Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

United Microelectronics Corp / Equity Bottom-Up

<ul>
<li>UMC reported 2Q23E results with revenue falling 20% YoY and EPS down 30% YoY. Results were higher than consensus but forward guidance was worrisome in our view.</li>
<li>We are concerned by UMC’s high exposure to more mature technology nodes, limited exposure to AI, and vulnerability to China competition forced to focus on non-leading edge technology nodes.</li>
<li>We rate the stock Underperform with a target price of $36 which implies a 2023E PER of 10x.</li>
</ul>


UMC reported 2Q23E results with revenue falling 20% YoY and EPS down 30% YoY. Results were higher than consensus but forward guidance was worrisome in our view.
We are concerned by UMC’s high exposure to more mature technology nodes, limited exposure to AI, and vulnerability to China competition forced to focus on non-leading edge technology nodes.
We rate the stock Underperform with a target price of $36 which implies a 2023E PER of 10x.


United Microelectronics: Underperform; Exposed to China Competition Avoiding Tech Restrictions

TSMC (Taiwan Semiconductor Manufacturing) - ADR / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing) - ADR

<ul>
<li>Japan's semiconductor technology export restrictions took effect on Sunday and are unlikely to ease for China any time soon.</li>
<li>Apple is reportedly telling suppliers that its flagship iPhone volumes will be similar to last year.</li>
<li>Hon Hai acquires 50% stake in German auto chassis maker, marking a significant expansion in its EV manufacturing efforts.</li>
</ul>


Japan's semiconductor technology export restrictions took effect on Sunday and are unlikely to ease for China any time soon.
Apple is reportedly telling suppliers that its flagship iPhone volumes will be similar to last year.
Hon Hai acquires 50% stake in German auto chassis maker, marking a significant expansion in its EV manufacturing efforts.


Taiwan Tech Weekly: Japan Semi Restrictions Take Effect; Apple IPhone Volumes; Hon Hai Acquisition

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Thematic (Sector/Industry)

<ul><li>TSMC unveiled an in-line 2Q23 results but guided slow 3Q recovery due to longer inventory correction and China weakness despite stronger AI demand.</li><li>Mgmt. guided down FY23E revenue to 10% YoY decline from prior low to mid-single digit decline on macro headwinds, slower China recovery and demand weakness.</li><li>As such, we believe market will turn more conservative on 3Q inventory correction and 4Q demand recovery. </li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

TSMC unveiled an in-line 2Q23 results but guided slow 3Q recovery due to longer inventory correction and China weakness despite stronger AI demand.Mgmt. guided down FY23E revenue to 10% YoY decline from prior low to mid-single digit decline on macro headwinds, slower China recovery and demand weakness.As such, we believe market will turn more conservative on 3Q inventory correction and 4Q demand recovery. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

China Technology – Implications of TSMC 2Q23: Slower 3Q and China Recovery

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

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.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of TWSE Stocks as of Jul 21st which has an aggregated short interest worth USD15.1bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in Gigabyte Tech, Lite-On Tech, Delta Elec, Walsin Lihwa.</li>
</ul>


We analyzed the changes in short interest of TWSE Stocks as of Jul 21st which has an aggregated short interest worth USD15.1bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in Gigabyte Tech, Lite-On Tech, Delta Elec, Walsin Lihwa.


TWSE Short Interest Weekly (Jul 21st): Gigabyte Tech, Lite-On Tech, Delta Elec, Walsin Lihwa

<ul>
<li>TSMC: 9.9% premium, continues to stay above one standard deviation from historical median... Earnings coming this week.</li>
<li>UMC: 0.0% ADR premium... Trading on par with local shares... Earnings next week.</li>
<li>Chunghwa Telecom: -0.8% discount represents relatively deep discount vs. history.</li>
</ul>


TSMC: 9.9% premium, continues to stay above one standard deviation from historical median... Earnings coming this week.
UMC: 0.0% ADR premium... Trading on par with local shares... Earnings next week.
Chunghwa Telecom: -0.8% discount represents relatively deep discount vs. history.


Taiwan Dual-Listings Monitor: TSMC Premium Staying High Ahead of Earnings This Week; UMC at Par

Taiwan

United Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs) and related electronic products.  The Company's main products are consumer electronic ICs, memory ICs, personal computer peripheral ICs, and communication ICs.

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United Microelectronics Corp (2303 TT)

United Microelectronics: Underperform; Exposed to China Competition Avoiding Tech Restrictions

We are concerned by UMC’s high exposure to more mature technology nodes, limited exposure to AI, and vulnerability to China competition forced to...

Vincent Fernando, CFA

Taiwan Tech Weekly: Japan Semi Restrictions Take Effect; Apple IPhone Volumes; Hon Hai Acquisition

Japan's semiconductor technology export restrictions took effect on Sunday and are unlikely to ease for China any time soon.

Vincent Fernando, CFA

China Technology – Implications of TSMC 2Q23: Slower 3Q and China Recovery

TSMC unveiled an in-line 2Q23 results but guided slow 3Q recovery due to longer inventory correction and China weakness despite stronger AI demand.

CMB International

TWSE Short Interest Weekly (Jul 21st): Gigabyte Tech, Lite-On Tech, Delta Elec, Walsin Lihwa

We analyzed TWSE short interest report for the past week and highlight short interest changes in Gigabyte Tech, Lite-On Tech, Delta Elec, Walsin...

Ke Yan, CFA, FRM

Taiwan Dual-Listings Monitor: TSMC Premium Staying High Ahead of Earnings This Week; UMC at Par

Earnings events will be coming over the next few weeks for all of our tracked names. UMC, CHT look interesting in terms of room for ADR spreads to...

Vincent Fernando, CFA

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