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. This Party’s Just Getting Started…
- Q423 revenues of $6.2 billion, $100 million above the guided midpoint, up 6% QoQ and up 10% YoY
- Q124 guidance was for $5.4 billion at the midpoint, down 13% QoQ and flat YoY.
- We forecast 2024 Data Center growth of >70% YoY with potential for further upside
2. TSMC, SMCI, Texas Instruments, AWE, ASML, and LRCX
- TSMC started this season’s earnings with a strong result. Shares rallied immensely on this print, and it’s justified. In almost every metric, TSMC came out ahead.
TSMC had a revenue, operating income, and gross margin beat and guided above the street.
Now let’s break out revenue by node and platform for a further look into the results of the world’s largest foundry.
3. Intel 18A is in Sight, Does it Matter?
- Intel reported earnings last week. Intel was one of my favorite stocks last year, and I wrote about it here in “Is This the Intel Inflection”, where I successfully called the bottom in the stock.
- It’s worked pretty well, even against the SOXX index since then.
- I’ll summarize my thesis back then, update you now on what I think about Intel, and write about results and read-throughs.
4. Samsung Memory Revenues Up Impressively
- Samsung’s earnings was recently reported, with memory revenues up nearly 50% in the fourth quarter
- This gain has been driven by very strong growth in AI and a normalization of inventory levels
- The memory business is approaching positive margins once again, and SK hynix is already profitable
5. LRCX. Recovery Stalls As Outlook Remains Stubbornly Muted
- LRCX reported Q423 revenues of $3.76 billion, marginally ahead of the guided midpoint, up 8% QoQ but down 29% YoY
- Looking ahead, LRCX forecasted Q124 revenues of $3.7 billion, essentially flat sequentially.
- The memory recovery is happening, but only for HBM and node transitions. No spending on memory capacity additions means limited upside for LRCX.
6. Taiwan Dual-Listings Monitor: Can TSMC Sustain Extreme ADR Spread?; UMC Results Catalyst Tomorrow
- TSMC: +13.5% ADR Premium, Historically High Spread Represents Short Opportunity
- UMC: -0.9% ADR Discount, Results Tomorrow Could Open Up Trade Opportunity
- ASE: +9.1% Premium, Historically High But Likely Best to Wait for Higher Levels
7. Taiwan Tech Weekly: Semiconductors Surging in Southeast Asia; UMC & Mediatek Results Today
- UMC & Mediatek Results Today in Taiwan, Samsung Also Reporting; Taiwan AI Names Flying; Himax & Novatek Top Losers Ahead of Results.
- Semiconductor Surge: Southeast Asia Taking Center Stage Amid Taiwan’s Geopolitical Shift
- First Run of Tech/Semis’ Guidance Tells Us What Industries and Companies to Avoid
8. MediaTek (2454.TT): 2024F Indicating a Complete Recovery from the Previous Downturn Situation.
- MediaTek expects a reduced DOI level in 2024F while maintaining operating expenses and pricing discipline in 2023.
- The upgrade cycle has begun for devices equipped with AI functions. The Dimensity 9300 is just the first edge AI product for smartphones.
- MediaTek does not predict a significant increase in demand and expects a steady demand for smartphones.
9. KLAC. Looks a Lot Like LRCX!
- Q423 revenues of $2.49 billion, marginally above the guided midpoint, up 3.6% QoQ but down 15.6% YoY. Net income was $583 million, down $158 million QoQ.
- Current quarter guidance of $2.3 billion, down 8% QoQ and also down around 5% YoY
- Interesting Q&A discussion on backlog. KLAC’s order book is risker than their peers due to their shorter lead times. Something to watch…
10. Mediatek Results Take-Aways: High-End Devices to Take Market Share Globally; Upward Revisions Likely
- Mediatek’s results for 4Q23 exceeded expectations; Forward guidance also suggests that consensus forecasts for 2024 may need to be revised upward.
- Foresees the start of its “next growth phase” in 2024, with AI influencing mobile upgrades and the introduction of new products in late 2025, indicating potential growth through 2026E.
- Mediatek indicated that AI interest will drive high-end mobile devices to gain market share in 2024E.
This weekly newsletter pulls together summaries of the top ten most-read Insights across Equity Capital Markets on Smartkarma.
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1. Amer Sports IPO Trading – Downsized and Cornered, Close to Optimistic Fair Value
- Amer Sports (AS US) raised around US$1.3bn in its US IPO, after pricing its IPO below its initial range, as per media reports.
- Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
- We have looked at the company’s performance and valuation in our past note. In this note, we talk about the trading dynamics.
2. Mixue Pre-IPO: Reliable Price Advantage – An On-The-Ground Viewpoint
- We believe Mixue’s low prices are fit for the current weak economy.
- Any “freshly made” price lower than Mixue’s will compete with bottled drinks.
- We also believe low rental is the key for Mixue’s low prices.
3. Brainbees Solutions (FirstCry) IPO: The Bear Case
- FirstCry (0172540D IN), India’s largest multi-channel retailing platform for mothers’, babies’ and kids’ products, has filed for a US$700 million IPO.
- In Brainbees Solutions (FirstCry) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
- The bear case rests on the worrying trend of India’s KPIs, margin pressures, cash burn, and deteriorating balance sheet strength.
4. Ola Electric Pre-IPO – The Negatives – Still a Long Road Ahead with Ample Competition
- Ola Electric is looking to raise about US$1bn in its upcoming India IPO.
- Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
- In this note, we talk about the not-so-positive aspects of the deal.
5. Metals Acquisition Ltd Secondary Listing – Too Much to Pay for a Single Asset
- Metals Acquisition (MTAL US) is looking to raise up to A$300m (US$197m) through its ASX secondary listing.
- The proceeds will be used to repay Glencore’s deferred consideration facility for the MTAL’s acquisition of its CSA copper mine, amongst other uses.
- In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
6. Ola Electric Pre-IPO – The Positives – India’s Answer to Tesla?
- Ola Electric is looking to raise about US$1bn in its upcoming India IPO.
- Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
- In this note, we talk about the positive aspects of the deal.
7. Samhyun IPO Preview
- Samhyun is getting ready to complete its IPO on the KOSDAQ exchange in March. The IPO total offering amount is 40 billion won to 50 billion won.
- The company generated sales of 99.8 billion won (up 45.5% YoY) and operating profit of 9.8 billion won (up 250% YoY) in 2023.
- Samhyun developed one of the world’s first CVVD (Continuously Variable Valve Duration) technology for automobile engines, which improves fuel efficiency by controlling the engine’s valve opening time.
8. Xiaocaiyuan International Holding Pre-IPO Tearsheet
- Xiaocaiyuan International Holding (XCY HK) is looking to raise up to US$200m in its upcoming HK IPO. The deal will be run by Huatai and UBS.
- Xiaocaiyuan is a Chinese home-style cuisine restaurant operator. It prices its menus’ items to achieve average spending per consumer between RMB50 and RMB70 for its dine-in customers at its restaurants.
- According to the firm, a Xiaocaiyuan restaurant offers approximately 45 to 50 menu items in each season, including cold dishes, stews and braised dishes, amongst others.
9. ECM Weekly (4th Feb 2024) – Ola Electric, Mixue, Citicore, Amer, Thai Credit, Indus Tower, MTAL
- 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, Amer Sports (AS US) was priced below its range, while Thai Credit Bank PCL, managed to get enough support to pull thru.
- Given the earnings season, there weren’t many placement apart from Indus Towers (INDUSTOW IN) and Metals Acquisition (MTAL US)‘s CDR offering.
10. Shouhui Tech Pre-IPO Tearsheet
- Shouhui Tech (SHOU HK) is looking to raise around US$200m in its upcoming Hong Kong IPO. The bookrunners on the deal are CICC, and Huatai International.
- Shouhui Tech (Shouhui) is an online life and health insurance intermediary service provider in China.
- According to F&S, Shouhui was the third largest online insurance intermediary in China in terms of GWPs of long-term life and health insurance in 2022, with a 7.1% market share.
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 (Mar 2024): Update on Ranking, Capping, Funding & Fast Retailing
- The review period for the Nikkei 225 (NKY INDEX) March rebalance ends yesterday. There could be three changes at the rebalance with sector balance in focus.
- Depending on the changes, passive trackers will need to buy between 1.3-19x ADV (7.1-24% of real float) on the inclusions and sell between 3.5-47x ADV on the deletions.
- Fast Retailing (9983 JP) avoids capping in March, passives will buy Nitori Holdings (9843 JP), and 25 stocks have over 0.5x ADV to sell as part of the funding trade.
2. Aeon (8267) Wants To Buy a Bigger Stake in Tsuruha (3391); What Does Tsuruha Want?
- Aeon Co Ltd (8267 JP) owns 13% of Tsuruha Holdings (3391 JP). Oasis owns 13% too. Oasis ran a governance campaign but lost last summer’s AGM. Aeon supported Tsuruha.
- Tsuruha shares popped in November when Tsuruha said it was looking at its strategic options. BBG reported PE firms were circling. Now Aeon wants to buy Oasis’ stake.
- That would put Aeon in a near-blocking position without consolidating. And it would mean minorities stayed minorities. The real question is whether this is what Tsuruha wants.
3. FINAL PREDICTIONS: March 2024 Nikkei 225 Rebal (Socionext, Disco, and 1 Consumer Goods Stock to ADD)
- The Nikkei 225 data for the March 2024 rebalance is a wrap. The names are the same as before but there is likely less DISCO Corp (6146 JP) to buy.
- It’s still big, but smaller than before because of the difference between performance and the change in PAF required to be below 1%. A 4:1 share split would be optimal.
- I recommend a few positioning changes from before, and the Fast Retailing trade loses one short-term option but the longer-term one stays in place.
4. Korea: Stocks with Near-Term Potential Passive Flows
- There are a few stocks in Korea that have outperformed/ underperformed their peers and could be added to or deleted from global passive portfolios next month.
- There could be buying in EcoPro Materials and Hanjin KAL while Hotel Shilla, Pearl Abyss, F&F, Hyundai Mipo Dockyard, Hanon Systems and Jyp Entertainment could be sold.
- There will be a lot of flow on the stocks and passive trackers will need to trade over 7 days of ADV in most stocks.
5. STAR50 Index Rebalance Preview: Sustaining Outperformance on Expected Impact
- The review period for the March rebalance ended 31 January. We expect the changes to be announced 23 February with the implementation taking place after the close on 8 March.
- We expect the index committee to continue using a 6-month minimum listing history resulting in three changes to the index.
- The potential inclusions have dropped but there has been significant outperformance versus the potential deletions. That could continue as positioning continues for the high expected impact on the stocks.
6. Timing of Double Dividends Opportunities in Korea
- The change in the dividend payment system in Korea in 2024 is likely to result in some attractive “double dividends” opportunities.
- According to the Korea Exchange, there are seven stocks that have changed their dividend record dates policy last year and also that pay quarterly dividends.
- Hyundai Motor (005380 KS) (common) provides a dividend yield of 5.8% and Hyundai Motor (005385 KS) (pref) provides a dividend yield of 9.6% at current prices.
7. NIFTY50 Index Rebalance Preview: One Change for Sure; Second One Is a Maybe
- With the review period complete, Shriram Finance (SHFL IN) should replace UPL Ltd (UPLL IN) in the NIFTY Index (NIFTY INDEX) at the March rebalance.
- We have Trent Ltd (TRENT IN) marginally ahead of Bharat Electronics (BHE IN) as lower probability replacements for Bharat Petroleum Corp (BPCL IN) in the index.
- The impact on the stocks will be large in terms of delivery volume to trade, but the stocks have moved a lot over the last few months.
8. A/H Premium Tracker (To 26 Jan 2024): AH Premia Still Near Multi-Yr Wides, SOEs May See New Action
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND flows were small positive and NORTHBOUND flows a decent buy. AH premia stopped rising. Chinese shares bounced. SOEs being bought. Tech being sold. Tencent seeing SB outflows, still.
- New article in China Securities Journal hints at new measures on SOEs. Watch this space. Wouldn’t be short SOEs vs Privates on H/A basis.
9. UOL Group (UOL SP): At Risk of Passive Selling in February
- UOL Group (UOL SP) has underperformed its Singapore peers and the drop in market cap could result in the stock being deleted from global passive portfolios in February.
- UOL Group (UOL SP) has traded higher since end October and there has been a steady increase in cumulative excess volume on the stock since then.
- UOL Group (UOL SP) trades richer than its closest peer, City Developments (CIT SP), on EV/Sales and EV/EBITDA. The recent outperformance presents a trading opportunity.
10. Benesse (9783) – Tender Offer To Launch; No Change in Terms (¥2,600/Share)
- The “MBO” for Benesse traded through terms from the 6th day post-announcement onwards. 37% total traded since announcement, 20% since that 6th day.
- The deal as announced 10 November was entirely too cheap. It was somewhat egregious if you look through the balance sheet. Plus there was a free museum on top.
- But to no avail. There is no bump. There have been no activists peeping above the parapet (yet). It isn’t impossible to block, but if nobody shows their face…
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. A ‘Back Seat’ Bond Yield Driver: US Treasury Is Forcing The Fed To End QT. US Yields To Re-Test 5¼%?
- ‘Stealth QE’ from the US Fed set to continue, but US Treasury is the ‘back seat driver’
- Treasury wrestling to cap near-term coupon supply to avoid rising yields, but Fed willing to let regional banks’ liquidity levels rise
- Rising public debt is the major bogey: pushed up by demographics and monetized by Fed and Treasury. 10-year yields will re-test 5¼%
2. Korean Government to Announce Specific Measures to Increase Value of Low PBR Stocks in February
- Choi Sang-Mok (Deputy Prime Minister and Minister of Strategy and Finance) stated that the Korean government will announce specific plans to increase the value of low PBR stocks this month.
- We provide a list of 97 stocks in KOSPI 200 that are trading below 1x P/B. They are trading at average P/B of 0.54x.
- We expect these low P/B stocks to continue to outperform the market in the next several weeks leading up to the government’s actual announcement.
3. Outlook 2024: Europe At A Crossroads
- Claims that the European Parliament elections in June are critical for the EU may be exaggerated.
- The election results, however, are considered the second most significant of 2024.
- The outcome could be crucial for the prospects of EU reform and enlargement.
4. US Liquidity & Debt Watch: Yellen to Decide the QT Tapering Timing Tomorrow
- Yesterday, the US Treasury revealed the issuance targets for Q1 and Q2.
- The net addition to marketable debt is $760 billion for Q1.
- While this is a substantial amount, it’s $55 billion less than the October estimate for Q1 ($816 billion).
5. New Zealand CPI Inflation 4.7% y-o-y (consensus 4.7%) in Q4-23
- New Zealand’s CPI inflation rate in Q4-23 was 4.7% year-on-year, marking a decrease from the previous quarter’s rate of 5.6%.
- The Q4-23 inflation rate is 1.05 percentage points below the one-year average.
- The 0.5% quarter-on-quarter rate annualises even lower, closely aligning with the target.
This insight is AI generated from publicly available sources.
6. Steno Signals #84 – The Red Sea troubles are spreading FAST!
- Happy Sunday folks and welcome to our flagship editorial!We have been banging the drum on the re-acceleration of goods inflation due to the Red Sea debacles for a while.
- Our Geopolitical Team highlighted the shipping risks as the largest risk to markets already on Oct 31 and we have been all over this story since – sadly watching the ever accelerating worsening by the week.
- The Suez has de facto been closed for containerships not sailing under Russian flag for a while, but the attacks over the weekend on the British tanker MV Merlin Luanda is potentially a sharp escalation of the situation as the tanker carried Russian oil.
7. War In 2024
- Investors have adapted to ongoing global conflicts such as the Russia/Ukraine war, the Middle East crisis, and China/Taiwan tensions.
- Despite this, they must remain cautious of less publicized war risks worldwide.
- These less visible risks are part of the turbulent times we currently live in.
8. Evergrande Nugget: Popping the World’s Largest Asset Bubble
- Monday, a Hong Kong court ordered the liquidation of Evergrande- whether the court ruling will be of much help to creditors remains to be seen as the court’s jurisdiction is separated from the bulk of Evergrande’s assets located in the Mainland.
- This ruling doesn’t come as a surprise to the markets, as Evergrande’s impending bankruptcy has been public knowledge for months.
- Beijing has displayed little inclination to rescue the world’s most heavily indebted real estate developer, burdened with an astounding $300 billion in total liabilities- a fact that has been reflected in the now-suspended Evergrande share price.
9. China Macro: Sector Positioning Update
- Industrials and Consumer Staples Remain Top Overweights, Though Sentiment Fragile for Both.
- Energy sector shows signs of a turnaround from long-term decline, whilst Financials remain unloved by China investors.
- Real Estate allocations have hit record lows, with average holdings at just 2.93%, while Consumer Discretionary sector approaches all-time highs.
10. US: On Track for a Rate Cut in Jun’24 as Core PCE Inflation Eases MoM and YoY
- Real GDP grew 2.5% in CY23, helped by exports (+2.7%), PCE (+2.2%), government spending (+4.4%), and falling imports (-1.7%). Slower PCE and government-spending to reduce growth to ~1% in H1CY24.
- Core PCE inflation (the Fed’s target) eased to 2.93%YoY in Dec’23, the lowest in 33 months. More crucially, MoM annualized gains in core PCE averaged 1.85% in H2CY23.
- 13 months of M2 contraction, and deceleration in RGDP and core PCE, provide the perfect backdrop for a rate cut in Jun’24. Expect FOMC to hint at that this week.
Entity | Insights | Analytics | News | Discussion | Filings | Reports |
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1. Memory Monitor: Microsoft Copilot Will Supercharge Demand for DRAM; SK Hynix, Nanya Tech, Micron
- MSFT’s new AI features for Windows will need computers with at least 16GB of DRAM to run effectively. MSFT is asking manufacturers for this as a minimum for AI models.
- MSFT announced Copilot Pro for individuals and small businesses last week. The desire to use generative AI and the minimum required DRAM will drive accelerated PC upgrades.
- We note relative strength in 16GB DRAM prices; In Memory space, we continue to see relative value in SK Hynix, however, Nanya has the opportunity to Outperform in Taiwan.
2. Good Entry Point as Tesla Stabilizes Its 4Q23 Asp and Profits Per EV
- Blended ASP of decline of 1% q/q in the past two quarters in 2H23, better than 3-10% q/q decline during 3Q22-2Q23, resulting in Tesla’s blended ASP decline to decelerate.
- Due to Tesla’s cost cutting efforts with nice inventory control, we calculates profits/EV rebounded nicely by 21% q/q to US$3,490 per EV in 4Q23, much nicer than no profits.
- Good improvement on its FSD Beta version 12.1.2 lately might become a pure profits/EV boost by incremental subscription of US$10,000-15,000 per EV or monthly fee by existing Tesla owners.
3. ASML Guides Q124 Down 27% QoQ, Shares Surge >8%. What Gives?
- ASML reported Q423 revenues of €7.2 billion, up 7.5% QoQ and ~€100 million above the guided midpoint for the quarter.
- ASML guided Q124 at €5.25 billion, down a very significant 27% sequentially. Also reiterated their previous forecast for 2024 revenues to be remain flat with 2023
- ASML shares surged >8% in overnight trading. What’s going on here?
4. Are You Confused About What Intel and UMC Are Working Together?
- What production fabs and capacity? Intel’s Arizona 10nm Fab 12, 22, 32, which are mostly depreciated. Intel will provide nearly 30k/m 12″ capacity for UMC at the first stage.
- Who’s 12nm node and design rule? UMC’s tsmc-like 12nm design rule for customers to produce WiFi 7, TV controller, and other products.
- Other discussions include: “Who will operate the fabs?”, “How to share sales/profits?”, “Mass production time?”, “Why benefits to Intel?”, “Why benefits to UMC?”, “Will TSMC get hurt?”
5. What SK Hynix’s Latest Results Indicate for PC & Mobile Makers into 2025E, Including Apple
- SK Hynix results surpised consensus with a swing to positive operating profit; The company expects industry demand growth to exceed supply growth by a wide margin in 2024E.
- Management suggests optimism not just for 2024E, but also for 2025E. 2025E is when a much larger positive demand impact from AI is expected as AI products will expand substantially.
- SK Hynix comments regarding AI phones imply that consumers will most likely need to upgrade their phones, including iPhones, to take full advantage of AI capabilities
6. A R&D Director Dr. Young Was at TSMC, SMIC, and Intel Foundry Shared Views on 3-1nm Competitions
- With a strong 20A/18A team, Intel might take some CPU shares back from AMD to affect TSMC but reduce geopolitical tensions from the US after Intel returning to the best.
- SMIC can use DUV to do 3nm but different from others’ because Moore’s law is no longer using circuit line width but to use performance, power, density to determine 3nm.
- New fabless industry opportunities are emerging in middle east countries, and south east Asia countries like Vietnam. Despite high cost issues, global expansion will help TSMC to attract global talents.
7. First Run of Tech/Semis’ Guidance Tells Us What Industries and Companies to Avoid
- Continuous weaknesses to be seen in industrial and general non-AI server semi demand starting 3Q23 and lasting into 1Q24 and some weaknesses in digital consumer semi demand starting 4Q23.
- Memory semiconductor vendors see strengths in 4Q23 and continuous improvement in DRAM/NAND price in 1Q24.
- We see a healthy mid single digit q/q and y/y decline on 4Q23 MOI but suggest vendors to avoid in next 1-2 months before they guide down the market.
8. From Dec N.A. SEMI Equipment Billings to Expect a Sales Raise for Applied Materials and Lam Research
- Applied guided -1% q/q and Lam Research guided 8% q/q sales growth, below N.A. front end semi equipment billings’ 12% q/q growth, room for analysts to raise their 4Q23E sales.
- N.A. front end equipment sales reached US$3.775bn, up 1% m/m, down 5% y/y but back end equipment billings reached US$222mn in December, down 8% m/m and down 9% y/y.
- Better than equipment vendors, WSTS/SIA reported November sales of US$48bn, up 3% m/m and up 5% y/y (the first month to turn positive after 14 months of consecutive y/y decline)
9. Intel Ruins The Rally With Its Gloomy Guide
- Q423 revenues of $15.4 billion, +8.5% QoQ, +10% YoY and $300 million above the guided midpoint
- Q124 guided to $12.7 billion, -17.5% QoQ albeit still up 8% YoY.
- Intel’s share priced fell 12% on the guide. CEO says this was an overreaction.
10. Taiwan Tech Weekly: SK Hynix Boosts Optimism for Memory; Intel, Mediatek, Microsoft, UMC Key Events
- Taiwan Tech Plays Have Soared Since TSMC’s Strong Outlook, and SK Hynix Reported a Return to Op Profit
- Memory Monitor: Microsoft Copilot Will Supercharge Demand for DRAM; SK Hynix, Nanya Tech, Micron
- Key Upcoming Events — Intel, Microsoft, Mediatek, UMC Results Ahead
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1. Renesas (6723 JP) ANOTHER Clean-Up Block Trade as Hitachi/NEC Exit
- Last November saw the clean-up trade of INCJ getting out of Renesas Electronics (6723 JP). That was 180+mm shares, well over-subscribed.
- Today we have news Hitachi and NEC are getting out of their stakes. That’s 123mm shares in an Accelerated Block Offering of about US$2bn. I expect it will go well.
- Recent gains in semiconductor stocks globally make this larger discount attractive. I expect a little heaviness but not much. There are index repercussions for international indices.
2. Renesas Electronics Placement – Another US$2bn Deal, Momentum and Index Weights Should Help
- Hitachi Ltd (6501 JP) and NEC Corp (6701 JP) aim to raise around US$2.1bn via a sell-down of their stake in Renesas Electronics (6723 JP).
- The stock has seen a number of deals over the past few years with the most recent one being a cleanup in Nov 2023, which did well.
- In this note, we will talk about the placement and run the deal through our ECM framework.
3. Amer Sports (AS US) IPO: Valuation Insights
- Amer Sports (AS US) is a global iconic sports and outdoor brand group. Amer has launched an NYSE IPO to raise US$1.6-1.8 billion at a US$16.00 to US$18.00 price range.
- We previously discussed the IPO in Amer Sports IPO: The Bull Case, Amer Sports IPO: The Bear Case and Amer Sports IPO: Valuation First-Look.
- We revise our forecasts to reflect the FY23 preliminary estimates and long-term growth targets. Our valuation analysis suggests that Amer is fairly valued at the IPO price range.
4. Amer Sports IPO Valuation Analysis
- Amer Sports announced it plans to raise up to $1.8 billion at $16 to $18 per share, targeting a valuation of up to $8.7 billion.
- We estimate the company to generate revenue of $5.6 billion (up 23.5% YoY) and operating profit of $285.7 million (down 13.7% YoY) in 2024.
- We would pass on this IPO due to lack of valuation merits, highly leveraged balance sheet, and inconsistent profit margins, despite its solid sales growth in the past several years.
5. Brainbees Solutions (FirstCry) Pre-IPO – The Positives – Carving Its Niche
- FirstCry is looking to raise up to US$700m in its upcoming India IPO.
- FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
- In this note, we talk about the positive aspects of the deal.
6. Amer Sports IPO – Deal Updates and Thoughts on Valuation
- Amer Sports (AS US) now aims to raise up to US$1.8bn in its US IPO. Proceeds from the listing will be used to pay down debt to the Anta-led consortium.
- Amer Sports is a sports and outdoor brands company making clothing and other sporting equipment for use in snow sports, running, climbing, baseball, american football, tennis and other sports.
- We have looked at the company’s performance in our past note. In this note, we talk about valuations.
7. Frasers Centrepoint Trust Placement – Relative Large Dilution for Smallish Accretion
- Frasers Centrepoint Trust (FCT SP) aims to raise around US$152m in order to partly fund its purchase of an additional stake in NEX mall.
- The company had purchased its initial stake in the property nearly a year ago.
- In this note, we comment on the deal dynamics and run the deal through our ECM framework.
8. Thai Credit Bank IPO – Sentiment Isn’t the Best, but Valuations Aren’t Demanding
- Thai Credit Bank PCL (3674238Z TB) is looking to raise up to US$281m in its Thailand IPO.
- TCB is a commercial bank that focuses on providing business loans to small and medium-size enterprises (SMEs), nano loans and micro credits to merchants, and home loans for individual customers.
- In this note, we will look at the updates since, undertake a quick peer comparison, and share our thoughts on valuation.
9. Brainbees Solutions (FirstCry) Pre-IPO – The Negatives – Not All of It Fits Together
- FirstCry is looking to raise up to US$700m in its upcoming India IPO.
- FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
- In this note, we talk about the not-so-positive aspects of the deal.
10. Pre-IPO Shouhui Tech – The Business Outlook and Stock Price Performance Are Not Optimistic
- The essence of Shouhui’s business model is to “sell insurance” rather than provide services with technological attributes. So, Shouhui has relatively single business composition and lacks diversified sources of revenue.
- The trend of “disintermediation” is becoming increasingly evident, which may lead to customers deciding to purchase insurance directly from insurance companies not from Shouhui, resulting declining demand for Shouhui’s services/products.
- The business nature of insurance is incompatible with the Internet’s pursuit of rapid expansion. Cooling “Internet +insurance” investment in recent years proves the decline of market’s enthusiasm for this business.
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. JSR (4185) – Very Juicy Arb Return At Expected Timeline
- Five weeks ago, JIC announced a delay in the commencement of the Tender Offer to buy JSR Corp (4185 JP), originally scheduled to start by end-December 2023.
- In the announcement, they said they expected the deal to start by end-February. In the press conference afterwards, JIC CEO Yokoo said “no particular issues with the Chinese regulator.”
- He then added he expected the deal to be done by March-end. Language is vague. I expect that means to start by then, but even then, annualised is now 30%.
2. Shinko Electric (6967) Takeover: Changing Break/Gap Risk as Comps Gain
- The JIC Deal for Shinko Electric Industries (6967 JP) started trading wide when announced five weeks ago. It is still at 9% for perhaps 9 months.
- There is FUD. There are Flows. Just like JSR (4185). Some of that FUD can be explained by “gap risk” on deal break…. or can it? We look at risks.
- 5 weeks ago, there was more positioning risk than fundamental risk. But now main comp Ibiden has outperformed Shinko by 17%. Gap risk is fundamentally lower now. Bump risk exists.
3. Renesas Electronics (6723 JP): Passives Will Need to Buy a LOT This Year
- Hitachi Ltd (6501 JP) and NEC Corp (6701 JP) are looking to sell their entire stake in Renesas Electronics (6723 JP) in a deal that will raise around US$2.2bn.
- Renesas Electronics (6723 JP) dropped a bit in November following INCJ’s stake sale but momentum has picked up again as the stock reaches for new highs.
- The float increase in global indices will coincide with the offering. There will be BIG buying by TSE Tokyo Price Index TOPIX (TPX INDEX) trackers in October.
4. Hong Kong: Where Could Shorts Be Covered?
- Short notional in Hong Kong is HK$335bn and has been falling over the last 12 months due to a drop in the market.
- In terms of short notional to marketcap, the Materials, Consumer Staples, Health Care, Utilities, Real Estate sectors are most shorted while the least shorted are Information Technology, Communication Services, Energy.
- The largest shorts have been built on BYD (1211), XPeng (9868), ICBC (1398), Xiaomi (1810), Link REIT (823), JD.com (9618), Wharf Holdings (4) and New World Development (17).
5. Ping An A/H Premium: Blow Out Could Lead to Sharp Reversal
- Ping An Insurance (601318 CH) trades at a 40% premium to Ping An Insurance (2318 HK). The premium has blown out the last week and there could be a reversal.
- The difference in Ping An’s AH premium versus the HSAHP Index has shrunk to its narrowest level in the last 10 years.
- Shareholding in Ping An Insurance Group of (601318 CH) via Northbound Connect has dropped and shareholding in Ping An Insurance (H) (2318 HK) via Southbound Connect has increased steadily.
6. TSE Action to Implement Management Conscious of Capital Cost and Stock Price – The Data Tool
- A few days ago, the TSE announced a “name-and-shame” list where they listed all the companies which had put forth a disclosure about 【資本コストや株価を意識した経営の実現に向けた対応】
- That translates to “Action to Implement Management That is Conscious of Cost of Capital and Stock Price”. The TSE asked companies in Mar-2023 to formulate and disclose a policy.
- Some have. Some have not. The TSE made a list. They will update the list every month. However, their list is wholly inadequate, so we made it better.
7. CSI500 Index Rebalance Preview: High Turnover & Big Flow
- With three-quarters of the review period nearly complete, we forecast 50 changes (the maximum permitted) for the CSI 500 Index at the close on 14 June.
- There is a big sector skew in the potential changes. We estimate a one-way turnover of 9.1% at the June rebalance resulting in a one-way trade of CNY 5.34bn.
- The potential adds and deletes and the CSI 500 Index have performed in line since August and the current setup appears attractive.
8. CSI300 Index Rebalance Preview: A Dozen Changes for June
- With three-quarters of the review period nearly complete, there could be 12 changes for the Shanghai Shenzhen CSI 300 Inde (SHSZ300 INDEX) in June.
- We estimate one-way turnover of 1.3% at the June rebalance leading to a one-way trade of CNY 5.06bn. There are a lot of stocks with over 1x ADV to trade.
- There have been big ETF inflows to the CSI 300 Index trackers, but the potential adds have still outperformed the index and the potential deletes.
9. China: Sliding Market Leads to Passive Selling
- The China equity markets have continued to slide and the lower market caps and free float market caps will see a lot of stocks deleted from passive portfolios in February.
- We currently estimate selling of around US$1.66bn across 74 stocks listed on the mainland, in HK and the U.S., and that number could increase as markets continue to underperform.
- The potential deletes have dropped a lot over the last 4 months and there has been a marked underperformance versus the headline indices over the last month.
10. KOSDAQ150 Adhoc Index Rebalance: Seronics to Replace L&F
- L&F Co Ltd (066970 KS) will move from the KOSDAQ Market to the KOSPI Market on 29 January. That means KOSDAQ 150 Index deletion at the close on 26 January.
- As the highest ranked non-constituent from the Information Technology sector at the December rebalance, Seronics Co Ltd (042600 KS) will be added to the index.
- Short interest on L&F Co (066970 KS) is 1.8m shares (KRW 364bn; 4.98% of shares outstanding; 7.24% of float; 2.4x ADV). There could be recalls from passives and forced covering.
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. Rising Liquidity And The Threat of 5% US Bond Yields
- US Treasury yields have resumed their uptrends and look set to retest 5%
- US Fed Liquidity continues to expand, following a 13% increase in 2023
- This is a ‘normal’ investment cycle for equities, credit and the economy, but it has been abnormal for bonds
2. Steno Signals #83 – A striking divergence between EUR and USD money trends
- Welcome to our flagship editorial!It is about this time of the year when we conclude that all year-ahead outlooks have already been blown to smithereens, but what is the major surprise this year?
- Back in mid-December, between 5-7% of respondents in the widely renowned fund manager betted on higher interest rates and/or inflation in 2024.
- This is the kind of consensus that only arises once we are leaning towards the mid-to-late innings of the recession, but the problem is that we are probably not even in a recession (in the US) yet.
3. Positioning Watch – How are markets positioned in inflation?
- Like we mentioned in the first positioning watch of the year, holders of risk-assets have entered a slightly more cautious stance, and the classic risk aversion dynamics seem to be back as inflation expectations have been on the rise yet again since December.
- The Fed now find themselves at an interesting crossroads as the inflation battle may turn out more difficult than anticipated, but the gifts have already been handed out, and markets are again pricing the Fed to be the most dovish central bank in 2024 (mispricing of central banks are apparently a market speciality).
- The chart below is also a clear proof of the market’s inability to be forward-looking.
4. Global Policy Isn’t Squeezing That Tight
- Surprising strength was broadly experienced across the flash PMIs for January. Demand growth is rebounding rather than slowing, prolonging inflationary excess demand.
- Unemployment rates should rise with below-potential growth, but they broadly remain below their pre-pandemic levels and have mostly stopped falling rather than risen.
- The failure of tight labour markets to loosen suggests global policy isn’t set far above a neutral level. That should postpone cuts and limit their future extent.
5. 29 Reasons to Be Bullish
- A bottom-up driven scan of stock charts shows over 29 stocks with bullish technical patterns consisting of uptrends or breakouts from multi-month bases with strong potential upsides.
- Bullish patterns are broadly based, primarily concentrated in technology and cyclicals, which argue for a continuation of the AI-related bull and an economic rebound.
- This bottom-up analysis also pointed to bullish macro conclusions about the economy.
6. Data Points to Continuing Signs of a Slowing US Economy
- US LEI release for December signals a weakening US economy
- The annual growth rate of US LEI is deeply negative
- December Taiwan Export Orders contract sharply indicating slower growth worldwide
7. China Property: In Hindsight On 2023 and 2022 Forecasts | “Draw The Line” 2024
- We look at the key annual macro-property data for 2011-2023 and review the past ‘group forecasts’ for new home sales in China in 2023 and 2022
- The views in 2023 proved more in line with the actual than in 2022 but NBS revisions to 2022 new home sales data (Mar-Dec) add some complications
- You can join this year’s ‘draw the line’ for new home sales, part of Real Estate Foresight’s 12th Annual China Property Outlook
8. Portfolio Watch: The Yellen Put
- Takeaways: Equities are currently a preferred refuge over bonds.
- US is still the place to be relative to peers– Recession risks have diminished lately, particularly in the US, but remain a concern in Europe
- It’s becoming increasingly clear that the Treasury is going to be front and center in 2024.
9. China Economics: Further Recovery Hinges on Painful Readjustments
- China’s slightly better-than-expected GDP growth for 2023 failed to dispel the gloom around its prospects.
- The drags on China’s growth will not ease until painful adjustments are completed.
- As that will take time, 2024 will remain difficult unless policy support is considerably strengthened.
10. Portfolio Watch: Aboard the train but starring at the emergency exit
- As we laid out last week our hands are up in the air long everything like we just don’t care- except bonds.
- The reason is that the existing regime we were left with late last year with liquidity stacking up and growth fueled by Bidenomics remains fairly accommodative for risk assets while the debt issuance the treasury is burdened with these days is keeping a floor on the yields.
- What we have been pondering of late is whether the enduring inflation risk we’ve flagged will be accompanied by a corresponding persistence in growth.
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. What Stories TSMC Investor Conference Telling Us About Customers, Supply Chains, and Competitors
- TSMC expects 2024 semi sector in recovery with 20-25% y/y growth itself, driven by AI customers. By controlling capex, more rooms to raise dividends but no growth for equipment vendors.
- Faster ramp on N3, likely N3E, N3P than competitor’s. TSMC expects 3nm from 6% of sales in 3Q23, 12.7% in 4Q23 to 15% in 2024, 3x y/y increase in 2024.
- TSMC reports a nearly 30% q/q drop on IOT and consumer IC demand and sees weakness on 12″ mature technology despite better demand 8″ specialty technology.
2. TSMC Results Make Buy Story Even More Clear; Strong 2024E Guidance & Reiterates Multi-Year Growth
- TSMC reported 4Q23 results at the upper end of its guidance. More importantly, the company guided for low/mid 20% 2024E sales growth and reiterated an expected 15-20% multi-year CAGR.
- The company provided optimistic guidance for the overall semiconductor industry, forecasting 10% growth in 2024E. TSMC expects to grow much faster than the industry, however.
- TSMC is one of our Structural Longs; our NT$760 target implies 29% upside. The latest results make TSMC’s Buy case even more clear, in our view.
3. TSMC. Roaring Into Year Of The Dragon
- Q423 revenues of $19.62 billion, at the high end of guidance, up 13.8% QoQ and down 1.5% YoY. Net profit margin of 38.2% results in net income of ~$7.5 billion.
- FY23 revenues of $69.3 billion, down 8.7% YoY, only the second such down year since 2005
- Bullish FY24 forecast for >20% YoY growth sends share price soaring in overnight trading.
4. Taiwan Tech Weekly: TSMC Results; AI PC Market Site Visit; Alchip GDR Offering
- TSMC Results Tomorrow, Interest Will Be Elevated After Taiwan’s Election Result
- AI PC Availability Tight in Taipei? We Visited Taipei’s Guanghua Consumer Electronics Market Over the Weekend
- Alchip Technologies GDR Offering – Has Been Riding on an Unwavering Momentum Over the Past Year
5. AI Industry Structure and Business Model: What Inning is It?
- What inning is AI in?
- If history is a guide, it’s hard to predict the twists and turns of a new market growing from nothing.
- Here’s my humble attempt at estimating AI penetration and my thoughts on the run-rate business of AI models and industry structure.
6. GlobalWafers (6488.TT): 1Q24F Outlook Could Be a Bit Downside, but 2Q24F Could Be Picking Upward.
- The Globalwafers (6488 TT) outlook for 1Q24F is likely to show a slightly negative QoQ revenue trend. However, we anticipate a positive direction from 2Q24F onwards.
- We have a relatively high conviction for 2024F compared to 2023, indicating upside potential for the Memory and Logic sectors.
- The supply of 12″ raw wafers remains constrained among the top market players, and overcoming this constraint won’t be easy.
7. Taiwan Dual-Listings Monitor: TSMC ADRs Outpace Local, Extreme Spread; ChipMOS Good Long Level
- TSMC: Stock Prices Soared After Reporting Earnings, But ADR Rose Higher… Now +12.4% Premium, Shortable Level
- ASE: ADR Spread Has Rebounded Substantially, Now +8.6%. Not Yet at Short Levels.
- ChipMOS: ADR Spread Drops to -2.2%, Good Level to Go Long.
8. TSMC (2330.TT; TSM.US): Expect Utilization Rate to Rise with Business Recovery.
- The revenue/ GM/ OPM/ EPS is USD$19.62bn/ 53%/ 41.6%/ NT$9.21 in 4Q23. The revenue/ GMO/ OPM is US$18-18.8bn/ 52-54%/ 40-42% in 1Q24F guidance.
- TSMC’s sales for 2024F are expected to grow in the low to mid-twenties YoY.
- 2024F is expected to be a relatively healthy year for the high-performance computing (HPC) and artificial intelligence (AI) sectors, with robust demand.
9. Novatek (3034.TT): Reserved IPhone 16 DDIC for 3Q24F Shipment; 1Q24F Outlook Bright.
- Novatek Microelectronics Corp (3034 TT) had reserved Apple (AAPL US) iPhone 16 Display Driver IC (DDIC) for future shipment since 3Q24F when qualification past.
- Novatek’s outlook is increasing to about 1~5% in 1Q24F, remarked a higher quarter demand than 4Q23.
- It could be a low season in 2Q24F because the rush order shown up around Chinese New Year.
10. 2023 PC Unit Shipments Disappoint While Smartphone Fared Better Than Expected
- For 2023, Smartphone unit shipments amounted to 1.17 billion units, a 3.2% YoY decline, far better than we expected at the beginning of last year.
- For 2023, PC unit shipments amounted to 241.8 million units, a 14.8% YoY decline, worse than expected. Last time annual shipments fell below 250 million units was in 2006.
- The weaker than anticipated PC TAM is a headwind for Intel heading into earnings and Q124 guidance on January 25