In today’s briefing:
- SMIC (SEHK: 00981; SSE Star Market: 688981): Back to Reality
- Taisei Corp (1801) Partial Tender for PS Mitsubishi Construction (1871)
SMIC (SEHK: 00981; SSE Star Market: 688981): Back to Reality
- Reports emphasizing that SMIC fell short of 3Q expectations don’t make much sense. The real test starts this quarter with 7nm smart phone processors for Huawei in mass production.
- Profits are under pressure from low capacity utilization, rising depreciation and continued high investment. Cash flow is adequate. The balance sheet is sound.
- The share price dropped 6.8% on Friday after rising 44% from late August to early November. 4Q guidance points to near-zero operating and net profit. Recovery will take time.
Taisei Corp (1801) Partial Tender for PS Mitsubishi Construction (1871)
- Last week, as Ps Mitsubishi Construction (1871 JP) reported earnings, Taisei Corp (1801 JP) announced a Partial Offer for PS Mitsubishi, buying out Ube Cement & Taiheiyo Cement stakes.
- Partial offers have recently traded well before the close, and badly after the result. As we near year-end, this one could trade a bit softer, suggesting a lower back end.
- Shareholder Structure, Pro-ration analysis, and back end calculation grids below.
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