Daily Brief TMT/Internet: KLA-Tencor Corp, Taiwan Semiconductor (TSMC) - ADR, Alibaba (ADR) and more

In today’s briefing:

MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact
Taiwan Dual-Listings: TSMC Normalizes; UMC, ChipMOS Compelling Discounts
[Alibaba (BABA US) Target Price Change]: No Growth in March Promotion, Cut TP to US$100

MVIS US Listed Semiconductor 25 Index Rebalance: Big Flow, Small Impact

The upcoming rebalance of the MVIS US Listed Semiconductor 25 Index will be implemented on 17 March. There are no constituent changes, but there are float and capping changes.
The VanEck Vectors Semiconductor (SMH US) ETF tracks the index and has an AUM of US$7.2bn.
Estimated one-way turnover is 4.8% resulting in a one-way trade of US$356m. The stocks are extremely liquid, the impact on the stocks in terms of ADV to trade is small.

United Microelectronics ADRs trading at a discount, risk-reward appears compelling.
TSMC has normalized; and reports are that it may launch a Singapore-based 12-inch semiconductor fab.
ChipMOS discount still compelling; and we now have detailed coverage of the company.

Based on our recent checks, we expect that Tmall sales in the march promo were weaker-than-expected, especially in apparel and beauty make-up.
Meanwhile, we maintain our prior forecast for Douyin’s overall eCommerce growth, and we expect that Douyin Mall’s share of Douyin eCommerce GMV is now higher than we previously estimated.
We cut the GMV growth of Taobao and Tmall from 4.4% YoY to 1.4% YoY in FY24, and cut BABA’s TP to US$ 100, implying 12.6x FY23 PE.

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