Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>A recent shift in momentum has pushed Taiwan to the largest country level underweight in the Asia Ex-Japan region</li>
<li>Taiwan Technology stocks have driven allocations lower, in addition to Consumer Discretionary and Staples, Health Care and Financials.</li>
<li>Taiwan Tech remains the key risk.  Sentiment is starting to waver when funds are close to maximum exposure.  Underperformance here will be costly on both an absolute a relative basis</li>
</ul>


A recent shift in momentum has pushed Taiwan to the largest country level underweight in the Asia Ex-Japan region
Taiwan Technology stocks have driven allocations lower, in addition to Consumer Discretionary and Staples, Health Care and Financials.
Taiwan Tech remains the key risk.  Sentiment is starting to waver when funds are close to maximum exposure.  Underperformance here will be costly on both an absolute a relative basis


Taiwan Moves to Top Underweight, Tech Overweight Risk

Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>Novatek reached NT$36.5bn, 50.7% and NT$18.3 for revenue, GM and ESP respectively. </li>
<li>Its revenue and GM would be NT$34.5~35.8bn and 46~49% range in 2Q22, which revenue was declined 2~5.5% QoQ and increase 1.2~4.7% YoY.</li>
<li>There are hopes for China 618-shopping Festival, US back-to-school and China double 11 shopping Festival, etc.</li>
</ul>


Novatek reached NT$36.5bn, 50.7% and NT$18.3 for revenue, GM and ESP respectively. 
Its revenue and GM would be NT$34.5~35.8bn and 46~49% range in 2Q22, which revenue was declined 2~5.5% QoQ and increase 1.2~4.7% YoY.
There are hopes for China 618-shopping Festival, US back-to-school and China double 11 shopping Festival, etc.


Novatek (3034.TT): 2Q22 Revenue Declined 2~5.5% QoQ, but the Stock Price Could Be Reacted Earlier.

Vanguard Intl Semiconductor / Equity Bottom-Up

<ul>
<li>Vanguard's revenue is NTD$13.49bn, which is falling at the high-end of guidance NTD$13.2~13.6 in 1Q22. </li>
<li>Vanguard is likely to further raise price in 2Q22, and we expect revenue/GM could be NT$14.67bn/49.2% in 2Q22.</li>
<li>Further price increase could hold in 2H22 because 1) the smartphone growth expectation is reducing in 2Q22, and 2) the US Federal Reserve increased interest rate to control the inflation.</li>
</ul>


Vanguard's revenue is NTD$13.49bn, which is falling at the high-end of guidance NTD$13.2~13.6 in 1Q22. 
Vanguard is likely to further raise price in 2Q22, and we expect revenue/GM could be NT$14.67bn/49.2% in 2Q22.
Further price increase could hold in 2H22 because 1) the smartphone growth expectation is reducing in 2Q22, and 2) the US Federal Reserve increased interest rate to control the inflation.


Vanguard (5347.TT): 1Q22 Results/ 2Q22 Preview- Further Price Increase Could Hold in 2H22

<ul>
<li>Novatek's revenue was NT$36.512bn in 1Q22, which was 38.5% YoY and 62.6% QoQ. It was 50.73%/36.73%/30.5% GM/OPM/NM in 1Q22, which was higher than our prior expectation of 43.6%/27.3%/22.3% in GM/OPM/NM.   </li>
<li>In our views, we revise up to be revenue/GM as NT$38.7bn/50.98% in 2Q20.</li>
<li>As the inflation, 5G, Russia-Ukraine war did change the landscape, the outlook seems not that so much worse in 2022.</li>
</ul>


Novatek's revenue was NT$36.512bn in 1Q22, which was 38.5% YoY and 62.6% QoQ. It was 50.73%/36.73%/30.5% GM/OPM/NM in 1Q22, which was higher than our prior expectation of 43.6%/27.3%/22.3% in GM/OPM/NM.   
In our views, we revise up to be revenue/GM as NT$38.7bn/50.98% in 2Q20.
As the inflation, 5G, Russia-Ukraine war did change the landscape, the outlook seems not that so much worse in 2022.


Novatek (3034.TT): 1Q22 Results/ 2Q22 Outlook- The Outlook Seems Better than Feared in 2022. .

<ul>
<li>Novatek’s monthly revenue is increasing above 20% YoY from July 2020.  However, the growth trend seems slowing down from 1Q22.</li>
<li>The price for DDIC (Display Driver IC) is the lowest among in the foundry companies’ products although its demand quantity can be large, which gives its actual price bargaining power.</li>
<li>Somehow, the end demand still needs a Display with related ICs for the application. So, there must be some certain suppliers to complete the supply chain.</li>
</ul>


Novatek’s monthly revenue is increasing above 20% YoY from July 2020.  However, the growth trend seems slowing down from 1Q22.
The price for DDIC (Display Driver IC) is the lowest among in the foundry companies’ products although its demand quantity can be large, which gives its actual price bargaining power.
Somehow, the end demand still needs a Display with related ICs for the application. So, there must be some certain suppliers to complete the supply chain.


Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.

Taiwan

Novatek Microelectronics Corporation designs, manufactures, and markets integrated circuits (ICs).  The Company's products are used in telecommunication, computer peripherals, and LCD (liquid crystal display) drivers.

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Novatek Microelectronics Corp (3034 TT)

Taiwan Moves to Top Underweight, Tech Overweight Risk

A recent shift in momentum has pushed Taiwan to the largest country level underweight in the Asia Ex-Japan region, with the Technology sector one...

Steven Holden

Novatek (3034.TT): 2Q22 Revenue Declined 2~5.5% QoQ, but the Stock Price Could Be Reacted Earlier.

Novatek's revenue declined 2~5.5% QoQ . There are hopes for China 618-shopping Festival, US back-to-school and China double 11 shopping Festival...

Patrick Liao

Vanguard (5347.TT): 1Q22 Results/ 2Q22 Preview- Further Price Increase Could Hold in 2H22

Vanguard's revenue is NTD$13.49bn, which is at the high-end of guidance NTD$13.2~13.6 in 1Q22. Vanguard is likely to further raise price in 2Q22,...

Patrick Liao

Novatek (3034.TT): 1Q22 Results/ 2Q22 Outlook- The Outlook Seems Better than Feared in 2022. .

Novatek's revenue/GM/OPM/NM was NT$36.512bn50.73%/36.73%/30.5% in 1Q22. In our views, we revise up to be revenue/GM as NT$38.7bn/50.98% in 2Q20....

Patrick Liao

Novatek (3034.TT): The Growth Trend Seems Slowing Down Since 1Q22.

Novatek’s monthly revenue is increasing above 20% YoY from July 2020. The growth still keeps stacking up for a higher record in 4Q21. However, the...

Patrick Liao

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