Managing Director, Zero One, Zero One

Vincent Fernando, CFA

Managing Director, Zero One

Equity Bottom-Up

<ul>
<li>Apple shares have fallen significantly on a weakening outloook; Yet manufacturers Quanta and Pegatron's shares still haven't reacted negatively.</li>
<li>Inventory levels appear too high across Apple's key contract manufacturers based on our analysis.</li>
<li>We see Quanta &amp; Pegatron at risk of margin pressure in 2023E with negative operating leverage potentially causing significant profit declines.</li>
</ul>


Apple shares have fallen significantly on a weakening outloook; Yet manufacturers Quanta and Pegatron's shares still haven't reacted negatively.
Inventory levels appear too high across Apple's key contract manufacturers based on our analysis.
We see Quanta &amp; Pegatron at risk of margin pressure in 2023E with negative operating leverage potentially causing significant profit declines.


Long Apple Vs. Short Quanta & Pegatron: Trade Ahead of Apple's Upcoming Earnings

<ul>
<li>Apple shares have fallen recently, nearing 52-week lows as analysts have been cutting share targets on China production uncertainty and weak consumer end-market demand.</li>
<li>Key Apple suppliers Quanta and Pegatron, in particular, appear to have not yet reacted to the declining market sentiment towards Apple.</li>
<li>Investors can consider Shorting Quanta and Pegatron vs. a Long position in Apple. We see limited potential for positive news flow for the stocks through January.</li>
</ul>


Apple shares have fallen recently, nearing 52-week lows as analysts have been cutting share targets on China production uncertainty and weak consumer end-market demand.
Key Apple suppliers Quanta and Pegatron, in particular, appear to have not yet reacted to the declining market sentiment towards Apple.
Investors can consider Shorting Quanta and Pegatron vs. a Long position in Apple. We see limited potential for positive news flow for the stocks through January.


Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?

Hon Hai Precision Industry / Equity Bottom-Up

<ul>
<li>Hon Hai's Zhengzhou problems appear to be easing; Nevertheless, the company is expanding in India and Vietnam regardless.</li>
<li>We believe the company's EV platform business and EV milestones will drive the shares in 2023E.</li>
<li>We have developed a financial model for Hon Hai and are establishing a 12-month price target of NT$155 per share, 55% above current levels. This is higher than the Street.</li>
</ul>


Hon Hai's Zhengzhou problems appear to be easing; Nevertheless, the company is expanding in India and Vietnam regardless.
We believe the company's EV platform business and EV milestones will drive the shares in 2023E.
We have developed a financial model for Hon Hai and are establishing a 12-month price target of NT$155 per share, 55% above current levels. This is higher than the Street.


Hon Hai: EV Growth Will Come Into Focus in 2023E, Can Hit NT$155 Per Share

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the changes in short interest of TWSE Stocks as of Nov 11th which has an aggregated short interest worth USD13.6bn.</li>
<li>We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.</li>
<li>We highlight short interest changes in Unimicron, Alchip, Lotes, King Yuan Electronics, Wistron, TXC. </li>
</ul>


We analyzed the changes in short interest of TWSE Stocks as of Nov 11th which has an aggregated short interest worth USD13.6bn.
We tabulate league table for top short by value and short as multiple of ADT, as well as weekly increases &amp; decreases in short value, short as multiple of ADT.
We highlight short interest changes in Unimicron, Alchip, Lotes, King Yuan Electronics, Wistron, TXC. 


TWSE Short Interest Weekly (Nov 11th): Unimicron, Alchip, Lotes, King Yuan Electronics, Wistron, TXC

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

<ul>
<li>The US Commerce Department is likely to expand China restrictions for the sale of chips and chip manufacturing equipment.</li>
<li>Impact for major Taiwan-listed suppliers appears minimal so far; Inventec is one name with potential exposure.</li>
<li>Not Made in China: More signs of shift as Tata is preparing a JV with Wistron to produce iPhones and Taiwanese companies look to Southeast Asia and the USA.</li>
</ul>


The US Commerce Department is likely to expand China restrictions for the sale of chips and chip manufacturing equipment.
Impact for major Taiwan-listed suppliers appears minimal so far; Inventec is one name with potential exposure.
Not Made in China: More signs of shift as Tata is preparing a JV with Wistron to produce iPhones and Taiwanese companies look to Southeast Asia and the USA.


Taiwan Tech Weekly: US Restrictions on Tech Sales to China to Expand

Taiwan

Wistron Corporation manufactures and markets notebook computers, personal computers, and other related information products.

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Wistron Corp (3231 TT)

Long Apple Vs. Short Quanta & Pegatron: Trade Ahead of Apple's Upcoming Earnings

We see Quanta & Pegatron at risk of margin pressure in 2023E -- With negative operating leverage potentially causing significant profit declines.

Vincent Fernando, CFA

Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?

Apple shares have fallen most recently, nearing 52-week lows as analysts have been cutting share targets on China production uncertainty.

Vincent Fernando, CFA

TWSE Short Interest Weekly (Nov 11th): Unimicron, Alchip, Lotes, King Yuan Electronics, Wistron, TXC

We analyzed TWSE short interest report for the past week and highlight short interest changes in Unimicron, Alchip, Lotes, King Yuan Electronics,...

Ke Yan, CFA, FRM

Taiwan Tech Weekly: US Restrictions on Tech Sales to China to Expand

Also more signs of shift as Tata is preparing a JV with Wistron to produce iPhones and Taiwanese companies look to Southeast Asia and the USA.

Vincent Fernando, CFA

Price Gauge

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Long Apple Vs. Short Quanta & Pegatron: Trade Ahead of Apple's Upcoming Earnings

We see Quanta & Pegatron at risk of margin pressure in 2023E -- With negative operating leverage potentially causing significant profit declines.

Vincent Fernando, CFA

Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?

Apple shares have fallen most recently, nearing 52-week lows as analysts have been cutting share targets on China production uncertainty.

Vincent Fernando, CFA

Hon Hai: EV Growth Will Come Into Focus in 2023E, Can Hit NT$155 Per Share

We have developed a financial model for Hon Hai and are establishing a 12-month price target of NT$155 per share, 55% above current levels. This is...

Vincent Fernando, CFA

TWSE Short Interest Weekly (Nov 11th): Unimicron, Alchip, Lotes, King Yuan Electronics, Wistron, TXC

We analyzed TWSE short interest report for the past week and highlight short interest changes in Unimicron, Alchip, Lotes, King Yuan Electronics,...

Ke Yan, CFA, FRM

Taiwan Tech Weekly: US Restrictions on Tech Sales to China to Expand

Also more signs of shift as Tata is preparing a JV with Wistron to produce iPhones and Taiwanese companies look to Southeast Asia and the USA.

Vincent Fernando, CFA