Daily Brief Equity Bottom-Up: TSMC (2330.TT; TSM.US): Retired Sr. VP Joins Intel; U.S. Fab Impact; Arizona Earnings Decline. and more

• TSMC (Taiwan Semiconductor Manufacturing) – ADR (TSM US)’s retired Senior Vice President Dr. Wei-Jen Lo has taken a position at Intel.
• Trump has been in power for less than a year, and the U.S.’s measures have fully revealed its purpose of confrontation between China and the United States. 
• TSMC’s Arizona fab profit dropped from NT$4.32 billion in 2Q25 to NT$410 million in 3Q25.

• We think Wharf REIC, which owns luxury malls in Hong Kong, is undergoing a structural de-rating, on the back of macro headwinds, currency impact and company fundamentals
• Southbound consumption into Hong Kong has weakened deeply, catalyzed by a punitive USD-pegged Hong Kong Dollar (HKD) and a collapsing Japanese Yen (JPY)
• In latest interim results, Wharf REIC reported HK$5.1 billion revaluation deficit and a HK$2.4 billion net loss, representing negative rental reversions crystallizing into lower asset values.

• Transition to AI-Driven Subscriptions Fueling Growth: Meitu is successfully transitioning its business model from advertising to a high-margin, AI-driven subscription service for its photo, video, and design products. This strategic shift is the primary driver behind significant revenue and profit growth, with paying subscribers reaching 15.4 million.
• Strategic Divestment from Cryptocurrency: The company has fully divested its cryptocurrency holdings, realizing a substantial net gain of nearly US$80 million. This move de-risks the balance sheet from the volatility of digital assets and allows management to refocus capital and attention on its core AI imaging business.
• Expanding Global Footprint and Enterprise Solutions: Meitu is aggressively expanding its international user base, which now accounts for 35% of total Monthly Active Users (MAUs). Concurrently, it is leveraging its core AI technology to launch productivity-focused tools for e-commerce and advertising, opening new avenues for enterprise revenue.

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• 3SBio Inc (1530 HK) proposed to spin-off and separately list the shares of Mandi, a subsidiary of the company.
• In 2024 and 1H25, Mandi contributed 16% and 17% of total consolidated sales respectively, while its EBITDA contribution was 14.4% (in 2024) and 11.5% (in 1H25).
• As far as 3SBio (ex-Mandi) is concerned, marketing approvals for key pipeline product like SSGJ-608, along with indication expansion, geographical expansion of few drugs will be key in near term.

• Iron ore prices have remained rock-solid at 104 USD/ton, but the fundamentals are on slightly shaky ground as Rio Tinto (RIO US) commenced shipments from its Simandou project. 
• Chinese steel production and apparent demand in October tracked an extremely weak 12%/12.5% YoY, with annualized production rates now 864 million tons, and lending (TSF) was lacklustre at -42% YoY.
• We like Fenix Resources (FEX AU) despite the negative sentiment, due to its production growth profile from 4 million to 10 million tons over the next 3 years. 

• Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.
• Highlights: Currently twelve pair trade opportunities across three markets and five sectors persist.
• Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.

• PDD’s total revenue increased by 9% YoY in 3Q25 higher than 7% YoY in 2Q25.
• In 3Q25, operating cash flows stopped decreasing after a year and grew by 66% YoY.
• We believe PDD’s stock price can be double for the next twelve month according to other e-commerce companies’ EV/EBITDA.

• Despite an overwhelming response and a 26-30% surge in the grey market, at 8.3x FY26 PER,  Chuangxin Industries (2788 HK)‘s IPO price does not generate much excitement for us. 
• Heavy reliance on connected transactions with the controlling shareholder, pressure on margins in the future, and a highly leveraged balance sheet are concerns. 
• We do not think it justifies trading at a premium to peers, hence, limited upside from now. The small free float, however, will increase the share price volatility.

• We compile our selection of small- and mid-cap names with the desired characteristics of high dividend yields, value, and a margin of safety.
• We compile updates on Oriental Watch (398 HK), The Keepers Holdings (KEEPR PM), and Ginebra San Miguel (GSMI PM), and others into the results.
• Our top picks are Asian Terminals (ATI PM), The Keepers Holdings (KEEPR PM), Taste Gourmet (8371 HK), Philippine Stock Exchange (PSE PM), and Ginebra San Miguel (GSMI PM).

• Copper inventory on the COMEX surpassed 400,000 tons on Friday, marking an increase of 330% from the beginning of the year, amidst speculation of a levy of tariffs.
• The Department of Commerce has issued a proclamation imposing a 15% tariff in 2027, with the rate increasing to 30% by 2028, implying a LME-Comex Spread of >3000 USD/ton.
• In addition to the sucking up of copper inventory into the US, we have supply shortages (see: Grasberg To Weigh On Copper Supply In The Medium-Term, March To 12k USD/Ton )