Macro & Asian equity Technical Strategies, BBSP Asia

Federico D'Inca

Macro & Asian equity Technical Strategies

BBSP Asia

Technical Analysis

Long Term Allocation (Strategic view) in terms of Relative Value (vs MXAP) and in USD terms. • NIKKEI/MXAP: Long term outperformance still expected. • ASX/MXAP: Outperformance expected holding above long-term support (from 2003). • TWSE/MXAP: Neutral at the moment, watching closely a key level (2.22) to surpass to confirm TWSE long term outperformance vs MXAP. • KOSPI/MXAP: Long term outperformance in progress/still expected. • HSI/MXAP: Long term outperformance in progress/still expected. •…

Long Term Allocation (Strategic view) in terms of Relative Value (vs MXAP) and in USD terms. • NIKKEI/MXAP: Long term outperformance still expected. • ASX/MXAP: Outperformance expected holding above long-term support (from 2003). • TWSE/MXAP: Neutral at the moment, watching closely a key level (2.22) to surpass to confirm TWSE long term outperformance vs MXAP.  • KOSPI/MXAP: Long term outperformance in progress/still expected. • HSI/MXAP: Long term outperformance in progress/still expected. •…

BBSP Equity Asia Weekly Research 10 August 2017

Asia and Global Semiconductor and Tech Research

Andrew Lu

Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC) / Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC)

<h2>Another major miss in 3Q17</h2>After a small miss in 2Q17 numbers (please see our earlier report "<a href="https://www.smartkarma.com/insights/terrible-miss-in-2q17-to-drive-more-downgrades-the-change-of-ceo-means-a-change-of-strategy" target="_blank" data-smartkarma-citation="insights:10625">Terrible Miss in 2Q17 to Drive More Downgrades; The Change of CEO Means a Change of Strategy?</a> dated 10 May 2017), <a href="https://www.smartkarma.com/entities/14231" target="_blank" data-smartkarma-citation="entities:14231:1">Semiconductor Manufacturing (981 HK)</a> guided 3Q17 sales growth of 0-3% q/q (vs. Bloomberg consensus' 13% q/q growth) together with 4ppts miss on the gross margin and 10ppts miss on operating margin guidance. We thus expect coverage analysts to cut their 3Q17 earnings estimates sharply to a…

Another major miss in 3Q17After a small miss in 2Q17 numbers (please see our earlier report "Terrible Miss in 2Q17 to Drive More Downgrades; The Change of CEO Means a Change of Strategy? dated 10 May 2017), Semiconductor Manufacturing (981 HK) guided 3Q17 sales growth of 0-3% q/q (vs. Bloomberg consensus' 13% q/q growth) together with 4ppts miss on the gross margin and 10ppts miss on operating margin guidance. We thus expect coverage analysts to cut their 3Q17 earnings estimates sharply to a…

SMIC Guides Another Miss- Heavy Capex Seems Not Turning into Sales and Profits

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.

MSCI Emerging Markets Index / Technical Analysis

Notable themes:<ul><li>
Sector leadership is concentrated. The MSCI EM Index’s YTD advance, which is pushing through to all-time highs, is driven primary by tech. This sector accounts for a 26% weighting in the Index, and it is the only sector trading at 12-month relative strength highs. That’s the rear-view mirror take. What’s the technical outlook for tech? We remain overweight, keeping in mind the sector is ripe for a pause/correction (based on how far it is trading above its 200-day MA). Long-term…</li></ul>

Notable themes:
Sector leadership is concentrated. The MSCI EM Index’s YTD advance, which is pushing through to all-time highs, is driven primary by tech. This sector accounts for a 26% weighting in the Index, and it is the only sector trading at 12-month relative strength highs. That’s the rear-view mirror take. What’s the technical outlook for tech? We remain overweight, keeping in mind the sector is ripe for a pause/correction (based on how far it is trading above its 200-day MA). Long-term…

<h2>MediaTek is changing its focuses after the new Co-CEO Rick Tsai on board</h2><ul><li>
Refocuses on margin: Apart from the gross margin improvement in 3Q17 to 35.5% from 1H17's 34-35%, MediaTek expects gross margin recovery to high 30% (37-39%) in 2H18, beating Bloomberg consensus' 35% in 2H18. The company attributes the margin improvement to a better cost reduction on new smartphone baseband design, allocating more resources to higher margin fast growing non-smartphone products like NB-IOT MT2625 SoC for…</li></ul>

MediaTek is changing its focuses after the new Co-CEO Rick Tsai on board
Refocuses on margin: Apart from the gross margin improvement in 3Q17 to 35.5% from 1H17's 34-35%, MediaTek expects gross margin recovery to high 30% (37-39%) in 2H18, beating Bloomberg consensus' 35% in 2H18. The company attributes the margin improvement to a better cost reduction on new smartphone baseband design, allocating more resources to higher margin fast growing non-smartphone products like NB-IOT MT2625 SoC for…

MediaTek Refocuses on Margin, Defocuses on the High-End Smartphone After the Management Changed

Advanced Semiconductor Engr / Equity Bottom-Up

<h2>Summary</h2><ul>
<li>Need another property disposal gain to window dressing 3Q17: By removing 2Q's property disposal gain, ASE could only deliver NT$0.44 EPS for 2Q17, falling short of Bloomberg's NT$0.57. ASE is guiding below seasonal 3Q sales growth of 12% q/q at a GM of 18%, which is 2% below Bloomberg consensus' sales estimates and 1-2ppts miss on margin. We thus expect analysts to cut their 3Q17 EPS estimates to NT$0.6 level from NT$0.85 now.</li>
<li>
ASE in fan out? The current fan-out capacity is about 15,000…</li>
</ul>

Summary
Need another property disposal gain to window dressing 3Q17: By removing 2Q's property disposal gain, ASE could only deliver NT$0.44 EPS for 2Q17, falling short of Bloomberg's NT$0.57. ASE is guiding below seasonal 3Q sales growth of 12% q/q at a GM of 18%, which is 2% below Bloomberg consensus' sales estimates and 1-2ppts miss on margin. We thus expect analysts to cut their 3Q17 EPS estimates to NT$0.6 level from NT$0.85 now.

ASE in fan out? The current fan-out capacity is about 15,000…


ASE Might Need Another Disposal Gain to Window Dressing 3Q17; SPIL Consolidation Is Still Unknown

Taiwan

MediaTek Inc. is a fabless semiconductor company for wireless communications and digital multimedia solutions. The company provides SOC system solutions for wireless communications, high-definition TV, optical storage, DVD and Blu-ray products.

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Mediatek Inc (2454 TT)

BBSP Equity Asia Weekly Research 10 August 2017

Long Term Allocation (Strategic view) in terms of Relative Value (vs MXAP) and in USD terms.• NIKKEI/MXAP: Long term outperformance still...

BBSP Asia

SMIC Guides Another Miss- Heavy Capex Seems Not Turning into Sales and Profits

Another major miss in 3Q17After a small miss in 2Q17 numbers (please see our earlier report "Terrible Miss in 2Q17 to Drive More Downgrades; The...

Andrew Lu

EM Leadership Screen & Chart Book

Notable themes: Sector leadership is concentrated. The MSCI EM Index’s YTD advance, which is pushing through to all-time highs, is driven primary...

Vermilion Research

MediaTek Refocuses on Margin, Defocuses on the High-End Smartphone After the Management Changed

MediaTek is changing its focuses after the new Co-CEO Rick Tsai on board Refocuses on margin: Apart from the gross margin improvement in 3Q17 to...

Andrew Lu

ASE Might Need Another Disposal Gain to Window Dressing 3Q17; SPIL Consolidation Is Still Unknown

Summary Need another property disposal gain to window dressing 3Q17: By removing 2Q's property disposal gain, ASE could only deliver NT$0.44 EPS...

Andrew Lu

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