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Apr 22
2

Smartkarma Expands Coverage with New Insight Providers

By | Smartkarma Press Releases

SINGAPORE, 22 April 2024: Smartkarma, the independent investment research network,  is pleased to announce significant additions to its roster of Insight Providers.

The following additions further enhance the breadth and depth of global coverage available on Smartkarma, providing subscribers with actionable and data-backed insights, and offering a more comprehensive view of the global economy.

  1. Sankalp Singh, Founder, AceGama Advisors
    Starting as a buy-side analyst in 2004, Sankalp Singh advanced to senior roles in investment research and options trading at FX Concepts in New York. In 2012, he founded AceGama Advisors in India, focusing on derivative strategies in multiple asset classes. Their approach combines proprietary analytics and data systems to inform their trading decisions and strategies and have started developing a research product on the NSE uniquely for Smartkarma.
  2. David Mudd, Asian Hedge Fund Manager, L/S Equity, Macro
    David Mudd, a veteran hedge fund manager based in Hong Kong, brings over 20 years of experience managing Asian Long/Short Equity funds. His approach blends macroeconomic analysis with detailed, bottom-up analysis, augmented by advanced technical analysis to identify thematic investment opportunities across Asia-Pacific.
  3. Mark Jolley, Lead Analyst, Transparently.AI
    With nearly four decades of experience, Mark Jolley has a storied career in investment strategy, advising major global funds and accurately predicting significant economic downturns. At Transparently.AI, he now leads efforts to employ AI to detect early signs of accounting manipulation and fraud. Their system focuses on uncovering potential corporate failures early, showcasing high accuracy in predicting high-profile fraud cases akin to Enron or Wirecard.
  4. Rikki Malik, Analyst/PM in Asia-focused, long-short, equity hedge fund
    With a 12-year background in Long/Short Equity and as a Chartered Accountant, Rikki Malik is a seasoned professional with a comprehensive top-down macro analysis approach. His expertise allows him to seamlessly transition into selecting investment themes and stocks that promise value. This method helps him navigate the complexities of the Asian financial landscape, developing strategic investment insights.
  5. Mohshin Aziz, Global Mobility/Transport, L/S Equity
    Specializing in aviation, Mohshin Aziz has extensive experience across continents and a deep focus on the aviation industry, covering airlines, travel tours, airports, airport retail & services, OEMs, online travel agents, aircraft lessors, air cargo/logistics in the APAC region. He leverages an active watchlist of 190 companies across 41 countries to identify compelling investment opportunities in the cyclical aviation sector.

Stay in the loop and check out their exclusive insights on Smartkarma.

About Smartkarma

Smartkarma is the independent investment research network that provides differentiated, independent analysis on companies, markets, and industries across the world. Smartkarma’s online platform empowers asset managers and private accredited investors who want to access market-moving, differentiated intelligence; corporates who need to maximise their outreach; and analysts who wish to reach global investors with their written reports and bespoke services. In 2021, Smartkarma received the Knowledge Enterprise Award at the Singapore FinTech Festival Global FinTech Awards. Smartkarma is backed by notable investors such as Sequoia Capital, SGX, Wavemaker Partners, Jungle Ventures, and Enterprise Singapore. Learn more at smartkarma.com

 

Apr 21
0

Weekly Top Ten Tech Hardware and Semiconductor – Apr 21, 2024

By | Tech Hardware and Semiconductor
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.

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1. TSMC. How To Turn Chicken Salad Into Chicken Sh*t

By William Keating, Ingenuity

  • Q124 revenues of $18.87 billion, marginally above the high end of the guided range, up 12.9% YoY and down 3.8% QoQ. Guided Q224 +6% QoQ.  Maintained full year 2024 outlook
  • Unnecessary, minor downward revisions for semi & foundry growth, combined with confusion about the reason triggered an allergic reaction on the markets. TSMC down ~8% since.
  • SMCI plunged 23% by Friday close, ARM down 16.9%, NVIDIA down 10%, AMD & Micron down ~5% etc. Nice one, TSMC!

2. What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference?

By Andrew Lu

  • TSMC reiterates 2024 sales y/y growth of 20-25% but revises down 2024 global semiconductor y/y sales from over 10% to 10% and global foundry sales growth from 20% to 15-19%.
  • No more Moore’s Law: After 3 years ramp up gap between N5-N3, TSMC confirms 10-11 quarters of ramp up gap between N3 and N2 due to longer production cycle.
  • Driven by stronger digital consumer (33% q/q), HPC (3% q/q), IoT (5% q/q) sales but weaker smartphone IC (-16% q/q), TSMC reports 1Q24 sales decline of only 5% q/q.

3. Multiple Positive Catalysts Ahead Of Q124 Earnings Season

By William Keating, Ingenuity

  • PC, Smartphone Unit shipments both registering YoY growth in Q124
  • TSMC will beat guidance & likely guide Q224 up ~5% QoQ. Samsung’s pre earnings showed strong recovery in operating profit
  • Server unit shipments are on a ~17% YoY growth run rate

4. Taiwan Tech Weekly: Apple Suppliers Slump on IPhone; PC Volumes Back to Growth; TSMC & ASML Results

By Vincent Fernando, CFA, Zero One

  • Apple supply chain names are falling due concerns about weak iPhone shipments. Global PC shipments returned to growth as per IDC data.
  • TSMC and ASML results this week and will be cruical for the market. Can TSMC rally again to achieve new highs or will it continue trading lower?
  • Nanya Technology sees DRAM Industry pricing rising through 2024E; but is underperforming financially.

5. TSMC (2330.TT; TSM.US): 2Q24F Sales in Line, 2024F Is Lowering the Growth Target Below 25% YoY

By Patrick Liao

  • Declaring a slower recovery for mature nodes was an outlier, indicating that Vanguard’s recovery progress might be slower. 
  • Apple’s iPhone is expected to be the focus for N2 production in 4Q15F.  
  • TSMC’s long-term gross margin is set at 53%, signifying a few key points. 

6. ASML. Maintaining 2024 Guidance Despite Sharp Decline In New Bookings

By William Keating, Ingenuity

  • ASML reported Q124 revenues of €5.3 billion, in line with expectations, down 27% QoQ and down 21% YoY.
  • Guided Q224 for €5.95 billion, down ~23% YoY. This implies H224 will have to be much stronger than H124 in order to maintain full year 2024 guidance of flat YoY
  • New order intake was €3.6 billion, down significantly from the €9.2 billion in the prior quarter, and challenging the narrative of a strong growth year in 2025

7. Novatek (3034.TT): 2Q24F Keeps Growing, and 3Q24F Shall Grow Significantly.

By Patrick Liao

Apr 21
0

Weekly Top Ten Equity Capital Markets – Apr 21, 2024

By | Equity Capital Markets
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. Kokusai Elec (6525) – The Much-Anticipated Lockup Expiry

By Travis Lundy, Quiddity Advisors

  • Last autumn, Kokusai Electric (6525 JP) was IPOed by KKR. The lockup expires next week, on 21 April 2024 (a Sunday). That frees up about 70% of the stock.
  • KKR’s own stake is worth about US$2.8bn. It is not clear that Applied Materials, Qatar, or the Koch Strategic Platforms stakes would be for sale (now, or near-term).
  • There is an interesting schedule of events between here and a likely offering date. It pays to pay attention to the details. 

2. Baicha Baidao (2555 HK) IPO: Valuation Insights

By Arun George, Global Equity Research Ltd

3. Vodafone Idea Placement – Very Well Flagged but Its Not Going to Fix a Whole Lot of Issues

By Sumeet Singh, Aequitas Research

  • Vodafone Idea (IDEA IN) plans to raise around US$2.2bn via a follow-on public offering.
  • The deal has been in the works for years and proceeds will be used for capex and short-term debt repayment.
  • In this note, we will run the deal through our ECM framework and talk about the deal dynamics.

4. ECM Weekly (15th Apr 2024) – Hyundai Marine, Bharti, Kayou, Zeekr, ChaPanda, Samsung, WT Micr, Sompo

By Sumeet Singh, Aequitas Research

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPO front, the focus remained on HD Hyundai Marine Solution (443060 KS), even as Sichuan Baicha Baidao Industrial is gearing up to launch its IPO. 
  • On the placement front, there were deals across India, South Korea and Australia.

5. Pre-IPO Sichuan Baicha Baidao Industrial (PHIP Updates) – Some Points Worth the Attention

By Xinyao (Criss) Wang

  • Baicha Baidao’s profit model doesn’t rely on tea drink sales, but on continuous expansion of store size.However, rapid expansion brought by the franchise model has led to significant management challenges.
  • The profitability/market attractiveness of ChaPanda stores are declining, which not only reflects franchisees’ concerns about future profit prospects,but also reflects the market’s re-evaluation of the attractiveness of Baicha Baidao brand.
  • Although current financial performance of Baicha Baidao seems acceptable, after IPO, its performance could decline year by year, leading to a collapse in stock price/valuation if this is the case.

6. Belle Fashion IPO: The Investment Case

By Arun George, Global Equity Research Ltd

7. Horizon Robotics IPO Preview: “Journey Together”, Strong Business Position and Market Share Gains

By Andrei Zakharov

  • Horizon Robotics, a consumer-centric and fast-growing provider of integrated ADAS and AD solutions for passenger vehicles, filed for an IPO and plans to raise up to $500M in Hong Kong.
  • Horizon Robotics was founded in 2015 by Dr. Yu Kai, Dr. Chang Huang, Ms. Feiwen Tao, and a group of scientists and tech entrepreneurs. 
  • I have a positive view of an upcoming IPO and believe Horizon Robotics is in a great position to capitalize on rapidly growing smart vehicles market in China and worldwide.

8. Sichuan Baicha Baidao IPO – Doesn’t Offer a Discount to Peers

By Sumeet Singh, Aequitas Research

  • Sichuan Baicha Baidao Industrial is looking to raise up to US$330m in its HK IPO.
  • SBBI sells new-style tea drinks through its ChaPanda stores. According to F&S, SBBI ranked third in China’s new-style tea shop market with a market share of 6.8% in FY23.
  • We have looked at the company’s performance in our past note. In this note, we talk about valuations

9. Upcoming Mobvoi’s Debut: Downsized IPO Despite Hyper-Growth In AIGC Business Segment

By Andrei Zakharov

  • Mobvoi, an emerging AIGC market player in China, set terms for an IPO and plans to raise ~HK$330M (~$42M) in Hong Kong. CICC and CMB International are leading the offering.
  • The initial public offering is expected to be between HK$3.70 and HK$4.10. At the midpoint of the range, Mobvoi has a market value of ~HK$5.8B based on 1491.5M outstanding shares.
  • In my insight, I discuss valuation framework for comparable company analysis and outline revenue growth scenarios for each business segment under my base case.

10. Will the Hyundai Marine Solution IPO Follow in Ecopro Materials’ Footsteps After It Goes Public?

By Sanghyun Park, Clepsydra Capital

  • The prospect of this IPO mirroring the post-listing rallies seen with Ecopro Materials is what keeps local institutions fixated on this IPO despite valuation issues.
  • The key factors are speculative trading frenzy among local retail investors and subsequent passive inflows through early entry into KOSPI 200/MSCI Standard.
  • Considering two factors is vital. Hyundai Marine Solution’s IPO size is twice Ecopro Materials’, potentially limiting speculative buying. Sector-wide rallies, crucial for Ecopro Materials, haven’t been as prominent in shipbuilding.
Apr 21
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 21, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Pasona (2168 JP) Special Div – Too Small to Matter

By Travis Lundy, Quiddity Advisors

  • On Friday, Pasona Group (2168 JP) announced its expected use of funds into the May 2024 results, including a special dividend plan, investment for growth, and “strengthening the operating platform.”
  • The plan will disappoint. The stock may get hit hard. The truth is somewhere in the middle. This is where active stewardship matters. So get stewarding.
  • A special div paid over 5yrs should be paid one-shot, now. If the company has plans worth supporting, set KPIs now, ask for money later. Good plans get good money.

2. Shinko Electric (6967) – Break/Gap Risk Update

By Travis Lundy, Quiddity Advisors

  • When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider. 
  • 12wks ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 5wks ago, reco’d trimming.
  • Shinko had outperformed Ibiden, and gross spreads had come in 5+% on JSR’s approval. Spreads are now 3% wider than their narrowest, but gap risk has widened as Shinko outperforms.

3. Kokusai Electric IPO Lock-Up – KKR Will Be Tempted by the US$2.7bn Release but Might Have to Wait

By Sumeet Singh, Aequitas Research

  • KKR raised around US$730m via selling some stake in Kokusai Electric (6525 JP) Japan IPO in Sep 2023. Its remaining stake will be released from its IPO linked lockup soon.
  • KE main business activities consist of the manufacturing, sales and maintenance service of semiconductor manufacturing equipment.
  • In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

4. JSR (4185) – Deal Done, Now Back End Arbs Need To Be Card Counters

By Travis Lundy, Quiddity Advisors

  • Today after the close, the results of the JSR Corp (4185 JP) Tender Offer were announced. Bidco JICC-02 obtained 84.36% of the shares out in the Tender Offer. 
  • That means imminent index downweights, delayed index downweights, and theoretically another selldown on the last day of listed existence. 
  • News which came up since the start of the Tender Offer make this a little more difficult than it might have otherwise been. 

5. Idemitsu (5019): First SumiChem’s, Now JERA’s Stake in Fuji Oil (5017) To Go to 22%. It’s Coming…

By Travis Lundy, Quiddity Advisors

  • In the mid-late teens, four refinery groups merged to create two refinery groups – JX and Tonen General became JXTG under ENEOS Holdings (5020 JP) and Idemitsu took over ShowaShell.
  • When Idemitsu got ShowaShell, it got 50+% in Toa Oil Co Ltd (5008 JP), 6.58% of Fuji Oil Co Ltd (5017 JP). In 2020, they tried to buy in Toa.
  • That was delayed by an activist. Today, Idemitsu announced they had gone to 23% in Fuji Oil. That stake will go up before it goes down.

6. Hang Lung Group: Thoughts On HLP’s Scrip Dividend

By David Blennerhassett, Quiddity Advisors

  • And eagle-eyed reader spotted Hang Lung Properties (101 HK)‘s scrip dividend option for the FY23 final dividend. That’s the first time I’ve seen HLP provide this alternative. 
  • Over the years, the Chan family and Hang Lung (10 HK) have chipped away at HLG’s and HLP’s minorities. HLP and HLG are currently trading at all-time low P/Bs. 
  • This scrip dividend, which takes a page out of Jardine Matheson (JM SP)‘s playbook, would boost HLG’s stake in HLP to ~63% from 61.24% currently; if opting only for scrip.

7. ChiNext/​​​ChiNext50 Index Rebalance Preview: Plenty of Overlap Between the Indices

By Brian Freitas, Periscope Analytics

  • Nearing the end of the review period, we forecast 8 changes for the ChiNext Index (SZ399006 INDEX) and 5 changes for the ChiNext 50 Index in June.
  • There are overlapping names for the two indices and some of the stocks will also have flows from the CSI Smallcap 500 Index – Shang (SH000905 INDEX) trackers.
  • The potential adds have outperformed the potential deletes between 9-10% for both indices over the last month with the deletes dropping a lot more than the adds.

8. Hollysys (HOLI US): Keep Calm as Closing Date Slips

By Arun George, Global Equity Research Ltd

  • On 15 April, Hollysys Automation Technologies (HOLI US) issued a 6-K filing stating that Ascendent remains in the process of obtaining regulatory approvals. 
  • The gross spread has widened to 8% as the closing date has slipped from the end of March guidance, and an updated timeline is lacking. 
  • A delay in securing regulatory approvals is not uncommon. However, regulatory approvals should be forthcoming as the transaction involves Chinese entities (including a SASAC entity) acquiring a Chinese-focused company. 

9. Shinko Electric (6967 JP): Widening Spread Is an Opportunity

By Arun George, Global Equity Research Ltd

  • Shinko Electric Industries (6967 JP)‘s pre-conditional tender offer from the JIC alliance is JPY5,920 per share. The gross spread widened from a low of 3.1% on 14 March to 7.0%. 
  • The widening spread can be attributed to China SAMR approval timing, earnings risk, Ibiden Co Ltd (4062 JP)’s material underperformance lowering the break price and a large fund liquidating positions. 
  • The deal break risks remain low with the timing remaining the key risk. The current 7.0% spread is an attractive opportunity to add. 

10. J&T Global Express IPO Lock-Up Expiry – Tiny Float with 87%+ Stake Lockup Release Worth >US$8.8bn

By Sumeet Singh, Aequitas Research

  • J&T Global Express, a global logistics provider, raised about US$500m in its Hong Kong IPO in Oct 2023. Its pre-IPO investors will be released from its IPO linked lockup soon.
  • As per Frost & Sullivan (F&S), the firm is the leading express delivery business in Southeast Asia, with a 25.4% market share as per 2023 parcel volume.
  • In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.
Apr 21
0

Weekly Top Ten Macro and Cross Asset Strategy – Apr 21, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. Steno Signals #95 – Is the Next Move a Hike?

By Andreas Steno, Steno Research

  • Before getting to the financial word, I just briefly want to reiterate that we find a de-escalation most likely between Iran and Israel after the events unfolding over the weekend.
  • Our head of geopolitics, Mikkel Rosenvold, released his take earlier.
  • Quote of the week: Iran’s Chief of Staff: “Our attack is over, and we do not wish to continue it, but we will respond forcefully if Israel targets our interests.

2. The week at a glance: Soft CPI in UK and a BIG positive surprise from China?

By Ulrik Simmelholt, Steno Research

  • Happy Monday and welcome to our short and sweet coverage of the data calendar for the week ahead.
  • We try to map the events with market moving potential and exploit weaknesses or skews in the economic consensus around them.
  • This week we see strong upside to US retail sales, Chinese GDP, while soft downside to the UK CPI figures.

3. Positioning Watch – Volatility Is Back, but Markets Still Lean into USD Duration.. God Knows Why..

By Andreas Steno, Steno Research

  • Hi everyone, and welcome back to our weekly positioning / sentiment overview, which will be delivered to you right as firefighters have hopefully put out the fire at the old exchange building in Copenhagen..
  • Markets have started the week off where they left last week, with the USD wrecking ball continuing to prevail, posing headwinds for equity and fixed income markets as Fed pricing has more or less turned upside down lately.
  • We generally positioned for this repricing of USD fixed income, but were caught wrongfooted in a few trades along the way admittedly.

4. The Rally in Gold: Clear as Day

By Jeroen Blokland, True Insights

  • The massive rally in the price of gold coincided with Fed Governor Waller’s speech, in which he stated that he believes the Federal Reserve should buy more T-bills.
  • Many market pundits argue that changing narratives explain historical gold rallies.
  • But digging a bit deeper reveals that, especially since the Great Financial Crisis, the narrative behind gold’s strong performance has been the same and getting stronger.

5. Chinese Data Continues to Improve Incrementally

By Rikki Malik

  • Qingming holiday sending surpasses  2019 levels on an absolute and per capita basis
  • A further relaxation of housing measures spurs increased mortgage demand
  • Two steps forward, one step back -typical signs of a bottoming-out economy.

6. The Liquidity ‘Air Pocket’: A Short Update After US Tax Filing-Week

By Michael J. Howell, CrossBorder Capital

  • Global Liquidity has been the key factor driving risk assets higher. It faces a short-term air pocket that investors need to understand
  • Three factors are dragging Global Liquidity — the US Fed, the PBoC and the rising MOVE Index
  • Most important near-term, the US money market liquidity has suffered a major hit this week following the April 15th Tax-filing deadline. Next up the QFA at month-end

7. Here Comes the Sentiment Flush

By Cam Hui, Pennock Idea Hub

  • The S&P 500 violated an uptrend that began in November. The violation resolved with the index is testing initial support nearby at the 50 dma at about 5110. 
  • Our analysis of market internals concludes that the decline is nearly done. Sentiment is not sufficiently panicked to be contrarian bullish. Technical conditions are oversold but can become more oversold.
  • We interpret these conditions as a stock market that’s undergoing final flush before an intermediate-term bottom is formed. We believe any pullback should be temporary and shallow in nature.

8. Hedging Risk Amidst the Escalating Israel-Iran Conflict

By Albert Maass, Edelscourt

  • Tensions between Israel and Iran have escalated, potentially leading to a broader conflict involving major global powers, which could significantly impact global financial markets.
  • Immediate market reactions could include a drop in global stock markets, a surge in oil prices, and increased demand for safe-haven assets like gold and the US dollar.
  • Multi-Asset portfolio managers need to employ strategies such as reducing risky asset exposure, increasing investments in defensive sectors, and diversifying geographically to mitigate the conflict’s impact on investments.

9. Iran’s attack – Large in Size, Harmless in Effect. What’s next?

By Mikkel Rosenvold, Steno Research

  • Welcome to the weekly Great Game, which is obviously dedicated to the situation in the Middle East.
  • We covered Saturday’s attack on Israel in our Debrief, so in this post, I’ll try and look a bit ahead and give our take on what may lie ahead – both in the Israel/Iran conflict, but perhaps even more importantly in the Red Sea deadlock.
  • Understanding Iran’s strikeSituation:On Saturday evening, Iran attacked Israel in response to the April 1st bombing of the Iranian embassy in Damascus.

10. Portfolio Watch: The USD Wrecking Ball Is Back

By Andreas Steno, Steno Research

  • The USD has been on a roll since the firm US inflation report earlier in the week and we are approaching the point where European trade balances will be impacted substantially by the rally in (energy) commodities.
  • Even European Nat Gas seems to be on the move and pairing that move with the broader rise in Oil and Copper leads to a likely “flip” in the Eurozone trade balance.
  • When the Euro-zone trade balance shifts from positive to negative, we typically see an impact on the trend of the EUR, which is probably the last thing the ECB needs right now.
Apr 14
0

Weekly Top Ten Tech Hardware and Semiconductor – Apr 14, 2024

By | Tech Hardware and Semiconductor
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.

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1. Early Sign of AI GPU Market Inflection Point?

By Andrew Lu

  • Taiwan Dell said “AI GPU shortage issue has been resolved. The lead time has been cut from 40 weeks by the end of 2023 to 8-12 weeks or less now.
  • We see this news short term positive but medium term negative to AI GPU supply chain vendors but need more information to confirm if this is an inflection point.
  • 1. Taiwan Dell got priority supply? 2. Earlier overbooking over? 3. Lead time cut by supply upside? 4. Cooling company said the same; 5. Will lead time continue to shrink?

2. TSMC (2330.TT; TSM.US): US$6.6bn from US CHIPS Act; the Earthquake Impact and the 2nd Japanese Fab.

By Patrick Liao

  • Today, the U.S. Department of Commerce and TSMC Arizona have signed a non-binding preliminary memorandum of terms for US$6.6 billion in direct funding under the CHIPS and Science Act.
  • We estimate the impact of the earthquake on April 3rd should result in a loss of within 0.5% in 2Q24F, which means it should not affect our 2Q24F revenue expectations.
  • TSMC’s 1st Japan Fab is expected to commence pilot production in February, and the 2nd Fab is projected to begin production of N6/N7 in 2027F.

3. Early Signs from the Reported March/1Q24 Taiwan Semi/Tech Sales

By Andrew Lu

  • Y/Y improvement for LCD, PMIC, GaAs RF, gaming card, cooling system, semi equipment&material, semi fab construction, memory, and foundry vendors but more y/y deterioration for WiFi and CMOS sensor vendors
  • After 6 vendors beating consensus, we might see AI server supply chain, large panel LCD driver, WiFi/networking, and NAND flash vendors in US to report a better than expected 1Q24.
  • We might see 8″/12″ raw wafer (like Shin Etsu, SUMCO , National Silicon Industry, Siltronic AG) vendors in Japan, China, and Germany to report a worse than expected 1Q24.

4. Beaten Down Semiconductor Could be AI Play

By Douglas O’Laughlin, Fabricated Knowledge

  • Maxlinear has probably been among this semiconductor cycle’s worst companies, if not the worst.
  • I think that it might be time to give them a fresh look.
  • Maxlinear was founded in 2003 in Carlsbad, California, by eight engineers. Today, Kishore Seendripu (CEO/Chairmen) and Curtis Ling (CTO) are still founders and work at the company. Maxlinear is a fabless company focused on mixed-signal products in the semiconductor industry.

5. TSMC Snags US CHIPS Act Funding & Ups The Ante On Intel

By William Keating, Ingenuity

  • TSMC snags $6.6 billion in US CHIPS Act funding, along with loans up to $5 billion and tax credits up to 25% on eligible capital expenditures
  • TSMC has committed to building a third fab in Arizona, scheduled to begin operations around 2030
  • TSMC’s reiteration of their world class CAGR, Gross Margin & ROE numbers shines a light on Intel’s vastly inferior performance outlook.

6. Taiwan Tech Weekly: TSMC Wins Major U.S. Support; Nanya Results; UMC Rush Orders

By Vincent Fernando, CFA, Zero One

  • TSMC (2330.TT; TSM.US): US$6.6bn from US CHIPS Act; the Earthquake Impact and the 2nd Japanese Fab. 
  • Memory Monitor: Nanya’s Results to Provide Latest Color on DRAM Post Earthquake; Short Int Rising 
  • UMC (2303.TT; UMC.US): Some Rush Orders Coming in and 2Q24F Could Post Positive QoQ. 

7. Memory Monitor: Nanya’s Results to Provide Latest Color on DRAM Post Earthquake; Short Int Rising

By Vincent Fernando, CFA, Zero One

  • DRAM producer Nanya Tech will report its 1Q24E results on April 10th.
  • While Micron has said it is evaluating the impact of the Taiwan earthquake on its operations and has halted price discussions with clients, Nanya could provide latest DRAM outlook color.
  • Short interest has spiked ahead of Nanya’s results; We note that the company has a large revenue and margin rebound it needs to deliver on to meet 2024E consensus.

8. UMC (2303.TT; UMC.US): Some Rush Orders Coming in and 2Q24F Could Post Positive QoQ.

By Patrick Liao

  • United Microelectronics Corp (2303 TT)‘s 2Q24F outlook is experiencing a slight upward now, possibly indicating a positive QoQ.  
  • UMC’s notable contributors are showing a mixed outlook, and Novatek Microelectronics Corp (3034 TT) could be the most influencer.
  • Attention should be paid to the 3Q24F outlook for any potential changes and a shift from a bearish view could positively impact the outlook, potentially signaling the end of downturn.  

9. Nanya. Tailwinds Mount Albeit Profits Still Elude

By William Keating, Ingenuity

  • Nanya’s quarterly revenue was NT$ 9.5 billion, up 9.2% QoQ & up 47.9% YoY
  • Nanya still had a net loss of NT$1.2 billion, its sixth loss making quarter in a row
  • Larger peers doubling down on HBM, structural reduction in memory wafer capacity & shortages likely triggered by Taiwan earthquake are all mounting tailwinds for Nanya

10. Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially

By Vincent Fernando, CFA, Zero One

  • Latest Nanya Tech results showed weak margin rebound. Gross margin rebounded but remained below zero.
  • Nanya expects DRAM pricing improvement through 2024E; due to demand for AI related memory products reducing capacity for other DRAM products rather than improvement for Nanya’s main Consumer segment.
  • Micron is reportedly increasing prices post Taiwan earthquake and this is positive, but we see Nanya’s 2024E consensus margin expectations set at a high bar and the stock isn’t cheap.
Apr 14
0

Weekly Top Ten Equity Capital Markets – Apr 14, 2024

By | Equity Capital Markets
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.

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1. HD Hyundai Marine Solution IPO Valuation Analysis

By Douglas Kim, Douglas Research Advisory

  • Our base case valuation of HD Hyundai Marine Solution is target price of 98,254 won per share, representing an 18% upside from the high end of the IPO price range.
  • The company’s ROE averaged 67% in 2022 and 2023. In comparison, the comps’ ROE averaged 10.6% in the same period. [HD Hyundai Marine Solution > Comps]
  • Our base case valuation is based on 24.7x P/E (comps’ average) using our estimated net profit of 178.7 billion won for the company in 2024. 

2. Samsung Electronics Placement – Better Timing This Time Around

By Sumeet Singh, Aequitas Research

  • KEB Hana Bank, on behalf of Lee Boo-Jin, is looking to raise up to US$325m via selling 0.1% of  Samsung Electronics (005930 KS).
  • The deal appears to be somewhat well flagged and the company recently reported better operating numbers for 1Q24.
  • In this note, we will run the deal through our ECM framework and talk about the recent updates.

3. WT Micro Placement – Another Well-Flagged Taiwan GDR Offering, This One Is Easier to Digest

By Clarence Chu, Aequitas Research

  • WT Microelectronics (3036 TT) is looking to raise US$341m in its GDR offering. The proceeds will be used to purchase raw materials overseas.
  • The deal is a very well flagged one, and will be a relatively small one to digest at just 4.8 days of the stock’s three month ADV.
  • In this note, we run the deal through our ECM framework and comment on the deal dynamics.

4. Bharti Hexacom IPO Trading – Strong Insti and Anchor, Retail Gave It a Miss

By Sumeet Singh, Aequitas Research

  • Government of India raised around US$513m via selling some of its stake in Bharti Hexacom’s IPO.
  • Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
  • We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

5. HD Hyundai Marine Solution IPO Industry Analysis

By Douglas Kim, Douglas Research Advisory

  • In this insight, we highlight some of the important industry factors impacting HD Hyundai Marine Solution. 
  • Eco-Friendly ships are high-value-added ships that require more parts than conventional ships and are mechanically more complex, so the unit cost of parts is higher than that of conventional ships. 
  • Therefore, the ship AM (aftermarket) is a key industry that is expected to benefit from higher customer demand and increase service prices.

6. ZEEKR IPO: Latest Updates as the IPO Process Restarts

By Arun George, Global Equity Research Ltd

  • ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has restarted its IPO process to raise US$500 million by listing on the NYSE.
  • We previously discussed the IPO in ZEEKR IPO: The Bull Case and ZEEKR IPO: The Bear Case. 
  • The latest SEC filings reinforce the bear case due to weak industry sentiment, rapidly slowing growth, ongoing operating losses and volatile FCF. 

7. Baicha Baidao IPO: The Bull Case

By Arun George, Global Equity Research Ltd

  • Sichuan Baicha Baidao Industrial (SCBCBDID CH), a leading freshly made tea drinks company, will launch an HKEx IPO to raise US$300 million next week, according to press reports. 
  • Biacha is China’s third largest freshly-made tea shop company in terms of retail sales value in 2023, according to Frost & Sullivan.
  • The bull case rests on a rising market share, high revenue growth, sector-leading margins, cash generation and a strong balance sheet. 

8. ECM Weekly (8th Apr 2024) – Hyundai Marine, Waaree Energies, Horizon Robotics, Bharti Hexacom

By Ethan Aw, Aequitas Research

9. ICTK IPO Preview

By Douglas Kim, Douglas Research Advisory

  • ICTK is getting ready to complete its IPO in KOSDAQ in May. The IPO price range is from 13,000 won to 16,000 won. 
  • According to the bankers’ valuation, the expected market cap of the company after the listing is 171 billion won to 210 billion won. 
  • ICTK is a security company specializing in Internet of Things (IoT) based on physical copy prevention technology. 

10. Trial to Become 5th Biggest Supermarket Post-IPO

By Michael Causton, JapanConsuming

  • Trial, the discount FMCG and retail technology company, completed its IPO last month, achieving an initial market capitalisation higher than most of its rivals in the supermarket sector. 
  • If forecasts for FY2023 are achieved, it will become the 5th largest chain in the country and its proprietary technology should give it an important advantage in the medium term.
  • But its position at the centre of the fast-growing discount sector will drive the real growth, and the Kyushu-based firm will emerge as challenger to leading retailers.
Apr 14
0

Weekly Top Ten Event-Driven and Index Rebalance – Apr 14, 2024

By | Event-Driven and Index Rebalance
This weekly newsletter pulls together summaries of the top ten most-read Insights across Event-Driven and Index Rebalance on Smartkarma.

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1. Sep24 Nikkei 225 Rebal – Now 1 ADD, 1 DELETE; Fastie+TEL Still Where the Fun Is

By Travis Lundy, Quiddity Advisors

2. Riso Kyoiku (4714) Partial Tender (¥320/Sh) Followed by Third Party Dilution To Get Hulic to 51%

By Travis Lundy, Quiddity Advisors

  • Today, cram school operator Riso Kyoiku (4714 JP) and 20% owner real estate developer Hulic Co Ltd (3003 JP) amended their Capital and Business Alliance agreement. 
  • Hulic will buy 25.5% of shares out in a Partial Offer at +43.5% vs last. Then post-tender, they will buy shares at last from the company to go to 51.%
  • The founder will sell his 10%. The rest is interesting. It’s a high ROE high div stock. Some own it from higher. Pro-ration is tough to estimate. But we try.

3. JAPAN ACTIVISM:  Mitsui Fudosan (8801) Responds to Elliott with Buyback, Amended Long-Term Plan

By Travis Lundy, Quiddity Advisors

  • 9 weeks ago, the FT reported Elliott Management had a stake in Mitsui Fudosan (8801 JP) and had asked them to sell cross-holdings and do a ¥1trln buyback. 
  • The stock popped 7% the next day to ¥1302, on the highest volume since the covid crash, hesitated a day, then powered almost 20% higher through the end of March. 
  • Today, Mitsui Fudosan responded with an Amendment to their Plan out to 2030. It has a higher dividend, a share buyback, higher EPS target growth, and higher ROE target. But…

4. The TOPIX Big April Basket Flows:  ¥200bn a Side Including Many Multi-ADV Flows

By Travis Lundy, Quiddity Advisors

  • Every year in April there is an interesting phenomenon with TOPIX. It is what Janaghan Jeyakumar, CFA calls “The Big April Basket.” The TSE re-assesses Liquidity Factor Coefficients.
  • It also does a FFW change, and this year it has Phased Weight Reductions for those slowly leaving TOPIX and PWR re-inclusions for those identified last October as going back.
  • Janaghan had 18 “High Conviction” LF removals. All were hits. They are upweights. Then there are 34 changes to FFW coefficients.

5. Riso Kyoiku (4714 JP): Hulic (3003 JP)’s Partial Tender Offer

By Arun George, Global Equity Research Ltd

  • Riso Kyoiku (4714 JP) announced a partial tender offer and third-party allotment with Hulic Co Ltd (3003 JP), the largest shareholder. Hulic aims to make Riso Kyoiku a consolidated subsidiary.  
  • The offer is for a maximum of 39.4 million shares (23.15% post-allotment ownership ratio) at JPY320 per share, a 46.8% premium to the undisturbed price (5 April).
  • Irrevocable (from the founder and Chairman) represents a 9.26% post-allotment ownership ratio. The offer is light, but there is no minimum acceptance condition. 

6. S&P/​​​​​​​​​ASX Index Rebalance Preview: Potential Changes from Now to June

By Brian Freitas, Periscope Analytics

  • With three-quarters of the review period complete, there could be a bunch of changes across the S&P/ASX family of indices in June.
  • The Red 5 Ltd (RED AU) / Silver Lake Resources (SLR AU) merger could lead to an ad hoc change prior to the implementation of the June rebalance.
  • There will be 1.6-25 days of ADV to buy from passives in the inclusions while the impact on the deletions will range between 0.8-11 days of ADV.

7. HSCEI Index Rebalance Preview: One Change or Two in June?

By Brian Freitas, Periscope Analytics

  • SenseTime Group (20 HK) is a potential deletion in June while Zijin Mining Group Co Ltd H (2899 HK) is a potential inclusion.
  • For yet another review, BeiGene (6160 HK) is a close add with the Velocity Test determining if the stock will be added to the index or not.
  • Estimated one-way turnover at the rebalance is 2.95% resulting in a one-way trade of HK$1.6bn. Official capping will be based off the close of trading on 4 June.

8. China TCM (570.HK) – Latest Updates on Privatization and the Potential Merger with Taiji Group

By Xinyao (Criss) Wang

  • Since “no dividend was proposed for the year ended 31 December 2023”, the privatization is highly likely to succeed. It may not be wise for investors to bet against privatization.
  • The recent high-level personnel changes in Taiji is “thought-provoking”, which seems to be preparing for the next step of integrating with China TCM. Spin-offs and integrations are expected within Taiji.
  • We analyzed possible playbook. In this way, CNPGC is able to solve the problem of horizontal competition. China TCM could also relist in A-share to gain higher valuations/better liquidity.

9. KOSPI200 Index Rebalance Preview: Hanmi Semiconductor (042700 KS) Flying High

By Brian Freitas, Periscope Analytics

10. KOSDAQ150 Index Rebalance Preview: Potential Adds Still Outperforming

By Brian Freitas, Periscope Analytics

  • With nearly 85% of the review period complete, there could be 15 changes for the KOSDAQ 150 Index (KOSDQ150 INDEX) at the June rebalance.
  • Prior to the June rebalance, C&C International (352480 KS) will replace CanariaBio (016790 KS) in the index following CanariaBio being listed as an Administrative Issue and an Investment Attention Issue.
  • The potential adds have outperformed the potential deletes and the KOSDAQ 150 Index since the start of the review period. Lighten positions ahead of the end of the review period.
Apr 14
0

Weekly Top Ten Macro and Cross Asset Strategy – Apr 14, 2024

By | Macro and Cross Asset Strategy
This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.

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1. EM Watch: China is preparing something BIG!

By Andreas Steno, Steno Research

  • The below chart of ours have made the rounds in recent days and weeks as China seems to be preparing for something big given the heavy restocking efforts in Copper space.
  • As the price trends are diverging in copper versus steel and iron ore, the strategic initiatives of China are becoming increasingly evident in price action across the commodity complex, but we are yet to fully understand and accept the ramifications for global rates.
  • We have read plenty of bad takes on why China is building up copper reserves and the most obvious reason seems to be neglected by many.

2. Technically Speaking: The Early Bird Gets the Worm, China Retail Buys Hong Kong

By David Mudd

  • Hong Kong market is at historically cheap valuations. So what’s new?
  • Capitulation bottom in late January/early February dramatically reduced shorts and now long positioning starts.
  • China retail buying is taking a cue from China’s government buying programs and SOE company directives.

3. Israel-Iran War Coming?

By Mikkel Rosenvold, Steno Research

  • Welcome to this week’s Great Game, where we cover current geopolitical events relevant to your portfolio!
  • Situation: Israel attacked the Iranian embassy in Damascus, Syria, killing several high ranking Republican Guard officers, and the whole region is now anticipating the Iranian response.
  • Meanwhile, Israel and Hamas are making little progress in their truce talks in Cairo while Israel has withdrawn from smaller areas in Southern Gaza amidst heavy diplomatic pressure from the US.

4. Positioning Watch – Reflation bets are back in

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly positioning/sentiment overview.
  • The mood in equity markets is still good, with major indices stabilizing at levels far above all time highs despite taking some time to swallow hawkish comments from Fed officials.
  • Markets seemingly don’t care about the repricing of Fed rates until they hear it from Powell’s mouth or until they get a feeling of true pivot (on the pivot).

5. 5 Things We Watch – Rates Pricing, Liquidity turning, Labor Market, Commodities & China

By Andreas Steno, Steno Research

  • Hello everyone, and welcome back to our weekly ‘5 Things We Watch’, where we provide 5 of the things we keep an eye out for in global macro in a short and concise format.
  • This week we are watching out for the following 5 topics within global macro: Rates Pricing, Liquidity Turning, Labor Market, Commodities, China.
  • The market went into the year expecting 7 cuts in total from the Fed, which has now been narrowed down to less than two, all while equity markets have continued their drift higher as the economy is doing better than expected paired with benign liquidity conditions.

6. Yen Weakness Not Solely Due to Bank of Japan as Corporates Play a Critical Role

By Said Desaque, DeSaque Macro Research

  • The weak yen could be a legacy of aggressive quantitative easing (QE), whereby the BoJ became the largest holder of government bonds, forcing traditional buyers overseas.
  • Overseas cash hoarding by Japanese affiliates is being cited as another reason for yen weakness. Superior growth opportunities outside of Japan are a reason for the lack of cash repatriation. 
  • Japan’s exporters currently face formidable competition with China, making a strong yen an unattractive option during a period of higher cost pressures, notably for labour.

7. Indonesia Economics: Disinflation Setbacks Tie Central Bank’s Hands Tighter

By Manu Bhaskaran, Centennial Asia Advisors

  • The latest figures show headline inflation inch further away from the central bank’s target, showcasing the difficulties caused by volatile food inflation worldwide. 
  • In addition to sticky inflation, fiscal policy uncertainty also lurks in the background; the new government has many big-ticket manifesto pledges that need to be funded. 
  • Still-Strong growth, sticky inflation, and depreciationary risks to the rupiah will cause Bank Indonesia to delay rate cuts, possibly for the whole year. 

8. Energy Cable: Melt UP in commodities upcoming?

By Ulrik Simmelholt, Steno Research

  • Take aways: Booking profits in crude, staying long in broader metals. Crude predicting ISM to turn in 6-9 months time. Sluggish German IP ahead. Last week, we reached our profit level in crude oil, leading us to exit the trade successfully.
  • Our outlook remains bullish on commodities, spurred by what we perceive as a reflation head fake.
  • This optimism has prompted us to enter a long proxy-position in the Bloomberg Commodity Index (BCOM), as we observe the rally widening across the commodity complex (Chart 1).

9. Gold and Goldilocks

By Mark Tinker, Market Thinker

  • This week’s ‘CPI Print’ has caused something of a panic in the bond markets and has left the ‘Pivot’ Pundits struggling versus the ‘No Cuts’ crowd, some of whom are now doubling down and even talking about rate rises.
  • Traders in other markets are looking across with some degree of concern, long wary of the ability of the bond markets to trigger problems elsewhere.
  • So too are the politicians, keen for their particular narrative on the economy to win them votes, but concerned that they need the markets (and by extension the Fed) to support their cause.

10. Looking For Inflation In All The Wrong Places

By Cam Hui, Pennock Idea Hub

  • Conventional inflation hedge vehicles have exhibited subpar performance despite rising concerns over persistent inflation that will delay the Fed’s rate cuts.
  • That’s because 1970s-style “bad inflation” is not present and “good inflation”, which is a by-product of an economic recovery and stronger growth expectations, is becoming dominant narrative.
  • Market expectations are shifting from a soft-landing to a no-landing outcome, which should be bullish for cyclical stocks and neutral to bearish for bonds.
Apr 07
0

Weekly Top Ten Tech Hardware and Semiconductor – Apr 7, 2024

By | Tech Hardware and Semiconductor
This weekly newsletter pulls together summaries of the top ten most-read Insights across Tech Hardware and Semiconductor on Smartkarma.

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1. Taiwan Dual-Listings Monitor: TSMC Continues Falling from Extreme Level; CHT at Unusual Discount

By Vincent Fernando, CFA, Zero One

  • TSMC: +11.8% Premium — Falling Closer to Its Historical Range
  • ASE: +9.2% Premium; Further Breakdown Could Indicate Return to Previous Trading Range
  • CHT: -1.8% Discount — Good Level to Long the Spread

2. The Data Center is the New Compute Unit: Nvidia’s Vision for System-Level Scaling

By Douglas O’Laughlin, Fabricated Knowledge

  • Nvidia CEO Jensen Huang has repeatedly emphasized that the data center is the new unit of compute.
  • While this concept seemed straightforward at first, the deeper implications became clearer after Nvidia’s presentations at GTC and OFC 2024.
  • I only recently grasped exactly what is happening, and a simple reframing of the underlying principles that drove Moore’s Law makes the entire picture clearer.

3. Will Taiwan Quake Trigger a Shortage?

By Jim Handy, Objective Analysis

  • A major earthquake struck Taiwan on April 3, where 25-30% of the world’s semiconductor wafers are produced
  • Most semiconductor fabs are far away from the earthquake’s epicenter
  • Those companies that have issued statements indicate that damage was slight, but there is still likely to be a shortage, which should boost chip maker profitability through 2024

4. TSMC (2330.TT; TSM.US): 2Q24F Preview; TSMC Is Anticipated to Receive ~US$5Bn from the US Chip Act.

By Patrick Liao

  • TSMC Q2 2024 outlook is expected to increase by approximately 5% QoQ, with 2024 projected Capex to see a slight uptick. 
  • Intel is expected to adopt TSMC N3B technology in 2Q24F, while we anticipate that MediaTek will transition to N3E by the end of 3Q24F.  
  • Intel has received financial assistance of US$8 billion through the US Chips and Science Act, and TSMC is also projected to receive around US$5 billion.

5. Taiwan Tech Weekly: Quanta Surging on Nvidia Server Orders; Nanya Results Ahead; Intel Foundry Event

By Vincent Fernando, CFA, Zero One

  • Quanta surged with major server wins from Meta, Alphabet, and Amazon. Nanya Tech results are two weeks ahead and Intel will host a webinar this week about its Foundry business.
  • Mediatek: Accelerating Momentum in Automotive, Data Center, and AI Memory Solutions 
  • Hon Hai (Foxconn): After the 50% Surge, Where Can It Go From Here? 

6. Fabricated Knowledge Quarterly Review

By Douglas O’Laughlin, Fabricated Knowledge

  • This is the first edition of a quarterly summary piece to highlight my ideas and best pieces quarterly.
  • This is one of the 16th-best quarters in SOXX since 2002. While it’s a pretty solid showing at a 17% quarterly return, this doesn’t compare to the incredible returns in 2020 and 2023.
  • Now, the misleading thing is that SMH, a broader ETF, is up 30%.

7. Intel’s New Segment Reporting. Transparency Or Obfuscation?

By William Keating, Ingenuity

  • Intel launched a new segment reporting structure under which its newly created Foundry P&L allegedly racked up operating losses of ~$17 billion over the past three years
  • The Foundry P&L is not expected to reach breakeven until the ’27/’28 timeframe
  • Intel’s share price is down >10% in the two days since the new financial model was launched. 

8. Post Nvidia GTC Industry Impact: Large Quanta Server Win Just the Beginning of an Order Wave?

By Vincent Fernando, CFA, Zero One

  • Just a week after Nvidia’s GTC conference, Quanta has reportedly secured large orders for new Nvidia Blackwell-based servers from Google, Amazon AWS, and Meta. 
  • Other firms showcasing Nvidia servers at GTC include Wiwynn, Gigabyte, Pegatron, Asus, Hon Hai (Ingrasys), Wistron, Dell, and Super Micro. There could be a higher probability of new order wins.
  • Stock Focus: Asustek — Improving outlook as a play on both AI PCs and AI servers.

9. Yaskawa (6506 JP): Start of a New Factory Automation Growth Cycle

By Scott Foster, LightStream Research

  • The outlook for factory automation is improving with inventory clearance, the upturn in the semiconductor industry and an AI-enhanced response to the labor shortage.
  • Yaskawa’s margins should continue to rise with renewed growth in Robotics, efficiency gains and an upgraded product line. 
  • Valuation stretched at 30x EPS guidance for FY Feb-25, but current weakness looks like a long term buying opportunity.

10. Vanguard (5347.TT): A Consensus View to Build a New 12″ Fab in Singapore.

By Patrick Liao

  • The utilization rate for Vanguard in 1Q24F is at a recent low of 50-53%, indicating that the utilization rate is expected to increase from 2Q24 onwards.  
  • Vanguard should consider building a new 12″ Fab in Singapore, aligning with our potential acquisition of Taiwan Semiconductor (TSMC) – ADR (TSM US)’s 40nm and above business.
  • In conclusion, the future outlook appears promising for the coming 3~4 years.