Asia and Global Semiconductor and Tech Research

Andrew Lu

Thematic (Sector/Industry)

Starting July 14, 2016, TSMC will first report 2Q16 results and provide 3Q16 guidance to kick off semi/tech earnings season. Our report takeaways suggest strengths in foundry, fabless, and display vendors to drive Taiwan semi sales recovery of 17% y/y in June and 8 out 12 vendors reported a beat on 2Q16 sales guidance. Despite the strengths, we saw weaknesses in power amplifier, touch panel, and solar vendors and our semi leading indicator fell to 8% in June 2016 from this year peak of 31% in…

Starting July 14, 2016, TSMC will first report 2Q16 results and provide 3Q16 guidance to kick off semi/tech earnings season. Our report takeaways suggest strengths in foundry, fabless, and display vendors to drive Taiwan semi sales recovery of 17% y/y in June and 8 out 12 vendors reported a beat on 2Q16 sales guidance. Despite the strengths, we saw weaknesses in power amplifier, touch panel, and solar vendors and our semi leading indicator fell to 8% in June 2016 from this year peak of 31% in…

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Event-Driven

The multi-month runup to <a href="https://www.smartkarma.com/entities/391" target="_blank" data-smartkarma-citation="entities:391">Sharp</a>'s decision February 25th to approve its effective takeover by long-time suitor and major <a href="https://www.smartkarma.com/entities/666" target="_blank" data-smartkarma-citation="entities:666">Apple Inc</a> supplier <a href="https://www.smartkarma.com/entities/745" target="_blank" data-smartkarma-citation="entities:745">Hon Hai Precision Industry</a> is covered in the Insight Stream to the right or <a href="https://www.smartkarma.com/entities/sharp-corp/insights" target="_blank">here</a>. Halfway through the day that Thursday we got the Nikkei leak that a deal was done, with proposed dilution much as previously modeled (in <a href="https://www.smartkarma.com/insights/sharp-currying-favor" target="_blank" data-smartkarma-citation="insights:2557">Sharp:  Currying Favor</a>), and the stock fell sharply on what appeared to be a sell-the-news reaction (either that or the market hadn't…

The multi-month runup to Sharp's decision February 25th to approve its effective takeover by long-time suitor and major Apple Inc supplier Hon Hai Precision Industry is covered in the Insight Stream to the right or here. Halfway through the day that Thursday we got the Nikkei leak that a deal was done, with proposed dilution much as previously modeled (in Sharp:  Currying Favor), and the stock fell sharply on what appeared to be a sell-the-news reaction (either that or the market hadn't…

SHARP: Updates Suggest Banks Take a Small Hit

I don't know why I do this to myself. After Japan <a href="https://www.smartkarma.com/insights/jumping-the-shark-jumping-the-sharp" target="_blank" data-smartkarma-citation="insights:2446">Jumping the Shark? Jumping the Sharp?</a> I jump back in. Last week it was the Fonze. This week it's curry.The history of the recent Sharp/INCJ/HonHai situation has been dealt with in the pieces below (but you can see the links at right as well):     <a href="https://www.smartkarma.com/insights/a-tragicomedy-of-errors-dealing-with-sharp-sharpish" target="_blank" data-smartkarma-citation="insights:2212">A Tragicomedy of Errors - Dealing with Sharp Sharpish</a>      <a href="https://www.smartkarma.com/insights/lost-in-translation-a-500bn-yen-deal-for-sharp" target="_blank" data-smartkarma-citation="insights:2232">Lost in Translation - A 500bn Yen Deal for Sharp?</a>      <a href="https://www.smartkarma.com/insights/sharp-h2-outlook-not-looking-pretty" target="_blank" data-smartkarma-citation="insights:2259">Sharp: H2 Outlook Not Looking Pretty </a>    <a href="https://www.smartkarma.com/insights/sharp-headed-into-the-arms-of-incj" target="_blank" data-smartkarma-citation="insights:2294">Sharp: Headed into the Arms of INCJ?</a>      <a href="https://www.smartkarma.com/insights/sharp-competition" target="_blank" data-smartkarma-citation="insights:2359">Sharp Competition</a>      <a href="https://www.smartkarma.com/insights/jumping-the-shark-jumping-the-sharp" target="_blank" data-smartkarma-citation="insights:2446">Jumping the Shark? Jumping the Sharp?</a> A flurry of interesting articles and developments late in the week and over the weekend lead to even more intrigue. Everybody has been floating balloons in the media - the govt, the banks, Hon Hai. Kyodo had an article suggesting Hon Hai might work with the INCJ (govt float). Reuters had some nice articles talking about how Hon Hai had clarified its offer, how the bureaucrats were impressed, and how the banks had been asking nasty questions (<a href="http://jp.reuters.com/article/sharp-incj-idJPKCN0V50SE?sp=true" target="_blank">J</a> only) but Terry Guo had been 'sincere' in his responses (Hon Hai float?). Other articles highlighting the difference between Hon Hai's numbers and INCJ's numbers offer plenty of quotes from the banks ("It's a proposal we need to take seriously"), aiming to put pressure on INCJ to increase the money it puts on the table (banks' float). The current version of the Reuters article Wednesday pointed out also that the banks would have a tough time with the governance problem (the initial version was shorter and missed that). Interestingly, it appears the INCJ couldn't even get its own proposal cleanly past its investment committee Friday.But Terry Guo spent Monday and Tuesday making the rounds of the bureaucrats, running through the nasty question gauntlet with the banks, and currying favor with Sharp by promising not to fire any Japanese employees and promising to keep management (though INCJ's deal is apparently now contingent on firing top mgmt); and according to media sources out after the close Friday, Foxconn was set to raise its bid from 625bn yen to 659-700bn yen (depending on the source). Mr. Guo then<a href="http://www.japantimes.co.jp/news/2016/01/30/business/corporate-business/hon-hai-chairman-makes-direct-offer-to-revive-struggling-sharp/#.Vq34O5N95TE" target="_blank">spent Saturday</a> at Sharp running through his latest offer and <a href="http://www.bloomberg.com/news/articles/2016-01-31/foxconn-s-gou-confident-of-winning-bid-to-take-control-of-sharp" target="_blank">said</a> at a Foxconn event today that he was confident of winning.After my last piece, others seem to have cottoned on to the fact that the INCJ proposal on the table was a horrible display of governance. The problem is that many of them seem to imply taking the INCJ deal would be bad for Sharp shareholders. THAT is not absolutely clear. It will depend on how well the LCDCO spinoff returns to shareholders and whether the details in Hon Hai's offer to take a "roughly 2/3 stake" in Sharp include pref dilution or not. Additionally, there are some odds and ends floating around (like Sharp's 37.6% ownership stake in SDP). If the Hon Hai proposal involves both 2/3 equity stake and the prefs on top of that (as it appears is likely), the INCJ deal is actually probably better for Sharp shareholders. One analyst quoted in the FT Friday suggesting how the Hon Hai money might be spent went so far as to say "None of these numbers make sense and hence we believe there is no real meaningful offer on the table." He was a) ignoring all possible cases but two extremes, and b) every article with any detail about the Hon Hai bid suggests the actual proposal fits neither of those extremes. He (or "they") is/are definitely wrong.Sharp is set to disclose Q3 earnings Thursday, and Terry Guo said today he expects a Sharp decision by this week. Some Sopranos, some comparative numbers, and some more curry below the fold.

I don't know why I do this to myself. After Japan Jumping the Shark? Jumping the Sharp? I jump back in. Last week it was the Fonze. This week it's curry.The history of the recent Sharp/INCJ/HonHai situation has been dealt with in the pieces below (but you can see the links at right as well):     A Tragicomedy of Errors - Dealing with Sharp Sharpish      Lost in Translation - A 500bn Yen Deal for Sharp?      Sharp: H2 Outlook Not Looking Pretty     Sharp: Headed into the Arms of INCJ?      Sharp Competition      Jumping the Shark? Jumping the Sharp? A flurry of interesting articles and developments late in the week and over the weekend lead to even more intrigue. Everybody has been floating balloons in the media - the govt, the banks, Hon Hai. Kyodo had an article suggesting Hon Hai might work with the INCJ (govt float). Reuters had some nice articles talking about how Hon Hai had clarified its offer, how the bureaucrats were impressed, and how the banks had been asking nasty questions (J only) but Terry Guo had been 'sincere' in his responses (Hon Hai float?). Other articles highlighting the difference between Hon Hai's numbers and INCJ's numbers offer plenty of quotes from the banks ("It's a proposal we need to take seriously"), aiming to put pressure on INCJ to increase the money it puts on the table (banks' float). The current version of the Reuters article Wednesday pointed out also that the banks would have a tough time with the governance problem (the initial version was shorter and missed that). Interestingly, it appears the INCJ couldn't even get its own proposal cleanly past its investment committee Friday.But Terry Guo spent Monday and Tuesday making the rounds of the bureaucrats, running through the nasty question gauntlet with the banks, and currying favor with Sharp by promising not to fire any Japanese employees and promising to keep management (though INCJ's deal is apparently now contingent on firing top mgmt); and according to media sources out after the close Friday, Foxconn was set to raise its bid from 625bn yen to 659-700bn yen (depending on the source). Mr. Guo thenspent Saturday at Sharp running through his latest offer and said at a Foxconn event today that he was confident of winning.After my last piece, others seem to have cottoned on to the fact that the INCJ proposal on the table was a horrible display of governance. The problem is that many of them seem to imply taking the INCJ deal would be bad for Sharp shareholders. THAT is not absolutely clear. It will depend on how well the LCDCO spinoff returns to shareholders and whether the details in Hon Hai's offer to take a "roughly 2/3 stake" in Sharp include pref dilution or not. Additionally, there are some odds and ends floating around (like Sharp's 37.6% ownership stake in SDP). If the Hon Hai proposal involves both 2/3 equity stake and the prefs on top of that (as it appears is likely), the INCJ deal is actually probably better for Sharp shareholders. One analyst quoted in the FT Friday suggesting how the Hon Hai money might be spent went so far as to say "None of these numbers make sense and hence we believe there is no real meaningful offer on the table." He was a) ignoring all possible cases but two extremes, and b) every article with any detail about the Hon Hai bid suggests the actual proposal fits neither of those extremes. He (or "they") is/are definitely wrong.Sharp is set to disclose Q3 earnings Thursday, and Terry Guo said today he expects a Sharp decision by this week. Some Sopranos, some comparative numbers, and some more curry below the fold.

Taiwan

FTC is a global engineering solutions partner for lightweight, eco-friendly casing and mechanical parts, heat dissipation modules, and electronics components.

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Foxconn Technology Corp (2354 TT)

Points from Taiwan Semi/Tech 2Q Sales

Starting July 14, 2016, TSMC will first report 2Q16 results and provide 3Q16 guidance to kick off semi/tech earnings season. Our report takeaways...

Andrew Lu

SHARP: Updates Suggest Banks Take a Small Hit

The multi-month runup to Sharp's decision February 25th to approve its effective takeover by long-time suitor and major Apple Inc supplier Hon Hai...

Travis Lundy

Sharp: Currying Favor

I don't know why I do this to myself. After Japan Jumping the Shark? Jumping the Sharp? I jump back in. Last week it was the Fonze. This week it's...

Travis Lundy

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