Category

Daily Briefs

Jun 23
0

Daily Brief Industrials: Luxshare Precision Industry, Deutsche Lufthansa and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mainland Connect NORTHBOUND Flows (To 21 June 2024): BIG Consumer Name Selling Again
  • European Airlines – Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial
  • Lufthansa – ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

Mainland Connect NORTHBOUND Flows (To 21 June 2024): BIG Consumer Name Selling Again

By Travis Lundy

  • The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
  • Last week saw NORTHBOUND net SELL RMB 16.1bn of A-shares. NORTHBOUND bought tech and sold everything else, especially consumer names. Kweichow Moutai, Midea, appliances and renewables.
  • Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

European Airlines – Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial

By Neil Glynn

  • Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
  • We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
  • IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.

Lufthansa – ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

By Neil Glynn

  • As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
  • In a strong year for the global industry, heavy 2023 losses prompt questions over ITA’s financial sustainability with Lufthansa support.
  • We highlight that ITA’s problems are in revenue generation rather than operational efficiency.

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Jun 23
0

Daily Brief Industrials: Luxshare Precision Industry, Deutsche Lufthansa and more

By | Daily Briefs, Industrials

In today’s briefing:

  • Mainland Connect NORTHBOUND Flows (To 21 June 2024): BIG Consumer Name Selling Again
  • European Airlines – Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial
  • Lufthansa – ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

Mainland Connect NORTHBOUND Flows (To 21 June 2024): BIG Consumer Name Selling Again

By Travis Lundy

  • The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
  • Last week saw NORTHBOUND net SELL RMB 16.1bn of A-shares. NORTHBOUND bought tech and sold everything else, especially consumer names. Kweichow Moutai, Midea, appliances and renewables.
  • Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

European Airlines – Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial

By Neil Glynn

  • Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
  • We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
  • IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.

Lufthansa – ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

By Neil Glynn

  • As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
  • In a strong year for the global industry, heavy 2023 losses prompt questions over ITA’s financial sustainability with Lufthansa support.
  • We highlight that ITA’s problems are in revenue generation rather than operational efficiency.

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Jun 23
0

Daily Brief TMT/Internet: Infocom Corp, Apple , Silergy Corp, United Microelectronics Corp, Novatek Microelectronics Corp and more

By | Daily Briefs, TMT/Internet

In today’s briefing:

  • (Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern
  • Will Apple Intelligence Drive IPhone Maker past USD 4 Trillion in Market Cap?
  • Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.
  • UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.
  • Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24

(Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern

By David Blennerhassett

Will Apple Intelligence Drive IPhone Maker past USD 4 Trillion in Market Cap?

By Uttkarsh Kohli

  • Never a pioneer, instead a perfectionist in delivering mind bending experience. That’s what Apple has stood for traditionally. Can it repeat the act in the Gen AI era? 
  • Siri to have advanced language comprehension and Writing Tools to deliver useful features to drive convenience and productivity. 
  • Private Cloud Compute ensures user data remains encrypted and secure. Reflects Apple’s commitment to privacy amidst growing concerns surrounding data misuse.

Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.

By Patrick Liao

  • We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
  • Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.  
  • Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.  

UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

By Patrick Liao

  • United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
  • We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
  • UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24

By Patrick Liao

  • We expect Novatek Microelectronics Corp (3034 TT) to achieve approximately a 5% QoQ growth in revenue and relatively flat gross margin (GM) QoQ in 3Q24.
  • Semiconductor Manufacturing International Corp (SMIC) (981 HK) and HLMC are capable of producing DDICs at 40nm and below.
  • Novatek is experiencing a decline in demand for 55nm Touch with Display Driver (TDDI) in 3Q24.

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Jun 23
0

Daily Brief Consumer: Exedy Corp, Webtoon Entertainment, L’Occitane, Trip.com and more

By | Consumer, Daily Briefs

In today’s briefing:

  • Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage
  • Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential
  • Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon
  • Monthly Chinese Tourism Tracker | Outbound Recovery Expands | Domestic Solid Too | (June 2024)

Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage

By David Blennerhassett

  • Murakami Group now owns 10.13% of Exedy Corp (7278 JP). Interestingly, NOMURA Aya sold 6.79% off-market to Minami Aoyama Fudosan. Has the Murakami Group made a “mistake” in its planning?
  • A big win for EOFlow (294090 KS) as the U.S. Federal Appeals Court issued its decision on overturning Insulet Corp (PODD US)‘s provisional injunction
  • L’Occitane (973 HK) finally announces the share alternative.  And  Pleasant Lake (3.25% of shares out) will accept the share offer (either cash or scrip). This is a done deal

Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential

By Andrei Zakharov

  • Webtoon Entertainment, a South Korean global storytelling platform and the world’s largest digital comics platform, filed for an IPO in the United States.
  • The company offers 15M shares at a price range between $18.00 and $21.00, implying a market cap of roughly $2.5B at the midpoint based on 129.3M outstanding shares.
  • I have a positive view of the upcoming Webtoon Entertainment IPO and I think risk/reward is more favorable for IPO investors given the company’s improving profitability and strong cash position.

Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon

By Arun George

Monthly Chinese Tourism Tracker | Outbound Recovery Expands | Domestic Solid Too | (June 2024)

By Daniel Hellberg

  • Growth of outbound Chinese travel demand strong in May as HK, Macau slow
  • Domestic travel demand also showed solid growth in May and early June
  • Trip.com appears reasonably cheap now that it’s dipped below US$50, BUY

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Jun 23
0

Most Read: Ryohin Keikaku, Barito Renewables Energy, Infocom Corp, Korea Stock Exchange KOSPI 200, Silergy Corp, Exedy Corp, Webtoon Entertainment, L’Occitane, United Microelectronics Corp and more

By | Daily Briefs, Most Read

In today’s briefing:

  • [JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run
  • Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close
  • Barito Renewables Energy (BREN IJ): Back to Normal Trading & Index Implications
  • (Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern
  • EQD | The KOSPI 200 Is Ready to Pullback (Again)
  • Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.
  • Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage
  • Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential
  • Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon
  • UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

[JAPAN ACTIVISM] – Murakami Group Goes Activisting on Exedy (7278) – Room To Run

By Travis Lundy

  • Late May, Aisin (7259 JP) announced a sell-down of its 34% stake in Exedy Corp (7278 JP) – a big non-dilutive offering, pricing 11% below undisturbed. Exedy announced a buyback.
  • Announced on the 27th of May, shares fell sharply the next day, it priced on the 3rd, and offering shares traded on the 10th. Then the price started climbing back.
  • My first and second pieces argued that buyback accretion, index impact, and change in register shape all meant it was a buy. Activist Murakami agreed, now he has 6.5%. 

Sep24 Nikkei 225 Rebal – Still 1 ADD, 1 DELETE, 1 Dark Horse, But #2-Ranked ADD Is Close

By Travis Lundy

  • The Sep 2024 Nikkei 225 Review base date is six weeks away. One can no extrapolate results quite accurately. It still gives us one ADD, one DELETE, and capping fun.
  • Recently, Yanai-san sold more Fast Retailing (9983 JP). More active holders own more stock (which may mean less interest to buy later), and only 1% to go to avoid capping.
  • There should be one DELETE, one ADD. There is a low-probability Dark Horse ADD but I expect Kokusai Electric (6525) to be added in March 2025. 

Barito Renewables Energy (BREN IJ): Back to Normal Trading & Index Implications

By Brian Freitas

(Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern

By David Blennerhassett

EQD | The KOSPI 200 Is Ready to Pullback (Again)

By Nico Rosti

  • After 3 weeks up in a row the KOSPI 200 is ripe for a pullback.
  • The reversal is probably going to begin this coming week.
  • If the index goes higher, look at 391 resistance targets to initiate SHORT trades or to cover your LONGs.

Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.

By Patrick Liao

  • We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
  • Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.  
  • Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.  

Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage

By David Blennerhassett

  • Murakami Group now owns 10.13% of Exedy Corp (7278 JP). Interestingly, NOMURA Aya sold 6.79% off-market to Minami Aoyama Fudosan. Has the Murakami Group made a “mistake” in its planning?
  • A big win for EOFlow (294090 KS) as the U.S. Federal Appeals Court issued its decision on overturning Insulet Corp (PODD US)‘s provisional injunction
  • L’Occitane (973 HK) finally announces the share alternative.  And  Pleasant Lake (3.25% of shares out) will accept the share offer (either cash or scrip). This is a done deal

Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential

By Andrei Zakharov

  • Webtoon Entertainment, a South Korean global storytelling platform and the world’s largest digital comics platform, filed for an IPO in the United States.
  • The company offers 15M shares at a price range between $18.00 and $21.00, implying a market cap of roughly $2.5B at the midpoint based on 129.3M outstanding shares.
  • I have a positive view of the upcoming Webtoon Entertainment IPO and I think risk/reward is more favorable for IPO investors given the company’s improving profitability and strong cash position.

Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon

By Arun George

UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

By Patrick Liao

  • United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
  • We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
  • UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

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Jun 23
0

Daily Brief Quantitative Analysis: A/H Premium Tracker (To 21 Jun 2024):  AH Premia Stabilising Lower and more

By | Daily Briefs, Quantitative Analysis

In today’s briefing:

  • A/H Premium Tracker (To 21 Jun 2024):  AH Premia Stabilising Lower, Can Move A Leg Lower Still
  • HK Connect SOUTHBOUND Flows (To 21 June 2024); Every Day A Net Buy; Banks, Energy, and Utes

A/H Premium Tracker (To 21 Jun 2024):  AH Premia Stabilising Lower, Can Move A Leg Lower Still

By Travis Lundy

  • The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
  • BIG Net SOUTHBOUND inflow continues. Notable in the past four weeks are US$1.9bn of net flow to Energy Hs and US$2.2bn to Banks in the H side of H/A Pairs.
  • AH Premia lowish in 52-week range, but still high for many pairs. I continue to expect further “convergence” among spreads, and the recent HA Premium bounce has lost momentum.

HK Connect SOUTHBOUND Flows (To 21 June 2024); Every Day A Net Buy; Banks, Energy, and Utes

By Travis Lundy

  • SOUTHBOUND was again a net buyer, for HK$24.1bn this week, on smallish two-way volumes. Banks, Tech, Energy, and Materials all saw inflows.
  • It is not clear how much of this is H/A discounts, expected dividend tax removal, shareholder return KPIs for SOE CEOs, upcoming Third Plenum policy, or national team buying…
  • But valuations are acceptable. Flows are good. Policy changes are afoot. SOUTHBOUND may continue to see inflows – national team and otherwise.

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Jun 23
0

Daily Brief Thematic (Sector/Industry): Japan Weekly | S&P 500 Continues Longest Stretch Without Significant Volatility Since GFC. and more

By | Daily Briefs, Thematic (Sector/Industry)

In today’s briefing:

  • Japan Weekly | S&P 500 Continues Longest Stretch Without Significant Volatility Since GFC.
  • EU’s Battery and Solar Investments, One Year After, Part II

Japan Weekly | S&P 500 Continues Longest Stretch Without Significant Volatility Since GFC.

By Mark Chadwick

  • Despite mixed economic signals, markets showed resilience. The S&P 500 gained 0.6%, the DJIA added 1.5%, and the Nasdaq remained flat.
  • The Japanese yen continued its decline against major currencies, falling below 159 per USD, nearing levels last seen in April before intervention by Japan’s Ministry of Finance
  • Fancl’s (4921) stock surged 19% to ¥2,720 following Kirin Holdings’ announcement to acquire it as a wholly owned subsidiary

EU’s Battery and Solar Investments, One Year After, Part II

By Eric Wen

  • Contrary to battery, Chinese renewable energy companies have largely been absent in EU’s solar capacity buildup.We believe the main reason is supply chain structure differences;
  • One year after we tallied the capacity in C2Q23,11% of the tallied capacity have been cancelled, but another 66% more have been added, among which, however,no ingot or polysilicon projects; 
  • Wacker Chemie’s 39GW polysilicon project needs to supply ~10GW of ingot and wafer,~13GW of cell and ~52GW of module, comparing to EU’s 2023 installation of only 56GW, which is insufficient.

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Jun 23
0

Daily Brief ECM: Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential and more

By | Daily Briefs, ECM

In today’s briefing:

  • Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential

Webtoon Entertainment IPO: Favorable Risk/Reward IPO Valuation and Limited Downside Potential

By Andrei Zakharov

  • Webtoon Entertainment, a South Korean global storytelling platform and the world’s largest digital comics platform, filed for an IPO in the United States.
  • The company offers 15M shares at a price range between $18.00 and $21.00, implying a market cap of roughly $2.5B at the midpoint based on 129.3M outstanding shares.
  • I have a positive view of the upcoming Webtoon Entertainment IPO and I think risk/reward is more favorable for IPO investors given the company’s improving profitability and strong cash position.

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Jun 23
0

Daily Brief Event-Driven: (Mostly) Asia-Pac M&A: Infocom and more

By | Daily Briefs, Event-Driven

In today’s briefing:

  • (Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern
  • Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage
  • Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon
  • Mainland Connect NORTHBOUND Flows (To 21 June 2024): BIG Consumer Name Selling Again

(Mostly) Asia-Pac M&A: Infocom, Capitol Health, MMA Offshore, Mimasu, Tatsuta Elect., Great Eastern

By David Blennerhassett

Last Week in Event SPACE: Exedy Corp, EOFlow, L’Occitane, Jardine Cycle & Carriage

By David Blennerhassett

  • Murakami Group now owns 10.13% of Exedy Corp (7278 JP). Interestingly, NOMURA Aya sold 6.79% off-market to Minami Aoyama Fudosan. Has the Murakami Group made a “mistake” in its planning?
  • A big win for EOFlow (294090 KS) as the U.S. Federal Appeals Court issued its decision on overturning Insulet Corp (PODD US)‘s provisional injunction
  • L’Occitane (973 HK) finally announces the share alternative.  And  Pleasant Lake (3.25% of shares out) will accept the share offer (either cash or scrip). This is a done deal

Weekly Deals Digest (23 Jun) – L’Occitane, Exedy, Infocom, Mimasu, Tatsuta, MMA Offshore, Webtoon

By Arun George

Mainland Connect NORTHBOUND Flows (To 21 June 2024): BIG Consumer Name Selling Again

By Travis Lundy

  • The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
  • Last week saw NORTHBOUND net SELL RMB 16.1bn of A-shares. NORTHBOUND bought tech and sold everything else, especially consumer names. Kweichow Moutai, Midea, appliances and renewables.
  • Ongoing questions as to whether the NORTHBOUND volumes to the buy side are all foreigners. Some suspect there is national team buying mixed in, as was expected from earlier announcements.

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Jun 23
0

Daily Brief Equity Bottom-Up: Will Apple Intelligence Drive IPhone Maker past USD 4 Trillion in Market Cap? and more

By | Daily Briefs, Equity Bottom-Up

In today’s briefing:

  • Will Apple Intelligence Drive IPhone Maker past USD 4 Trillion in Market Cap?
  • Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.
  • UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.
  • Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24
  • Monthly Chinese Tourism Tracker | Outbound Recovery Expands | Domestic Solid Too | (June 2024)
  • European Airlines – Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial
  • Lufthansa – ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

Will Apple Intelligence Drive IPhone Maker past USD 4 Trillion in Market Cap?

By Uttkarsh Kohli

  • Never a pioneer, instead a perfectionist in delivering mind bending experience. That’s what Apple has stood for traditionally. Can it repeat the act in the Gen AI era? 
  • Siri to have advanced language comprehension and Writing Tools to deliver useful features to drive convenience and productivity. 
  • Private Cloud Compute ensures user data remains encrypted and secure. Reflects Apple’s commitment to privacy amidst growing concerns surrounding data misuse.

Silergy (6147.TT): The Wafer Demand Is Projected to Increase by 30-40% QoQ from 2Q24 Onwards.

By Patrick Liao

  • We presume Silergy is likely to see demand recovery or inventory rebuilding starting from 2Q24.
  • Silergy’s wafer demand is projected to increase by 30-40% QoQ from 2Q24 onwards.  
  • Silergy’s primary focus remains on China, Taiwan, and Korea, but the US market is promising for potential growth.  

UMC (2303.TT; UMC.US): The Outlook for 3Q24 Has Reached a Slightly Upside QoQ.

By Patrick Liao

  • United Microelectron Sp Adr (UMC US) 3Q24 outlook could be showing a slightly upside quarter over quarter and the gross margin is approaching to ~30%.
  • We estimate that UMC’s overall utilization in 3Q24 will be around 65-70%, with 12” at 70-75% and 8” at 60%.
  • UMC is benefiting from Novatek shipping OLED DDIC to Apple (AAPL US) in 3Q24.

Novatek (3034.TT): To Achieve a ~5% QoQ Growth in Revenue and Relatively Flat GM QoQ in 3Q24

By Patrick Liao

  • We expect Novatek Microelectronics Corp (3034 TT) to achieve approximately a 5% QoQ growth in revenue and relatively flat gross margin (GM) QoQ in 3Q24.
  • Semiconductor Manufacturing International Corp (SMIC) (981 HK) and HLMC are capable of producing DDICs at 40nm and below.
  • Novatek is experiencing a decline in demand for 55nm Touch with Display Driver (TDDI) in 3Q24.

Monthly Chinese Tourism Tracker | Outbound Recovery Expands | Domestic Solid Too | (June 2024)

By Daniel Hellberg

  • Growth of outbound Chinese travel demand strong in May as HK, Macau slow
  • Domestic travel demand also showed solid growth in May and early June
  • Trip.com appears reasonably cheap now that it’s dipped below US$50, BUY

European Airlines – Fare Softening Suggests Elevated Earnings Risk with Self-Help Stories Crucial

By Neil Glynn

  • Forward looking fare data suggests pricing further weakening for the European flag carriers on long haul in particular.
  • We expect Lufthansa to miss EBIT guidance by 30% in 2024 while we also cut Air France-KLM 2024 EBIT by 15%.
  • IAG stands out as most resilient, with BA seemingly outperforming peer pricing on the Transatlantic.

Lufthansa – ITA Airways Financial Sustainability Questions Without Lufthansa Partnership/Steering

By Neil Glynn

  • As Lufthansa nears European Commission approval for its investment in ITA Airways, as widely reported this week, we highlight our analysis of the Italian carrier.
  • In a strong year for the global industry, heavy 2023 losses prompt questions over ITA’s financial sustainability with Lufthansa support.
  • We highlight that ITA’s problems are in revenue generation rather than operational efficiency.

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