Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Thematic (Sector/Industry)

<ul><li>Welcome to this week’s earnings. My spark notes are the NXPI and IFX did better than I feared, but I continue to be unconstructive on automotive.</li><li>Fabrinet and Coherent both achieved good results, but Fabrinet disappointed expectations for Nvidia's pluggable revenue. Is this a weak read-through? Unlikely. Marvell should have an amazing year if Coherent’s TAM is remotely correct.</li><li>MKSI put up the exact results I was looking for, and this continues to be my favorite idea. As WFE increases, inventory builds will happen, and then financial and operational leverage will take care of the rest.</li></ul>

Welcome to this week’s earnings. My spark notes are the NXPI and IFX did better than I feared, but I continue to be unconstructive on automotive.Fabrinet and Coherent both achieved good results, but Fabrinet disappointed expectations for Nvidia's pluggable revenue. Is this a weak read-through? Unlikely. Marvell should have an amazing year if Coherent’s TAM is remotely correct.MKSI put up the exact results I was looking for, and this continues to be my favorite idea. As WFE increases, inventory builds will happen, and then financial and operational leverage will take care of the rest.

Automotive (NXPI, IFX) Optics (FN, COHR), MKSI, MPWR, ACLS, SLAB, RMBS, ARM

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>If we consider 2023 as a banner year for AI technology, 2024 is set to be another solid year for both infrastructure investments and downstream demand continue to thrive.</li><li>We reaffirm our positive stance on optical transceiver players, specifically in light of their ongoing capacity expansion and production ramp-up of the high data rate optical modules, e.g., 400G/800G products.</li><li>Among those players we favor Innolight (300308 CH, BUY) and TFC (300394 CH, NR), both of which have leveraged the AI wave effectively through 2023 and stayed on strong trajectory into 2024. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

If we consider 2023 as a banner year for AI technology, 2024 is set to be another solid year for both infrastructure investments and downstream demand continue to thrive.We reaffirm our positive stance on optical transceiver players, specifically in light of their ongoing capacity expansion and production ramp-up of the high data rate optical modules, e.g., 400G/800G products.Among those players we favor Innolight (300308 CH, BUY) and TFC (300394 CH, NR), both of which have leveraged the AI wave effectively through 2023 and stayed on strong trajectory into 2024. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Semi – Market Outlook on Optical Transceivers

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>This is our first report on Fabrinet, a leading provider of advanced manufacturing services.</li><li>The company reported new quarterly records for both revenue and earnings per share (EPS), while free cash flow also hit a new quarterly high.</li><li>Furthermore, this strong revenue growth contributed to record non-GAAP net income of $2 per share.</li></ul>

This is our first report on Fabrinet, a leading provider of advanced manufacturing services.The company reported new quarterly records for both revenue and earnings per share (EPS), while free cash flow also hit a new quarterly high.Furthermore, this strong revenue growth contributed to record non-GAAP net income of $2 per share.

Fabrinet: Initiation of Coverage - Revolution in Optics: Can They Dominate The AI Interconnect Market?  – Major Drivers

<ul><li>Nvidia released FY3Q24 results with quarterly revenue at US$18.1bn, up 34% QoQ and 206% YoY. GPM was 74.0%, up 3.9ppts QoQ.</li><li>Net profit was US$9.2bn, up 50% QoQ and 1,274% YoY.</li><li>According to the company’s guidance, 4Q24 revenue is expected to reach US$20bn (+/-2%), implying 10% QoQ and 231% YoY growth; GAAP GPM is expected to increase to 74.5% (+/- 50bps). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Nvidia released FY3Q24 results with quarterly revenue at US$18.1bn, up 34% QoQ and 206% YoY. GPM was 74.0%, up 3.9ppts QoQ.Net profit was US$9.2bn, up 50% QoQ and 1,274% YoY.According to the company’s guidance, 4Q24 revenue is expected to reach US$20bn (+/-2%), implying 10% QoQ and 231% YoY growth; GAAP GPM is expected to increase to 74.5% (+/- 50bps). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

<ul><li>Microsoft unveiled two major custom-designed chips for cloud computing at its Ignite developer conference on 15 Nov 2023, Maia 100 AI accelerator and Cobalt 100 CPU.</li><li>Maia 100 was specifically designed with consideration of Azure hardware. It will be mainly used for AI tasks and generative AI for maximized utilization of hardware.</li><li>It will power some of Microsoft’s largest internal AI workloads running on Azure. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Microsoft unveiled two major custom-designed chips for cloud computing at its Ignite developer conference on 15 Nov 2023, Maia 100 AI accelerator and Cobalt 100 CPU.Maia 100 was specifically designed with consideration of Azure hardware. It will be mainly used for AI tasks and generative AI for maximized utilization of hardware.It will power some of Microsoft’s largest internal AI workloads running on Azure. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Thailand

Fabrinet offers outsourced process engineering and manufacturing services.  The Company contracts to manufacture optical communications, automotive, industrial, and imaging components, sub-assemblies, and modules for its original equipment manufacturer customers.

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Fabrinet (FN US)

Automotive (NXPI, IFX) Optics (FN, COHR), MKSI, MPWR, ACLS, SLAB, RMBS, ARM

Welcome to this week’s earnings. My spark notes are the NXPI and IFX did better than I feared, but I continue to be unconstructive on automotive...

Fabricated Knowledge

Semi – Market Outlook on Optical Transceivers

If we consider 2023 as a banner year for AI technology, 2024 is set to be another solid year for both infrastructure investments and downstream...

CMB International

Fabrinet: Initiation of Coverage - Revolution in Optics: Can They Dominate The AI Interconnect Market? – Major Drivers

This is our first report on Fabrinet, a leading provider of advanced manufacturing services. The company reported new quarterly records for both...

Baptista Research

Technology (Hardware/Semi) - 23 Nov 2023

Nvidia released FY3Q24 results with quarterly revenue at US$18.1bn, up 34% QoQ and 206% YoY. GPM was 74.0%, up 3.9ppts QoQ. Net profit was...

CMB International

Technology (Hardware/Semi)

Microsoft unveiled two major custom-designed chips for cloud computing at its Ignite developer conference on 15 Nov 2023, Maia 100 AI accelerator...

CMB International

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