Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>Novatek's revenue was NT$36.512bn in 1Q22, which was 38.5% YoY and 62.6% QoQ. It was 50.73%/36.73%/30.5% GM/OPM/NM in 1Q22, which was higher than our prior expectation of 43.6%/27.3%/22.3% in GM/OPM/NM.   </li>
<li>In our views, we revise up to be revenue/GM as NT$38.7bn/50.98% in 2Q20.</li>
<li>As the inflation, 5G, Russia-Ukraine war did change the landscape, the outlook seems not that so much worse in 2022.</li>
</ul>


Novatek's revenue was NT$36.512bn in 1Q22, which was 38.5% YoY and 62.6% QoQ. It was 50.73%/36.73%/30.5% GM/OPM/NM in 1Q22, which was higher than our prior expectation of 43.6%/27.3%/22.3% in GM/OPM/NM.   
In our views, we revise up to be revenue/GM as NT$38.7bn/50.98% in 2Q20.
As the inflation, 5G, Russia-Ukraine war did change the landscape, the outlook seems not that so much worse in 2022.


Novatek (3034.TT): 1Q22 Results/ 2Q22 Outlook- The Outlook Seems Better than Feared in 2022. .

<ul>
<li>Novatek’s monthly revenue is increasing above 20% YoY from July 2020.  However, the growth trend seems slowing down from 1Q22.</li>
<li>The price for DDIC (Display Driver IC) is the lowest among in the foundry companies’ products although its demand quantity can be large, which gives its actual price bargaining power.</li>
<li>Somehow, the end demand still needs a Display with related ICs for the application. So, there must be some certain suppliers to complete the supply chain.</li>
</ul>


Novatek’s monthly revenue is increasing above 20% YoY from July 2020.  However, the growth trend seems slowing down from 1Q22.
The price for DDIC (Display Driver IC) is the lowest among in the foundry companies’ products although its demand quantity can be large, which gives its actual price bargaining power.
Somehow, the end demand still needs a Display with related ICs for the application. So, there must be some certain suppliers to complete the supply chain.


Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

China managers are losing faith in <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK).</a> From peak ownership of 32.5% of funds back in December 2020, active China managers have closed positions in <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a> en masse.  Average holding weights have dropped from 0.77% to 0.37% over the same period, with the net underweight rising to -1.17%.This leaves sentiment in <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>  among the worst in the China universe at present.Analysis taken from our China research, which covers 116 active China managers with combined AUM of $68bn

China managers are losing faith in Xiaomi Corp (1810 HK). From peak ownership of 32.5% of funds back in December 2020, active China managers have closed positions in Xiaomi Corp (1810 HK) en masse.  Average holding weights have dropped from 0.77% to 0.37% over the same period, with the net underweight rising to -1.17%.This leaves sentiment in Xiaomi Corp (1810 HK)  among the worst in the China universe at present.Analysis taken from our China research, which covers 116 active China managers with combined AUM of $68bn

Xiaomi Exodus:  Confidence Fading Among Active China Investors

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.

Technical Analysis

OmniVision Integrated Circuits Group / Technical Analysis

OmniVision Integrated Circuits Group (603501 CH)

New developments suggest caution is warranted, and leads us to believe the mixed market environment is poised to continue. The new and concerning developments include widening high yield spreads in the U.S. and Europe and improving relative strength for defensive Sectors -- both are clear signs of risk aversion. At the same time, global indexes remain above critical support levels; until this changes our neutral outlook remains appropriate.

New developments suggest caution is warranted, and leads us to believe the mixed market environment is poised to continue. The new and concerning developments include widening high yield spreads in the U.S. and Europe and improving relative strength for defensive Sectors -- both are clear signs of risk aversion. At the same time, global indexes remain above critical support levels; until this changes our neutral outlook remains appropriate.

Global Equity Strategy: Reason For Caution; Actionable Themes: Services/Technology & Staples

China

OmniVision Integrated Circuits Group, Inc. manufactures image sensor and semiconductor products. The Company produces and sells complementary metal oxide semiconductors, protecting devices, power devices, power management integrated circuits, radio frequency devices, microphone sensors, and more. OmniVision Integrated Circuits Group markets its products worldwide.

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OmniVision Integrated Circuits Group (603501 CH)

Novatek (3034.TT): 1Q22 Results/ 2Q22 Outlook- The Outlook Seems Better than Feared in 2022. .

Novatek's revenue/GM/OPM/NM was NT$36.512bn50.73%/36.73%/30.5% in 1Q22. In our views, we revise up to be revenue/GM as NT$38.7bn/50.98% in 2Q20....

Patrick Liao

Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.

Novatek’s monthly revenue is increasing above 20% YoY from July 2020. The growth still keeps stacking up for a higher record in 4Q21. However, the...

Patrick Liao

Xiaomi Exodus: Confidence Fading Among Active China Investors

China managers are losing faith in Xiaomi Corp (1810 HK). From peak ownership of 32.5% of funds back in December 2020, active China managers have...

Steven Holden

Global Equity Strategy: Reason For Caution; Actionable Themes: Services/Technology & Staples

With interest rates expected to move sideways to lower, we recommend a mix of growth and defensive Sectors. Today we focus on Services/Technology...

Vermilion Research

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