Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nvidia-corp" target="_blank" data-smartkarma-citation="entities:5891:1" rel="noopener">NVIDIA (NVDA US)</a> and <a href="https://www.smartkarma.com/entities/sherwin-williams-co-the" target="_blank" data-smartkarma-citation="entities:15539:1" rel="noopener">Sherwin Williams (SHW US)</a> will replace <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel (INTC US)</a> and <a href="https://www.smartkarma.com/entities/dow-inc" target="_blank" data-smartkarma-citation="entities:19107:1" rel="noopener">Dow (DOW US)</a> in the <a href="https://www.smartkarma.com/entities/dow-jones-industrial-average" target="_blank" data-smartkarma-citation="entities:22887:1" rel="noopener">Dow Jones Industrial Average</a> at the close on 7 November.</li>
<li>The impact of passive trading is highest in <a href="https://www.smartkarma.com/entities/sherwin-williams-co-the" target="_blank" data-smartkarma-citation="entities:15539:1" rel="noopener">Sherwin Williams Co (SHW US)</a> and <a href="https://www.smartkarma.com/entities/dow-inc" target="_blank" data-smartkarma-citation="entities:19107:1" rel="noopener">Dow (DOW US)</a> in terms of days of ADV and free float. Round-trip trade is US$16.5bn.</li>
<li>Given the ad hoc nature of the rebalances and the short timeline between announcement and implementation, the stocks could move over the rest of the week.</li>
</ul>



NVIDIA (NVDA US) and Sherwin Williams (SHW US) will replace Intel (INTC US) and Dow (DOW US) in the Dow Jones Industrial Average at the close on 7 November.
The impact of passive trading is highest in Sherwin Williams Co (SHW US) and Dow (DOW US) in terms of days of ADV and free float. Round-trip trade is US$16.5bn.
Given the ad hoc nature of the rebalances and the short timeline between announcement and implementation, the stocks could move over the rest of the week.


Dow Jones Industrials (INDU) Index Rebalance: NVIDIA, Sherwin-Williams Replace Intel, Dow

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

Equity Bottom-Up

<ul>
<li>Q324 revenues of $13.3 billion, $300 million above the guided midpoint, up 4% QoQ but down 6% YoY</li>
<li>Current quarter guidance of $13.8 billion at the midpoint, up 3.7% QoQ, with the now customary plus or minus $500 million for safety sake</li>
<li>Extraordinary reveals during Q&amp;A including defect density versus mature yield clarification, increasing outsourcing in 2025 &amp; why Lunar Lake is an accidental gross margin killer</li>
</ul>


Q324 revenues of $13.3 billion, $300 million above the guided midpoint, up 4% QoQ but down 6% YoY
Current quarter guidance of $13.8 billion at the midpoint, up 3.7% QoQ, with the now customary plus or minus $500 million for safety sake
Extraordinary reveals during Q&amp;A including defect density versus mature yield clarification, increasing outsourcing in 2025 &amp; why Lunar Lake is an accidental gross margin killer


Intel Q324. Restructuring & Impairment Charges Tank Gross Margin

Technology / Semiconductor / Internet Research

Nicolas Baratte

<ul>
<li>3Q24 was hit by US$18.7bn restructuring charges. Intel says that post-restructuring, once 18A production starts late 2025, everything will be better. Streamlined portfolio, competitive process, high Fab loading, margins recovery...</li>
<li>We’ve heard that restructuring turnaround theory too many times. A lot of hope and no evidence for another 12-18 months. No AI strategy. Margins improvement depends on unproven 18A yields. </li>
<li>Consensus aligns with Management's rosy outlook. Yet, the stock trades at 22x 2025 and 13x 2026. Risks are too high, in our view.  Strangely, the stock is up 7% after-hours. </li>
</ul>


3Q24 was hit by US$18.7bn restructuring charges. Intel says that post-restructuring, once 18A production starts late 2025, everything will be better. Streamlined portfolio, competitive process, high Fab loading, margins recovery...
We’ve heard that restructuring turnaround theory too many times. A lot of hope and no evidence for another 12-18 months. No AI strategy. Margins improvement depends on unproven 18A yields. 
Consensus aligns with Management's rosy outlook. Yet, the stock trades at 22x 2025 and 13x 2026. Risks are too high, in our view.  Strangely, the stock is up 7% after-hours. 


Intel 3Q24: Big Restructuring Hit. Core Problem Remains Zero Visibility to Support Management Vision

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

Silicon Motion Technology / Equity Bottom-Up

<ul>
<li>3Q24 Beats Consensus; Gross Margin Continues Recovery Despite Weakness in Overall Memory Market</li>
<li>Sees Near-Term Weakness in PC &amp; Smartphone Markets; Sees NAND Market Tightening by Mid-2025E</li>
<li>Despite Near-Term Memory Cycle Concerns, Structural Revenue Growth Drivers Remain in Place</li>
</ul>


3Q24 Beats Consensus; Gross Margin Continues Recovery Despite Weakness in Overall Memory Market
Sees Near-Term Weakness in PC &amp; Smartphone Markets; Sees NAND Market Tightening by Mid-2025E
Despite Near-Term Memory Cycle Concerns, Structural Revenue Growth Drivers Remain in Place


Silicon Motion Warns Near-Term Weakness in PC/Smartphone Memory Market; But Remain Structurally Long

<ul>
<li>Q324 revenues of $2.84 billion, at the upper end of the guided range, up 10.5% QoQ and up 18.3% YoY</li>
<li>Q424 revenue guide of 2.95 billion, plus or minus $150 million. This represents a ~4% QoQ increase and a 18.6% increase YoY</li>
<li>CEO Rick Wallace: "for years now, we've really had primarily one major player at the leading edge”. That's an interesting comment to make.</li>
</ul>


Q324 revenues of $2.84 billion, at the upper end of the guided range, up 10.5% QoQ and up 18.3% YoY
Q424 revenue guide of 2.95 billion, plus or minus $150 million. This represents a ~4% QoQ increase and a 18.6% increase YoY
CEO Rick Wallace: "for years now, we've really had primarily one major player at the leading edge”. That's an interesting comment to make.


KLAC Q324. Heavy Emphasis On Leading Edge For Growth In 2025

United States

Intel Corporation designs, manufactures, and sells computer components and related products.  The Company's major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, network and communications products, systems management software, conferencing products, and digital imaging products.

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Intel Corp (INTC US)

Dow Jones Industrials (INDU) Index Rebalance: NVIDIA, Sherwin-Williams Replace Intel, Dow

NVIDIA and Sherwin-Williams will replace Dow and Intel in the index. Round-trip trade is US$16.5bn. There is a lot to buy in Sherwin-Williams both...

Brian Freitas

Intel Q324. Restructuring & Impairment Charges Tank Gross Margin

Q324 $13.3 billion, +4% QoQ but -6% YoY. Q424 guide of $13.8 billion, +3.7% QoQ, but -10,4% YoY. Amazingly frank Q&A session with multiple reveals,...

William Keating

Intel 3Q24: Big Restructuring Hit. Core Problem Remains Zero Visibility to Support Management Vision

Huge $18.7bn restructuring charges hit 3Q. Management reiterates its rosy outlook for a more focused and profitable future. We are skeptical on...

Nicolas Baratte

Silicon Motion Warns Near-Term Weakness in PC/Smartphone Memory Market; But Remain Structurally Long

3Q24 earnings beat expectations with improving gross margins despite memory market weakness. Anticipates short-term challenges in PC and...

Vincent Fernando, CFA

KLAC Q324. Heavy Emphasis On Leading Edge For Growth In 2025

Q324 $2.84 billion, +10.5% QoQ & +18.3% YoY. Q424 guide $2.95 billion, +4% QoQ & +18.6% YoY. CEO states "for years now, we've really had primarily...

William Keating

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52-week Range

Market Cap (USDm)

P/E

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Dow Jones Industrials (INDU) Index Rebalance: NVIDIA, Sherwin-Williams Replace Intel, Dow

NVIDIA and Sherwin-Williams will replace Dow and Intel in the index. Round-trip trade is US$16.5bn. There is a lot to buy in Sherwin-Williams both...

Brian Freitas

Intel Q324. Restructuring & Impairment Charges Tank Gross Margin

Q324 $13.3 billion, +4% QoQ but -6% YoY. Q424 guide of $13.8 billion, +3.7% QoQ, but -10,4% YoY. Amazingly frank Q&A session with multiple reveals,...

William Keating

Intel 3Q24: Big Restructuring Hit. Core Problem Remains Zero Visibility to Support Management Vision

Huge $18.7bn restructuring charges hit 3Q. Management reiterates its rosy outlook for a more focused and profitable future. We are skeptical on...

Nicolas Baratte

Silicon Motion Warns Near-Term Weakness in PC/Smartphone Memory Market; But Remain Structurally Long

​3Q24 earnings beat expectations with improving gross margins despite memory market weakness. Anticipates short-term challenges in PC and...

Vincent Fernando, CFA

KLAC Q324. Heavy Emphasis On Leading Edge For Growth In 2025

Q324 $2.84 billion, +10.5% QoQ & +18.3% YoY. Q424 guide $2.95 billion, +4% QoQ & +18.6% YoY. CEO states "for years now, we've really had primarily...

William Keating

3Q24 earnings beat expectations with improving gross margins despite memory market weakness. Anticipates short-term challenges in PC and...