Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>Good Morning Japan: A detailed look at the overnight news and market moves that will impact the trading day in Japan</li>
<li>Broad based rally ahead of US mid terms as market downplays risks with the inflation numbers on tap this week</li>
<li>Japan: Earnings showing 25% of firms reporting record profits so far for 1H. In contrast, over 40% showing profits down or  losses on cost inflation. Focus today: Daikin, Sumco, Pan-Pacific,etc</li>
</ul>


Good Morning Japan: A detailed look at the overnight news and market moves that will impact the trading day in Japan
Broad based rally ahead of US mid terms as market downplays risks with the inflation numbers on tap this week
Japan: Earnings showing 25% of firms reporting record profits so far for 1H. In contrast, over 40% showing profits down or  losses on cost inflation. Focus today: Daikin, Sumco, Pan-Pacific,etc


Good Morning Japan - November 8, 2022(Tue)

Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

Taiwan Semiconductor (TSMC) - ADR / Equity Bottom-Up

<ul>
<li>Taiwan’s tech space fell hard last week, with the tech sector down 5.4%, compared to a 4.9% drop for the overall market. Semiconductors performed the worst, down 6.2%.</li>
<li>Hon Hai, Delta, Lite-On -- EV a major theme for the first-ever Taiwan Expo USA coming October 12th.</li>
<li>Taiwan wafer exports were at an all-time high in August. We note that wafer names have underperformed TSMC.</li>
</ul>


Taiwan’s tech space fell hard last week, with the tech sector down 5.4%, compared to a 4.9% drop for the overall market. Semiconductors performed the worst, down 6.2%.
Hon Hai, Delta, Lite-On -- EV a major theme for the first-ever Taiwan Expo USA coming October 12th.
Taiwan wafer exports were at an all-time high in August. We note that wafer names have underperformed TSMC.


Taiwan Tech Weekly: Trying to Recover After a Week of Deep Declines

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>Sumco 1Q revenues were on the strong side, 1.5% above consensus but OP beat by 9.9%. </li>
<li>As we have been flagging, consensus is underestimating operating leverage and that was before the weakening of the yen. </li>
<li>Revenue guidance for 2Q was 4.9% above consensus and OP 12.8% higher but we expect results to be an even larger beat.</li>
</ul>


Sumco 1Q revenues were on the strong side, 1.5% above consensus but OP beat by 9.9%. 
As we have been flagging, consensus is underestimating operating leverage and that was before the weakening of the yen. 
Revenue guidance for 2Q was 4.9% above consensus and OP 12.8% higher but we expect results to be an even larger beat.


<ul>
<li>Sumco’s 4Q results were on the strong side with revenue beating by 2.3% and OP beating by 2.0%. </li>
<li>1Q guidance was also bullish with revenue guidance of ¥99bn 5.3% higher than consensus while OP guidance of ¥21bn was 12.8% higher. </li>
<li>Guidance is still a touch conservative in our view, particularly on the margin side.</li>
</ul>


Sumco’s 4Q results were on the strong side with revenue beating by 2.3% and OP beating by 2.0%. 
1Q guidance was also bullish with revenue guidance of ¥99bn 5.3% higher than consensus while OP guidance of ¥21bn was 12.8% higher. 
Guidance is still a touch conservative in our view, particularly on the margin side.


Sumco – Consensus Probably Too Timid on Price Hikes

Taiwan Tech Focused Senior Analyst

Patrick Liao

<ul>
<li>To merge with Siltronic has reached to 95% in probability for GlobalWafers now. Our target price for GlobalWafers doesn’t change at NT$880~960 and $1,200 if it finally past.  </li>
<li>Chinese government requested that GlobalWafers has to spin off its Denmark’s subsidiary 8” float zone (FZ) wafer within no more than 9 months at most.</li>
<li>Currently, Siltronic is delivering a GM of 25.6~32% during 1Q~3Q in 2021, which is competitive to Sumco, Shin Etsu. However, it shall be able to improve the GM further.</li>
</ul>


To merge with Siltronic has reached to 95% in probability for GlobalWafers now. Our target price for GlobalWafers doesn’t change at NT$880~960 and $1,200 if it finally past.  
Chinese government requested that GlobalWafers has to spin off its Denmark’s subsidiary 8” float zone (FZ) wafer within no more than 9 months at most.
Currently, Siltronic is delivering a GM of 25.6~32% during 1Q~3Q in 2021, which is competitive to Sumco, Shin Etsu. However, it shall be able to improve the GM further.


GlobalWafers (6488.TT): The Last Step to Go for Siltronic (WAF GR) Mergence

Japan

SUMCO Corporation manufactures silicon wafers for the semiconductor industry. The Company produces silicon wafers used to produce solar batteries as well as ultra-high purity quartz used to produce vessels for silicon manufacturing process. SUMCO markets its products worldwide.

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SUMCO Corp (3436 JP)

Good Morning Japan - November 8, 2022(Tue)

Good Morning Japan: A detailed look at the overnight news and market moves that will impact the trading day in Japan. We highlight small to big...

Mark Chadwick

Taiwan Tech Weekly: Trying to Recover After a Week of Deep Declines

AU Optronics stock suspended, Intel's Mobileye IPO is back, Samsung takes share from TSMC, Taiwan wafer exports are at an all-time high.

Vincent Fernando, CFA

Sumco – Still Underestimated

Sumco delivered a strong beat at 1Q together with strong guidance but we believe those numbers are still highly conservative given a weakening yen.

Mio Kato

Sumco – Consensus Probably Too Timid on Price Hikes

Sumco’s 4Q results were on the strong side and 1Q guidance was also bullish with revenue guidance of ¥99bn 5.3% higher than consensus while OP...

Mio Kato

GlobalWafers (6488.TT): The Last Step to Go for Siltronic (WAF GR) Mergence

GlobalWafers to merge with Siltronic has reached to 95% in probability now. Our target price for GlobalWafers doesn’t change at NT$880~960, and it...

Patrick Liao

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