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>Hon Hai beat expecations by nearly 30% but reduced 2023E sales guidance. However, the company's AI server business is expected to take market share and its EV business is developing.</li>
<li>Asustek management provided some clarity on when AI PCs might turn from dream into reality -- 3Q24E is when the company believes they will contribute significantly to sales volume.</li>
<li>Himax reported some improvement in demand from China beleaguered automotive industry and said it expects its dominant global market position for automotive display drivers to continue.</li>
</ul>


Hon Hai beat expecations by nearly 30% but reduced 2023E sales guidance. However, the company's AI server business is expected to take market share and its EV business is developing.
Asustek management provided some clarity on when AI PCs might turn from dream into reality -- 3Q24E is when the company believes they will contribute significantly to sales volume.
Himax reported some improvement in demand from China beleaguered automotive industry and said it expects its dominant global market position for automotive display drivers to continue.


Taiwan Tech Weekly: Hon Hai AI Servers Taking Share, Asus Specifies When AI PCs Will Drive Market

Taiwan Semiconductor (TSMC) / Equity Bottom-Up

<ul>
<li>U.S. has announced new bans on PE and VC investment into key Chinese tech industries.</li>
<li>Elan Microelectronics, ChipMOS reported good results, two longs to consider as we still see upside.</li>
<li>Apple earnings short-term trades update -- We're closing out both trades, one at a loss and one roughly flat.</li>
</ul>


U.S. has announced new bans on PE and VC investment into key Chinese tech industries.
Elan Microelectronics, ChipMOS reported good results, two longs to consider as we still see upside.
Apple earnings short-term trades update -- We're closing out both trades, one at a loss and one roughly flat.


Taiwan Tech Weekly: U.S. Announces New Bans on Investment into Chinese High Tech Industries

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.</li>
<li>Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).</li>
<li>There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.</li>
</ul>


There are 38 adds/36 deletes for the JPX Nikkei 400 Index to bring the number of index constituents back to 400. There are stocks with multiple days ADV to trade.
Based on the adds, deletes and capping changes, we estimate one way turnover of 4.35% and a two-way trade of JPY 461bn (US$3.24bn).
There are a few stocks that will have same way flow from other index trackers within a few weeks of the JPX Nikkei 400 Index rebalance.


JPX Nikkei 400 Index Rebalance: Some Big Impact Names

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

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>During 4QFY03/2023 results release, Nikon announced a medium-term target of revenues of ¥700bn, OPM of 10%+ and ROE of 8%+ by the end of FY2025E (FY ended 31st March 2026).</li>
<li>Our analysis (with conservative assumptions) suggests that the company could easily achieve its medium-term target despite the company expecting to see its earnings declining in FY03/2024E.</li>
<li>Nikon is trading at a discount to its Japanese peers Canon and Konica Minolta and we think the market is clearly undervaluing the company as a pure-play Imaging products player.</li>
</ul>


During 4QFY03/2023 results release, Nikon announced a medium-term target of revenues of ¥700bn, OPM of 10%+ and ROE of 8%+ by the end of FY2025E (FY ended 31st March 2026).
Our analysis (with conservative assumptions) suggests that the company could easily achieve its medium-term target despite the company expecting to see its earnings declining in FY03/2024E.
Nikon is trading at a discount to its Japanese peers Canon and Konica Minolta and we think the market is clearly undervaluing the company as a pure-play Imaging products player.


Nikon: A Reality Check on Nikon’s Medium-Term Management Plan

Japan Specialist

Mark Chadwick

Thematic (Sector/Industry)

<ul>
<li>OVERSEAS. SOX 1.9% bid as Generative AI drives bid for semis/tech hardware; Booming US Economy as GDP prints 2.4% driving yields higher; But USD weaker vs Yen on BOJ. </li>
<li>JAPAN.  NKY Futures -1% vs Cash; USDJPY 139. 5; Really all about the BOJ as the Nikkei broke news  on potential YCC tweak; Earnings deluge: -ve Shin-etsu; Fujitsu. </li>
<li>NUGGET. Tokyo Steel has more advantages than meets the eye. No need for the massive capex in the crucial process that Nippon Steel or JFE needs to put out. Bullish. </li>
</ul>


OVERSEAS. SOX 1.9% bid as Generative AI drives bid for semis/tech hardware; Booming US Economy as GDP prints 2.4% driving yields higher; But USD weaker vs Yen on BOJ. 
JAPAN.  NKY Futures -1% vs Cash; USDJPY 139. 5; Really all about the BOJ as the Nikkei broke news  on potential YCC tweak; Earnings deluge: -ve Shin-etsu; Fujitsu. 
NUGGET. Tokyo Steel has more advantages than meets the eye. No need for the massive capex in the crucial process that Nippon Steel or JFE needs to put out. Bullish. 


Ohayo Japan| AI Bid; Strong GDP->more Hikes? Stocks Drop; NUGGET: Steel Decarb-Advantage Tokyo Steel

Japan

Tokyo Electron Limited manufactures and sells industrial electronics products, such as semiconductor manufacturing machines, computer system, and electronic components.  The Company products are sold in US, Taiwan, and others as well as in Japan.

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Tokyo Electron (8035 JP)

Taiwan Tech Weekly: U.S. Announces New Bans on Investment into Chinese High Tech Industries

Also, Elan Microelectronics and ChipMOS reported strong results. The two companies represent two Longs to consider, we still see upside.

Vincent Fernando, CFA

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds and 36 deletes for the JPXNK400 Index. The adds have outperformed the deletes and there is a fair bit to trade on a lot of...

Brian Freitas

Nikon: A Reality Check on Nikon’s Medium-Term Management Plan

As Nikon is reporting earnings soon, this insight would help readers have a quick glance at the company's last quarter earnings and whether Nikon...

Shifara Samsudeen, ACMA, CGMA

Ohayo Japan| AI Bid; Strong GDP->more Hikes? Stocks Drop; NUGGET: Steel Decarb-Advantage Tokyo Steel

Strong US GDP print drive yield higher, stocks drop; NKY Futures -1% vs Cash; USDJPY 139. 5; Really all about the BOJ as the Nikkei broke news on...

Mark Chadwick

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Taiwan Tech Weekly: Hon Hai AI Servers Taking Share, Asus Specifies When AI PCs Will Drive Market

Also -- According to media reports, Apple has bought all of TSMC's leading-edge 3nm capacity and may have exclusivity for this 3nm production...

Vincent Fernando, CFA

Taiwan Tech Weekly: U.S. Announces New Bans on Investment into Chinese High Tech Industries

Also, Elan Microelectronics and ChipMOS reported strong results. The two companies represent two Longs to consider, we still see upside.

Vincent Fernando, CFA

JPX Nikkei 400 Index Rebalance: Some Big Impact Names

There are 38 adds and 36 deletes for the JPXNK400 Index. The adds have outperformed the deletes and there is a fair bit to trade on a lot of...

Brian Freitas

Nikon: A Reality Check on Nikon’s Medium-Term Management Plan

As Nikon is reporting earnings soon, this insight would help readers have a quick glance at the company's last quarter earnings and whether Nikon...

Shifara Samsudeen, ACMA, CGMA

Ohayo Japan| AI Bid; Strong GDP->more Hikes? Stocks Drop; NUGGET: Steel Decarb-Advantage Tokyo Steel

Strong US GDP print drive yield higher, stocks drop; NKY Futures -1% vs Cash; USDJPY 139. 5; Really all about the BOJ as the Nikkei broke news on...

Mark Chadwick