Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>The index constituent weights of the TWSE Div+ Index will be capped during the upcoming March 2023 Index quarterly index review. </li>
<li>Previously, it looked like there were going to be no flows. However, now my expectations have changed, as of Monday's close (they weren't going to change as of Friday).</li>
<li>In this insight, we take a look at Quiddity's expectations for index flows resulting from these events. </li>
</ul>


The index constituent weights of the TWSE Div+ Index will be capped during the upcoming March 2023 Index quarterly index review. 
Previously, it looked like there were going to be no flows. However, now my expectations have changed, as of Monday's close (they weren't going to change as of Friday).
In this insight, we take a look at Quiddity's expectations for index flows resulting from these events. 


Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (TSM US)

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>Berkshire's TSMC U-Turn. Berkshire's TSMC stake was sold down by 86.2% just months after acquiring it. One had to wonder what the about-face on the investment was based on.</li>
<li>Applied Materials results well received by the market, however provided some caveates in terms of how fast the Memory chip industry recovery will come. (Readthrough: Nanya Tech, Micron, SK hynix)</li>
<li>TSMC believes that the automotive chip crunch is now easing, which should be good news for the auto industry, especially EV.</li>
</ul>


Berkshire's TSMC U-Turn. Berkshire's TSMC stake was sold down by 86.2% just months after acquiring it. One had to wonder what the about-face on the investment was based on.
Applied Materials results well received by the market, however provided some caveates in terms of how fast the Memory chip industry recovery will come. (Readthrough: Nanya Tech, Micron, SK hynix)
TSMC believes that the automotive chip crunch is now easing, which should be good news for the auto industry, especially EV.


Taiwan Tech Weekly: AMAT Results Imply Longer Memory Weakness, Berkshire's U-Turn on TSMC

<ul>
<li>Intel reported weak results at the end of last week, with its PC segment hit worst.</li>
<li>PC total addressable market to fall by 7.5% based on Intel's guidance.</li>
<li>Asus and Acer inventory levels show the problem impacting Intel, and for the industry as a whole right now.</li>
</ul>


Intel reported weak results at the end of last week, with its PC segment hit worst.
PC total addressable market to fall by 7.5% based on Intel's guidance.
Asus and Acer inventory levels show the problem impacting Intel, and for the industry as a whole right now.


Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E

<ul>
<li>Apple shares have fallen recently, nearing 52-week lows as analysts have been cutting share targets on China production uncertainty and weak consumer end-market demand.</li>
<li>Key Apple suppliers Quanta and Pegatron, in particular, appear to have not yet reacted to the declining market sentiment towards Apple.</li>
<li>Investors can consider Shorting Quanta and Pegatron vs. a Long position in Apple. We see limited potential for positive news flow for the stocks through January.</li>
</ul>


Apple shares have fallen recently, nearing 52-week lows as analysts have been cutting share targets on China production uncertainty and weak consumer end-market demand.
Key Apple suppliers Quanta and Pegatron, in particular, appear to have not yet reacted to the declining market sentiment towards Apple.
Investors can consider Shorting Quanta and Pegatron vs. a Long position in Apple. We see limited potential for positive news flow for the stocks through January.


Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?

<ul>
<li>We believe Elan Microelectronics has capacity for share buybacks in 2023E, and that it could be in shareholder interests.</li>
<li>Even in the coming 2023E down-year, we believe the company could generate over NT$1.7bn in EBITDA. Its balance sheet will remain net-cash.</li>
<li>The company is in a strong position as a leader in touch screens, touch pads, and fingerprint sensors. Intel's upcoming January webinar could provide clarity on the industry cycle.</li>
</ul>


We believe Elan Microelectronics has capacity for share buybacks in 2023E, and that it could be in shareholder interests.
Even in the coming 2023E down-year, we believe the company could generate over NT$1.7bn in EBITDA. Its balance sheet will remain net-cash.
The company is in a strong position as a leader in touch screens, touch pads, and fingerprint sensors. Intel's upcoming January webinar could provide clarity on the industry cycle.


Elan Microelectronics: Capacity for Share Buybacks in 2023E, Intel Event Could Provide Cycle Clarity

Taiwan

Elan Microelectronics Corp. designs, manufactures, and markets integrated circuits (ICs).  The Company's product lines include telecom line, consumer electronic line, microcontroller line, personal computer (PC) peripheral line, and memory line.

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Elan Microelectronics (2458 TT)

Quiddity TWSE Div+ Capping Flows March 2023: Final Minute Changes to Expectations

I expect 27 names to experience positive index flows and 23 names to experience negative index flows. I expect the one-wat flow size to be around...

Janaghan Jeyakumar, CFA

Taiwan Tech Weekly: AMAT Results Imply Longer Memory Weakness, Berkshire's U-Turn on TSMC

Applied Materials results well received by the market, however provided some caveates in terms of how fast the Memory chip industry recovery will...

Vincent Fernando, CFA

Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E

Intel has said that sales are well below real demand since industry PC inventories are being slashed right now. Asus and Acer inventory levels show...

Vincent Fernando, CFA

Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?

Apple shares have fallen most recently, nearing 52-week lows as analysts have been cutting share targets on China production uncertainty.

Vincent Fernando, CFA

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