Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

<h2>What's new?</h2><p>Taiwan Ministry of Finance announced yesterday a new tax reform (starting 2019 calendar year for 2018 income taxes) to cut personal tax ceiling to 40% from 45% but raise the corporate tax rate to 20% from 17% coupled with 50% cut on retained earning taxes to 5% from 10%. For the same reform, cash dividends taxes for domestic investors will be cut substantially but be raised by 1% to 21% for foreign investors. Post our analysis, we conclude the reform is positive</p><p>Post our analysis, we…</p>

What's new?Taiwan Ministry of Finance announced yesterday a new tax reform (starting 2019 calendar year for 2018 income taxes) to cut personal tax ceiling to 40% from 45% but raise the corporate tax rate to 20% from 17% coupled with 50% cut on retained earning taxes to 5% from 10%. For the same reform, cash dividends taxes for domestic investors will be cut substantially but be raised by 1% to 21% for foreign investors. Post our analysis, we conclude the reform is positivePost our analysis, we…

Taiwan Tax Reform: Positive to Domestic Investors but Only Marginal Impact to Corporates' Earnings

Equity Bottom-Up

Advanced Semiconductor Engr / Equity Bottom-Up

<h2>What's new?</h2><p><a href="https://www.smartkarma.com/entities/721" target="_blank" data-smartkarma-citation="entities:721:1">Advanced Semiconductor Engr (2311 TT)</a> 's Chief Operating Officer (COO) Dr. Tien Wu was indicted by Kaohsiung District Prosecutors Office for the alleged violations of the ROC Securities and Exchange Act. According to the Kaohsiung District Prosecutors Office, the indictment is related to the insider trading case before ASE announced the tender offer of <a href="https://www.smartkarma.com/entities/720" target="_blank" data-smartkarma-citation="entities:720:1">Siliconware Precision Inds (2325 TT)</a> outstanding shares. Apart from Dr. Tien Wu, Ms. Chang (Tien's friend), Secretary Wu, and Mr. Lin…</p>

What's new?Advanced Semiconductor Engr (2311 TT) 's Chief Operating Officer (COO) Dr. Tien Wu was indicted by Kaohsiung District Prosecutors Office for the alleged violations of the ROC Securities and Exchange Act. According to the Kaohsiung District Prosecutors Office, the indictment is related to the insider trading case before ASE announced the tender offer of Siliconware Precision Inds (2325 TT) outstanding shares. Apart from Dr. Tien Wu, Ms. Chang (Tien's friend), Secretary Wu, and Mr. Lin…

ASE - COO Dr. Tien Wu Was Indicted for the Insider Trading on SPIL Merger Case; Implications

<h2>What's new?</h2><p>According to Commercial Times today, <a href="https://www.smartkarma.com/entities/666" target="_blank" data-smartkarma-citation="entities:666:1">Apple Inc (AAPL US)</a> asked <a href="https://www.smartkarma.com/entities/9181" target="_blank" data-smartkarma-citation="entities:9181:1">Chunghwa Telecom Co Ltd (2412 TT)</a>, <a href="https://www.smartkarma.com/entities/19488" target="_blank" data-smartkarma-citation="entities:19488:1">Far Eastone Telecomm Co Ltd (4904 TT)</a>, <a href="https://www.smartkarma.com/entities/12128" target="_blank" data-smartkarma-citation="entities:12128:1">Taiwan Mobile Co Ltd (3045 TT)</a> to buy nearly 100,000-200,000 units of iPhone 6 and 6s inventories to secure iPhone 8 shipment quota in early introduction likely shortage period. To clean up this inventory stuffing, operators are cutting iPhone 6 and 6s price to promote. </p><h2>Our takeaways on the news</h2><ul><li>
<strong>Old iPhone stuffing might help 2H17 numbers</strong>: We expect…</li></ul>

What's new?According to Commercial Times today, Apple Inc (AAPL US) asked Chunghwa Telecom Co Ltd (2412 TT), Far Eastone Telecomm Co Ltd (4904 TT), Taiwan Mobile Co Ltd (3045 TT) to buy nearly 100,000-200,000 units of iPhone 6 and 6s inventories to secure iPhone 8 shipment quota in early introduction likely shortage period. To clean up this inventory stuffing, operators are cutting iPhone 6 and 6s price to promote. Our takeaways on the news
Old iPhone stuffing might help 2H17 numbers: We expect…

Apple Asks Operators to Take IPhone 6/6s Inventories to Secure IPhone 8 Quota

<h2><strong>Summary</strong></h2><ul>
<li><em><strong><strong>Need another property disposal gain to window dressing 3Q17: </strong></strong>By removing 2Q's property disposal gain, ASE could only deliver NT$0.44 EPS for 2Q17, falling short of Bloomberg's NT$0.57. ASE is guiding below seasonal 3Q sales growth of 12% q/q at a GM of 18%, which is 2% below Bloomberg consensus' sales estimates and 1-2ppts miss on margin. We thus expect analysts to cut their 3Q17 EPS estimates to NT$0.6 level from NT$0.85 now.</em></li>
<li>
<em><strong>ASE in fan out? </strong>The current fan-out capacity is about 15,000</em>…</li>
</ul>

Summary
Need another property disposal gain to window dressing 3Q17: By removing 2Q's property disposal gain, ASE could only deliver NT$0.44 EPS for 2Q17, falling short of Bloomberg's NT$0.57. ASE is guiding below seasonal 3Q sales growth of 12% q/q at a GM of 18%, which is 2% below Bloomberg consensus' sales estimates and 1-2ppts miss on margin. We thus expect analysts to cut their 3Q17 EPS estimates to NT$0.6 level from NT$0.85 now.

ASE in fan out? The current fan-out capacity is about 15,000…


ASE Might Need Another Disposal Gain to Window Dressing 3Q17; SPIL Consolidation Is Still Unknown

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI AC Asia Pacific Excluding Japan Index / Technical Analysis

MSCI AC Asia Pacific Excluding Japan Index

<p>As all eyes are focused on Europe—the current darling trade—Asia is emerging as a technical leader. The MSCI All-Country Asia Index (below) is breaking out from a two-year base. Relative strength (vs. MSCI ACWI ex-US) depicts a similar pattern; after lagging since mid-2015, its RS trend has slowly rounded higher, resulting in the recent breakout. Combined, this warrants an overweight.</p><p>Today’s report is a country by country review of leadership and actionable themes within the region, including stock recommendations.</p>

As all eyes are focused on Europe—the current darling trade—Asia is emerging as a technical leader. The MSCI All-Country Asia Index (below) is breaking out from a two-year base. Relative strength (vs. MSCI ACWI ex-US) depicts a similar pattern; after lagging since mid-2015, its RS trend has slowly rounded higher, resulting in the recent breakout. Combined, this warrants an overweight.Today’s report is a country by country review of leadership and actionable themes within the region, including stock recommendations.

Taiwan

Advanced Semiconductor Engineering Inc. manufactures and markets integrated circuit products. The Company produces thermally enhanced packages, high frequency packages, flip chip packages, and other products. Advanced Semiconductor Engineering markets its products in Asia, America, Europe, and other regions.

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Advanced Semiconductor Engr (2311 TT)

Taiwan Tax Reform: Positive to Domestic Investors but Only Marginal Impact to Corporates' Earnings

What's new?Taiwan Ministry of Finance announced yesterday a new tax reform (starting 2019 calendar year for 2018 income taxes) to cut personal tax...

Andrew Lu

ASE - COO Dr. Tien Wu Was Indicted for the Insider Trading on SPIL Merger Case; Implications

What's new?Advanced Semiconductor Engr (2311 TT) 's Chief Operating Officer (COO) Dr. Tien Wu was indicted by Kaohsiung District Prosecutors Office...

Andrew Lu

Apple Asks Operators to Take IPhone 6/6s Inventories to Secure IPhone 8 Quota

What's new?According to Commercial Times today, Apple Inc (AAPL US) asked Chunghwa Telecom Co Ltd (2412 TT), Far Eastone Telecomm Co Ltd (4904 TT),...

Andrew Lu

ASE Might Need Another Disposal Gain to Window Dressing 3Q17; SPIL Consolidation Is Still Unknown

Summary Need another property disposal gain to window dressing 3Q17: By removing 2Q's property disposal gain, ASE could only deliver NT$0.44 EPS...

Andrew Lu

Asia: Developing Leadership

As all eyes are focused on Europe—the current darling trade—Asia is emerging as a technical leader. The MSCI All-Country Asia Index (below) is...

Vermilion Research

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