021. It should also make concerns over December quarter results less relevant as market attention shifts to the year ahead.</p><p>Investors in Tokyo Electron (TEL) and other makers of semiconductor production, assembly and test equipment should benefit, even if the shares appear to be overbought.</p><p>TEL's 1H results were well ahead of guidance and full-year FY Mar-21 guidance was raised. But the new guidance implies a weaker 2H. In our estimation, it too is likely to prove conservative. </p>

The rapid growth of remote work and home entertainment caused by COVID-19, 5G mobile telecom, the industrial internet of things and vehicle electrification have pushed the semiconductor industry close to full capacity.
In recent weeks, Volkswagen, Bosch, Continental, Toyota, Nissan, Honda, Subaru, VW, Ford and Fiat Chrysler have announced production cuts or shipment delays due to a shortage of semiconductors. 
In December, Nvidia and AMD reported shortages of GDDR6 memory.
Samsung may invest more than $30 billion in its semiconductor business this year. On January 9, Japan's Nikkei newspaper reported that Chipmaking equipment manufacturers say the company has provided order plans for 2021 that point to a further 20% to 30% increase in spending.

This should support semiconductor pricing, cash flow and capital spending, possibly lifting sales of semiconductor equipment above SEMI's 4.4% growth forecast for 2021. It should also make concerns over December quarter results less relevant as market attention shifts to the year ahead.Investors in Tokyo Electron (TEL) and other makers of semiconductor production, assembly and test equipment should benefit, even if the shares appear to be overbought.TEL's 1H results were well ahead of guidance and full-year FY Mar-21 guidance was raised. But the new guidance implies a weaker 2H. In our estimation, it too is likely to prove conservative. 

Tokyo Electron (8035 JP): Semiconductor Shortage Points to Stronger Year Ahead

<p>Advantest enters the new year with its share price back to its pre-Lehman Shock high, but lagging Tokyo Electron and other high-flying Japanese semiconductor production equipment (SPE) stocks.</p><p>But orders, sales and profits turned up in 2Q of FY Mar-21 and the medium-to-long-term outlook for both memory and system-on-chip (SoC) test requirements is favorable.</p><p>5G is likely to add about 10% to SoC test demand over the next 2-3 years. Smart-phone complexity, high-performance computing, data traffic, memory and storage requirements, and industrial applications are the underlying drivers of test system demand.</p><div><p>Sales should rise by about 25% and operating profit by nearly 40% in the two and a half years to Mar-23, in our estimation, with operating and net profits regaining and then exceeding the peaks recorded in FY Mar-19 despite substantial investments in new technology.</p></div><p>Valuations have risen, but not radically so, and Japan Analytics calculations indicate that the shares are nowhere near being oversold. SPE comparables suggest potential upside of 30% to ¥10,000-plus. </p><p>The primary threats to Advantest's prospects are macro-economic and political, in our opinion. Risk to the important China market should decline with the departure of Donald Trump. </p><div><div><div><div></div></div></div></div><div><div></div></div>

Advantest enters the new year with its share price back to its pre-Lehman Shock high, but lagging Tokyo Electron and other high-flying Japanese semiconductor production equipment (SPE) stocks.But orders, sales and profits turned up in 2Q of FY Mar-21 and the medium-to-long-term outlook for both memory and system-on-chip (SoC) test requirements is favorable.5G is likely to add about 10% to SoC test demand over the next 2-3 years. Smart-phone complexity, high-performance computing, data traffic, memory and storage requirements, and industrial applications are the underlying drivers of test system demand.Sales should rise by about 25% and operating profit by nearly 40% in the two and a half years to Mar-23, in our estimation, with operating and net profits regaining and then exceeding the peaks recorded in FY Mar-19 despite substantial investments in new technology.Valuations have risen, but not radically so, and Japan Analytics calculations indicate that the shares are nowhere near being oversold. SPE comparables suggest potential upside of 30% to ¥10,000-plus. The primary threats to Advantest's prospects are macro-economic and political, in our opinion. Risk to the important China market should decline with the departure of Donald Trump. 

Advantest (6857 JP): 5G Keeps the Ball Rolling

Founder/CEO of ROK Advisory, ROK Advisory LLC

Ken S. Kim

Founder/CEO of ROK Advisory

ROK Advisory LLC

ROK is an independent research advisory firm. We guide you to minimize the information gap between foreign and local investors in Northeast Asia with a focus in Korea, Taiwan and Japan.

Independent Research Advisory Firm

Thematic (Sector/Industry)

<p>There has been talks that Sammy capital expenditure ("capex) will be lower vs. their original guide due to an equipment manufacturers conservative guidance due to uncertainty in 2H21.   Is <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a> cutting up to 20% of their original capital expenditure guidance or is there something else to this? The latter in my view. </p>

There has been talks that Sammy capital expenditure ("capex) will be lower vs. their original guide due to an equipment manufacturers conservative guidance due to uncertainty in 2H21.   Is Samsung Electronics (005930 KS) cutting up to 20% of their original capital expenditure guidance or is there something else to this? The latter in my view. 

Is Samsung Electronics Cutting 2021 Capex with Its New Leadership Change?

Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

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Tokyo Electron (8035 JP)

Last Week in Event SPACE: OFAC's Longer List, TOPIX Free Float, PCCW, Jardines, Toa, Guoco, Sansan

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

StubWorld: TBS/Tokyo Electron, Intouch/Gulf, Jardines' Buybacks

Tokyo Electron (8035 JP) outperforms as global carmakers face a chip shortage; Gulf Energy increases its questionable stake in Intouch; and Jardine...

David Blennerhassett