In today’s briefing:
- Tencent/Netease: Game Approval Rotation in May
- Wistron Corp: Valuations Stretched After a 96% Share Price Climb in 6 Months
- Ferrotec. Accelerating Growth Across Multiple Niche Semi Segments
- CCL Products (India) Ltd- Forensic Analysis
- Taiwan Tech Weekly: China Micron Restrictions; Taiwan Benefit From ‘Chip Tensions’; Nvidia Earnings
- Nvidia (NVDA) Phenomenal Business, Overcooked Stock -Hedge & Protect Gains
- EuBiologics (206650 KS): Capacity Expansion Amid Global Supply Shortage to Accelerate Growth
- Tokyo Electron (8035 JP): Dubious Guidance
- Qualcomm Incorporated: New Processor Launch Amidst Market Slowdown – Key Drivers
- Respiri – Telehealth acquisition to bolster US roll-out
Tencent/Netease: Game Approval Rotation in May
- China just announced game approval for May batch. The number of games approved is in-line with the pace of approval in recent month.
- Pace of China game approval stays flattish, at a much slower pace than pre-tightening.
- Both Tencent and Netease received approval for one game. We saw a pattern of approval rotation for the duo.
Wistron Corp: Valuations Stretched After a 96% Share Price Climb in 6 Months
- Wistron Corp’s share price is up 96% in the past six months. Despite its outstanding results, a lot of the positives have already been reflected in its share price.
- We think a more likely scenario for the stock is to undergo a period of share price consolidation in the next several months.
- Its valuations also appear stretched, especially in terms of P/E and P/B valuation multiples as compared to their historical valuation multiples.
Ferrotec. Accelerating Growth Across Multiple Niche Semi Segments
- Delivered FY’23 net sales of ¥$211 billion, up 57.5% sequentially.
- FY’23 operating profit of ¥35 billion was up 63% sequentially
- Our favourite Japanese semi stock with a TTM P/E <5
CCL Products (India) Ltd- Forensic Analysis
- CCL Products India (CCLP IN) is a coffee manufacturing company and has presence in both India and abroad.
- The company has seen an appealing growth in its top-line, growing at a three year CAGR of 22% till F23.
- However, when it comes to the forensics, there are several concerns, especially with its treatment of investment in subsidiaries and disclosures in the financials.
Taiwan Tech Weekly: China Micron Restrictions; Taiwan Benefit From ‘Chip Tensions’; Nvidia Earnings
- China bans Micron chips for critical information infrastructure — Taiwanese firms could benefit by straddling both sides of the trade tensions.
- TSMC rallies as U.S. and Japan advance incentives for TSMC and Taiwanese firms.
- Nvida earnings this week — We’ll see if the AI leader can keep the market excited about AI’s brave new world.
Nvidia (NVDA) Phenomenal Business, Overcooked Stock -Hedge & Protect Gains
- First of all, Nvidia is a great business with many applications and infrastructure across many industries and one can even say an AI hardware leader down the road.
- Overall, a big business with a wide moat in a great secular sector, hence a name that very likely will be here 10-20-30 years down the road.
- Semiconductors in general have been a top sector lately given AI advancements like the ChatGPT breakthrough, and the overall combo of high demand & supply issues.
EuBiologics (206650 KS): Capacity Expansion Amid Global Supply Shortage to Accelerate Growth
- Due to the surging cholera cases globally, demand for cholera vaccines for public market continues to grow. According to GAVI, shortage of cholera vaccine is likely to continue through 2025.
- To respond to surging vaccine demand, Eubiologics (206650 KS) plans to increase its production capacity from the current 33M doses per year to a maximum of 90M doses in 2027.
- Eubiologics, in partnership with TechInvention is launching Euvichol-Plus in India. India is among the top cholera-endemic countries, with an estimated incidence rate of 1.64 per 1,000 people.
Tokyo Electron (8035 JP): Dubious Guidance
- Guidance for 1H of FY Mar-24 should be easy to beat. The sharp rebound that management is forecasting for 2H is open to question.
- TSMC and Micron plan long-term expansion in Japan and Rapidus will be a new customer. But exports to China – the company’s largest market – will be restricted.
- The share price has spiked, but uncertainty is high, visibility is low and valuations are not compelling.Management’s MAGIC medium-term targets look like … magic.
Qualcomm Incorporated: New Processor Launch Amidst Market Slowdown – Key Drivers
- Qualcomm’s fiscal Q2 results were decent with revenues above expectations and earnings in line with the analyst consensus estimates.
- It is considered a fair result given the difficult macroeconomic climate and widespread decline in the semiconductor industry.
- During the quarter, there was significant use of Qualcomm’s Snapdragon digital chassis across major OEMs and Tier 1 clients in automotive.
Respiri – Telehealth acquisition to bolster US roll-out
In a strategic push of its US commercialisation strategy, Respiri has announced the proposed acquisition of Access Managed Services, its US remote patient monitoring (RPM) and chronic care management partner, for a cash consideration of up to US$3m (A$4.5m). We expect the acquisition to afford Respiri greater oversight of operations and sales and marketing efforts, potentially reducing sales cycles and expediting patient onboarding. The acquisition will also result in the RPM recurring revenue increasing to US$70–100 from US$10–20 per patient, although we note Respiri will cease to recognise revenue from device sales and operating expenses will likely trend higher. Management now guides for break-even to be achieved at 9,000 patients (by end CY24) vs 30,000–40,000 patients previously. The acquisition will be funded by a A$6.5m capital raise, including A$4.5m in convertible notes and a A$2m equity offer. We will update our model and estimates following the fund-raise and deal closure.
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