In today’s briefing:
- CNI Semiconductor Chips Index Rebalance: One Change with Big Impact
- TIP Customized Taiwan Select High Dividend Index Rebalance: 22 Changes as Expected
- Xiaomi (1810 HK): 1Q25, Home Appliance Up by 59% and Capacities Under Construction
- TSMC Wafer Price Increase ~30-40% at Each Node (N2-A16-A14), that Will Eventually Limit Demand
- Circle IPO Analysis (Second Largest Issuer of Stablecoins Globally)
- Smartphone 2025 Shipments Revised Down, PC Revised Up (IDC). Mediatek a Tad Expensive, TSMC Cheaper.
- [Xiaomi Inc. (1810 HK, BUY, TP HK$55) TP Change]: Trade-In Subsidy Is Still the Main Driver
- Lens Technology H-Share Listing: First Look
- Plover Bay (1523 HK): Preview On Earnings For H1 2025
- VEON US: Pakistan Towers Sale Frees Capital for Digital Growth in Core Market Ahead of Ukraine IPO
CNI Semiconductor Chips Index Rebalance: One Change with Big Impact
- There is 1 change for the CNI Semiconductor Chips Index that will be implemented at the close on 13 June.
- Passive trackers are estimated to buy 2.7x ADV in Nexchip Semiconductor (688249 CH) and sell 1.5x ADV in Amlogic Shanghai (688099 CH).
- The delete has outperformed the inclusion this year. With 8 days left to implementation of the changes and decent impact, there could be a short-term reversal.
TIP Customized Taiwan Select High Dividend Index Rebalance: 22 Changes as Expected
- There are 16 adds and 6 deletes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF has an AUM of US$12.4bn.
- The ETF has started trading the stocks and are expected to continue trading for the next 7 trading days. In reality, the process could drag on for some stocks.
- The index committee appears to have a little discretion in choosing the inclusions with one expected add not being added and one lower ranked stock being added to the index.
Xiaomi (1810 HK): 1Q25, Home Appliance Up by 59% and Capacities Under Construction
- In 1Q25, total revenue grew by 47% YoY with home appliance up by 59% YoY.
- Both home appliance and electric vehicle will expand their capacities.
- The stock has an upside of 29% and a price target of HK$66 for the next twelve months.
TSMC Wafer Price Increase ~30-40% at Each Node (N2-A16-A14), that Will Eventually Limit Demand
- A N3 wafer costs US$20k. Taiwan news mention N2 price at $30k, 16A at $45k. That’s a bit inflated but price increase at each node will be a hefty ~30-40%.
- It will become difficult for PC, Smartphone to absorb a US$40k wafer cpst, or to use the chip’s performance in these devices. The addressable market will shrink: AI, Networking, Server.
- TSMC’s growth will come more from wafer price increase than from volume growth. It’s already the case! Could be a problem for Semi Production Equipment vendors: scale will be smaller.
Circle IPO Analysis (Second Largest Issuer of Stablecoins Globally)
- Circle raised both the IPO shares to be issued and IPO price range. New IPO price range is $27 to $28 per share (from $24 to $26 per share previously).
- We have a Positive View of the Circle due to its status as the second largest issuer of stablecoins globally, rapidly increasing user base and sales, and improving profit margins.
- Major risk factors of this IPO include CBDCs, centralization, cyberattacks, and potential government crackdown.
Smartphone 2025 Shipments Revised Down, PC Revised Up (IDC). Mediatek a Tad Expensive, TSMC Cheaper.
- IDC has revised down 2025 Smartphone unit growth from 2.3% to 0.6%; increased PC from 3.7% to 4.5% but expects a decline in 2026.
- The positive for Mediatek is AI in Mobile chips, but it’s a secondary driver compared to AI ASIC design. Mediatek stock is more expensive than TSMC despite lower visibility.
- I don’t see any stock for which PC is a positive. The risk remain over-estimating replacement demand ahead of Windows 10 end-of-support in Oct-25.
[Xiaomi Inc. (1810 HK, BUY, TP HK$55) TP Change]: Trade-In Subsidy Is Still the Main Driver
- Xiaomi reported C1Q25 top line, non-IFRS operating income and IFRS net profit 2.0%, 41% and 57% vs. our estimate.
- While there are a few product positives supporting outperformance, the main driver is still trade-in subsidy (TIS), which will start to end in C3Q25;
- We continue to view Xiaomi as having an enviable market position as a “Huawei without the sanctions”, its valuation has also become very rich.
Lens Technology H-Share Listing: First Look
- Shenzhen-Listed iPhone glass supplier Lens Technology (300433 CH) has filed for a listing on HKEx and plans to raise proceeds of around US$1-1.5bn.
- The company is heavily reliant on smartphones (mainly iPhones) however has diversified into other verticals. While this has helped grow revenues, margins have continued to decline.
- Though some exemptions have been given, the potential for further US reciprocal tariffs could increase costs and disrupt supply chains impacting Lens.
Plover Bay (1523 HK): Preview On Earnings For H1 2025
- We expect the Trump tariffs announced on Taiwan (base for suppliers/production of Plover Bay) to slightly affect growth rates for H1 FY25 and estimate a 15%/13% YoY revenue/profit growth number.
- A 32% tariff was imposed on Taiwan suppliers; however, electronic items, including routers, were subsequently excluded. Nonetheless, overall business sentiment had already been negatively impacted before these adjustments.
- Trading at 19.4x FY25e earnings (assuming a reversion to 15% growth), the stock is somewhat fairly valued, although we love this name’s execution and long-term track record.
VEON US: Pakistan Towers Sale Frees Capital for Digital Growth in Core Market Ahead of Ukraine IPO
- VEON last week announced it has secured regulatory approvals for its tower asset partnership with Engro Corp in Pakistan, unlocking US$563 million in value.
- Cash portion of funds will be paid in tranches and received in Pakistan, with flexibility to upstream capital or reinvest locally.
- Transaction supports VEON’s ongoing transformation at the Group level and digital growth strategy in Pakistan while offering a roadmap for similar value creation in Ukraine.
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