In today’s briefing:
- Himax Advances Optical Chip Solutions for NVIDIA and TSMC; But Fog Lingers Over China Auto Recovery
- SMIC 1Q25 Strong Wafer Growth but Weak ASP. Same in 2Q. Large Capex to Continue in 2025.
- Hua Hong: Very Poor Margins to Continue, Operating Losses for Longer
- Unusual Machines, Inc.: 1Q25 Earnings; Strong Quarter, Outlook
- Domain Holdings (DHG AU): CoStar’s A$4.43 Binding Proposal a Done Deal
- Soluna Holdings, Inc: Two New Wind-Powered Data Centers
- Digital Arts (2326 JP): Full-year FY03/25 flash update
- Okinawa Cellular Telephone (9436 JP): FY FY03/25 Flash Update
- Amkor Technology: The Advanced Packaging Solutions, Semiconductor Growth & Other Major Drivers!
- Softcreate Holdings (3371 JP): Full-year FY03/25 flash update
Himax Advances Optical Chip Solutions for NVIDIA and TSMC; But Fog Lingers Over China Auto Recovery
- Auto ICs over 50% of revenue and maintaining market share leading position, but 2Q25 guidance reflects China auto industry caution as China stimulus repeat impact fades and inventory stays lean.
- Himax advances in co-packaged optics (CPO) shipping samples; to supply TSMC and NVIDIA; Separately, Himax’s AR display tech may align with META’s needs.
- Strong auto positioning with 200+ Tcon design wins and CPO opportunity in AI/HPC supply chain reinforce long-term upside, despite soft near-term visibility. Maintain our Structural Long view on Himax.
SMIC 1Q25 Strong Wafer Growth but Weak ASP. Same in 2Q. Large Capex to Continue in 2025.
- 1H25 strong revenue growth continues as capacity increase, “production shifting back domestically”, but weakening ASP and clearly demand pull-in in 1H due to US tariffs and China domestic consumer subsidies.
- “2H not clear, especially after late 3Q”. Management mentions the usual macro / US tariffs unknowns. 2025 Capex similar to 2024 (US$7.7bn, 80% revenue), D&A increasing, ASP down, margins muted.
- The stock is as expensive as always. 49x 2025 EPS, 41x 2026. Consensus is not expecting a negative tariffs shock or weaker China domestic demand.
Hua Hong: Very Poor Margins to Continue, Operating Losses for Longer
- Operating loss in 1Q25 will persist in 2Q25 – I expect throughout 2025. Hua Hong rapid capacity increase is supposedly sold out but D&A is increasing much faster than revenue.
- Consensus is not expecting an end-demand slowdown resulting from US import tariffs, or sluggish China domestic consumption. Consensus expects Hua Hong to sell its capacity increase fully.
- Given losses in 1H25, Consensus EPS forecast is too high for 2025, probably for 2026 as well. Stock is expensive at 43x 2025 EPS, EPS forecasts looks too high.
Unusual Machines, Inc.: 1Q25 Earnings; Strong Quarter, Outlook
- Unusual Machines (NYSE American: UMAC) reported another record quarter with revenue of approximately $2.04 million and a gross margin of 24% with some impact from tariffs, which the company expects to be short lived.
- This growth was achieved even though US government purchases have paused recently. Margins took a slight hit from the tariffs.
- The company raised $40 million at $5.00 a share to bolster its balance sheet (customers and suppliers need to see the ability to work large orders), and to build out its Orlando motor manufacturing facility.
Domain Holdings (DHG AU): CoStar’s A$4.43 Binding Proposal a Done Deal
- Domain Holdings Australia (DHG AU) entered a scheme implementation deed with Costar Group (CSGP US) at A$4.43 per share, a 42.0% premium to the undisturbed price.
- As CoStar is a US entity, FIRB approval should be forthcoming. The scheme vote is low-risk, as Nine (60.05% of outstanding shares) will vote in favour of it.
- While attractive to precedent transaction multiples, the offer remains light compared to peer multiples. At the last close and for an end-of-August payment, the gross/annualised spread is 1.1%/3.6%.
Soluna Holdings, Inc: Two New Wind-Powered Data Centers
- Soluna just published its monthly update, which includes signing of term sheets for two new wind- powered data centers (Project Hedy for 120MW and Project Ellen for 100 MW), securing land for 166MW of Project Kati, and a new partnership with Blockware for hosting capacity at Project Dorothy 2.
- For April Soluna’s hosted hashrate was a record 1,727 PH/s, and it mined 10 Bitcoins
- Project Dorothy 1A/1B: Dorothy 1A (25 MW hosting) is fully deployed, and Dorothy 1B (25 MW prop-mining) has achieved strong hashrate growth and met Q1 2025 ancillary service requirements.
Digital Arts (2326 JP): Full-year FY03/25 flash update
- Digital Arts forecasts FY03/26 sales of JPY12.6bn, operating profit of JPY6.2bn, and net income of JPY4.2bn.
- The company projects FY03/26 cost of sales at JPY3.3bn, with significant increases in labor and communication costs.
- Digital Arts plans a JPY95.0 annual dividend per share, including a JPY5.0 commemorative dividend for its 30th anniversary.
Okinawa Cellular Telephone (9436 JP): FY FY03/25 Flash Update
- For FY03/25, the company reported operating revenue of JPY84.3bn (+8.1% YoY) and net income of JPY12.4bn (+2.3% YoY).
- The company revised FY03/25 revenue forecast to JPY83.0bn, citing higher au Denki and handset sales, with increased expenses.
- FY03/26 forecasts include operating revenue of JPY85.0bn (+0.8% YoY) and capex investment of JPY6.9bn (+20.3% YoY).
Amkor Technology: The Advanced Packaging Solutions, Semiconductor Growth & Other Major Drivers!
- Amkor Technology reported its first-quarter financial results for 2025, delivering revenue of $1.32 billion, which reached the upper end of the company’s guidance.
- Earnings per share (EPS) stood at $0.09, pressured by increased research and development (R&D) expenses dedicated to advancing RDL technology for upcoming programs.
- The company’s global manufacturing operations have largely remained insulated from current tariffs and ongoing trade regulations due to their presence in free trade zones, minimizing direct impacts from U.S. import tariffs.
Softcreate Holdings (3371 JP): Full-year FY03/25 flash update
- FY03/25 revenue grew 10.9% YoY to JPY31.0bn, with operating profit at JPY5.5bn and net income at JPY3.5bn.
- EC Solutions revenue increased 6.9% YoY to JPY16.6bn, driven by e-commerce site development and cloud services.
- FY03/26 forecast: revenue JPY33.5bn, operating profit JPY6.0bn, with growth in EC Solutions and IT Solutions segments.
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