China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Thematic (Sector/Industry)

<ul>
<li>From what we understand, the Kirin 9000s that powers Huawei’s new 5G phone is the same 9000 that launched in 2020, only refitted from TSMC’s 5nm to SMIC’s 7nm. </li>
<li>The good news is capacity will likely reach 50-60mn a year, or 17% of China’s smartphone volume in 2022;</li>
<li>Huawei’s launch of 5G does speak volumes about the strides China’s semiconductor supply chain has made, but its timing also takes advantage of the defusing of geopolitical tensions.</li>
</ul>


From what we understand, the Kirin 9000s that powers Huawei’s new 5G phone is the same 9000 that launched in 2020, only refitted from TSMC’s 5nm to SMIC’s 7nm. 
The good news is capacity will likely reach 50-60mn a year, or 17% of China’s smartphone volume in 2022;
Huawei’s launch of 5G does speak volumes about the strides China’s semiconductor supply chain has made, but its timing also takes advantage of the defusing of geopolitical tensions.


[Blue Lotus Hardware Sector Update]: Huawei Mate 60 Is a Win-Win for Both US and China

<ul>
<li>ACMR/981.HK/1347.HK: US outbound investment restrictions likely to exempt publicly traded securities (+/+/+)</li>
<li>NIO/1211 HK: Geely's sub-brand Zeekr cut price of its 001 model (-/-)</li>
<li>XPEV/NIO/BYD: Tesla China cuts Model Y prices and offers insurance subsidy for Model 3 (-/-/-)</li>
</ul>


ACMR/981.HK/1347.HK: US outbound investment restrictions likely to exempt publicly traded securities (+/+/+)
NIO/1211 HK: Geely's sub-brand Zeekr cut price of its 001 model (-/-)
XPEV/NIO/BYD: Tesla China cuts Model Y prices and offers insurance subsidy for Model 3 (-/-/-)


China TMT Update-ACMR/981.HK/1347.HK/NIO/1211.HK/XPEV/BYD-Tesla Cuts Model Y Prices/Geely Cuts Price

Equity Bottom-Up

<ul>
<li>ACMR reported C2Q23 top-line, non-GAAP EBIT, and non-GAAP net profit 22%, 130%, and 209% vs. our est., and 25%, 228%, and 248%, respectively. </li>
<li>As FY guidance was unchanged, we suggest that the revenue beat was due to tool delivery faster than expected (i.e., order pull-in).</li>
<li>We maintain our FY23 revenue estimate, but raise our net margin estimate to reflect the better-than-expected impact of USD appreciation on profitability. </li>
</ul>


ACMR reported C2Q23 top-line, non-GAAP EBIT, and non-GAAP net profit 22%, 130%, and 209% vs. our est., and 25%, 228%, and 248%, respectively. 
As FY guidance was unchanged, we suggest that the revenue beat was due to tool delivery faster than expected (i.e., order pull-in).
We maintain our FY23 revenue estimate, but raise our net margin estimate to reflect the better-than-expected impact of USD appreciation on profitability. 


[ACM Research (ACMR US, BUY, TP US$30) Review]: Beat on Order Pull-In and Favorable Foreign Exchange

<ul>
<li>We expect ACMR to report C2Q23 top-line and non-IFRS net profit in-line and 12.7% vs. consensus, respectively.</li>
<li>Peers guided that a major ACMR customer, CXMT, made purchase orders greater than they had previously anticipated. We raised our FY23 revenue estimate by 2% to US$ 574mn.</li>
<li>ACMR remains position to capture demand from export restricted local manufacturers. As a result, we maintain our BUY rating and US$ 30 TP.</li>
</ul>


We expect ACMR to report C2Q23 top-line and non-IFRS net profit in-line and 12.7% vs. consensus, respectively.
Peers guided that a major ACMR customer, CXMT, made purchase orders greater than they had previously anticipated. We raised our FY23 revenue estimate by 2% to US$ 574mn.
ACMR remains position to capture demand from export restricted local manufacturers. As a result, we maintain our BUY rating and US$ 30 TP.


[ACM Research (ACMR US, BUY, TP US$30) Preview]: CXMT Order Volume Could Be Ahead of Expectations

<ul>
<li>We expect ACMR to report C1Q23 top-line and IFRS net income 2.8% and 83% vs. consensus, respectively. </li>
<li>We expect it to raise FY the mid-point of its guidance to US$560mn~, due to YMTC orders and 4Q23 order visibility; </li>
<li>We are buyers into earnings but avoid long-positions between reporting dates due to geopolitical risk exposure.</li>
</ul>


We expect ACMR to report C1Q23 top-line and IFRS net income 2.8% and 83% vs. consensus, respectively. 
We expect it to raise FY the mid-point of its guidance to US$560mn~, due to YMTC orders and 4Q23 order visibility; 
We are buyers into earnings but avoid long-positions between reporting dates due to geopolitical risk exposure.


[ACM Research Inc. (ACMR US, BUY, TP US$30) Earnings Preview]: Tool Monopoly for Next YMTC Expansion

United States

ACM Research, Inc. develops wet processing technology. The Company produces equipment for a range of applications in integrated circuits and wafer level packaging, as well as offers coating, developer, wet stripping, scrubber, and plating systems. ACM Research serves customers worldwide.

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ACM Research (ACMR US)

[Blue Lotus Hardware Sector Update]: Huawei Mate 60 Is a Win-Win for Both US and China

Huawei’s launch of 5G does speak volumes about the strides China’s semiconductor supply chain has made, but its timing also takes advantage of the...

Blue Lotus Research Institute

China TMT Update-ACMR/981.HK/1347.HK/NIO/1211.HK/XPEV/BYD-Tesla Cuts Model Y Prices/Geely Cuts Price

ACMR/981.HK/1347.HK: US outbound investment restrictions;NIO/1211 HK: Geely's sub-brand Zeekr cut price;XPEV/NIO/BYD: Tesla China cuts Model Y...

Blue Lotus Research Institute