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.

Equity Bottom-Up

<ul>
<li>The recent spike in the share price has discounted the positive scenario for sales and earnings, which is represented by management's guidance for FY Mar-24.</li>
<li>The negative scenario - weaker than expected foundry demand, tougher than expected restrictions on exports to China - implies a significant downward revision to that guidance.</li>
<li>The share price is up 77.5% year-to-date and 36% since the end of April. That should be enough for now. </li>
</ul>


The recent spike in the share price has discounted the positive scenario for sales and earnings, which is represented by management's guidance for FY Mar-24.
The negative scenario - weaker than expected foundry demand, tougher than expected restrictions on exports to China - implies a significant downward revision to that guidance.
The share price is up 77.5% year-to-date and 36% since the end of April. That should be enough for now. 


Screen Holdings (7735 JP): Positive Scenario Discounted

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) (TSM US)

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>Samsung announced that it would reduce memory chip production in light of crashing profits, this is after the company had previously said it would not reduce production. Memory names rallied.</li>
<li>Hon Hai announced a $820m investment plan for EV manufacturing in southern Taiwan.</li>
<li>Japan's semiconductor manufacturing equipment export restrictions targeting China will take effect starting in July.</li>
</ul>


Samsung announced that it would reduce memory chip production in light of crashing profits, this is after the company had previously said it would not reduce production. Memory names rallied.
Hon Hai announced a $820m investment plan for EV manufacturing in southern Taiwan.
Japan's semiconductor manufacturing equipment export restrictions targeting China will take effect starting in July.


Taiwan Tech Weekly: Samsung Finally Announces Chip Production Cuts; Hon Hai's New EV Factory

<ul>
<li>A tour of the Hikone factory last week left us impressed with Screen's efficiency and the timing of its capacity expansion.</li>
<li>The company's semiconductor production equipment sales are likely to decline this year, but outperform the industry as a whole due to low exposure to memory. </li>
<li>Buy for longer-term recovery after the recent advance has been digested.</li>
</ul>


A tour of the Hikone factory last week left us impressed with Screen's efficiency and the timing of its capacity expansion.
The company's semiconductor production equipment sales are likely to decline this year, but outperform the industry as a whole due to low exposure to memory. 
Buy for longer-term recovery after the recent advance has been digested.


Screen Holdings (7735 JP): Positive Impression from Hikone Factory Tour

<ul>
<li>Orders, sales and profits increased substantially YoY in the three months to June (1Q), but new SPE orders declined sequentially (QoQ) for the first time in two years.</li>
<li>Management has lowered 2Q sales and profit guidance in expectation of a weak 2Q. Full-year guidance remains unchanged. In our view, this reflects a wait-and-see attitude.</li>
<li>Major customer Intel has cut capex. TSMC and memory makers see weak quarters ahead. The potential downside risk has probably not been fully discounted.</li>
</ul>


Orders, sales and profits increased substantially YoY in the three months to June (1Q), but new SPE orders declined sequentially (QoQ) for the first time in two years.
Management has lowered 2Q sales and profit guidance in expectation of a weak 2Q. Full-year guidance remains unchanged. In our view, this reflects a wait-and-see attitude.
Major customer Intel has cut capex. TSMC and memory makers see weak quarters ahead. The potential downside risk has probably not been fully discounted.


Screen Holdings (7735 JP): Weakness Not Necessarily Discounted

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/advantest-corp" target="_blank" data-smartkarma-citation="entities:18107:1" rel="noopener">Advantest Corp (6857 JP)</a> yesterday announced Q1 results, with Revenues/OP/NP at record levels, a H1 div hike of 30%, guidance well ahead of consensus, and a buyback.  </li>
<li>They also announced a Mid-Term Plan revision which shows forward guidance better than consensus. </li>
<li>The buyback is smaller than the last one BUT float is not what you think it is. Understanding float dynamics here is key.</li>
</ul>



Advantest Corp (6857 JP) yesterday announced Q1 results, with Revenues/OP/NP at record levels, a H1 div hike of 30%, guidance well ahead of consensus, and a buyback.  
They also announced a Mid-Term Plan revision which shows forward guidance better than consensus. 
The buyback is smaller than the last one BUT float is not what you think it is. Understanding float dynamics here is key.


Advantest (6857) - Strong SoC Sales, Record Profits, Bullish Guidance, and a Buyback (+ Index Flow)

Japan

SCREEN Holdings Co Ltd.  manufactures and sell semiconductors, FPD devices, commercial printing and printed circuit boards(PCB). The company also provides additional services for its products.

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SCREEN Holdings (7735 JP)