Taiwan Tech Focused Senior Analyst

Patrick Liao

Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC) / Equity Bottom-Up

Semiconductor Manufacturing International Corp (SMIC)

<ul>
<li>Expected sequential revenue growth of 13% to 15%, gross margin expected between 18% and 20%.</li>
<li>The company has not increased capacity utilization through price cuts but supports customers in facing competition to maintain market share.</li>
<li>Inventory replenishment behavior will end in the third quarter, and fourth-quarter orders will more accurately reflect actual demand rather than the impact of restocking.</li>
</ul>


Expected sequential revenue growth of 13% to 15%, gross margin expected between 18% and 20%.
The company has not increased capacity utilization through price cuts but supports customers in facing competition to maintain market share.
Inventory replenishment behavior will end in the third quarter, and fourth-quarter orders will more accurately reflect actual demand rather than the impact of restocking.


SMIC (981.HK): Revenue and GM Continued to Trend Up in 3Q24

United Microelectron Sp Adr / Equity Bottom-Up

<ul>
<li>3Q24 guidance: Shipment up mid-single digits QoQ; ASP: Remains firm in USD; GM: around mid-30%. (Consensuses were high single digits.)</li>
<li>Has provided a 22nm HV solution for high-end OLED DDI to high-end SP, and expects to reach high-volume production in 2025.  </li>
<li>Cooperation with <a href="https://www.smartkarma.com/entities/intel-corp" target="_blank" data-smartkarma-citation="entities:16764:1" rel="noopener">Intel Corp (INTC US)</a> is progressing well, targeting MP for 14nm in 2027.</li>
</ul>


3Q24 guidance: Shipment up mid-single digits QoQ; ASP: Remains firm in USD; GM: around mid-30%. (Consensuses were high single digits.)
Has provided a 22nm HV solution for high-end OLED DDI to high-end SP, and expects to reach high-volume production in 2025.  
Cooperation with Intel Corp (INTC US) is progressing well, targeting MP for 14nm in 2027.


UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Hua Hong Semiconductor / Equity Bottom-Up

<ul>
<li>After hitting a low point in Q4 2023, Research on Hong Kong companies has been slow to pick up reflecting the ongoing skepticism from investors. </li>
<li>Reports on the large China tech companies dominated the top ten companies covered over the last couple of years and in the first half of 2024.</li>
<li>As China continues to dominate and make news in the global EV market, research in that sector has picked up.</li>
</ul>


After hitting a low point in Q4 2023, Research on Hong Kong companies has been slow to pick up reflecting the ongoing skepticism from investors. 
Reports on the large China tech companies dominated the top ten companies covered over the last couple of years and in the first half of 2024.
As China continues to dominate and make news in the global EV market, research in that sector has picked up.


BUY/SELL/HOLD: China/Hong Kong Stock Updates (July 8th)

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Foxconn Industrial Internet / Technical Analysis

<ul>
<li>Not much has changed since our latest Int'l Compass from May 31, 2024 titled "Buy the Pullback." </li>
<li>We were buyers of the pullback in global equities (MSCI ACWI, ACWI ex-US, EAFE, EM, Europe, Japan, Taiwan, etc.) with important supports holding, combined with ongoing healthy market dynamics.</li>
<li>Supports are holding, and our bullish outlook (since early-November 2023) remains intact. Continue to buy dips.</li>
</ul>


Not much has changed since our latest Int'l Compass from May 31, 2024 titled "Buy the Pullback." 
We were buyers of the pullback in global equities (MSCI ACWI, ACWI ex-US, EAFE, EM, Europe, Japan, Taiwan, etc.) with important supports holding, combined with ongoing healthy market dynamics.
Supports are holding, and our bullish outlook (since early-November 2023) remains intact. Continue to buy dips.


Downgrading Europe to Market Weight; Europe Indexes Still Bullish (Price); Bullish Outlook Intact

Novatek Microelectronics Corp / Equity Bottom-Up

<ul>
<li>The 2Q24 revenue outlook is NT$24.4-25.5bn, which was below Bloomberg consensuses NTD$26.45bn. </li>
<li>The company sees more aggressive stocking for TVs in 2Q24, but smartphone demand is soft in 2Q24.  </li>
<li>The dividend payout rate has been maintained at 80-85% over the past few years, with no significant changes expected.  </li>
</ul>


The 2Q24 revenue outlook is NT$24.4-25.5bn, which was below Bloomberg consensuses NTD$26.45bn. 
The company sees more aggressive stocking for TVs in 2Q24, but smartphone demand is soft in 2Q24.  
The dividend payout rate has been maintained at 80-85% over the past few years, with no significant changes expected.  


Novatek (3034.TT): 1Q24 Sales Inline; 2Q24F Sales Guidance Below Consensuses

Taiwan

Vanguard International Semiconductor Corporation offers integrated circuit foundry services.  The Company manufactures 0.18um logic, mixed-signal, analog, high voltage, low power, CMOS RF, flash, embedded memory, and bipolar CMOS DMOS semiconductors.

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Vanguard Intl Semiconductor (5347 TT)

SMIC (981.HK): Revenue and GM Continued to Trend Up in 3Q24

Company expects solid revenue growth and stable gross margins, focusing on supporting customers and anticipating more accurate demand in upcoming...

Patrick Liao

UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

Overall, sales are lower than consensuses in 3Q24. UMC plans to reach high-volume production for 22nm HV solution by 2025 and is progressing well...

Patrick Liao

BUY/SELL/HOLD: China/Hong Kong Stock Updates (July 8th)

Tech NEV companies continue to dominate the research landscape for Hong Kong coverage. Bosideng, China Water Affairs, Topsports, BYD and Xiaomi...

David Mudd

Downgrading Europe to Market Weight; Europe Indexes Still Bullish (Price); Bullish Outlook Intact

Downgrading Europe to Market Weight $FEZ $STOXX; Europe Still Bullish From a Price Perspective; Bullish Outlook Intact on $ACWI $EEM; Supports...

Vermilion Research

Novatek (3034.TT): 1Q24 Sales Inline; 2Q24F Sales Guidance Below Consensuses

Company's 2Q24 revenue outlook falls below expectations due to soft smartphone demand, despite aggressive stocking for TVs. Dividend payout rate...

Patrick Liao

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SMIC (981.HK): Revenue and GM Continued to Trend Up in 3Q24

​Company expects solid revenue growth and stable gross margins, focusing on supporting customers and anticipating more accurate demand in upcoming...

Patrick Liao

UMC (2303.TT; UMC.US): 3Q24 Sales Were Slightly Below Consensuses

Overall, sales are lower than consensuses in 3Q24. UMC plans to reach high-volume production for 22nm HV solution by 2025 and is progressing well...

Patrick Liao

BUY/SELL/HOLD: China/Hong Kong Stock Updates (July 8th)

Tech NEV companies continue to dominate the research landscape for Hong Kong coverage. Bosideng, China Water Affairs, Topsports, BYD and Xiaomi...

David Mudd

Downgrading Europe to Market Weight; Europe Indexes Still Bullish (Price); Bullish Outlook Intact

Downgrading Europe to Market Weight $FEZ $STOXX; Europe Still Bullish From a Price Perspective; Bullish Outlook Intact on $ACWI $EEM; Supports...

Vermilion Research

Novatek (3034.TT): 1Q24 Sales Inline; 2Q24F Sales Guidance Below Consensuses

​Company's 2Q24 revenue outlook falls below expectations due to soft smartphone demand, despite aggressive stocking for TVs. Dividend payout rate...

Patrick Liao

Company expects solid revenue growth and stable gross margins, focusing on supporting customers and anticipating more accurate demand in upcoming...

Company's 2Q24 revenue outlook falls below expectations due to soft smartphone demand, despite aggressive stocking for TVs. Dividend payout rate...