Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

<ul>
<li>Nanya Technology recently reported 3Q22 results and its gross margin fell substantially, but this appears mostly digested into consensus estimates.</li>
<li>The company also announced a major reduction in capex, which highlights the latest industry trend whereby supply/demand imbalances are being addressed by reduced capacity expansion.</li>
<li>Nanya Technology has outperformed the TAIEX Semi Index by ~27% in less than three weeks.</li>
</ul>


Nanya Technology recently reported 3Q22 results and its gross margin fell substantially, but this appears mostly digested into consensus estimates.
The company also announced a major reduction in capex, which highlights the latest industry trend whereby supply/demand imbalances are being addressed by reduced capacity expansion.
Nanya Technology has outperformed the TAIEX Semi Index by ~27% in less than three weeks.


Nanya Tech: Another Example of Capex Reduction, Major Share Price Divergence

<ul>
<li>Micron's near-term guidance implies that consensus estimates likely need to come down for both Micron and Nanya Tech.</li>
<li>However, Micron indicated that they expect supply/demand balance to improve in 2023E.</li>
<li>There could be more negative industry news to come, however Nanya Tech has a very strong balance sheet to weather some weak quarters and is trading at trough-type valuations.</li>
</ul>


Micron's near-term guidance implies that consensus estimates likely need to come down for both Micron and Nanya Tech.
However, Micron indicated that they expect supply/demand balance to improve in 2023E.
There could be more negative industry news to come, however Nanya Tech has a very strong balance sheet to weather some weak quarters and is trading at trough-type valuations.


Nanya Tech: Micron Results, Light at the End of the Tunnel? Shares Rise

<ul>
<li>We estimate that Nanya Technology has the highest level of net cash as a percent of its market cap in its history and it is trading well below 1x PBV.</li>
<li>The median 6-month total shareholder return has been 40.5% for instances since 2012 when Nanya Tech has traded below 1.0x PBV.</li>
<li>Micron's results this Thursday will provide color on Nanya's outlook and could be a catalyst.</li>
</ul>


We estimate that Nanya Technology has the highest level of net cash as a percent of its market cap in its history and it is trading well below 1x PBV.
The median 6-month total shareholder return has been 40.5% for instances since 2012 when Nanya Tech has traded below 1.0x PBV.
Micron's results this Thursday will provide color on Nanya's outlook and could be a catalyst.


Nanya Tech: Valuation Backtest Implies Upside, Potential Catalyst Thursday

Zero One

Founded in 2015, Zero One produces independent investment research and provides corporate finance advisory services with a focus on both listed and private technology companies. Founder Vincent Fernando has over 20 years of experience in US and Asia capital markets.

Independent Investment Research

<ul>
<li>Latest Nanya Tech results showed weak margin rebound. Gross margin rebounded but remained below zero.</li>
<li>Nanya expects DRAM pricing improvement through 2024E; due to demand for AI related memory products reducing capacity for other DRAM products rather than improvement for Nanya's main Consumer segment.</li>
<li>Micron is reportedly increasing prices post Taiwan earthquake and this is positive, but we see Nanya's 2024E consensus margin expectations set at a high bar and the stock isn't cheap.</li>
</ul>


Latest Nanya Tech results showed weak margin rebound. Gross margin rebounded but remained below zero.
Nanya expects DRAM pricing improvement through 2024E; due to demand for AI related memory products reducing capacity for other DRAM products rather than improvement for Nanya's main Consumer segment.
Micron is reportedly increasing prices post Taiwan earthquake and this is positive, but we see Nanya's 2024E consensus margin expectations set at a high bar and the stock isn't cheap.


Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially

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

<ul>
<li>Nanya’s quarterly revenue was NT$ 9.5 billion, up 9.2% QoQ &amp; up 47.9% YoY</li>
<li>Nanya still had a net loss of NT$1.2 billion, its sixth loss making quarter in a row</li>
<li>Larger peers doubling down on HBM, structural reduction in memory wafer capacity &amp; shortages likely triggered by Taiwan earthquake are all mounting tailwinds for Nanya</li>
</ul>


Nanya’s quarterly revenue was NT$ 9.5 billion, up 9.2% QoQ &amp; up 47.9% YoY
Nanya still had a net loss of NT$1.2 billion, its sixth loss making quarter in a row
Larger peers doubling down on HBM, structural reduction in memory wafer capacity &amp; shortages likely triggered by Taiwan earthquake are all mounting tailwinds for Nanya


Nanya. Tailwinds Mount Albeit Profits Still Elude

Taiwan

Nanya Technology Corp. manufactures and markets dynamic random access memories (DRAMs).  The Company sells its products in Taiwan and exports worldwide.

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Nanya Technology (2408 TT)

Nanya Tech: Micron Results, Light at the End of the Tunnel? Shares Rise

Margin guidance implies Nanya Tech and Micron consensus numbers need to be reduced significantly, but Micron management comments provide positive...

Vincent Fernando, CFA

Nanya Tech: Valuation Backtest Implies Upside, Potential Catalyst Thursday

The median 6-month total shareholder return has been 40.5% for instances since 2012 when the company has traded below 1.0x PBV. Net cash to market...

Vincent Fernando, CFA

Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially

Nanya Tech's gross margin rebound appears to be lagging Memory peers. DRAM pricing is expected to improve through 2024E, but its mostly due to...

Vincent Fernando, CFA

Nanya. Tailwinds Mount Albeit Profits Still Elude

Q124 revenue NT$ 9.5 billion, +9.2% QoQ & +47.9% YoY. Larger peers focus on HBM, structural reduction in capacity & shortages caused by Taiwan...

William Keating

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Nanya Tech: Another Example of Capex Reduction, Major Share Price Divergence

Announced major reduction in capex is good news as the company is holding back volume expansion and focusing on higher value output.

Vincent Fernando, CFA

Nanya Tech: Micron Results, Light at the End of the Tunnel? Shares Rise

Margin guidance implies Nanya Tech and Micron consensus numbers need to be reduced significantly, but Micron management comments provide positive...

Vincent Fernando, CFA

Nanya Tech: Valuation Backtest Implies Upside, Potential Catalyst Thursday

The median 6-month total shareholder return has been 40.5% for instances since 2012 when the company has traded below 1.0x PBV. Net cash to market...

Vincent Fernando, CFA

Nanya Technology Sees DRAM Industry Pricing Rising Through 2024E; But Is Underperforming Financially

​Nanya Tech's gross margin rebound appears to be lagging Memory peers. DRAM pricing is expected to improve through 2024E, but its mostly due to...

Vincent Fernando, CFA

Nanya. Tailwinds Mount Albeit Profits Still Elude

Q124 revenue NT$ 9.5 billion, +9.2% QoQ & +47.9% YoY. Larger peers focus on HBM, structural reduction in capacity & shortages caused by Taiwan...

William Keating

Nanya Tech's gross margin rebound appears to be lagging Memory peers. DRAM pricing is expected to improve through 2024E, but its mostly due to...