China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

Hua Hong Semiconductor / Equity Bottom-Up

<ul>
<li>We expect Hua Hong to report C1Q23 top-line, IFRS operating income, and IFRS net income in-line, 14.1% and 19.1% vs. consensus, respectively. </li>
<li>Our sample of 1Q23 A-share fabless balance sheets showed that inventory days rose, which we expect will lead to a slowdown in wafer orders beginning in 2Q23.</li>
<li>Despite near-term weakness, we are positive the longer-term benefits of (1) localization, and (2) EV demand. We maintain BUY and raise TP to HKD35.</li>
</ul>


We expect Hua Hong to report C1Q23 top-line, IFRS operating income, and IFRS net income in-line, 14.1% and 19.1% vs. consensus, respectively. 
Our sample of 1Q23 A-share fabless balance sheets showed that inventory days rose, which we expect will lead to a slowdown in wafer orders beginning in 2Q23.
Despite near-term weakness, we are positive the longer-term benefits of (1) localization, and (2) EV demand. We maintain BUY and raise TP to HKD35.


[Hua Hong (1347 HK) Target Price Change]: High IGBT Inventory Signals Pause in Top-Line Growth

Thematic (Sector/Industry)

<ul>
<li>We see the future, post decoupling world to have two operating systems, one surrounding US and the other surrounding China.</li>
<li>Both US and China will develop respective partners to complete their ecosystems. We will soon have a world running on two sets of standards</li>
<li>While the western world dominates the old order and the new frontiers, China is leading in the new order of energy, drug and manufacturing.</li>
</ul>


We see the future, post decoupling world to have two operating systems, one surrounding US and the other surrounding China.
Both US and China will develop respective partners to complete their ecosystems. We will soon have a world running on two sets of standards
While the western world dominates the old order and the new frontiers, China is leading in the new order of energy, drug and manufacturing.


[Blue Lotus Sector Update]: All Will Have a Bright Future

<ul>
<li>JD: JD plans listing of its MRO distributor subsidiary JD Industrials (+)</li>
<li>PDD: Reports indicate that small merchants rebel against PDD policies (-)</li>
<li>981HK/1347HK/650HK/ACMR: Japan announces restrictions on exports of semiconductor equipment (+)</li>
</ul>


JD: JD plans listing of its MRO distributor subsidiary JD Industrials (+)
PDD: Reports indicate that small merchants rebel against PDD policies (-)
981HK/1347HK/650HK/ACMR: Japan announces restrictions on exports of semiconductor equipment (+)


China TMT Update: JD/PDD/981HK/1347HK/650HK/ACMR - Small Merchants Rebel Against PDD Policies

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 Emerging Markets Index / Technical Analysis

<ul>
<li>In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. </li>
<li>The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).</li>
<li>The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).</li>
</ul>


In our February 6, 2023 EM Strategy, we discussed that we were buyers of the MSCI EM (EEM-US) on a pullback to the 50-day MA. 
The pullback went a bit deeper but managed to hold at our $37.50 line-in-the-sand which we discussed in our recent ETF Pathfinder reports (Mar. 6 and Mar. 20, 2023).
The EEM-US displays a bullish 2-month downtrend reversal- add exposure. Signs continue to point to a topping DXY, and a declining DXY has historically resulted in EM outperformance (vs. EAFE).


MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

<ul>
<li>9926HK：Akeso and China's 2nd largest pharmaceutical distributor signed collaborative R&amp;D agreement（+）</li>
<li>XPEV: Xpeng to officially unveils facelift of P7 on Friday (+)</li>
<li>981.HK/1347.HK/ACMR: Netherlands announces intention to ban only “state-of-the-art” ASML DUV tools (+/+/+)</li>
</ul>


9926HK：Akeso and China's 2nd largest pharmaceutical distributor signed collaborative R&amp;D agreement（+）
XPEV: Xpeng to officially unveils facelift of P7 on Friday (+)
981.HK/1347.HK/ACMR: Netherlands announces intention to ban only “state-of-the-art” ASML DUV tools (+/+/+)


China TMT Update(Mar.10): 9926hk/XPEV/981.HK/1347.HK/ACMR: Xpeng to Unveils Facelift of P7 (+)

China

Hua Hong Semiconductor Limited manufactures semiconductors on 200mm wafers for specialty applications. The Company's products are used in the consumer electronic, communication, computing and industrial, and automotive industries.

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Hua Hong Semiconductor (1347 HK)

[Hua Hong (1347 HK) Target Price Change]: High IGBT Inventory Signals Pause in Top-Line Growth

We expect Hua Hong to report C1Q23 top-line, IFRS operating income, and IFRS net income in-line, 14.1% and 19.1% vs. consensus, respectively.

Blue Lotus Research Institute

[Blue Lotus Sector Update]: All Will Have a Bright Future

We see the future, post decoupling world to have two operating systems, one surrounding US and the other surrounding China.

Blue Lotus Research Institute

China TMT Update: JD/PDD/981HK/1347HK/650HK/ACMR - Small Merchants Rebel Against PDD Policies

Small merchants rebel against PDD policies ; Japan announces restrictions on exports of semiconductor equipment; JD plans listing of its MRO...

Blue Lotus Research Institute

MSCI EM $EEM 2-Month Downtrend Reversal at Support -- Add Exposure. Upgrading Taiwan to Overweight

Signs continue to point to a topping $DXY, and a declining DXY has historically resulted in EM outperformance (vs. $EAFE). Many ideas in China/Hong...

Vermilion Research

China TMT Update(Mar.10): 9926hk/XPEV/981.HK/1347.HK/ACMR: Xpeng to Unveils Facelift of P7 (+)

Akeso and China's 2nd largest pharmaceutical distributor signed collaborative R&D agreement ; Xpeng to officially unveils facelift of P7:...

Blue Lotus Research Institute

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