Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

Hon Hai Precision Industry / Equity Bottom-Up

<ul>
<li>Hon Hai's Zhengzhou problems appear to be easing; Nevertheless, the company is expanding in India and Vietnam regardless.</li>
<li>We believe the company's EV platform business and EV milestones will drive the shares in 2023E.</li>
<li>We have developed a financial model for Hon Hai and are establishing a 12-month price target of NT$155 per share, 55% above current levels. This is higher than the Street.</li>
</ul>


Hon Hai's Zhengzhou problems appear to be easing; Nevertheless, the company is expanding in India and Vietnam regardless.
We believe the company's EV platform business and EV milestones will drive the shares in 2023E.
We have developed a financial model for Hon Hai and are establishing a 12-month price target of NT$155 per share, 55% above current levels. This is higher than the Street.


Hon Hai: EV Growth Will Come Into Focus in 2023E, Can Hit NT$155 Per Share

<ul>
<li>Hon Hai Precision Industry (2317 TT) and Yulon Motor Company (2201 TT) plan to IPO their electric vehicles JV Foxtron Vehicle Technologies in 1Q23E, seeking NT$10bn.</li>
<li>The IPO's valuation could be a major uplift for <a href="https://www.smartkarma.com/entities/yulon-motor-company" target="_blank" data-smartkarma-citation="entities:18249:1" rel="noopener">Yulon Motor Company (2201 TT)</a>'s valuation. </li>
<li>
<a href="https://www.smartkarma.com/entities/hon-hai-precision-industry-co-ltd" target="_blank" data-smartkarma-citation="entities:745:1" rel="noopener">Hon Hai Precision Industry (2317 TT)</a>: Successful IPO would provide markets proof that its EV platform can create value uplifts again and again in the future. Accumulate.</li>
</ul>


Hon Hai Precision Industry (2317 TT) and Yulon Motor Company (2201 TT) plan to IPO their electric vehicles JV Foxtron Vehicle Technologies in 1Q23E, seeking NT$10bn.
The IPO's valuation could be a major uplift for Yulon Motor Company (2201 TT)'s valuation. 

Hon Hai Precision Industry (2317 TT): Successful IPO would provide markets proof that its EV platform can create value uplifts again and again in the future. Accumulate.


Hon Hai & Yulon IPO: Media Reports of Electric Vehicle JV 1Q23 Listing, Stock Implications

TSMC (Taiwan Semiconductor Manufacturing) / Equity Bottom-Up

TSMC (Taiwan Semiconductor Manufacturing)

<ul>
<li>US bans high end chip sales to China, Nvidia shares sink in reaction, as do Nvida suppliers and the overall sector.</li>
<li>Broadcom's fiscal Q3 results beat expectations and its optimistic outlook bucks the industry trend.</li>
<li>Yulon motors soars 9%; its JV with Hon Hai has received 10,000 EV pre-orders in two days.</li>
</ul>


US bans high end chip sales to China, Nvidia shares sink in reaction, as do Nvida suppliers and the overall sector.
Broadcom's fiscal Q3 results beat expectations and its optimistic outlook bucks the industry trend.
Yulon motors soars 9%; its JV with Hon Hai has received 10,000 EV pre-orders in two days.


Taiwan Tech Weekly: More Nvidia Issues, Broadcom Surprises, Yulon Soars

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

<div><p>The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.</p></div><div><p>Hong Kong saw shorts rise on <a href="https://www.smartkarma.com/entities/xinyi-solar-holdings-ltd" target="_blank" data-smartkarma-citation="entities:318:1" rel="noopener">Xinyi Solar Holdings (968 HK)</a>, <a href="https://www.smartkarma.com/entities/lenovo-group-ltd" target="_blank" data-smartkarma-citation="entities:13359:1" rel="noopener">Lenovo (992 HK)</a>, <a href="https://www.smartkarma.com/entities/jd-health-international-inc" target="_blank" data-smartkarma-citation="entities:29677:1" rel="noopener">JD Health (6618 HK)</a>, <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> and <a href="https://www.smartkarma.com/entities/alibaba-group" target="_blank" data-smartkarma-citation="entities:28434:1" rel="noopener">Alibaba Group (9988 HK)</a> while there was short covering on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/china-pacific-insurance-group" target="_blank" data-smartkarma-citation="entities:6177:1" rel="noopener">China Pacific Insurance (2601 HK)</a>, <a href="https://www.smartkarma.com/entities/sunny-optical-tech" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical (2382 HK)</a> and <a href="https://www.smartkarma.com/entities/cspc-pharmaceutical-group-ltd" target="_blank" data-smartkarma-citation="entities:229:1" rel="noopener">CSPC Pharmaceutical Group (1093 HK)</a>. Shorts increased in Consumer Discretionary, Consumer Staples, Health Care and Information Technology, while shorts decreased in Communication Services, Financials, Real Estate and Industrials.</p></div><div><p>In Japan, stocks that saw the most shorts were <a href="https://www.smartkarma.com/entities/eneos-holdings-inc" target="_blank" data-smartkarma-citation="entities:638:1" rel="noopener">ENEOS Holdings (5020 JP)</a>, <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a>, <a href="https://www.smartkarma.com/entities/resona-holdings-inc" target="_blank" data-smartkarma-citation="entities:6841:1" rel="noopener">Resona Holdings (8308 JP)</a>, <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-lease-finance" target="_blank" data-smartkarma-citation="entities:1467:1" rel="noopener">Mitsubishi UFJ Lease &amp; Finance (8593 JP)</a> and <a href="https://www.smartkarma.com/entities/nsk-ltd" target="_blank" data-smartkarma-citation="entities:6309:1" rel="noopener">NSK Ltd (6471 JP)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/toshiba-corp" target="_blank" data-smartkarma-citation="entities:637:1" rel="noopener">Toshiba Corp (6502 JP)</a>, <a href="https://www.smartkarma.com/entities/asics-corp" target="_blank" data-smartkarma-citation="entities:16287:1" rel="noopener">ASICS Corp (7936 JP)</a>, <a href="https://www.smartkarma.com/entities/haseko-corp" target="_blank" data-smartkarma-citation="entities:748:1" rel="noopener">Haseko Corp (1808 JP)</a>, <a href="https://www.smartkarma.com/entities/cyberagent-inc" target="_blank" data-smartkarma-citation="entities:8197:1" rel="noopener">CyberAgent Inc (4751 JP)</a> and <a href="https://www.smartkarma.com/entities/idemitsu-kosan-co-ltd" target="_blank" data-smartkarma-citation="entities:109:1" rel="noopener">Idemitsu Kosan (5019 JP)</a>. Shorts increased in Financials, Energy, Health Care and Information Technology sectors, and decreased in the Industrials sector.</p></div><div><p>In Korea, short increased on <a href="https://www.smartkarma.com/entities/amorepacific-corp" target="_blank" data-smartkarma-citation="entities:20854:1" rel="noopener">Amorepacific Corp (090430 KS)</a>, <a href="https://www.smartkarma.com/entities/korea-united-pharm-inc" target="_blank" data-smartkarma-citation="entities:5207:1" rel="noopener">Korea United Pharm (033270 KS)</a>, <a href="https://www.smartkarma.com/entities/lg-chem-ltd" target="_blank" data-smartkarma-citation="entities:3583:1" rel="noopener">LG Chem Ltd (051910 KS)</a> and <a href="https://www.smartkarma.com/entities/korea-electric-power-corp" target="_blank" data-smartkarma-citation="entities:16:1" rel="noopener">Korea Electric Power (015760 KS)</a> while shorts decreased on <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/doosan-infracore-co-ltd" target="_blank" data-smartkarma-citation="entities:3982:1" rel="noopener">Doosan Infracore (042670 KS)</a>, <a href="https://www.smartkarma.com/entities/naver-corp" target="_blank" data-smartkarma-citation="entities:16029:1" rel="noopener">Naver Corp (035420 KS)</a> and <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>. </p></div><div><p>Stocks in Taiwan that saw the highest increase in shorts were <a href="https://www.smartkarma.com/entities/pegatron-corp" target="_blank" data-smartkarma-citation="entities:12852:1" rel="noopener">Pegatron Corp (4938 TT)</a>, <a href="https://www.smartkarma.com/entities/unimicron-technology-corp" target="_blank" data-smartkarma-citation="entities:18778:1" rel="noopener">Unimicron Technology (3037 TT)</a>, <a href="https://www.smartkarma.com/entities/yulon-motor-company" target="_blank" data-smartkarma-citation="entities:18249:1" rel="noopener">Yulon Motor Company (2201 TT)</a> and <a href="https://www.smartkarma.com/entities/united-microelectronics-corp" target="_blank" data-smartkarma-citation="entities:6450:1" rel="noopener">United Microelectronics Corp (2303 TT)</a> while shorts were covered on <a href="https://www.smartkarma.com/entities/taiwan-semiconductor-manufacturing-company" target="_blank" data-smartkarma-citation="entities:11230:1" rel="noopener">TSMC (2330 TT)</a>, <a href="https://www.smartkarma.com/entities/yageo-corporation" target="_blank" data-smartkarma-citation="entities:13212:1" rel="noopener">Yageo Corporation (2327 TT)</a>, <a href="https://www.smartkarma.com/entities/au-optronics-corp" target="_blank" data-smartkarma-citation="entities:6704:1" rel="noopener">AU Optronics (2409 TT)</a> and <a href="https://www.smartkarma.com/entities/acer-inc" target="_blank" data-smartkarma-citation="entities:15726:1" rel="noopener">Acer Inc (2353 TT)</a>. </p></div>

The Asia Short Interest weekly looks at moves in market wide short interest and highlights movements in stock specific short interest across Hong Kong, Japan, Korea and Taiwan using the last available data published by the relevant authorities.Hong Kong saw shorts rise on Xinyi Solar Holdings (968 HK), Lenovo (992 HK), JD Health (6618 HK), BYD (1211 HK) and Alibaba Group (9988 HK) while there was short covering on Tencent Holdings (700 HK), Xiaomi Corp (1810 HK), China Pacific Insurance (2601 HK), Sunny Optical (2382 HK) and CSPC Pharmaceutical Group (1093 HK). Shorts increased in Consumer Discretionary, Consumer Staples, Health Care and Information Technology, while shorts decreased in Communication Services, Financials, Real Estate and Industrials.In Japan, stocks that saw the most shorts were ENEOS Holdings (5020 JP), Mitsubishi UFJ Financial (MUFG) (8306 JP), Resona Holdings (8308 JP), Mitsubishi UFJ Lease &amp; Finance (8593 JP) and NSK Ltd (6471 JP) while shorts decreased on Toshiba Corp (6502 JP), ASICS Corp (7936 JP), Haseko Corp (1808 JP), CyberAgent Inc (4751 JP) and Idemitsu Kosan (5019 JP). Shorts increased in Financials, Energy, Health Care and Information Technology sectors, and decreased in the Industrials sector.In Korea, short increased on Amorepacific Corp (090430 KS), Korea United Pharm (033270 KS), LG Chem Ltd (051910 KS) and Korea Electric Power (015760 KS) while shorts decreased on Samsung Electronics (005930 KS), Doosan Infracore (042670 KS), Naver Corp (035420 KS) and SK Hynix (000660 KS). Stocks in Taiwan that saw the highest increase in shorts were Pegatron Corp (4938 TT), Unimicron Technology (3037 TT), Yulon Motor Company (2201 TT) and United Microelectronics Corp (2303 TT) while shorts were covered on TSMC (2330 TT), Yageo Corporation (2327 TT), AU Optronics (2409 TT) and Acer Inc (2353 TT). 

Asia Short Interest: Xinyi Solar, Alibaba, Tencent, ENEOS, Resona, Toshiba, Samsung, TSMC, Yageo

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

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 class="content-highlight">
<p>The car sales tax holiday has proven to be a critical element that improved car sales during MCO and it has just been extended until June 2021 which means the upward momentum should carry forward to Q1 2021 at least. The postal business, typically a drag to the group, benefited from the MCO through stronger e-commerce activities and online marketplace that contributed positively to the postal business, similar to <a href="https://www.smartkarma.com/entities/singapore-post-ltd" target="_blank" data-smartkarma-citation="entities:150:1" rel="noopener">Singapore Post (SPOST SP)</a> . </p>
</div>
<p>Compared to <a href="https://www.smartkarma.com/entities/umw-holdings-bhd" target="_blank" data-smartkarma-citation="entities:1700:1" rel="noopener">UMW Holdings (UMWH MK)</a> , DRB is trading at a 36.5% PBR discount, at a slight 8% PER premium, and a 26% EV/EBITDA discount.  DRB is trading at 4% PER discount, 89% PBR discount, and 56% EV/EBITDA discount, suggesting that it is relatively undervalued to the peers. Keep <a href="https://www.smartkarma.com/entities/drb-hicom-bhd" target="_blank" data-smartkarma-citation="entities:19627:1" rel="noopener">DRB-Hicom Bhd (DRB MK)</a> in your portfolio or buy if you have not. </p>


The car sales tax holiday has proven to be a critical element that improved car sales during MCO and it has just been extended until June 2021 which means the upward momentum should carry forward to Q1 2021 at least. The postal business, typically a drag to the group, benefited from the MCO through stronger e-commerce activities and online marketplace that contributed positively to the postal business, similar to Singapore Post (SPOST SP) . 

Compared to UMW Holdings (UMWH MK) , DRB is trading at a 36.5% PBR discount, at a slight 8% PER premium, and a 26% EV/EBITDA discount.  DRB is trading at 4% PER discount, 89% PBR discount, and 56% EV/EBITDA discount, suggesting that it is relatively undervalued to the peers. Keep DRB-Hicom Bhd (DRB MK) in your portfolio or buy if you have not. 

DRB HiCom (DRB): Tax Holiday and E-Commerce Beneficiaries

Taiwan

Yulon Motor Co., Ltd. designs, manufactures, and sells motor vehicles and parts. The Company produces automobiles and trucks in a joint venture with Nissan Motor Company and operates dealerships throughout Taiwan.

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Yulon Motor Company (2201 TT)

Hon Hai & Yulon IPO: Media Reports of Electric Vehicle JV 1Q23 Listing, Stock Implications

Major uplift potential for Yulon. For Hon Hai, successful IPO would provide markets proof that its EV platform can create value uplifts again and...

Vincent Fernando, CFA

Taiwan Tech Weekly: More Nvidia Issues, Broadcom Surprises, Yulon Soars

Nvidia shares sink in reaction to US banning high-end chip sales to China, Taiwan's Nvida suppliers and the overall sector fall as well. Broadcom...

Vincent Fernando, CFA

Asia Short Interest: Xinyi Solar, Alibaba, Tencent, ENEOS, Resona, Toshiba, Samsung, TSMC, Yageo

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

DRB HiCom (DRB): Tax Holiday and E-Commerce Beneficiaries

The car sales tax holiday improved car sales during MCO and it has just been extended until June 2021 The postal business, benefited from the MCO...

Henry Soediarko

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Hon Hai: EV Growth Will Come Into Focus in 2023E, Can Hit NT$155 Per Share

We have developed a financial model for Hon Hai and are establishing a 12-month price target of NT$155 per share, 55% above current levels. This is...

Vincent Fernando, CFA

Hon Hai & Yulon IPO: Media Reports of Electric Vehicle JV 1Q23 Listing, Stock Implications

Major uplift potential for Yulon. For Hon Hai, successful IPO would provide markets proof that its EV platform can create value uplifts again and...

Vincent Fernando, CFA

Taiwan Tech Weekly: More Nvidia Issues, Broadcom Surprises, Yulon Soars

Nvidia shares sink in reaction to US banning high-end chip sales to China, Taiwan's Nvida suppliers and the overall sector fall as well. Broadcom...

Vincent Fernando, CFA

Asia Short Interest: Xinyi Solar, Alibaba, Tencent, ENEOS, Resona, Toshiba, Samsung, TSMC, Yageo

The Insight looks at large short interest movements across HK, Japan, Korea and Taiwan stocks and highlights large increases/decreases in shorts to...

Brian Freitas

DRB HiCom (DRB): Tax Holiday and E-Commerce Beneficiaries

The car sales tax holiday improved car sales during MCO and it has just been extended until June 2021 The postal business, benefited from the MCO...

Henry Soediarko