Technology / Semiconductor / Internet Research

Nicolas Baratte

Equity Bottom-Up

<ul>
<li>DISCO Mar-25 results beat Consensus by ~12%. Jun-25 guidance is very weak but DISCO always under-guides egregiously. But it’s weak.</li>
<li>Consensus has revised down its Jun-25 revenue forecast from 12% YoY growth to 6% but left Sept-Dec-25 unchanged at ~10% YoY growth. The odds are that Consensus is too high.</li>
<li>The stock is down -39% since end Dec-24 but still trading at 20x EPS in the face of downside risks to Consensus. Not appealing.</li>
</ul>


DISCO Mar-25 results beat Consensus by ~12%. Jun-25 guidance is very weak but DISCO always under-guides egregiously. But it’s weak.
Consensus has revised down its Jun-25 revenue forecast from 12% YoY growth to 6% but left Sept-Dec-25 unchanged at ~10% YoY growth. The odds are that Consensus is too high.
The stock is down -39% since end Dec-24 but still trading at 20x EPS in the face of downside risks to Consensus. Not appealing.


DISCO: Growth Is Slowing Down, the Stock Is Still Expensive

Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Thematic (Sector/Industry)

<ul><li>Japan is the darling of the moment. To those who haven’t kept track of the story, a series of <a href="https://www.jpx.co.jp/english/equities/improvements/follow-up/b5b4pj000004yqcc-att/dreu250000000uqc.pdf" target="_blank" rel="noopener">market reforms in January</a> encourages companies with a price-to-book ratio below one to create a plan to achieve capital efficiency.</li><li>Given that half of the companies at the time were trading below 1x P/B, this is a big deal.</li><li>And this has driven a massive wave of buybacks and changes, leading to the Nikkei finally breaking a 30-year high.</li></ul>

Japan is the darling of the moment. To those who haven’t kept track of the story, a series of market reforms in January encourages companies with a price-to-book ratio below one to create a plan to achieve capital efficiency.Given that half of the companies at the time were trading below 1x P/B, this is a big deal.And this has driven a massive wave of buybacks and changes, leading to the Nikkei finally breaking a 30-year high.

Japanese Semiconductor Stocks and AI "Winners" that Ain't So

Japanese Equity Specialist, Ortus Advisors

Andrew Jackson

Japanese Equity Specialist

Ortus Advisors

<ul>
<li>Late session rally for chips and semi-cap names with the US signalling a softening of export curbs.</li>
<li>ARM numbers after the bell sending stock -10% point to Softbank missing todays upside.</li>
<li>Is Japanese shipbuilding expertise the new bargaining chip against tariffs? </li>
</ul>


Late session rally for chips and semi-cap names with the US signalling a softening of export curbs.
ARM numbers after the bell sending stock -10% point to Softbank missing todays upside.
Is Japanese shipbuilding expertise the new bargaining chip against tariffs? 


Japan Morning Connection: Rescinding of US Chip Restrictions to Send JP Semi Plays Higher

<ul>
<li>NVDA disappoints market expectations and trades -7% after-market, setting a very weak tone for Japanese SPE and tech related names to start.</li>
<li>The bad news for 4911 Shiseido continues, with the tone out of a small sell-side meeting held yesterday after-market pointed to further earnings downside.</li>
<li>Expect a continued rotation into value and domestic defensives as the market pivots away from AI/tech with plenty of room for profit taking after the recent rebound.</li>
</ul>


NVDA disappoints market expectations and trades -7% after-market, setting a very weak tone for Japanese SPE and tech related names to start.
The bad news for 4911 Shiseido continues, with the tone out of a small sell-side meeting held yesterday after-market pointed to further earnings downside.
Expect a continued rotation into value and domestic defensives as the market pivots away from AI/tech with plenty of room for profit taking after the recent rebound.


Japan Morning Connection: NVDA Disappoints

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Sep 2024 Nikkei 225 Review data set is mostly done, and one can interpolate results relatively accurately. It still leaves us with one ADD, one DELETE, and capping fun.</li>
<li>Recently, Yanai-san sold more <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a>. There is more Real World Float- more active holders own more stock (which may mean less interest to buy later).</li>
<li>There is a dark horse candidate which is on investor radar for other reasons. It would not be out of the question, but the precedent is old, and different.</li>
</ul>


The Sep 2024 Nikkei 225 Review data set is mostly done, and one can interpolate results relatively accurately. It still leaves us with one ADD, one DELETE, and capping fun.
Recently, Yanai-san sold more Fast Retailing (9983 JP). There is more Real World Float- more active holders own more stock (which may mean less interest to buy later).
There is a dark horse candidate which is on investor radar for other reasons. It would not be out of the question, but the precedent is old, and different.


Sep24 Nikkei 225 Rebal - Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse

Japan

DISCO CORPORATION manufactures abrasive and precision industrial machinery for cutting and grinding purposes.  The Company's products are applied in the semiconductor, electronics, and construction industries to produce consumer goods such as personal computers, digital cameras, video game systems, and Digital Video Disc (DVD) players.

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DISCO Corp (6146 JP)

DISCO: Growth Is Slowing Down, the Stock Is Still Expensive

DISCO beats Mar-25 Consensus but weak Jun-25 guidance. Consensus too high on revenue forecasts. Stock down -39% but still overvalued at 20x EPS.

Nicolas Baratte

Japanese Semiconductor Stocks and AI "Winners" that Ain't So

Another BSPDN name and some ABF ideas. Not every AI semiconductor stock is actually winning. This edition just so happens to be Japan focused

Fabricated Knowledge

Japan Morning Connection: Rescinding of US Chip Restrictions to Send JP Semi Plays Higher

Upside for chips and semi-cap as US eases export curbs, poor outlook for Softbank as ARM drops 10%, Japanese shipbuilding expertise may be used as...

Andrew Jackson

Japan Morning Connection: NVDA Disappoints

NVDA disappoints market, setting weak tone for Japanese tech names. Shiseido faces further earnings downside. Market pivots to value and domestic...

Andrew Jackson

Sep24 Nikkei 225 Rebal - Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse

The Nikkei 225 Rebal for Sep24 has 3mos before the data cutoff. I still see one ADD and one DELETE. There is a possible dark horse ADD, and Fast...

Travis Lundy

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DISCO: Growth Is Slowing Down, the Stock Is Still Expensive

​DISCO beats Mar-25 Consensus but weak Jun-25 guidance. Consensus too high on revenue forecasts. Stock down -39% but still overvalued at 20x EPS.

Nicolas Baratte

Japanese Semiconductor Stocks and AI "Winners" that Ain't So

Another BSPDN name and some ABF ideas. Not every AI semiconductor stock is actually winning. This edition just so happens to be Japan focused

Fabricated Knowledge

Japan Morning Connection: Rescinding of US Chip Restrictions to Send JP Semi Plays Higher

Upside for chips and semi-cap as US eases export curbs, poor outlook for Softbank as ARM drops 10%, Japanese shipbuilding expertise may be used as...

Andrew Jackson

Japan Morning Connection: NVDA Disappoints

​NVDA disappoints market, setting weak tone for Japanese tech names. Shiseido faces further earnings downside. Market pivots to value and domestic...

Andrew Jackson

Sep24 Nikkei 225 Rebal - Still 1 ADD (Ryohin Keikaku), 1 DELETE, and 1 Very Large Very Dark Horse

The Nikkei 225 Rebal for Sep24 has 3mos before the data cutoff. I still see one ADD and one DELETE. There is a possible dark horse ADD, and Fast...

Travis Lundy

DISCO beats Mar-25 Consensus but weak Jun-25 guidance. Consensus too high on revenue forecasts. Stock down -39% but still overvalued at 20x EPS.

NVDA disappoints market, setting weak tone for Japanese tech names. Shiseido faces further earnings downside. Market pivots to value and domestic...