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

Thematic (Sector/Industry)

<ul>
<li>A record 80.7% of China managers have exposure to the Semiconductor sector at an average weight of 3.68%, or +2.58% overweight the MSCI China benchmark.</li>
<li>Over the last 6-months, Semiconductor allocations have remained largely unchanged, whilst rebalancing occurs among other key industry groups.</li>
<li>With record overweights and stalling ownership growth, active China managers should consider whether overweight is the right stance, at this juncture.</li>
</ul>


A record 80.7% of China managers have exposure to the Semiconductor sector at an average weight of 3.68%, or +2.58% overweight the MSCI China benchmark.
Over the last 6-months, Semiconductor allocations have remained largely unchanged, whilst rebalancing occurs among other key industry groups.
With record overweights and stalling ownership growth, active China managers should consider whether overweight is the right stance, at this juncture.


MSCI China Funds: Semiconductor Growth Stalls

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.

King Yuan Electronics Co, Ltd. / Equity Bottom-Up

<ul>
<li>KYEC reached revenue, GM, OPM and Diluted EPS of NT$8,984mn, 35.8%, 25.6% and NT$1.47 respectively in 1Q22.</li>
<li>KYEC could reach to ~10% revenue QoQ growth in 2Q22 because of some orders delayed in Suzhou for COVID-19 controlling measure in 1Q22.</li>
<li>The mainland China smartphone is not strong in 2Q22, but the smartphone chipset testing demand could still be the largest demand in KYEC. </li>
</ul>


KYEC reached revenue, GM, OPM and Diluted EPS of NT$8,984mn, 35.8%, 25.6% and NT$1.47 respectively in 1Q22.
KYEC could reach to ~10% revenue QoQ growth in 2Q22 because of some orders delayed in Suzhou for COVID-19 controlling measure in 1Q22.
The mainland China smartphone is not strong in 2Q22, but the smartphone chipset testing demand could still be the largest demand in KYEC. 


KYEC (2449.TT): It Could Reach ~10% QoQ Growth in 2Q22 Because Some Orders Were Delayed in 1Q22.

<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.

China

Will Semiconductor Co.,Ltd. Shanghai manufactures image sensor products and semiconductor products. The Company produces and sells complementary metal oxide semiconductors, protecting devices, power devices, power management integrated circuits, radio frequency devices, microphone sensors, and more. Will Semiconductor Shanghai markets its products worldwide.

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Will Semiconductor Shan (603501 CH)

MSCI China Funds: Semiconductor Growth Stalls

With near record overweights and stalling ownership growth, active China managers should consider whether overweight Semiconductors is the right...

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

KYEC (2449.TT): It Could Reach ~10% QoQ Growth in 2Q22 Because Some Orders Were Delayed in 1Q22.

KYEC could reach to ~10% revenue QoQ growth in 2Q22. The mainland China smartphone is not strong in 2Q22, but the smartphone chipset testing demand...

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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