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: TSMC Spread Slumps Then Fully Rebounds; Shorts Spiking Ahead of IMOS Results
- TSMC: Premium Fell and Then Rebounded, Now +15.6%; Can Consider Shorting Again
- ASE: Falls to +12.3%; Wait for Higher Level Before Considering a New Short Again
- ChipMOS: -0.6% Discount; Massing of Short Interest Right Ahead of Earnings
2. Taiwan Tech Weekly: Hon Hai New All-Time Highs; Asustek Soars; Leading Chip Testing Firm Exits China
- Taiwan Tech Rallies Along With Rebound In Global Tech; Hon Hai, Asustek Top Gainers; KYEC a Top Loser After Announcing China Market Divestment
- PC Monitor: The Next Version of MSFT CoPilot Will Be the Killer App for a Global AI PC Upgrade Cycle
- ASMedia GDR Early Look – Momentum Has Been Strong, and Raising Would Grow Its Cash Base Almost 6x
3. Silicon Motion: Leader in Powerful Niche for Edge AI Memory; Plus Key Wins for Data Center Solution
- Silicon Motion’s lQ24 results confirmed the company’s end-demand strength as implied by previous Samsung and SK Hynix management commentary re: solid state memory.
- Management has increased 2024E guidance, citing rising ASPs and strong demand due to its memory controller products’ usage in edge AI applications such as AI PCs and AI smartphones.
- The street upgraded target prices across the board after the results; however we note the stock remains below its past acquistion offer price by Maxlinear and we see further upside.
4. KLAC. Priced For Perfection In 2025 & Beyond
- Q124 revenues of 2.36 billion, $60 million above the guided midpoint, down 5% QoQ and down 3% YoY.
- Current quarter revenue guidance of $2.5 billion representing a ~6% QoQ increase and about the same YoY.
- Share price close to record highs yet CY2024 outlook is tepid while the massive over reliance on China just keeps on going
5. SMIC (981.HK): 1Q24 Outlook Was Improved, and The 2Q24 Outlook Appears to Be Better than 1Q24.
- It’s an exciting 1Q24 result that revenue and GM beat the prior guidance.
- The 2Q24 outlook appears to be better than 1Q24, with revenue expected to increase by 5% to 7% QoQ and GM by 9% to 11%.
- We consider the primary bottleneck is the embargo of EUV machines to China from the Netherlands.
6. KYEC (2449.TT): 1Q24F Was a Seasonal Dip, but 2Q24F Should Be Picking up Below 5% QoQ.
- In 1Q24, it was reported that the revenue growth was -3.35% QoQ, slightly exceeding our expectation of a 5% QoQ decline.
- For 2Q24, revenue is expected to grow, but the increase is projected to be less than 5% QoQ.
- NVIDIA revenue in KYEC is forecasted to reach 15% by the end of 2024F, up from about 2% in 2023, driven by the increasing demand for AI.
7. GlobalWafers (6488.TT): Demand Was Weaker in 1H24F, and We Hope It Will Be Better in 2H24F.
- 1Q24 revenue and GM are in line, but operating income at 24.3% was 1% below consensus.
- GlobalWafers anticipates revenue in 2024 will likely be similar to 2023, which means 1H24 revenue could account for 45% of the 2024 yearly revenue.
- The planned dividend payout for 2024 is NT$19.0, with NT$8.0 from 1H23 and NT$11 from 2H23.
8. Novatek (3034.TT): 1Q24 Sales Inline; 2Q24F Sales Guidance Below Consensuses
- The 2Q24 revenue outlook is NT$24.4-25.5bn, which was below Bloomberg consensuses NTD$26.45bn.
- The company sees more aggressive stocking for TVs in 2Q24, but smartphone demand is soft in 2Q24.
- The dividend payout rate has been maintained at 80-85% over the past few years, with no significant changes expected.
9. AMD’s MI300 Disappointment, Hyperscalers Capex, and FPGAs
I will start with a AMD section. Shares are down ~6-7% on last week’s result. Let’s talk about the result and why it was so disappointing.
- AMD exactly matched EPS, was slightly light on revenue, and guided essentially in line with Q2 guidance.
This also was one of the slightest EPS and revenue beats in recent years. The last time this happened, the PC segment was imploding. This time it’s embedded revenue.
10. Mitsubishi Heavy Industries (7011 JP): Orders Momentum Has Peaked
- MHI was sold off last week as FY Mar-24 operating profit fell short of guidance and management guided for a decline in new orders this fiscal year.
- Orders momentum has peaked. Sales and profits will follow. But the latter are still rising and guidance could once again be conservative.
- Consolidation of the share price is likely to continue until orders and profit trends are confirmed.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. ZEEKR (ZK US) IPO: Valuation Insights
- ZEEKR (ZK US), a premium Chinese BEV manufacturer and a subsidiary of Geely Auto (175 HK), has launched an IPO to raise up to US$368 million.
- We previously discussed the IPO in ZEEKR IPO: The Bull Case, ZEEKR IPO: The Bear Case and ZEEKR IPO: Latest Updates as the IPO Process Restarts.
- The IPO price range values ZEEKR at a material discount to peers’ multiples. We would be inclined to participate in the IPO.
2. HD Hyundai Marine Solution IPO Trading – Strong Demand and Peers Continue to Rise
- HD Hyundai Marine Solution (443060 KS) had raised around US$539m in its Korean IPO, after pricing the deal at the top end of KRW83,400/share.
- HD Hyundai Marine Solution (HMS from hereon) is a ship aftermarket service provider that provides necessary services throughout a ship’s life cycle after the delivery of a new ship.
- In this note, we will talk about the demand for the deal and other trading dynamics.
3. Zeekr IPO – Missed Targets and Related Party Deals – We Would Stick to the Bottom-End
- ZEEKR (ZK US), a premium EV brand by Geely Auto (175 HK), aims to raise around US$370m in its US listing.
- Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
- We have looked at the company’s past performance in our earlier notes. In this note, we talk about the updates from its recent filings and have a relook at valuations.
4. Aadhar Housing Finance IPO – Larger and Slower, at a Reasonable Discount
- Aadhar Housing Finance (AHF) is now looking to raise around US$360m in its India IPO, via selling a mix of primary and secondary shares.
- AHF is focused on the low income housing segments (ticket size less than INR1.5m) in India. It offers a range of mortgage-related loan products.
- We have looked at the company’s performance in our past note. In this note, we talk about valuations.
5. ECM Weekly (6th May 2024) – Aadhar, Indegene, TBO Tek, Super Hi, China Resources Bev, Honasa, Worley
- 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, a number of deals were launched in India, while HD Hyundai Marine Solution (443060 KS) will list in the coming week.
- On the placement front, the two deals in Australia, WorleyParsons Ltd (WOR AU) and Endeavour Group /Australia (EDV AU) delivered opposing results.
6. Swiggy Pre-IPO Early Look – Innovation Leader, Profitability Laggard
- Swiggy aims to raise US$1.25bn in its upcoming India IPO. The company has filed confidentially for its IPO, which is likely to be launched towards the end of the year.
- Swiggy, along with Zomato, operates a duopoly that has come to dominate the food delivery market in India. In 1H24, Swiggy serviced over 274,000 restaurants via its 370,000 delivery partners.
- In this note, we will take an early look at the company based on the publicly available financials.
7. Innospace IPO Preview
- Innospace is getting ready to complete its IPO in June 2024. According to bankers’ valuation, the implied market cap of Innospace is from 347 billion won to 434 billion won.
- Innospace engages in the satellite launch vehicle production and launch service business.
- The company estimates its sales to increase from 0.2 billion won in 2023 to 2.0 billion won in 2024, 47.8 billion won in 2025, and 97.2 billion won in 2026.
8. Zeekr IPO Trading – Not as Cheap as It Looks but Float Is Tiny
- ZEEKR (ZK US), a premium EV brand by Geely, raised around US$440m in its US listing, after the deal was upsized and priced at the top.
- Zeekr was formed in Mar 2021 as a JV between Geely and its founder. Its first model was launched in Apr 21 with deliveries starting in Oct 21.
- We have looked at the company’s past performance and provided our thoughts on valuations in our earlier notes. In this note, we talk about the trading dynamics.
9. Lalatech IPO: New Filing Shows March From Losses To Profits Between 2021 and 2023
- In this insight we show drivers of LalaTech’s +US$1bn turnaround in OpInc
- We also evaluate which drivers are likely to generate future improvements
- Lalatech won’t repeat incredible 2021-23 CoR, OpEx performances, in our view
10. TBO Tek IPO – RHP Updates & Quick Thoughts on Valuation
- TBO Tek (0395045D IN) is looking to raise approximately US$200m in its upcoming India IPO.
- TBO Tek is a global travel distribution platform. Its two-sided technology platform serves companies involved in the travel industry such as hotels, airlines, travel agencies and travel management companies.
- In this note, we provide a summary of its RHP updates and share our quick thoughts on valuation.
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. Nikkei 225 Index Rebalance Preview (Sep 2024): Ranking, Capping, Funding & Other Changes
- The review period for the Nikkei 225 (NKY INDEX) September rebalance ends in July. There could be three changes at the rebalance with sector balance in focus for the additions.
- Depending on the changes, passive trackers will need to buy between 5-16x ADV (10.1%-24% of real float) on the inclusions and sell between 4-42x ADV on the deletions.
- Fast Retailing (9983 JP) will be capped to 10% of the index weight while Tokyo Electron (8035 JP) is also close to the 10% cap.
2. CSI300 Index Rebalance Preview: Bounce in the Potential Deletes Could Be Short Lived
- The review period for the June rebalance is complete and we expect 11 changes to the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX).
- We estimate one-way turnover of 1.4% at the rebalance leading to a one-way trade of CNY 8.82bn (US$1.22bn). There are a lot of stocks with multiple days ADV to trade.
- The potential deletes have bounced off their lows as the market has recovered. But the potential passive selling could see them underperform over the next month.
3. KKR Deal for Alps Logistics (9055) Appears Imminent
- There was a news article I missed in late February saying Alps Alpine (6770 JP), parent of Alps Logistics (9055 JP) was in the process of selling the logistics unit.
- A deal made sense for a strategic given the upcoming “2024 Problem”. Pre-close, headlines blared, the stock popped 12%, now we’re at double the end-February price.
- Late in the evening,Alps Logistics said it had received a bid from Logisteed but nothing had been decided. This morning we have a few more details, but nothing concrete
4. Shinko Electric (6967) – Break/Gap Risk Early May 2024 Update
- 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.
- 15wks 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 8wks ago, recommended taking profits.
- Shinko had outperformed Ibiden, gross spreads had narrowed 5+% on JSR approval. Spreads are now 3.6% wider than at narrowest, but gap risk has widened as Shinko outperforms, Ibiden.
5. L’Occitane (973 HK): The Rollover Option, And Alternate Listing Valuations
- Concurrent with its HK$34/share VGO, L’Occitane (973 HK)‘s disinterested shareholders may be entitled to a share scrip alternative. IF afforded, up to 5% of shares out can participate.
- The big unknown is whether you receive shares of the levered-up Bidco, at some as yet undetermined scrip ratio; or keep shares of L’Occitane as-is.
- To trigger the rollover option, 10% of disinterested shareholders need to express interest by the 15th May (a Hong Kong holiday btw). A deadline without details.
6. Sigma Healthcare (SIG AU): ASX200 Inclusion Now, MUCH More Squeezy Fun Later. Maybe…
- In early December, pharmacy distributor Sigma Healthcare (SIG AU) arranged a “transformational merger” with mega chain Chemist Warehouse (CWG). Effectively a reverse takeover designed to get CWG listed.
- SIG issued shares, raising cash, enabling it so NEWCO had high enough minimum float upon merging. Financial engineering for the win. SIG popped – a kind of IPO premium trade.
- But plenty of people are against the deal, and ACCC hasn’t yet opined (13 June is the provisional date), but on Thursday, S&P announced SIG would join ASX200 despite risks.
7. CSI500 Index Rebalance Preview: Potential Adds Rally and Outperform the Potential Deletes
- With the review period now complete, we forecast 50 changes (the maximum permitted) for the CSI Smallcap 500 Index – Shang (SH000905 INDEX) at the close on 14 June.
- We estimate a one-way turnover of 9.3% at the rebalance resulting in a one-way trade of CNY10.88bn (US$1.5bn). The Industrials and Information Technology sectors gain at the expense of Materials.
- The potential adds have outperformed the potential deletes by 8% over the last 3 months. There could be further outperformance over the next few weeks.
8. SSE50 Index Rebalance Preview: Financials Continue to Outperform
- With the review period nearing completion, 6 stocks are in inclusion zone and 9 are in deletion zone. However, there can be a maximum of 5 changes at a review.
- We estimate a one-way turnover of 7.1% at the June rebalance leading to a one-way trade of CNY 9.9bn (US$1.37bn). Index arb balances should increase the impact on the stocks.
- The potential inclusions (of which four are Financials) have continued to outperform the mixed bag of potential deletions. With pretty big impact on the deletes, expect further divergence.
9. China TCM (570.HK) Update – Despite Doubts, This Privatization Seems “Mandatory”
- Some investors have concerns that the privatization may fail. We also noticed that Morgan Stanley raised China TCM’s target price to HK$5.4. However, the privatization of China TCM seems “mandatory”.
- At this stage, some background information is worth the attention, which will help investors better understand the logic behind this privatization and thus resolve the “confusion”.
- According to regulatory requirements, it’s expected that both CNPGC and Taiji will integrate resources in pharmaceutical manufacturing and distribution sectors, so as to solve horizontal competition issue between the two.
10. STAR50 Index Rebalance Preview: Adds Steamroll Deletes
- With the review period complete, we forecast 3 changes for the SSE STAR50 (STAR50 INDEX) in June. All changes are migrations from/to the STAR 100 Index.
- One way turnover is estimated at 3.4% resulting in a one-way trade of CNY 4.5bn (US$630m). There is a lot to trade from passive trackers, especially on the inclusions.
- The potential adds have outperformed the potential deletions by ~18% over the last month with Hangzhou EZVIZ Network (688475 CH) and APT Medical (688617 CH) moving higher.
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. Big Fines on Foreign Investment Banks for Naked Short Selling in Korea – Implications
- The FSS mentioned it has uncovered 211 billion won of naked short sales by Credit Suisse and 8 other global banks of Korea-listed stocks between 2021 and 2023.
- The current ban on short selling stocks could be extended to at least 1H 2025.
- The Korean government’s imposing these large fines on the foreign brokers is sending a message to the foreign brokers to not engage in naked short selling.
2. Portfolio Watch – Time for liquidity bets
- Hello everyone, and welcome back to our weekly portfolio watch.
- A slightly positive week for our macro portfolio, which after a couple of days of sell-off in equities have gained ground again after the FOMC meeting Wednesday, revealing the Fed’s intend of lowering the monthly redemption cap on USTs from USD 60 bn. to USD 25 bn.
- The slight dovish narrative is back in market pricing, and the mix of dovish central bank vibes and added liquidity will likely rule markets in the coming weeks, as economic data from the US will continue its run.
3. Outperformance Using Smartkarma Smartscore for KOSPI Stock Screen & Where There Is Smoke, Stay Away
- In this insight, we discuss the use of Smartkarma Smartscore system to screen stocks in KOSPI 100.
- For top 50 companies (in KOSPI 100) in Smartscore rankings, their share prices were up on average 7% YTD. Bottom 50 companies had average share price decline of 7.8% YTD.
- In using the Smartkarma Smartscore system, it may be appropriate to describe it in terms of “WHERE THERE IS SMOKE, STAY AWAY.”
4. USD inflation preview: NO, inflation is not going away folks..
- The monthly inflation reports have proven to be the catalysts for the repricing of USD rates in recent months and we fear another 1-2 sigma event next week.
- Our calibrated nowcasts have settled on the hottest inflation forecast in town, which will likely prove to be a shocker now that USD duration bets are back in fashion.
- Our nowcasts hint at 0.45% MoM headline inflation and 0.38% MoM core inflation, which is well above consensus at 0.3% MoM for both (see full details in chart 7)The uniformity in the early consensus numbers is striking with right about every analyst on earth expecting a 0.3% MoM print, which has oddly turned into the mechanical monthly forecast every single month.
5. Steno Signals #98 – The recession panic is back right as liquidity is returning!
- Happy Sunday from a wet Copenhagen!Let me just admit to it upfront.
- Last week didn’t play out according to my macro thesis.
- The US cycle suddenly showed signs of weakness in surveys, which alleviated some of the pressures in USD rates and in USD versus Asian FX.
6. Macro Regime Indicator May – UP UP UP!
- Welcome to our monthly flagship asset allocation analysis – the “Macro Regime Indicator”.
- Coming into April, we wrote that “The macro environment is turning worse on both inflation -and liquidity metrics, while the growth variable remains positive (measured by the cyclical manufacturing momentum).
- This leaves us in a classic “QT” environment with less obvious “gung ho” risk taking through April compared to the full-on risk positive environment we have seen over the past 4-5 months as continuously flagged and traded via our allocation tools.”Without the growth parameter being a home-run in our models, we mostly got the April correction right and also capitalized decently well on the liquidity withdrawal and the hot inflation report.
7. New Release: Fund Positioning Chart Pack
- Q1 Performance Analysis for active Global EM funds. Country/Sector/Stock Positioning relative to benchmark for Global funds
- Spotlight on Indonesia activity among Asia Ex-Japan investors. Sector Dispersion in USA funds
- Extreme Stock Positioning in UK Small/Midcap funds. Ownership Trends in the Financials sector among MSCI China funds.
8. Energy Cable: Saudis are pushing hard for a new oil bull market
- Freight rates are rising again and it will likely impact USD inflation in Q2 already.
- The Saudis are trying to bring back the oil bulls via keeping the market tight. ‘
- Our models are close to entering a long oil bet again..
9. The Week That Was in ASEAN@Smartkarma – Astra International, Bukalapak, and Bank Negara Indonesia
- The past week saw insights on Bank Negara Indonesia (BBNI IJ), Bukalapak,Astra International,Siloam International Hospitals, Bumrungrad Hospital, Multi Bintang Indonesia, Sai Gon Cargo Service (SCS VN).
- There were also macro insights on Indonesia and Vietnam, and a sector insight on Indonesian banks, and a further insight on Sheng Siong (SSG SP).
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.
10. Tectonic Macro Shifts
”Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion.”
With this sentence, the Fed announced the tapering of their QT program last week.
The Federal Reserve has been running QT (Quantitative Tightening) since mid-2022: this process is aimed at unwinding the multi-trillion Fed bond holdings accumulated during previous QE episodes
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. AMD. It’s A Marathon, Not A Sprint
- Q124 revenues of $5.5 billion, $100 million above the guided midpoint, down 11% QoQ but up 2% YoY.
- Looking ahead, AMD forecasted the current quarter revenues of $5.7 billion, up 3.6% sequentially.
- Share price down 7% in AH and down 35% from its recent 52 week high. We could see it retest the $100 level in the coming months
2. Taiwan Tech Weekly: Major Week of Earnings; Apple’s Edge AI Could Make Your Current IPhone Obsolete
- Taiwan Tech Rebounds Sharply Alongside Major Nvidia/U.S. Tech Rebound Last Week. Wave of Major Earnings Releases This Week — See Our Key Events Section.
- Apple’s Latest Supplier List Released Last Week — Nanya Tech, Lotes, and Novatek Dropped. New List Shows Apple Struggling to Diversify from China.
- Apple iOS 18 Will Heavily Feature Edge AI Running Locally on the iPhone for User’ Privacy and Security — We Believe This Could Be a Major Driver of Phone Upgrades
3. Key Insights from Qualcomm’s Latest Data; Mediatek Taking Market Share?
- Qualcomm’s latest earnings came in at the high end of guidance with automotive revenue surging and mobile steady. We analyze QCOM results’ key implications for Mediatek.
- Qualcomm’s 2024E global handset market volume guidance remained unchanged vs. last quarter; however we believe Mediatek may have taken some market share in CY1Q24.
- Qualcomm confirmed Mediatek’s view regarding high-end phone demand strength right now, with AI capabilities the likely driver. Combining QCOM + Mediatek color suggests an AI-driven handset upgrade cycle ahead.
4. PC Monitor: The Next Version of MSFT CoPilot Will Be the Killer App for a Global AI PC Upgrade Cycle
- Branded PC makers’ shares have been mostly lower in April, however Intel and Microsoft developments are providing strong signals for a future PC upgrade cycle into AI PCs.
- Over 60% of Fortune 500 companies are now using Microsoft’s CoPilot AI assistant; Intel expects the industry to exceed its prior forecast for AI PC shipments in 2024E.
- CoPilot is the killer app that will trigger a global enterprise PC upgrade cycle; The next generation of CoPilot will be an edge AI app that will require powerful hardware.
5. Taiwan Dual-Listings Monitor: TSMC & ASE Spreads Surge to Extremes; CHT Shorts Massing Pre-Earnings
- TSMC: Premium Soars to +15.2%, Good Level to Consider Shorting the Spread
- UMC: Spread Bounces from Lows to Relatively Extreme High of +1.9%; Good Level to Short
- ASE: Spread Soars to Near All-Time High of +15.5%; Consider Shorting the Spread
6. Mediatek Seeing Massive Rebound in Mobile; Major AI Data Center Driver on the Horizon
- Mediatek Enjoying a Massive Rebound for its Mobile Phone Segment; Most Optimistic About High-End Smartphone Demand
- New AI Data Center Growth Driver on the Horizon; Recent Investment in U.S. AI Server Chip Startup
- Recent Share Price Dip is an Accumulation Opportunity; We Rate Mediatek as a Structural Long
7. Deep Dive Into Samsung’s Memory & Foundry Results: TSMC, AI PC, Server, AI Phone Implications
- Samsung 1Q24 results beat consensus by a wide margin and the company gave strong guidance for its Memory segment, guiding for further strength driven by servers, PCs, & phones needs.
- Guided strong demand for PC/Mobile Memory in 2H24E driven by on-device AI, which supports the case of edge AI hardware beginning to drive demand in addition to cloud/server-based AI hardware.
- Foundry segment’s losses reduced, but still loss-making? Samsung’s order backlog is at an all-time high but Samsung Foundry results suggest manufacturing yield performance likely well behind TSMC.
8. Siltronic Slashes 2024 Sales Forecast As Inventory Woes Worsen
- Siltronic cut its 2024 sales revenue forecast by 10% just days ahead of their Q124 earnings release
- Inventory levels, while gradually improving, are still at all time record highs
- In the case of Siltronic, it seems likely that Automotive end-market weakness is the main culprit
9. Earnings Week of April 26th
This earnings post will be a bit less detailed than usual. I just finished a move mid-earnings, and it was insanely distracting. So, I’ll start with the spark notes before I go into depth.
Industrial (TXN) is possibly bottoming, Automotive is probably bottoming (TXN), but SiC (STM) is doing much worse, and mobile (TER) hasn’t changed quite much. Consumer (NOD) got a substantial call out.
- Telecom (MXL, INTC) is about to bottom imminently. I continue to like MaxLinear and other companies that are exposed to telecom. HBM (TER, SK) continues to be strong. In Semicap, Logic is strong, HBM is strong, and China is declining less than expected.
10. Lasertec (6920 JP): Orders Up, Guidance Down
- The share price has bounced back on strong 3Q orders and long-term optimism, but weak 4Q guidance calls the growth trajectory into question.
- Guidance, which has sales dropping to about half what they were a year earlier, is based on the expected timing of customer acceptance of delivered equipment. It could be conservative.
- At 75X EPS guidance for FY Jun-24, a rate of growth not visible in current trends has already been discounted. Current orders should translate into sales in 2026.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Worley Placement – Largest Shareholder Selling at an Attractive Discount
- DAR Group is looking to raise A$1.5bn (US$983m) from selling the majority of its stake in WorleyParsons Ltd (WOR AU).
- DAR had attempted to privatize Worley in late 2016. Failing that attempt, it has been adding to its stake over the years.
- As the deal isn’t a cleanup, there will be an overhang post-deal, although its a relatively small one at just 4.5% of DAR’s remaining stake; locked up for 30 days
2. Endeavour Group Placement – While There Is an Overhang, Selldown Now Appears Well Flagged
- Woolworths Ltd (WOW AU) is looking to raise A$468m (US$305m) from selling its stake in Endeavour Group /Australia (EDV AU).
- Endeavour Group was demerged from Woolworths in Jun 2021 and it runs the drinks and hospitality business of Woolworths.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
3. SHEIN IPO: The Biggest IPO in 2024 in London?
- Although Shein has yet to formally announce the listing destination, there is a growing anticipation that the listing venue could be London, rather than New York.
- It has been reported that the company has more than doubled its net profit to more than US$2 billion in 2023.
- The company is currently seeking a corporate value of nearly US$70 billion to US$90 billion in the Shein IPO which would be one of the biggest IPOs globally in 2024.
4. Super Hi International US ADS – Has Been Doing Well but Doesn’t Really Need the Cash
- Super Hi International Holding (9658 HK) aims to raise around US$100m in its US ADR IPO. MS and Huatai are on the deal.
- Super Hi International (SHI) is a Chinese cuisine restaurant brand, operating Haidilao hot pot restaurants in the international market.
- In this note, we talk about the deal dynamics and the listing impact.
5. Indegene Limited Pre-IPO: Subscribe on Profitable Niche Business Model and Attractive Valuation
- Indegene Limited (1864095D IN) has set IPO price band at INR430–452 per share. The IPO consists of fresh issue as well as OFS by existing shareholders.
- Considering FY24 annualized post-IPO EPS of INR13.48, Indegene seeks a P/E valuation of 31.9–33.5x.
- Considering niche business focus, proven execution capability, marquee clientele, long-standing client relationship, life science focus, and comprehensive offering, Indegene’s valuation seems quite attractive.
6. China Resources Beverage Pre-IPO – The Positives – Strong Position in Its Main Market
- China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- In this note, we talk about the positive aspects of the deal.
7. ECM Weekly (29th Apr 2024) – IDEA, Kokusai, J&T, Krafton, Horizon, Oceana, ChaPanda, 99 Speed, Afcon
- 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, Sichuan Baicha Baidao Industrial (2555 HK) and Mobvoi (2438 HK)‘s listing doesn’t really help the HK sentiment.
- On the placement front, Vodafone Idea (IDEA IN) managed to do well, while Krafton (259960 KS) followed Samsung Electronics (005930 KS) footsteps.
8. Indegene Pre-IPO – RHP Updates – Client Base Continued to Grow, and Margins Have Begun Stabilizing
- Indegene Limited (1864095D IN) is looking to raise about US$220m in its upcoming India IPO.
- Indegene is a “digital-first” commercialisation firm with an exclusive focus on the global life sciences industry.
- We looked at the firm’s past performance in an earlier note. In this note, we look at the RHP updates.
9. Pre-IPO Ximalaya – The Potential Risks and the Outlook
- The key to Ximalaya turning losses into profits is not the outstanding performance in revenue side, but rather the effective cost control. The Company seems to have encountered growth bottleneck.
- To achieve long-term stable profits, it’s necessary to continuously optimize content quality, improve user experience, and expand paying user scale, but Ximalaya has shown “signs of fatigue” in this regard.
- AI technology brings big room for imagination, but the question here is how much would truly translate into a leap in financial performance? Ximalaya’s valuation could be lower than peers.
10. China Resources Beverage Pre-IPO – The Negatives – Remains a Minnow in Other Markets
- China Resources Beverage is looking to raise US$1bn in its upcoming Hong Kong IPO.
- China Resources Beverage manufactures and sells packaged drinking water and RTD soft beverages in China.
- In this note, we talk about the not-so-positive aspects of the deal.
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. Tax-Loss Selling in Australia 2024 – Historical Analysis and A Trade Basket
- I am not a tax advisor and I do not play one on TV but it is a subject of interest in Australia, as an AFR article from June 2022 shows.
- The general gist: retail investors in Australia will take gains on stocks which run up in price, or get taken over, then look for losses to offset.
- Below I present a study using data from 2012-2023 and this year’s portfolio.
2. L’Occitane (973 HK): Geiger’s $34/Share Offer
- After nearly six years of conjecture, rumour – plus the key shareholder (holding 72.63% of shares out) contemplating a takeover – we finally have an Offer for L’Occitane (973 HK).
- The price? $34/share, a 30.77% premium to undisturbed, and a figure a shade below the HK$35/share flagged by Reuters last August deemed “false and without basis“. The price is final.
- This takeover is a Voluntary General Offer. The key condition is securing 90% of disinterested shareholders holding 27.36%. 9.6% of that number have provided irrevocable undertakings or letters of support.
3. India: Potential Free Float Changes & Passive Flows in May
- Companies in India have disclosed their shareholding pattern as of end-March in April. There are companies with significant float changes from end-September and/or end-December.
- The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
- Depending on the date that the shareholding was published, there could be 14 stocks with passive inflows from global trackers while 7 could see passive outflows in May.
4. L’Occitane (973 HK): Conditional VGO at HK$34
- L’Occitane (973 HK) disclosed a conditional voluntary offer from Reinold Geiger at HK$34.00, a 15.3% premium to the last close and a 30.8% premium to the undisturbed price (5 February).
- The minimum acceptance condition is that the offeror holds at least 90% of the shares held by disinterested shareholders, which enables the offeror to exercise compulsory acquisition rights.
- Irrevocable and letters of support to accept represent 37.96% of disinterested shares. An attractive offer (representing an all-time high) should facilitate the offer being declared unconditional.
5. Carlyle Reportedly To Buy KFC Japan (9873) From MitCorp (8058) – Deal Likely Imminent
- On 28 Feb, the Nikkei reported (an article I missed) Mitsubishi Corp (8058 JP) would seek to unload its 35% stake in Kfc Holdings Japan (9873 JP)
- The stock popped, then continued to rise further. After the close Friday, the Nikkei reported MitCorp was close to a deal with Carlyle. A deal is apparently expected imminently.
- I expect this could be a “Split Price Deal” (like Hitachi Transport and Pasona).
6. ASX200 Index Rebalance Preview: Potential Changes Prior to the June Rebalance
- Seven Group Holdings (SVW AU)‘s holding in Boral Ltd (BLD AU) continues to increase and that could lead to an index change at the June rebalance, if not earlier.
- The Silver Lake Resources (SLR AU)/ Red 5 Ltd (RED AU) merger could lead to an index change early June.
- Cie De Saint-Gobain (SGO FP)‘s acquisition of CSR Ltd (CSR AU) could lead to another index change just ahead of the regular June rebalance.
7. Worley (WOR): Impact of Dar Group’s A$1.4bn Sale
- Dar Al-Handasah has sold 19% of WorleyParsons Ltd (WOR AU) overnight at A$14.35/share, a 12% discount to the last close, to raise A$1.44bn (US$943m).
- This reduces Dar’s stake in WorleyParsons Ltd (WOR AU) to 4.5% and will trigger upweights from index providers in the next few days.
- The stake sale could also lead to a re-rating of the stock with a large blocking stake off the share register.
8. HD Hyundai Marine Solution (443060 KS) IPO: No Passive Buying Near-Term
- HD Hyundai Marine Solution (443060 KS) is looking to raise KRW 742bn (US$540m) in its IPO, valuing the company at KRW 3,707bn (US$2.69bn). Listing is expected to be in early-May.
- Competition for the shares has been fierce with institutional investors indicating demand for 201x the number of shares on offer at prices higher than the top end of the range.
- Barring a doubling of the stock price, the earliest that the stock will be added to major indices is December 2024. So, no passive buying in the short-term.
9. SET50 Index Rebalance Preview: Market Consultation & More Changes in June
- The SET has run a market consultation on relaxing liquidity thresholds for inclusion of stocks in the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) universe.
- The consultation is the result of an increase in Average Daily Trading Values and lower turnover ratios, especially for large cap stocks.
- Berli Jucker (BJC TB) is now a potential index inclusion in June and that could result in four constituent changes at the next rebalance.
10. KOSPI200 Index Rebalance Preview: 5-6 Changes Possible from Now to June
- With the review period complete, there could be up to 5 changes for the Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX) at the June rebalance.
- Hahn&Co now own over 96% of the shares in Ssangyong Cement Industrial (003410 KS) and there could be another change at or before the June rebalance.
- Passive trackers will need to trade between 0.5-15x ADV on the index changes. There are big shorts in L&F (066970 KS) and Lotte Tour Development Co, Ltd. (032350 KS).
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 #97 – 5 reasons why the CNY will be devalued next week and how to trade it
- I spent last week in Asia and even though I admittedly like to see my research as edgy and contrarian, I quickly realized that most PMs in the region agreed on my take on the imminent risk of a devaluation of the CNY.
- USD/CNH call options are popular/consensus in the Asian Macro PM space, but interestingly there is no consensus around the contagion from a devaluation of the USDCNY.
- The discussions I had pointed in all directions, meaning that a CNY devaluation holds the potential to turn into a macro earthquake, despite it already being a consensus position.
2. April Themes and Thematic Portfolio Review
- A monthly review of how the markets and our themes are currently performing
- Analysing what went wrong and what went right in stocks and sectors
- Highlighting positions added or removed from the thematic investment portfolio
3. Corporate Value Up Program Guidelines Proposed by the FSC – Disappointing & Needs Improvement
- Some of the Corporate Value Up program’s initial guidelines proposed by the Financial Services Commission (FSC) were announced today.
- Overall, the initial guidelines were disappointing mainly because they lacked concrete figures with regards to tax incentives for companies that make significant improvements to their corporate governance.
- More concrete measures announced today included recommendations for overlapping parent company listing (split listing) and disclosure recommendations for the majority shareholder’s profit transfer to an unlisted private company (tunneling).
4. Portfolio Watch: No respite for Asian FX.. How to deal with it?
- Welcome to our weekly Portfolio Watch! We have had a strong week in our portfolio with a USD-reflationary lean, but we are starting to contemplate how to deal with contagion from a continued rise in USD versus Asian FX pairs, especially if the increasing latent risk of a major devaluation of the CNY comes into fruition.
- There is currently no respite for the Asian FX pairs as all major forward looking models point to a reacceleration of US inflation trends from the current plateau around 3.5% YoY.
- We will look at the devaluation risks in detail tomorrow in our weekly “Steno Signals”, but will pinpoint value pockets in markets already today in our Portfolio Watch.
5. NPS Changes Its Core Asset Allocation Method – First Time in 18 Years
- NPS announced today that it will change its core asset allocation method, which aims to increase its purchase of risky assets including stocks and alternative assets.
- Under the new system, the proportion of risky assets will increase to 65% of the NPS’ entire fund assets and the remaining 35% will be allocated to the safe assets.
- There is an increasing probability that a portion of the 24.6 trillion won (2.3% of AUM) could get allocated to risky assets including domestic equities.
6. Positioning Watch – Prepare for further action in JPY pairs
- Hello everyone, and welcome back to our weekly positioning/sentiment overview!Equity sentiment has soured a bit since we last spoke, with broad US traded ETF fund flows sent back into solid negative territory after a stunning start to the year.
- While most of it is due to the tax-season in April, the hawkish repricing of global central banks has also played its part in normalizing the über-bullish sentiment in US equities, with markets now also biting their nails as an ECB June cut is no longer a certainty.
- Chart 1: Rolling monthly US ETF fund flowsAfter a couple of weeks of outflows from XLE, the reflation bet is back on track with around 500 mn.
7. China Ups the Ante with Relaxation of Property Curbs
- Property restrictions removed in major cities, continuing the gradual process from the last 6-8 months
- A BIG signal to the market and the public with the relaxation of curbs in Beijing
- China’s factory output continues expansion and travel data positive for consumption
8. The Week At A Glance: ISMs, NFP, FOMC & QRA to put even more pressure on USD rates?
- The QRA announcement will be released in a few hours (on Monday) while the issuance details will be released on Wednesday.
- We generally don’t see any reasons to fear the Q2 issuance as a strong tax-season has been confirmed with the TGA standing at 941bn dollars, which is almost 200bn above the target range.
The TGA also printed above the target range going into Q2, making it unlikely that the US Treasury turns the heat on in the issuance pace. We see a small downgrade of the Q2 number (202bn) as the most likely.
9. Energy Cable: The recipe for another summer of exploding energy prices (in Europe)
- Energy markets in Europe still fragile. A hot summer and manufacturing rebound could set prices going.
- Manufacturing cycle is improving everywhere but in Germany. Cost-push inflation showing up in drilling now
- This week we want to talk about the ingredients needed for another summer of exploding electricity and gas prices.
10. Great Game – Could Biden Have Even More to Fear from Trump’s Trial?
- Welcome to this week’s Great Game where we will catch up on events in the Middle East and also cover the Trump trial that’s currently taking all the attention in the US Election race.
- Situation:Israel responded very lightly to the massive Iranian attack on April 13th and we haven’t heard any more from that conflict over the past week.
- As we predicted, Israel’s response was “next to nothing” and clearly acknowledged the de-escalatory nature of Iran’s strike. I know some took offense to that analysis, but it is genuinely our assessment and I think events since has reinforced that view.
Entity | Insights | Analytics | News | Discussion | Filings | Reports |
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1. Why Tesla Shows Post Results Rebound of over 10%?
- Again, Tesla reports a 1Q24 sales with 4% miss but post market share price up more than 10% for 6 reasons. 1. Gross margin was stable on 15% sales drop;
- 2. ASP was stable; 3. Affordable EV on track for 2025; 4. Factory expansion to slow; 5. Optimus to sell end of 2025; 6. 2024 EV shipment higher than 2023.
- Near term risks to remain: 1. When will margin trough? 2. Why bother to buy EV if 2nd hand market collapsing? 3. Will Robotaxi/FSD bring in meaningful sales/profits soon?
2. TSMC Just Provided Substantial Visibility into Their Long-Term Growth Estimate; ASML Adds Color
- TSMC and ASML reported 1Q24 results last week; both stocks have fallen post results, impacted by global concerns despite a strong outlook for these two leaders into 2025E.
- TSMC guided for strong growth not just in 2024E, but if one digs into management’s comments, they actually provided strong visibility into their 2028E internal revenue expectations.
- For ASML, its EUV product business is the key indicator to watch. We believe TSMC shares will continue to re-rate even through a period of global economic softness.
3. TSMC, ASML, VAT Group, and Alphawave Earnings
- It’s time for the main event: earnings are upon us. As is customary, let’s start with TSMC, move to ASML and Alphawave, and then discuss VAT Group.
- TSM revenue is above guidance, gross margins are a bit ahead of the midpoint, and operating margins are at the high end of guidance.
- First, while this is a good result, semiconductors are due for a correction. I wrote about this in March, and SOXX has quietly crept downwards since then.
4. Taiwan Dual-Listings Monitor: TSMC Breaks Down From Extreme, UMC Discount Near Historical Low
- TSMC: +9.2% Premium, Major Breakdown From Previous Historically Extreme High
- UMC: -1.9% Discount, Is Near Low End of Historical Range
- ASE: +10.4%; ADR Short Interest Jumps to Very High Level vs. History
5. Intel Is Shifting Focus to Products, Away from Manufacturing/Foundry; Worth to Follow?
- Intel misses 1H24 market consensus again, post market correction of over 7%. Can shifting focus away from foundry/manufacturing help?
- Is the breakdown change for future spin off/IPO of foundry/manufacturing, and non focus businesses like Altera and Mobileye positive?
- We disagree Intel foundry to breakeven in two years; we see AI product lagging behind competitors and non AI server CPU being squeezed by AI server GPU and GPU/CPU integration.
6. Lasertec (6920 JP): Further to Fall
- Lasertec has dropped more than 20% in the past week and a half, but is still selling at more than 60x EPS guidance for FY Jun-24.
- Weak orders at ASML, disappointing guidance from TSMC and doubts about Intel’s equipment purchases cast doubt on Lasertec’s growth potential.
- Between December 2021 and June 2022, Lasertec’s share price dropped by more than 50%. Wait for Q3 results before reaching for a falling knife.
7. Q124 Tesla & Meta: Compare & Contrast
- Tesla had a dismal quarter but Musk told a fairy tale about RoboTaxis and Robots and the markets rejoiced
- Meta had a beat & raise quarter but Zuckerberg told the truth about the fact that it would take time to monetise their AI investments and the markets recoiled
- Markets are on edge and big moves either way can be expected post earnings
8. SK Hynix: AI Is Still the Main Driver
- SK hynix earnings were announced, with a 10% Q/Q revenue increase driving a 734% increase in operating profit
- Although the company cited AI demand as the basis for this, its DRAM revenues, which are very AI dependent, increase very little
- NAND SSD demand increased significantly, with a 30% increase in revenues, largely attributable to price increases
9. Taiwan Tech Weekly: Semi/AI Darlings Slammed; TSMC Supply Chain Insights; ASE Wins Key IPhone Order
- Taiwan Tech Shares Fell Sharply Along With Global Selling — Semiconductor and AI Names Most Exposed
- What Is TSMC Telling Us About Semi Supply Chain Stories at Its Investor Conference?
- ASE Technology Holding (3711 TT) Wins iPhone 16 System-in-Package Order from Apple (AAPL US)
10. Memory Monitor: What SK Hynix Sees For PC and Server Markets Ahead; TSMC’s Strength Vs. Samsung
- SK Reports Massive Margin Rebound; Nanya Tech’s Financial Performance Appears Relatively Weak in Perspective
- AI Applications Now Translating Into Rising Solid-State Memory (SSD) Demand
- SK Povided Positive Color for Taiwan PC Names; New TSMC Collaboration Highlights TSMC Strength vs. Samsung