Daily Brief Equity Bottom-Up: TSMC Order Cut Rumors: Keep Calm and Ignore the Rumors. and more

• News or rumors of Nvidia, AMD, Broadcom cutting down CoWoS orders at TSMC have been flying around since last week (Taiwan media, some sell-side analysts).
• TSMC guided for AI revenues doubling in 2025. Nvidia’s CEO clarified that CoWoS-S orders are declining because CoWoS-L is increasing. This transition has been known for over 1 year.
• TSMC is converting CoWoS-S to L and adding capacity in Tainan Science Park phase 2 & 3. In 2024, CoWoS-L was ~10% of CoWoS output, increasing to 50-60% in 2025.

• Rumors of a potential merger between Glencore and Rio Tinto, which would be the largest mining M&A deal ever
• Talks were reported to have occurred in the second half of last year but are not currently active
• Both companies have London listings and did not comment on the rumors, indicating a potential window of no talking due to UK takeover rules

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• Halliburton will report its Q4 earnings on 22/Jan, with revenue and EPS projected to fall sequentially and annually. For fiscal 2024, revenue and net profit are expected to drop.
• Halliburton’s OI PCR at 1.21, signalling bearish sentiment, with a 67% IV percentile indicating moderately high volatility.
• For the 24/Jan expiry, Halliburton’s OI shows calls concentrated at strikes 28.5, 29, and 30. Puts dominate at 26, 27, and 27.5. Put OI is higher at key levels.

• Shipment: expected to decrease by mid-single-digits QoQ ASP: Remains flat in USD/NTD appreciation may lead to decline for 1Q25 sales. 
• UMC’s addressable market in 2025 will grow in the low-single-digits YoY, driven by a moderate recovery in consumer applications in mature nodes.  
• 1Q25 consumer will grow QoQ thanks to higher DTV, DDI, Wi-Fi, and STB demand. Other applications will decline QoQ.

• Henderson sells Kowloon project to Miramar Hotel for $400M in a strategic move to shift focus and secure a profitable deal.
• CapitaLand shifts Tan to commercial REIT and hires Yong to lead Malaysia Trust, showing active leadership changes within the company.
• CapitaLand India Trust initiates $54M Hyderabad IT Park revamp, signaling a significant investment in the Indian real estate market.

• JPMorgan Chase & Co.’s latest financial results reveal a robust performance for the fourth quarter of 2024.
• The firm reported net income of $14 billion with earnings per share (EPS) of $4.81 on revenue of $43.7 billion, reflecting a year-on-year revenue increase of 10%.
• The return on tangible common equity (ROTCE) was a solid 21%.

• Fu Shou Yuan’s performance in full-year 2024 is likely to fall short of expectations. The current pain point is declining performance growth due to difficulty of expanding beyond Shanghai region.
• If Fu Shou Yuan’s dividends/stock buybacks are lower-than-expected, we don’t think the stock is worth holding for the long term, since long-term revenue growth rate would fall to single digit.
• Since high growth is difficult to achieve, it’s better to buy at a low price (e.g. PE of 10x).When valuation bounces back to 15x PE, investors could consider taking profits.

• Taiwan startup secures military contract for anti-drone tech, expanding manufacturing in mobile sector
• Dixon sees phone sales spike, eyes display fab with India semiconductor incentive
• Samsung delays DRAM development, CG Power granted subsidy for OSAT facility, Poland faces US sanctions, Taiwan quake impacts semiconductor production, ByteDance dominates AI chatbot market, Broadcom and Marvell compete in ASIC opportunities

• Citigroup has released its fourth quarter earnings for 2024, showcasing a notable rise in net income by almost 40% to $12.7 billion for the full year, indicating positive momentum across key business segments.
• This performance was coupled with a revenue increase of 5% excluding divestitures, supported by a 17% uptick in fee revenue, and an efficiency ratio improvement by 340 basis points, which highlights the company’s operational improvements.
• However, certain macroeconomic challenges remain persistent, such as China’s slower-than-anticipated growth and Europe’s underperformance.

• UMC Misses 4Q24 Expectations — Gross Margin Dips with Flat QoQ Revenue
• UMC Guides for 40% Reduction in Capex Budget — We Believe Signals Strategic Shift to Less Capex Intensive Business Model
• Intel 12nm Partnership Remains on Track and is Key Business Model for Future; UMC Sees Improvement in Consumer Electronics Industry Inventories