Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

Equity Bottom-Up

<ul>
<li>Micron gave up earlier gains despite solid numbers as NAND sluggishness overshadowed DRAM strength </li>
<li>This was reflected in Kioxia and Kokusai Electric yesterday, but this may be short lived as scramble for QTR-end gains drives laggards </li>
<li>Renesas -12% after management changes direction - negative for the share price yesterday but ultimately the right call. </li>
</ul>


Micron gave up earlier gains despite solid numbers as NAND sluggishness overshadowed DRAM strength 
This was reflected in Kioxia and Kokusai Electric yesterday, but this may be short lived as scramble for QTR-end gains drives laggards 
Renesas -12% after management changes direction - negative for the share price yesterday but ultimately the right call. 


Successful US-China Trade Deal and Risk-On Mood Remains

Technology / Semiconductor / Internet Research

Nicolas Baratte

<ul>
<li>Revenues are hitting the bottom in 1Q25, most firms mention sequential growth in 2Q, sometimes YoY growth. Trends depend on specific firms, mentions of both Auto and Industrial recovering.</li>
<li>Gross / operating profit recovery could take a bit longer as inventory and price concessions could negate revenue growth for a couple of quarters.</li>
<li>2 categories of stocks: the cheap ones (NXP, Onsemi, Renesas, STMicro) and the expensive stocks (Analog Devices, Infineon, Microchip, Texas Instruments). I’d go with Renesas and Texas Instruments.</li>
</ul>


Revenues are hitting the bottom in 1Q25, most firms mention sequential growth in 2Q, sometimes YoY growth. Trends depend on specific firms, mentions of both Auto and Industrial recovering.
Gross / operating profit recovery could take a bit longer as inventory and price concessions could negate revenue growth for a couple of quarters.
2 categories of stocks: the cheap ones (NXP, Onsemi, Renesas, STMicro) and the expensive stocks (Analog Devices, Infineon, Microchip, Texas Instruments). I’d go with Renesas and Texas Instruments.


Automotive & Industrial Semiconductors Part 2: Is It the Bottom, Finally? Time to Buy?

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

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a> is looking to raise up to JPY137bn (US$940m) by selling 73.9m shares of <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a> to international investors.</li>
<li>The indicative price range is JPY 1,812-1,848/share, a discount of 1-2.95% to Monday's close. The placement is 4.1% of shares outstanding and is 4.7 days of ADV.</li>
<li>We do not expect any passive buying at the time of settlement of the placement shares. The earliest passive buying will take place in August and September.</li>
</ul>



Denso Corp (6902 JP) is looking to raise up to JPY137bn (US$940m) by selling 73.9m shares of Renesas Electronics (6723 JP) to international investors.
The indicative price range is JPY 1,812-1,848/share, a discount of 1-2.95% to Monday's close. The placement is 4.1% of shares outstanding and is 4.7 days of ADV.
We do not expect any passive buying at the time of settlement of the placement shares. The earliest passive buying will take place in August and September.


Renesas Electronics (6723 JP): Denso Exits as Stock Price Falters

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/denso-corp" target="_blank" data-smartkarma-citation="entities:18703:1" rel="noopener">Denso Corp (6902 JP)</a> is looking to raise US$940m via selling its remaining stake in <a href="https://www.smartkarma.com/entities/renesas-electronics-corp" target="_blank" data-smartkarma-citation="entities:15933:1" rel="noopener">Renesas Electronics (6723 JP)</a>.</li>
<li>DENSO last sold some of its stake nearly a year ago and hence, this deal is well flagged.</li>
<li>In this note, we will talk about the placement and run the deal through our ECM framework.</li>
</ul>



Denso Corp (6902 JP) is looking to raise US$940m via selling its remaining stake in Renesas Electronics (6723 JP).
DENSO last sold some of its stake nearly a year ago and hence, this deal is well flagged.
In this note, we will talk about the placement and run the deal through our ECM framework.


Renesas Electronics Block - Well Flagged, Clean up but Momentum Isn’t Great

<ul>
<li>Revenues are still declining by ~teens% YoY but margins shows signs of improvements as end-demand improves and utilization is low. </li>
<li>Renesas doesn’t have an inventory problem and increasing revenues will lead to higher utilization and higher margins. </li>
<li>As Renesas is showing signs of a bottom, the stock is very cheap, trading at -2 standard deviations or 11x 2025 EPS, 9x 2026 EPS.</li>
</ul>


Revenues are still declining by ~teens% YoY but margins shows signs of improvements as end-demand improves and utilization is low. 
Renesas doesn’t have an inventory problem and increasing revenues will lead to higher utilization and higher margins. 
As Renesas is showing signs of a bottom, the stock is very cheap, trading at -2 standard deviations or 11x 2025 EPS, 9x 2026 EPS.


Renesas 1Q25: Cheap Stock That’s Bottoming Out

Japan

Renesas Electronics Corporation researches, develops, designs and manufactures electronic components such as semiconductors and integrated devices.

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Renesas Electronics (6723 JP)

Successful US-China Trade Deal and Risk-On Mood Remains

Micron's solid numbers overshadowed by NAND sluggishness, Kioxia and Kokusai Electric affected, Renesas sees -12% after management changes direction.

Andrew Jackson

Automotive & Industrial Semiconductors Part 2: Is It the Bottom, Finally? Time to Buy?

1Q25 revenues hitting bottom, firms see QoQ growth in 2Q. Auto and Industrial show signs of improvement. Profit recovery may lag (inventory, price...

Nicolas Baratte