Daily Brief Equity Bottom-Up: Himax Advances Optical Chip Solutions for NVIDIA and TSMC; But Fog Lingers Over China Auto Recovery and more

• Auto ICs over 50% of revenue and maintaining market share leading position, but 2Q25 guidance reflects China auto industry caution as China stimulus repeat impact fades and inventory stays lean.
• Himax advances in co-packaged optics (CPO) shipping samples; to supply TSMC and NVIDIA; Separately, Himax’s AR display tech may align with META’s needs.
• Strong auto positioning with 200+ Tcon design wins and CPO opportunity in AI/HPC supply chain reinforce long-term upside, despite soft near-term visibility. Maintain our Structural Long view on Himax.

• In this insight, we provide the top 10 stocks picks and key catalysts in the Korean stock market for the two weeks (9 to 23 May 2025).
• Our top 10 picks in the past two weeks were up on average 5.0% (from 25 April to 9 May), outperforming KOSPI which was up 1.2% in the same period.
• Our top 10 picks in this bi-weekly include HD Hyundai, Hyundai Elevator, KT Corp, Shinsegae, Coway, Hanwha Aerospace, F&F Co, SM Entertainment, and SK Inc. 

• 1H25 strong revenue growth continues as capacity increase, “production shifting back domestically”, but weakening ASP and clearly demand pull-in in 1H due to US tariffs and China domestic consumer subsidies.
• “2H not clear, especially after late 3Q”. Management mentions the usual macro / US tariffs unknowns. 2025 Capex similar to 2024 (US$7.7bn, 80% revenue), D&A increasing, ASP down, margins muted.
• The stock is as expensive as always. 49x 2025 EPS, 41x 2026. Consensus is not expecting a negative tariffs shock or weaker China domestic demand.

Wheaton announced record revenue, earnings and operational cash flows in Q125, posting adjusted net EPS that was 10.5% better than our forecast and at the top of the range of analysts’ expectations. The main reason for the outperformance was an 18,616oz (20.1%) oversale of gold relative to production, which drove a US$40.1m positive variance in revenue, partially offset by an US$8.6m negative variance in costs, US$3.6m lower-than-expected interest income and US$2.3m higher tax to result in a US$23.9m positive variance in earnings. As a result, we have upgraded our FY25 adjusted net EPS forecast by 7.5c per share (3.4%). Note that, at current metals prices, our FY26 EPS estimate rises by 73.0% to US$2.63/share.

• Revelation Biosciences is a life sciences company whose development of immunologic-based therapies is based on the well-established biology of phosphorylated hexaacyl disaccharide (PHAD) and its effect on the innate immune system.
• The company announced its 1Q2025 financial results after recently revealing that it is targeting a new target indication with its Gemini treatment, the prevention of infection in burn patients.

• Operating loss in 1Q25 will persist in 2Q25 – I expect throughout 2025. Hua Hong rapid capacity increase is supposedly sold out but D&A is increasing much faster than revenue. 
• Consensus is not expecting an end-demand slowdown resulting from US import tariffs, or sluggish China domestic consumption. Consensus expects Hua Hong to sell its capacity increase fully. 
• Given losses in 1H25, Consensus EPS forecast is too high for 2025, probably for 2026 as well. Stock is expensive at 43x 2025 EPS, EPS forecasts looks too high.

• Unusual Machines (NYSE American: UMAC) reported another record quarter with revenue of approximately $2.04 million and a gross margin of 24% with some impact from tariffs, which the company expects to be short lived.
• This growth was achieved even though US government purchases have paused recently. Margins took a slight hit from the tariffs.
• The company raised $40 million at $5.00 a share to bolster its balance sheet (customers and suppliers need to see the ability to work large orders), and to build out its Orlando motor manufacturing facility.

BlackRock Latin American Investment Trust’s (BRLA’s) lead co-manager Sam Vecht reiterates his enthusiasm for a region that is out of favour with other investors. He recognises that returns in Latin America can be volatile, so takes a longer-term view, seeking companies with the potential for stable growth that are trading on reasonable valuations. The manager has developed an in-depth knowledge of the region because of his frequent visits, which include travel to the smaller countries as well as to Brazil and Mexico, the economies of which dominate Latin America. Vecht believes that meeting a wide network, including corporate executives, government officials and community members, allows him to uncover interesting opportunities that may be overlooked by other investors.

• Soluna just published its monthly update, which includes signing of term sheets for two new wind- powered data centers (Project Hedy for 120MW and Project Ellen for 100 MW), securing land for 166MW of Project Kati, and a new partnership with Blockware for hosting capacity at Project Dorothy 2.
• For April Soluna’s hosted hashrate was a record 1,727 PH/s, and it mined 10 Bitcoins
• Project Dorothy 1A/1B: Dorothy 1A (25 MW hosting) is fully deployed, and Dorothy 1B (25 MW prop-mining) has achieved strong hashrate growth and met Q1 2025 ancillary service requirements.

• Shionogi & Co (4507 JP) is acquiring Torii Pharmaceutical, as well as the pharmaceutical business of Japan Tobacco and U.S. group company Akros Pharma (sub-subsidiary of Japan Tobacco) for ~¥160B.
• With minimum overlap in focus areas, Shionogi believes that the transaction will create a leading company that delivers innovative pharmaceuticals. However, R&D expenses of the combined company will remain elevated.
• Considering the promising pipeline, we are hopeful on the long-term growth prospect of the combined company. Shionogi is scheduled to announce FY25 result on May 12.