Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Senior Technology Analyst, Japanese Equities

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

Disco's share price has nearly doubled from its COVID low of last March and has risen by more than 40% since September, reaching a new all-time high of ¥33,700 on November 30. This reflects very strong results in the three months to September (2Q of FY Mar-21).But as Campbell Gunn pointed out in <a href="https://www.smartkarma.com/insights/japan-results-revisions-10-22-chugai-disco-benefit-one-pasona-oisix" target="_blank" data-smartkarma-citation="insights:44452" rel="noopener">🇯🇵 JAPAN • Results &amp; Revisions 10/​​​​​​​​​​​​​​​22 </a> , the shares are now Overbought and at a new post-listing Relative Price Score high ... the upside will be constrained as the market-implied growth rate of four times GDP is unrealistic... We expect the current cycle to peak ... and the shares to mean-revert out of Overbought territory.New orders and the order backlog peaked in 4Q of FY Mar-20, shipments peaked in 1Q of this fiscal year, and sales and profits peaked in 2Q. Management is guiding for substantially lower sales and profits in 3Q. Operating and net profit were up nearly 40% year-on-year in 2Q; management is guiding for low single-digit growth in 3Q. So far, there is no guidance for FY Mar-21 as a whole, but extrapolating from 3Q guidance and industry trends points to a 12% increase in net profit, which would put the shares on a P/E of 38.5. Japanese SPE industry leader Tokyo Electron, by comparison, is selling at 27.5x management's EPS guidance for FY Mar-21.

Disco's share price has nearly doubled from its COVID low of last March and has risen by more than 40% since September, reaching a new all-time high of ¥33,700 on November 30. This reflects very strong results in the three months to September (2Q of FY Mar-21).But as Campbell Gunn pointed out in 🇯🇵 JAPAN • Results &amp; Revisions 10/​​​​​​​​​​​​​​​22  , the shares are now Overbought and at a new post-listing Relative Price Score high ... the upside will be constrained as the market-implied growth rate of four times GDP is unrealistic... We expect the current cycle to peak ... and the shares to mean-revert out of Overbought territory.New orders and the order backlog peaked in 4Q of FY Mar-20, shipments peaked in 1Q of this fiscal year, and sales and profits peaked in 2Q. Management is guiding for substantially lower sales and profits in 3Q. Operating and net profit were up nearly 40% year-on-year in 2Q; management is guiding for low single-digit growth in 3Q. So far, there is no guidance for FY Mar-21 as a whole, but extrapolating from 3Q guidance and industry trends points to a 12% increase in net profit, which would put the shares on a P/E of 38.5. Japanese SPE industry leader Tokyo Electron, by comparison, is selling at 27.5x management's EPS guidance for FY Mar-21.

Disco (6146 JP): 2Q Growth Unsustainable, Shares Overbought

Semiconductors, Memory and SSDs Specialist, Objective Analysis

Jim Handy

Semiconductors, Memory and SSDs Specialist

Objective Analysis

Objective Analysis offers third-party independent market research and data for the semiconductor industry and investors in the semiconductor industry.

Semiconductors, Memory and SSDs

Slowly the details have emerged about the SK hynix acquisition of Intel's NAND flash business, which is the bulk of Intel's Nonvolatile Systems Group (NSG).  This Smartkarma Insight shares recent details and explains why some may have been ill-conceived.

Slowly the details have emerged about the SK hynix acquisition of Intel's NAND flash business, which is the bulk of Intel's Nonvolatile Systems Group (NSG).  This Smartkarma Insight shares recent details and explains why some may have been ill-conceived.

Details of SK Hynix Acquisition of Intel Flash Business

Thematic (Sector/Industry)

The latest WSTS semiconductor forecast provides a glittering outlook, but the organization's history, and the long-term trend of the industry, cast important doubt on the WSTS outlook.  Most of the positive sentiment appears to stem from the strong current market for memory chips.

The latest WSTS semiconductor forecast provides a glittering outlook, but the organization's history, and the long-term trend of the industry, cast important doubt on the WSTS outlook.  Most of the positive sentiment appears to stem from the strong current market for memory chips.

The SIA announced WSTS monthly semiconductor sales statistics for October 2020.   Sales were 6% higher than October 2019 and 3.1% higher than the prior month.  While this looks like the beginning of a growth phase, it seems more likely that sales will drop back to trend in the near future.

The SIA announced WSTS monthly semiconductor sales statistics for October 2020.   Sales were 6% higher than October 2019 and 3.1% higher than the prior month.  While this looks like the beginning of a growth phase, it seems more likely that sales will drop back to trend in the near future.

October Semiconductor Revenues Continue Upward Trend

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Ingenuity

Our focus is exclusively on in-depth research & consulting in the broader semiconductor industry. We focus on the key players, namely Intel, Micron, Qualcomm, Apple, Samsung, NVIDIA, AMD, TSMC & Global Foundries - as well as some of the lesser known, but nonetheless critical, companies such as ASML (for EUV), Mellanox, Cavium, Xilinx etc. We specialise in their products, roadmaps, process technologies, competitive advantages & threats etc. We also help our clients understand the implications of new and emerging technologies, e.g. 3D X-Point, 3D NAND, Carbon Nanotubes, Autonomous Driving, Graphene, Silicon Photonics, Wafer-Level Optics, Artificial Intelligence, FPGA, GPU, ASIC etc. 

Semiconductor Analysis & Research

<a href="https://www.smartkarma.com/entities/micron-technology-inc" target="_blank" data-smartkarma-citation="entities:13382:1" rel="noopener">Micron</a> presented their technology roadmap together with a strategy update earlier this week. The event was a tour de force, highlighting technology leadership examples and consistently improving cost competitiveness. It also included deeper dives into recent and future technology decisions such as their NAND Replacement Gate and when it makes sense to deploy EUV lithography in the manufacturing of DRAM. Here's a look in detail at what they had to say.

Micron presented their technology roadmap together with a strategy update earlier this week. The event was a tour de force, highlighting technology leadership examples and consistently improving cost competitiveness. It also included deeper dives into recent and future technology decisions such as their NAND Replacement Gate and when it makes sense to deploy EUV lithography in the manufacturing of DRAM. Here's a look in detail at what they had to say.

Micron. Key Takeaways From This Week's Technology Roadmap & Strategy Update.

United States

Micron Technology, Inc., through its subsidiaries, manufactures and markets dynamic random access memory chips (DRAMs), very fast static random access memory chips (SRAMs), Flash Memory, other semiconductor components, and memory modules.

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Micron Technology (MU US)

Disco (6146 JP): 2Q Growth Unsustainable, Shares Overbought

Disco's share price has appreciated by more than 40% since September despite declining orders and guidance for sharp declines in sales and profits...

Scott Foster

Details of SK Hynix Acquisition of Intel Flash Business

SK hynix has acquired Intel's flash business, but does it make sense? SK hynix' management's statements indicate a disquieting misunderstanding of...

Jim Handy

WSTS Forecast Update All Positive

WSTS announced a very bullish semiconductor forecast, but this Insight shows why the careful investor needs to understand how this forecast came to...

Jim Handy

October Semiconductor Revenues Continue Upward Trend

October semiconductor sales showed impressive growth. Will this acceleration continue? This post indicates that revenues are most likely to drop...

Jim Handy

Micron. Key Takeaways From This Week's Technology Roadmap & Strategy Update.

A detailed review of key technology and strategy decisions being made at Micron and which are at the heart of their product leadership and...

William Keating

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