In today’s briefing:
- No Visa For Group Tour Visitors from China to South Korea Likely Starting 3Q 2025
- Isetan Shinjuku Takes 24% of Tokyo Market but Worries for Future
- TSMC News: Kumamoto Postponed, Maybe Germany Too. Arizona Accelerating. N2 Yield Rates.
- Tabio: Licensing and Overseas Expansion Should Boost Sock Retailer
- Turning Bearish: Hang Lung Properties Going Through a Perfect Storm
- Nippo Ltd. (9913 JP): Research Update
- Sinfonia (6507) | A Moment to Take Stock
- VRA: Time For Change (Again); Suspending Rating, PT; Lowering Projections
- TSMC (2330.TT; TSM.US): Is the Cost of Advanced Wafers a Concern? We Believe It Isn’t.
- Worry About Fake Fakes Makes RealReal a Bad Bet
No Visa For Group Tour Visitors from China to South Korea Likely Starting 3Q 2025
- In the next several weeks, the South Korean government is likely to provide details of a no visa policy for group tour visitors from China to South Korea.
- We provide a list of top 15 Korean companies that could benefit from potential no visa policy for group tour visitors from China to South Korea.
- These 15 companies’ share prices are up on average 49.2% YTD, sharply outperforming KOSPI and KOSDAQ that are up 21.2% and 15.9%, respectively YTD.
Isetan Shinjuku Takes 24% of Tokyo Market but Worries for Future
- Department stores had a terrific year in FY2024, especially some of the more iconic stores like Isetan Shinjuku and Hankyu Umeda.
- Declining custom from tourists is beginning to be a worry but the emphasis on capturing data on core local customers has, and will, pay big dividends for the best stores.
- The rest of the sector however, will continue to contract but the polarisation will help highlight the luxury positioning of the best stores.
TSMC News: Kumamoto Postponed, Maybe Germany Too. Arizona Accelerating. N2 Yield Rates.
- Kumamoto 2nd Fab delayed because of bad traffic? Sure, bad traffic, but legacy Fab utilization is 70%, who needs additional capacity now and in 2026? Legacy demand remains weak.
- Arizona construction is accelerating, highlighting the dichotomy that I’ve been mentioning : demand for AI / Data Center is booming, demand for Legacy (specially auto & industrial) remains weak.
- 2nm yield reached 90%. True, but that’s the yield of SRAM test cell. This is not a production yield. SRAM is a very small cell used to qualify volume ramp.
Tabio: Licensing and Overseas Expansion Should Boost Sock Retailer
- Tabio is the biggest retailer of hosiery in Japan but has suffered a decade of stagnant growth.
- It now has plans to grow e-commerce, men’s sports lines through licenses such as with FC Barcelona.
- It will also speed up overseas expansion, especially in China.
Turning Bearish: Hang Lung Properties Going Through a Perfect Storm
- We are turning bearish on Hang Lung Properties. Given China’s economic slowdown, we think luxury spending in China will take longer than expected
- In addition, the property slowdown and housing prices decline will lead to a negative wealth effect, which will further impact luxury consumption
- If RMB is to strengthen, more Chinese will travel to spend overseas. HLP P/B valuation is almost historical low, but can stay cheap as a “value trap”
Nippo Ltd. (9913 JP): Research Update
- Nippo produced record earnings in FY24, with OP of ¥1,970mil (+2.7% YoY) on sales of ¥44,890mil (+7.1% YoY).
- Thanks primarily to solid growth in order for print circuit boards [PCBs] used in generative AI servers and wafer polishing jigs manufactured in Nippo’s Okinawa factory, sales landed above the firm’s guidance of ¥42,000mil.
- FY25 is the final year of Nippo’s medium-term plan [MTP] which calls for an OP target of ¥2,000mil.
Sinfonia (6507) | A Moment to Take Stock
- Strong fundamentals priced in: Sinfonia’s sharp share price rally reflects robust FY3/25 results, but modest FY3/26 guidance limits near-term upside potential.
- Conservative outlook despite tailwinds: Management’s cautious projections for semiconductor and defense segments appear understated given ongoing structural growth in both industries.
- Valuation fair at current levels: Updated DCF suggests shares are reasonably valued; premium to peers justified by dual exposure to secular growth in aerospace and semiconductors.
VRA: Time For Change (Again); Suspending Rating, PT; Lowering Projections
- We are suspending our rating and price target for Vera Bradley and lowering our projections after a below expectations 1Q, and the announced departure of CEO Jacqueline Ardrey and Chief Financial Officer Michael Schwindle.
- Further, the company has already hired Martin Layding (x-Divisional CFO for the Coach brand) as CFO, with Board member Ian Bickley (Coach management) entering into a new role as Vera Bradley Executive Chairman until the CEO transition is completed.
- Given the shifts, the company suspended any formal financial guidance.
TSMC (2330.TT; TSM.US): Is the Cost of Advanced Wafers a Concern? We Believe It Isn’t.
- There is speculation that the cost of Taiwan Semiconductor (TSMC) – ADR (TSM US) 1.4nm wafers is more than 30% higher than that of 2nm wafers.
- In semiconductor node migration, newly introduced solutions are generally more advanced and therefore more valuable—which naturally means higher costs.
- Apple (AAPL US)’s iPhone consistently adopts TSMC’s most advanced technology, ensuring its products maintain industry-leading operational efficiency.
Worry About Fake Fakes Makes RealReal a Bad Bet
- Product authentication and legitimacy are paramount for The RealReal (NASDAQ: REAL), which sells used luxury items.
- But our research indicates that REAL’s authentication lets through many counterfeits, and that has enraged both buyers and sellers, undermining the sense of trust.
- REAL has applied AI to the authentication problem to speed things up, but we see no evidence of effectiveness.
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