Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

Equity Bottom-Up

<ul class="">
<li>Baidu's new methodology directs the large majority of search results to its in-house functions, especially to its blog function BJH (百家号).</li>
<li>Baidu began to hide websites of search results after the change above was widely criticized. However, as a result, users can hardly find authoritative websites.</li>
<li>Because of these changes, it is hard for users to find useful content.</li>
<li>We believe Baidu is giving up its existing advantages for users and clients.</li>
<li>We also believe that users will choose to leave if the platform tries to choose content for them. If users leave Baidu, advertisers will follow them.</li>
</ul>


Baidu's new methodology directs the large majority of search results to its in-house functions, especially to its blog function BJH (百家号).
Baidu began to hide websites of search results after the change above was widely criticized. However, as a result, users can hardly find authoritative websites.
Because of these changes, it is hard for users to find useful content.
We believe Baidu is giving up its existing advantages for users and clients.
We also believe that users will choose to leave if the platform tries to choose content for them. If users leave Baidu, advertisers will follow them.


Baidu (BIDU): The Change Amounts to Business Suicide, Disappointing Existing Users and Clients

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/16764" target="_blank" data-smartkarma-citation="entities:16764:1">Intel</a>'s fourth quarter 2018 results last week missed on earnings to the tune of $360 million. That, combined with a tepid outlook for 2019 YoY growth of just 1% spooked investors, sending the stock down over 5% on three times the normal trading volume the following day. Lagging process technology leadership, ever increasing competition from ARM, AMD and NVIDIA, lower modem sales as iPhone unit shipments decline, falling NAND prices, data center spending significantly reduced as the hyperscalers digest and optimise their record-breaking build-out will all weigh heavily on the company in the coming quarters. After a record breaking 2018 which saw the company's annual revenue grow 13% to edge north of the $70 billion mark for the first time ever, Intel now faces a growing array of headwinds which will dog the company for the Year of the Pig.

Intel's fourth quarter 2018 results last week missed on earnings to the tune of $360 million. That, combined with a tepid outlook for 2019 YoY growth of just 1% spooked investors, sending the stock down over 5% on three times the normal trading volume the following day. Lagging process technology leadership, ever increasing competition from ARM, AMD and NVIDIA, lower modem sales as iPhone unit shipments decline, falling NAND prices, data center spending significantly reduced as the hyperscalers digest and optimise their record-breaking build-out will all weigh heavily on the company in the coming quarters. After a record breaking 2018 which saw the company's annual revenue grow 13% to edge north of the $70 billion mark for the first time ever, Intel now faces a growing array of headwinds which will dog the company for the Year of the Pig. 

Intel. Dogged By Headwinds In The Year Of The Pig

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

ja research

ja research is an independent research platform focused exclusively on Japanese equities. Leveraging data and graphic analysis provided by Japan Analytics, we provide insights on small and medium-sized companies that have been ignored by the sell-side as well as challenging conventional wisdom on larger companies. We also offer analyst and corporate access, the latter with translation if required. 

Quantitative Analysis

- MARKET COMPOSITE -
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/724/original/2019-01-26_17-35-03.png?1548496734" class="editor-image img-responsive" data-smartkarma-image-id="76724"></figure>
<div class="content-caption">Source: Japan Analytics</div>
SLOW &amp; STEADY RECOVERY - From December 25th's lows of 8% by number and 11% by value, the percentages of Japanese stocks above the weighted sum of moving averages have continued to recover to now 19% by number and 26% by value. Total Market Value has now risen by 11.2% from the Christmas Day low and is overdue a 'breather'.
<hr>
- SECTORS -
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/725/original/2019-01-26_17-29-21.png?1548497304" class="editor-image img-responsive" data-smartkarma-image-id="76725"></figure>
<div class="content-caption">
LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.</div>
SECTOR BREAKDOWN - The top six sectors measured by their percentage above the weighted average of 5-240 Days remain domestic and defensive. REITs, Information Technology, Media, Healthcare and Utilities continue from our previous review with Restaurants replacing Transportation. Equally predictable is the bottom half-dozen - Banks, Autos, Metals, Building Materials, and Chemicals remain from two weeks ago, with Construction replacing Autos. 
<hr>
- COMPANIES -
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/763/original/2019-01-27_15-07-37.png?1548569281" class="editor-image img-responsive" data-smartkarma-image-id="76763"></figure>
<div class="content-caption">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/076/775/original/2019-01-27_16-34-40.png?1548574490" class="editor-image img-responsive" data-smartkarma-image-id="76775"></figure>
Source: Japan Analytics
</div>
COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five larger capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note. <a href="https://www.smartkarma.com/entities/26722" target="_blank" data-smartkarma-citation="entities:26722:1">UUUM (3990 JP)</a> is currently the most 'extreme' positive outlier, and <a href="https://www.smartkarma.com/entities/20895" target="_blank" data-smartkarma-citation="entities:20895:1">Welcia (3141 JP)</a> the most 'extreme' negative outlier

- MARKET COMPOSITE -

Source: Japan Analytics
SLOW &amp; STEADY RECOVERY - From December 25th's lows of 8% by number and 11% by value, the percentages of Japanese stocks above the weighted sum of moving averages have continued to recover to now 19% by number and 26% by value. Total Market Value has now risen by 11.2% from the Christmas Day low and is overdue a 'breather'.

- SECTORS -


LEGEND: The 'sparklines' show the three-year trend in the weighted percentage above moving average relative to the Market Composite and the 'STDev' column is a measure of the variability of that relative measure. The table also provides averages for the breaks above and breaks below and the positive and negative crossovers.
SECTOR BREAKDOWN - The top six sectors measured by their percentage above the weighted average of 5-240 Days remain domestic and defensive. REITs, Information Technology, Media, Healthcare and Utilities continue from our previous review with Restaurants replacing Transportation. Equally predictable is the bottom half-dozen - Banks, Autos, Metals, Building Materials, and Chemicals remain from two weeks ago, with Construction replacing Autos. 

- COMPANIES -



Source: Japan Analytics

COMPANY MOVING AVERAGE OUTLIERS - As with the Market Composite and Sectors, the Moving Average Outlier indicator uses a weighted sum of each company's share price relative to its 5-day, 20-day, 60-day, 120-day and 240-day moving averages. 'Extreme' values are weighted sums greater than 100% and less than -100%. We would caution that this indicator is best used for timing shorter-term reversals and, in many cases, higher highs and lower lows will be seen. 
In the DETAIL section below, we highlight the current top and bottom twenty-five larger capitalisation outliers, as well as those companies that have seen the most significant positive and negative changes in their outlier percentage in the last two weeks and provide short comments on companies of particular note. UUUM (3990 JP) is currently the most 'extreme' positive outlier, and Welcia (3141 JP) the most 'extreme' negative outlier

Japan: Moving Average Outliers - Tech[nical] Rebound

IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

Next week promises to be a large catalyst driven week, with <a href="https://www.smartkarma.com/entities/666" target="_blank" data-smartkarma-citation="entities:666:1">Apple Inc (AAPL US)</a>, <a href="https://www.smartkarma.com/entities/1089" target="_blank" data-smartkarma-citation="entities:1089:1">NTT Docomo Inc (9437 JP)</a> and <a href="https://www.smartkarma.com/entities/20279" target="_blank" data-smartkarma-citation="entities:20279:1">Tesla Motors (TSLA US)</a> expected to report results, among others. We have provided a list below of the key equity catalysts for next week as well as potential drivers for M&amp;A deals and stubs. If you are interested in importing this directly into Outlook or have any further requests, please let us know. Kind regards, Rickin Arun and Venkat

Next week promises to be a large catalyst driven week, with Apple Inc (AAPL US), NTT Docomo Inc (9437 JP) and Tesla Motors (TSLA US) expected to report results, among others. We have provided a list below of the key equity catalysts for next week as well as potential drivers for M&amp;A deals and stubs. If you are interested in importing this directly into Outlook or have any further requests, please let us know. Kind regards, Rickin Arun and Venkat

GER Upcoming EVENTS and Earnings Calendar

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

While <a href="https://www.smartkarma.com/entities/11230" target="_blank" data-smartkarma-citation="entities:11230:1">Taiwan Semiconductor Manufacturing Company</a>'s Q4 2018 earnings were in line with expectations at ~$9.4 billion, the company's revenue forecast for Q1 2019 was down 22% sequentially to $7.3 billion. TSMC predicts a tepid 2019 with semiconductor growth of 1%, down from ~6% last year. Like many of its peers, TSMC sees challenges relating to inventory overhang, waning smartphone unit sales and global macro uncertainty weighing on the company in the first half and expects business to recover to modest growth in the second half. The bottom line is that the company anticipates a no-to-low growth year of the Pig. In spite of the downbeat outlook for the year, the company reiterated its belief that it will hit its 5-10% growth CAGR through 2021. To meet that goal, it is clear that TSMC now expects both 2020 and 2021 to be double digit growth years and, as we outlined in our SmartKarma Originals report <a href="https://www.smartkarma.com/insights/tsmc-bull-case-detail" target="_blank" data-smartkarma-citation="insights:26781">A Bull Investment Case for TSMC (In-Depth Version)</a>, much of that growth will come from TSMC's new-found markets for processors and AI acceleration in the data center.From a process technology leadership perspective, a fundamental tenet of our bull case for the company, TSMC noted that its 7nm process accounted for a staggering 23% of revenues in the fourth quarter, 7nm+ (with EUV) is on track for volume ramp in the second quarter and 5nm remains on track to follow just one year later. Investors shrugged of the negative outlook for the year with the company's share price barely registering the news. We reiterate our bullish stance on the stock and our growth CAGR of 8.36% through 2022.

While Taiwan Semiconductor Manufacturing Company's Q4 2018 earnings were in line with expectations at ~$9.4 billion, the company's revenue forecast for Q1 2019 was down 22% sequentially to $7.3 billion. TSMC predicts a tepid 2019 with semiconductor growth of 1%, down from ~6% last year. Like many of its peers, TSMC sees challenges relating to inventory overhang, waning smartphone unit sales and global macro uncertainty weighing on the company in the first half and expects business to recover to modest growth in the second half. The bottom line is that the company anticipates a no-to-low growth year of the Pig. In spite of the downbeat outlook for the year, the company reiterated its belief that it will hit its 5-10% growth CAGR through 2021. To meet that goal, it is clear that TSMC now expects both 2020 and 2021 to be double digit growth years and, as we outlined in our SmartKarma Originals report A Bull Investment Case for TSMC (In-Depth Version), much of that growth will come from TSMC's new-found markets for processors and AI acceleration in the data center.From a process technology leadership perspective, a fundamental tenet of our bull case for the company, TSMC noted that its 7nm process accounted for a staggering 23% of revenues in the fourth quarter, 7nm+ (with EUV) is on track for volume ramp in the second quarter and 5nm remains on track to follow just one year later. Investors shrugged of the negative outlook for the year with the company's share price barely registering the news. We reiterate our bullish stance on the stock and our growth CAGR of 8.36% through 2022.

TSMC. Reiterating Our Bullish Stance After Earnings

United States

Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related accessories. The Company also offers payment, digital content, cloud and advertising services. Apple Inc.'s customers are primarily in consumer, small & mid-sized business, education, enterprise and government markets worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Apple (AAPL US)

Baidu (BIDU): The Change Amounts to Business Suicide, Disappointing Existing Users and Clients

Baidu's new methodology directs the large majority of search results to its in-house functions, especially to its blog function BJH (百家号). Baidu...

Ming Lu

Intel. Dogged By Headwinds In The Year Of The Pig

Intel's fourth quarter 2018 results last week missed on earnings to the tune of $360 million. That, combined with a tepid outlook for 2019 YoY...

William Keating

Japan: Moving Average Outliers - Tech[nical] Rebound

- MARKET COMPOSITE - SLOW & STEADY RECOVERY - From December 25th's lows of 8% by number and 11% by value, the percentages of Japanese stocks...

Campbell Gunn

GER Upcoming EVENTS and Earnings Calendar

Next week promises to be a large catalyst driven week, with Apple Inc (AAPL US), NTT Docomo Inc (9437 JP) and Tesla Motors (TSLA US) expected to...

Rickin Thakrar

TSMC. Reiterating Our Bullish Stance After Earnings

While Taiwan Semiconductor Manufacturing Company's Q4 2018 earnings were in line with expectations at ~$9.4 billion, the company's revenue forecast...

William Keating

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)