Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Equity Bottom-Up

<p>Micron Technology announced its earnings on June 30, providing a lot of upbeat news while noting a few caveats.  The market is strong, the company is executing well, but tooling and new technologies will prevent margins from rising as high as they could.  Overall, the outlook for the company is good.</p>

Micron Technology announced its earnings on June 30, providing a lot of upbeat news while noting a few caveats.  The market is strong, the company is executing well, but tooling and new technologies will prevent margins from rising as high as they could.  Overall, the outlook for the company is good.

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

<p><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> on 8 February 2021 announced that they had signed an agreement to acquire <a href="https://www.smartkarma.com/entities/dialog-semiconductor-plc-664a1f83-2a21-4690-a91f-fb971832e7ad" target="_blank" data-smartkarma-citation="entities:21607:1" rel="noopener">Dialog Semiconductor (DLG GR)</a> for an equity value of €4.9bn. The company on the same day <a href="https://www.renesas.com/eu/en/about/press-room/notice-concerning-filing-shelf-registration-statement-issuance-new-shares" target="_blank" rel="noopener">announced</a> a shelf registration to issue up to ¥270bn of shares to pay for the deal.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/211/854/original/Screenshot+2021-06-08+at+10.38.41+AM.png?1623120032" class="editor-image img-responsive" data-smartkarma-image-id="211854"></figure></section><p>Renesas shares fell on the news, bounced, then fell, and have traded in a range of ¥1,100-1,300/share since then. </p><p>In the interim (it will take until the end of 2021 to get the Dialog deal past foreign review boards and anti-trust regulators), the company experienced <a href="https://www.renesas.com/eu/en/node/1509341" target="_blank" rel="noopener">a fire at its Naka Factory</a> which will cost a ¥24bn impact in H1, there is an ongoing global chip shortage affecting both semiconductor makers and their customers, and the end of May saw the company finally <a href="https://www.renesas.com/eu/en/about/press-room/renesas-announces-issuance-new-shares-and-secondary-offering-shares" target="_blank" rel="noopener">announce</a> its equity offering - large at nearly US$4bn. This seemed like an overhang, but has ended up not being so much of one.</p><p>The interim period, while showing a sideways trend for Renesas, saw its Peers outperform dramatically. The announcement of the equity offering and its size <em>looked like</em> it would present significant overhang. It has not turned out to be the case. There has been a "buy the news" reaction. </p><p>It is a big offering. There are a bunch of moving parts. And lots of index flow.</p>

Renesas Electronics (6723 JP) on 8 February 2021 announced that they had signed an agreement to acquire Dialog Semiconductor (DLG GR) for an equity value of €4.9bn. The company on the same day announced a shelf registration to issue up to ¥270bn of shares to pay for the deal.Renesas shares fell on the news, bounced, then fell, and have traded in a range of ¥1,100-1,300/share since then. In the interim (it will take until the end of 2021 to get the Dialog deal past foreign review boards and anti-trust regulators), the company experienced a fire at its Naka Factory which will cost a ¥24bn impact in H1, there is an ongoing global chip shortage affecting both semiconductor makers and their customers, and the end of May saw the company finally announce its equity offering - large at nearly US$4bn. This seemed like an overhang, but has ended up not being so much of one.The interim period, while showing a sideways trend for Renesas, saw its Peers outperform dramatically. The announcement of the equity offering and its size looked like it would present significant overhang. It has not turned out to be the case. There has been a "buy the news" reaction. It is a big offering. There are a bunch of moving parts. And lots of index flow.

Renesas Equity Offering - Priced To Go With Index Demand Now and Later

David Blennerhassett

Event-Driven

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<p><em>This week in StubWorld ...</em></p>
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<a href="https://www.smartkarma.com/entities/tokyo-electron-ltd" target="_blank" data-smartkarma-citation="entities:280:1" rel="noopener">Tokyo Electron (8035 JP)</a> outperforms as global carmakers face a chip shortage;</li>
<li>
<a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a> increases its questionable stake in <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a>; and</li>
<li>
<a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a>'s ramps up its buybacks.</li>
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<p>Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
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<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
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This week in StubWorld ...




Tokyo Electron (8035 JP) outperforms as global carmakers face a chip shortage;

Gulf Energy Development Public Company (GULF TB) increases its questionable stake in Intouch Holdings (INTUCH TB); and

Jardine Matheson Holdings (JM SP)'s ramps up its buybacks.




Preceding my comments on these holdcos are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: TBS/Tokyo Electron, Intouch/Gulf, Jardines' Buybacks

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<div><p><a href="https://www.smartkarma.com/entities/aem-holdings-ltd" target="_blank" data-smartkarma-citation="entities:11019:1" rel="noopener">AEM Holdings (AEM SP)</a> posted stellar 1H20 results and raised its 2020 guidance. The margin improvement was strong as NPM doubled from 14.8% to 20.2%. Long-term the company's TAM continues to rise and diversification away from core-client <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel Corp (INTC US)</a> will gather pace in FY21-22. <strong>As chips get more complicated, more system-level testing will be needed remains the crux of the investment case.</strong> The trend of working at home, data centers, 5G, and AI all necessitate more complex chips.</p></div><div>
<p>While investors in ASEAN SMIDcaps often have to worry about the alignment of the promoters and the interests of minorities we believe they are aligned at AEM. Free float is over 83% which also makes AEM a <strong>prime takeover candidate</strong>, but not before maximum value has been extracted by the current management team.</p>
<p>It is too early to have any visibility into 2021's order book but management did note its new test handler is now with its key client for testing. The hope is a demand for this new generation test handler will be large. The risk is demand for the new test handler is weak and FY20 will prove to be peak profits for AEM.</p>
<p><strong>Our previous Fair Value was 3.7 SGD, but is now raised to 5 SGD</strong> which would mean the company has a 1 billion USD market cap. Many global funds have this as a cut-off point so expect AEM to get on the radar of many new investors. This also increases the likelihood of coverage by large international brokers and potentially a dual listing on Nasdaq at some point.</p>
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AEM Holdings (AEM SP) posted stellar 1H20 results and raised its 2020 guidance. The margin improvement was strong as NPM doubled from 14.8% to 20.2%. Long-term the company's TAM continues to rise and diversification away from core-client Intel Corp (INTC US) will gather pace in FY21-22. As chips get more complicated, more system-level testing will be needed remains the crux of the investment case. The trend of working at home, data centers, 5G, and AI all necessitate more complex chips.
While investors in ASEAN SMIDcaps often have to worry about the alignment of the promoters and the interests of minorities we believe they are aligned at AEM. Free float is over 83% which also makes AEM a prime takeover candidate, but not before maximum value has been extracted by the current management team.
It is too early to have any visibility into 2021's order book but management did note its new test handler is now with its key client for testing. The hope is a demand for this new generation test handler will be large. The risk is demand for the new test handler is weak and FY20 will prove to be peak profits for AEM.
Our previous Fair Value was 3.7 SGD, but is now raised to 5 SGD which would mean the company has a 1 billion USD market cap. Many global funds have this as a cut-off point so expect AEM to get on the radar of many new investors. This also increases the likelihood of coverage by large international brokers and potentially a dual listing on Nasdaq at some point.


AEM: Onwards to $1 Billion Market Cap; Now More Attractive as M&A Target with Biz Diversification

<p>In Intel's earnings call today the company showed Y/Y revenue growth of 20% that was due in part to the data center build-out caused by COVID-19 and the work-from-home wave.  Management indicated that future quarters may not be as good.</p>

In Intel's earnings call today the company showed Y/Y revenue growth of 20% that was due in part to the data center build-out caused by COVID-19 and the work-from-home wave.  Management indicated that future quarters may not be as good.

Intel Earnings Call - Solid Revenues Partly Thanks to COVID-19

United States

Texas Instruments Incorporated operates as a semiconductor design and manufacturing company. The Company develops analog ICs and embedded processors. Texas Instruments has manufacturing or sales operations worldwide.

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Texas Instruments (TXN US)

Micron 3Q Call: Good News with a Caution

Micron's June 30 quarterly earnings call was not ALL good news, but there was enough good news to make the company very attractive. The outlook is...

Jim Handy

Renesas Equity Offering - Priced To Go With Index Demand Now and Later

Renesas will offer up to 373mm shares or what should be ~$4bn of new and used stock. Pricing (with pushing and shoving before) should be 9 June....

Travis Lundy

StubWorld: TBS/Tokyo Electron, Intouch/Gulf, Jardines' Buybacks

Tokyo Electron (8035 JP) outperforms as global carmakers face a chip shortage; Gulf Energy increases its questionable stake in Intouch; and Jardine...

David Blennerhassett

AEM: Onwards to $1 Billion Market Cap; Now More Attractive as M&A Target with Biz Diversification

AEM Holdings (AEM SP) posted stellar 1H20 results and raised its 2020 guidance. The margin improvement was strong as NPM doubled from 14.8% to...

Nicolas Van Broekhoven

Intel Earnings Call - Solid Revenues Partly Thanks to COVID-19

In Intel's earnings call today the company showed Y/Y revenue growth of 20% that was due in part to the data center build-out caused by COVID-19...

Jim Handy

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