Daily Brief Equity Bottom-Up: Severfield — Upside risks to margins and profits and more

Severfield has suffered greatly in the last 12 months, but the outlook appears to be improving as the order book is expanding and the low embedded margins within it wash out over the next 12 months or so. Furthermore, we anticipate the recruitment of a new chief executive ‘imminently’ and the company could return to paying dividends in the current year if the outlook and balance sheet improve sufficiently. Margin recovery could imply that risks are to the upside in FY27.

• MediaTek Reportedly Wins Meta’s 2nm AI Chip Order Over Broadcom
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• Semi Key Indicators Q2 2025: PC, Smartphone Unit Shipments, Global Semi & WFE Sales All Looking Good 

• There is a brewing disagreement among many members of the National Assembly in Korea regarding the new dividend tax policy.
• A key controversial issue is dividend taxes on dividends exceeding 300 million won. There is a room for some disappointment in the works regarding tax reductions on dividends.
• Instead of 25% tax rate for this dividend income bracket (exceeding 300 million won), there has been an increasing pressure by the ruling party to raise this rate to 35%.

• 2Q is inline, revenue and margins look like a beat but that’s weaker JPY and higher utilization as the firm is increasing inventory, expecting a better 2H25. 
• 3Q guide is flat QoQ, the YoY recovery continues (2Q -9%, 3Q -4%). For 4Q, management expects a “modest” flattish or slight increase QoQ, which implies at least +13% YoY
• The stock is cheap, but “overall demand for automotive, we still have no clue as to how that will unfold” and short-term, Auto growth depends on China

• We update our views on ten Japanese midcap banks focusing on those with large strategic shareholdings relative to market value, as well as beneficiaries of the improving interest rate outlook
• Our top-rated pick is Iyogin Holdings (5830 JP), with its constructive mix of large strategic holdings, attractive valuations including PTBV ratio and healthy gearing to higher interest rates
• We also retain Hokuhoku Financial and Hachijuni Bank as buys; Hokuhoku has yet to realize its large strategic holdings whilst Hachijuni has reached its target level for cross-holdings reduction

• 3Q25 Outlook (based on USD/TWD = 28.7): Wafer Shipments: +7–9% QoQ; ASP: +1–3% QoQ; Gross Margin: 25–27%.
• Revenue Mix (Industrial, Auto, 3C): Industrial + Automotive: 40%+ (majority industrial; automotive in teens) ; Communication & Computing: 20%+ each ; Consumer: 10%+.
• 2025 Dividend Policy : Will maintains NT$4.5 per share dividend.

• Context: The Ampol (ALD AU) vs. Woodside (WDS AU) price-ratio has diverged more than two standard deviations from its one-year average – a classic signal for a potential mean-reversion trade.
• Highlights: Going long Ampol (ALD AU) and short Woodside (WDS AU) targets a 7% return if the price ratio reverts to its one-standard-deviation threshold.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• Singapore’s small- and mid-cap equities have surged over the past month, defying a generally cautious macroeconomic backdrop.
• The rally is widely linked to expectations of significant capital inflows from the Monetary Authority of Singapore’s (MAS) Equity Market Development Programme (EQDP).
• A firm Singapore dollar and comparatively attractive dividend yields have further supported investor interest in these stocks.

• 2Q25 Results Summary: Reports Broad-Based Growth with Specialty Margin Strength  
• Yageo Inventory Recovery Marks a Demand-Led Inflection for Hardware Components
• Update on Shibaura Acquisition: Still on Track, Strategic Synergy in Focus

• This morning, EDG announced assay results for four drill holes at its Reliance Gold Project as part of its 2025 exploration campaign.
• Today’s highlight hole returned 5.63 g/t Au and 5.12% Sb over 3.3m, representing the best antimony grade over width intersection to date.
• At current antimony prices, this intercept adds about 10 g/t AuEq (gold equivalent) to the 5.63 g/t gold intercept.