Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Quantitative Analysis

<ul>
<li>An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top 100 stocks in the MSCI GEM Index.</li>
<li>The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.</li>
<li>Developed over roughly 4 years and implemented in its current state for over 3 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.</li>
</ul>


An overview (and output) of our machine learning-driven GEM screening model, which seeks to find the best medium-term long ideas within the top 100 stocks in the MSCI GEM Index.
The model is based on 1) a quantitative multifactor screening model, enhanced by two AI Technology-based approaches; 2) a Deep Neural Network model, and 3) a Recurrent Neural Network model.
Developed over roughly 4 years and implemented in its current state for over 3 years, the model has a solid real-world alpha-generating performance track record, discussed in detail below.


Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

ASE Technology Holding   / Equity Bottom-Up

<ul>
<li>ASE's results commentary for its semiconductor packaging and testing service said that inventory problems for the industry are taking longer than expected to improve.</li>
<li>The weaker than expected environment was only realized towards the end of 1Q23. The company's utilization is near an all-time low which is expected to persist through 2Q23E.</li>
<li>Automotive remains a bright spot for the company, with Auto-linked revenue rising 30% YoY.</li>
</ul>


ASE's results commentary for its semiconductor packaging and testing service said that inventory problems for the industry are taking longer than expected to improve.
The weaker than expected environment was only realized towards the end of 1Q23. The company's utilization is near an all-time low which is expected to persist through 2Q23E.
Automotive remains a bright spot for the company, with Auto-linked revenue rising 30% YoY.


ASE Technology: Semiconductor Packaging & Testing Demand Suprisingly Weak At End of Quarter

<ul>
<li>SK Hynix and Samsung reported results in the last week, showing major losses for their memory businesses. More evidence of a 'two-track recovery' for different parts of the chip industry.</li>
<li>SK Hynix's inventory situation worsened based on our analysis; Micron appears to be managing inventory moderately better than peers based on recent results.</li>
<li>Long Micron vs. Short Nanya Technology: Micron has continued to outperform Nanya Tech, as well as SK Hynix and Samsung.</li>
</ul>


SK Hynix and Samsung reported results in the last week, showing major losses for their memory businesses. More evidence of a 'two-track recovery' for different parts of the chip industry.
SK Hynix's inventory situation worsened based on our analysis; Micron appears to be managing inventory moderately better than peers based on recent results.
Long Micron vs. Short Nanya Technology: Micron has continued to outperform Nanya Tech, as well as SK Hynix and Samsung.


Memory Monitor: SK Hynix & Samsung Losses & Conservative Guidance Indicate Two-Track Chip Recovery

Semiconductor & Technology Specialist, Ingenuity

William Keating

Semiconductor & Technology Specialist

Thematic (Sector/Industry)

<ul>
<li>Taiwan’s UMC, the world’s third largest foundry, reported Q1’23 revenues of NT$54.2 billion, a decrease of 20.1% QoQ and a 14.5% YoY, in line with expectations</li>
<li>Q2'23 forecasted flat sequentially, outperforming TSMC's outlook for a 6.5% QoQ decline</li>
<li>Management foresees recovery being slower than previously anticipated and to admits to having very limited visibility into H2'23</li>
</ul>


Taiwan’s UMC, the world’s third largest foundry, reported Q1’23 revenues of NT$54.2 billion, a decrease of 20.1% QoQ and a 14.5% YoY, in line with expectations
Q2'23 forecasted flat sequentially, outperforming TSMC's outlook for a 6.5% QoQ decline
Management foresees recovery being slower than previously anticipated and to admits to having very limited visibility into H2'23


UMC. Calling Q1'23 The Trough Despite Limited Forward Visibility

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

<ul>
<li>TSMC's ADR spread just experienced one of its largest one-period drops in recent history. The ADRs are now trading at a 2.3% premium after a 4.2% drop.</li>
<li>UMC ADR's are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC earnings coming this week.</li>
<li>ASE ADR's are trading at a 4.7% premium. ASE's Taiwan shares are down 10% since end-March, compared to a 5% drop for the TAIEX Semiconductor Index.</li>
</ul>


TSMC's ADR spread just experienced one of its largest one-period drops in recent history. The ADRs are now trading at a 2.3% premium after a 4.2% drop.
UMC ADR's are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC earnings coming this week.
ASE ADR's are trading at a 4.7% premium. ASE's Taiwan shares are down 10% since end-March, compared to a 5% drop for the TAIEX Semiconductor Index.


Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week

Taiwan

Taiwan Semiconductor Manufacturing Company, Ltd. manufactures and markets integrated circuits. The Company provides the following services: wafer manufacturing, wafer probing, assembly and testing, mask production, and design services. TSMC's ICs are used in computer, communication, consumer electronics, automotive, and industrial equipment industries.

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Taiwan Semiconductor (TSMC) (2330 TT)

Screening for GEMs: May 2023

This insight provides an overview of our, machine learning-driven, proprietary GEM screening model, based on a Multifactor model, a Deep Neural...

Wium Malan, CFA

ASE Technology: Semiconductor Packaging & Testing Demand Suprisingly Weak At End of Quarter

The weaker than expected environment was only realized towards the end of 1Q23. The company's utilization is near an all-time low which is expected...

Vincent Fernando, CFA

Memory Monitor: SK Hynix & Samsung Losses & Conservative Guidance Indicate Two-Track Chip Recovery

SK Hynix's inventory metrics worsened while Micron appears to be managing inventory better than peers. We see more evidence of a 'two-track...

Vincent Fernando, CFA

UMC. Calling Q1'23 The Trough Despite Limited Forward Visibility

Q1’23 revenues of NT$54.2 billion, a decrease of 20.1% QoQ and a 14.5% YoY, in line with expectations. Recovery slower than previously anticipated,...

William Keating

Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week

UMC ADR's are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC...

Vincent Fernando, CFA

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