Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

<ul>
<li>We think the chance for GlobalWafers mergence case to have the final approval could be high. Even if it finally failed, the raw wafer supply should be full until 2024.</li>
<li>This deal was granted by seven governments and organizations already. And it is still under review of Chinese and Japanese governments.</li>
<li>The deal will not change the worldwide raw wafer supply status, especially such supply tightness. To our understanding, the secrets to achieve success are cost reduction and resource management mostly.</li>
</ul>


We think the chance for GlobalWafers mergence case to have the final approval could be high. Even if it finally failed, the raw wafer supply should be full until 2024.
This deal was granted by seven governments and organizations already. And it is still under review of Chinese and Japanese governments.
The deal will not change the worldwide raw wafer supply status, especially such supply tightness. To our understanding, the secrets to achieve success are cost reduction and resource management mostly.


Globalwafers (6488.TT): Stock Price Can Go Higher Even If Siltronic Mergence Case Failed

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>Both Siltronic and Globalwafers expected the transaction to be completed in H2 2021, which has not yet happened. The closing remains subject to receipt of further regulatory approvals.</li>
<li>The deal has to be renegotiated if China and Germany do not approve the deal by 31 January (although Siltronic expects this to happen), in the context of strong growth.</li>
<li>
<strong>Gross spread</strong> at the closing share price on 28 December is <strong>3.1%</strong>. Recommendation is <strong>long WAF GR</strong>. There is the possibility of further upside in case of terms renegotiation.</li>
</ul>


Both Siltronic and Globalwafers expected the transaction to be completed in H2 2021, which has not yet happened. The closing remains subject to receipt of further regulatory approvals.
The deal has to be renegotiated if China and Germany do not approve the deal by 31 January (although Siltronic expects this to happen), in the context of strong growth.

Gross spread at the closing share price on 28 December is 3.1%. Recommendation is long WAF GR. There is the possibility of further upside in case of terms renegotiation.


Globalwafers/Siltronic: Possibility of Terms Renegotiation

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.

<p>Year-on-year sales and profit comparisons turned positive in 2Q of FY Dec-21 and management is guiding for further improvement in 3Q. But the share price has dropped 23% since mid-July,</p><p>Potential reasons for the sell-off include concern over the resurgent pandemic, price competition, an over-heated semiconductor market and plans for new green field investment, which could limit profitability.</p><p>On the plus side, management reports that contract prices are firm, spot prices have started to rise and customer inventory has been declining. Supplies of both 300mm and 200mm silicon wafers remain tight.</p><p>Taking an optimistic view of logic and memory demand over the next few years, we recommend buying into the current weakness.</p>

Year-on-year sales and profit comparisons turned positive in 2Q of FY Dec-21 and management is guiding for further improvement in 3Q. But the share price has dropped 23% since mid-July,Potential reasons for the sell-off include concern over the resurgent pandemic, price competition, an over-heated semiconductor market and plans for new green field investment, which could limit profitability.On the plus side, management reports that contract prices are firm, spot prices have started to rise and customer inventory has been declining. Supplies of both 300mm and 200mm silicon wafers remain tight.Taking an optimistic view of logic and memory demand over the next few years, we recommend buying into the current weakness.

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Sino American Silicon Products / Equity Bottom-Up

<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a> currently has a market cap of 97.3 billion TWD (US$3.5 billion). Sino American Silicon Products has a 51.2% stake in <a href="https://www.smartkarma.com/entities/globalwafers-co-ltd" target="_blank" data-smartkarma-citation="entities:17916:1" rel="noopener">Globalwafers (6488 TT), </a>which has a market cap of 326.4 billion TWD (US$11.7 billion).</p>
<p>SAS's 51.2% stake in Globalwafers is currently worth 168.7 billion TWD (US$6.0 billion). In other words, Sino American Silicon Products' 51.2% stake in Globalwafers is nearly twice as high as the former company's entire market cap right now. </p>
</div><table class="table table-striped">
<colgroup>
<col>
<col>
</colgroup>
<tbody>
<tr><td colspan="2" style="width: 401pt;"><strong>Sino American Silicon Products' 51.2% stake in Globalwafers (Market Cap Comparison)</strong></td></tr>
<tr>
<td></td>
<td style="text-align: center;"><strong>Market Cap (US$ bn)</strong></td>
</tr>
<tr>
<td><strong>Sino American Silicon Products</strong></td>
<td style="text-align: center;"><strong>3.5</strong></td>
</tr>
<tr>
<td>Globalwafers</td>
<td style="text-align: center;">11.7</td>
</tr>
<tr>
<td><strong>Sino American Silicon Products' 51.2% stake in Globalwafers</strong></td>
<td style="text-align: center;"><strong>6.0</strong></td>
</tr>
<tr>
<td>Source: Company data, Yahoo Finance</td>
<td style="text-align: center;"></td>
</tr>
</tbody>
</table><div class="content-highlight"><p><strong>Our NAV analysis suggests a target price of 232 TWD for Sino American Silicon Products, representing a 40% upside from current price. </strong></p></div>


Sino American Silicon Products (5483 TT) currently has a market cap of 97.3 billion TWD (US$3.5 billion). Sino American Silicon Products has a 51.2% stake in Globalwafers (6488 TT), which has a market cap of 326.4 billion TWD (US$11.7 billion).
SAS's 51.2% stake in Globalwafers is currently worth 168.7 billion TWD (US$6.0 billion). In other words, Sino American Silicon Products' 51.2% stake in Globalwafers is nearly twice as high as the former company's entire market cap right now. 






Sino American Silicon Products' 51.2% stake in Globalwafers (Market Cap Comparison)


Market Cap (US$ bn)


Sino American Silicon Products
3.5


Globalwafers
11.7


Sino American Silicon Products' 51.2% stake in Globalwafers
6.0


Source: Company data, Yahoo Finance



Our NAV analysis suggests a target price of 232 TWD for Sino American Silicon Products, representing a 40% upside from current price. 

Sino-American Silicon Products - Its Majority Stake in Globalwafers Is Worth More Than Its Mkt Cap

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p><a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a>  is a Taiwan-based company mainly engaged in the research, development, design, manufacture, and distribution of semiconductor wafer products with subsidiaries in both listed and unlisted companies including <a href="https://www.smartkarma.com/entities/globalwafers-co-ltd" target="_blank" data-smartkarma-citation="entities:17916:1" rel="noopener">Globalwafers (6488 TT)</a> , <a href="https://www.smartkarma.com/entities/parade-technologies-ltd" target="_blank" data-smartkarma-citation="entities:6987:1" rel="noopener">Parade Technologies (4966 TT)</a> , <a href="https://www.smartkarma.com/entities/actron-technology-corp" target="_blank" data-smartkarma-citation="entities:4989:1" rel="noopener">Actron Technology (8255 TT)</a> and <a href="https://www.smartkarma.com/entities/advanced-wireless-semiconduc" target="_blank" data-smartkarma-citation="entities:16559:1" rel="noopener">Advanced Wireless Semiconduc (8086 TT)</a> with only in Globalwafers - SAS owns more than 51%.</p>
<p>The large discount between SAS and its subsidiaries could be due to 1) lack of bulge-bracket coverage, 2) higher polysilicon price 3) and 3) weak 1H demand from the solar and the semiconductor from COVID-19 plague which caused investors to care less about the value dislocation between SAS and its subsidiaries.</p>
<p>With a somewhat certain 28-30% gain in the earning as early Q1 2022, investors should start slowly building positions in SAS as the risk-off beast may disturb the confidence in the equity market much longer than what investors would like. The second scenario of increasing stake in Parade Tech should be treated as a call option as when it happens, it is a bonus of another 24%. Thus the total upside could be around 54%. </p>
<div class="content-highlight">
<p>Besides the above-mentioned reasons, <a href="https://www.smartkarma.com/entities/sino-american-silicon-products-inc" target="_blank" data-smartkarma-citation="entities:3441:1" rel="noopener">Sino American Silicon Products (5483 TT)</a> remains a smart way to gain exposure in Globalwafers which trades at 24x PER, compared to SAS that trades at 13x PER. The other factor is that Globalwafers dividend yield is 2.28% while SAS is 5.22%. </p>
</div>

Sino American Silicon Products (5483 TT)  is a Taiwan-based company mainly engaged in the research, development, design, manufacture, and distribution of semiconductor wafer products with subsidiaries in both listed and unlisted companies including Globalwafers (6488 TT) , Parade Technologies (4966 TT) , Actron Technology (8255 TT) and Advanced Wireless Semiconduc (8086 TT) with only in Globalwafers - SAS owns more than 51%.
The large discount between SAS and its subsidiaries could be due to 1) lack of bulge-bracket coverage, 2) higher polysilicon price 3) and 3) weak 1H demand from the solar and the semiconductor from COVID-19 plague which caused investors to care less about the value dislocation between SAS and its subsidiaries.
With a somewhat certain 28-30% gain in the earning as early Q1 2022, investors should start slowly building positions in SAS as the risk-off beast may disturb the confidence in the equity market much longer than what investors would like. The second scenario of increasing stake in Parade Tech should be treated as a call option as when it happens, it is a bonus of another 24%. Thus the total upside could be around 54%. 

Besides the above-mentioned reasons, Sino American Silicon Products (5483 TT) remains a smart way to gain exposure in Globalwafers which trades at 24x PER, compared to SAS that trades at 13x PER. The other factor is that Globalwafers dividend yield is 2.28% while SAS is 5.22%. 


Sino American Silicon (5483): Entry to Globalwafers and Others

Taiwan

Globalwafers Co., Ltd. specializes in silicon wafer manufacturing and also provides solar wafers and crystal rods. The Company possesses a complete production line from ingot growth, slicing, etching, diffusion, polishing to epitaxy. Their products include Epi wafers, polished wafers, etched wafers, ultra thin wafers and deep diffusion wafers.

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Globalwafers (6488 TT)