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In today’s briefing:
- Nidec (6594 JP): Buy into Current Decline
- Taiwan Dual-Listings Monitor: TSMC and ASE Premium Trading Range Blow-Outs During Recent Sell-Off
- ASE Color Suggests Widening Performance Gap Between Leading-Edge and Mature Semiconductor Players
- Molten Ventures – Making progress on its realisation agenda
- OSE Immunotherapeutics – Lusvertikimab shines in Phase II UC trial
- Tesla’s Bold Ambitions vs. Harsh Realities Of Product Delays & Slowing Growth Of EV Demand! – Major Drivers
- Verizon Communications: New Brand Strategy & Expansion of Fixed Wireless Access (FWA) Are The Highlights! – Major Drivers
- Visa Inc.: Consistent Strong Performance in Value-Added Services (VAS) & Other Major Drivers
- Cadence Design Systems: Increasing Demand for 3D-IC Technology & Recurring Revenue Growth Makes This A ‘Buy’? – Major Drivers
- discoverIE Group – FY25 earnings expectations maintained
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Nidec (6594 JP): Buy into Current Decline
- If further restructuring can be avoided, profitability should return to an acceptable level while sales growth continues.
- The decline of EV prices has probably run its course and global demand for factory automation continues to rise despite weakness in China.
- Projected valuations are at a 10-year low. Investor attention can now shift to economic and operating risks.
Taiwan Dual-Listings Monitor: TSMC and ASE Premium Trading Range Blow-Outs During Recent Sell-Off
- TSMC: Crashed Then Rebounded to +15.1% Premium; Likely to Break Down Again
- UMC: -0.2% Discount; Earnings Imminent; Notable Decrease in ADR Headroom
- ASE: Rebounded to +9.2 Premium After Major Breakdown; Likely to Drop Again
ASE Color Suggests Widening Performance Gap Between Leading-Edge and Mature Semiconductor Players
- A TALE OF TWO SEMI INDUSTRIES: ASE’s latest earnings commentary indicates that the performance gap between “leading-edge” technologies and “traditional/mature” semiconductor technologies may be widening.
- CAPITAL REQUIREMENT TO KEEP PACE IS RISING: Capacity utilization is starkly different for traditional vs. leading-edge capacity; and capital requirements to keep up in terms of advanced capacity is rising.
- ENTRY BARRIERS RISING: We suspect that smaller players could face significant challenges in keeping up with the investments necessary for leading-edge packaging and testing capacity. ASE needs to invest heavily.
Molten Ventures – Making progress on its realisation agenda
Molten Ventures has recently completed the exits from Perkbox, Endomag and Graphcore. This translates into more than £70m realisation proceeds, which means Molten is on track to reach the £100m that management expects for FY25. As a result, Molten has announced a £10m buyback programme (starting on 26 July), in line with its recently updated capital allocation policy of earmarking at least 10% of realisation proceeds for share repurchases. Molten has also agreed a new £180m debt facility that replaces the previous £150m facility maturing in September 2024.
OSE Immunotherapeutics – Lusvertikimab shines in Phase II UC trial
OSE Immunotherapeutics’ run of positive news continues with the announcement of encouraging data from the Phase II proof-of-concept CoTikiS study, evaluating Lusvertikimab as a novel treatment for ulcerative colitis (UC). The randomised, double-blind trial (n=136) has reported encouraging, statistically significant benefits, reflected in material improvements on the Modified Mayo Score (MMS). The full data set will be presented in due course, and we expect the next stage of development to be undertaken in partnership, which we estimate will be in place in 2025. Lusvertikimab is a potentially first-in-class IL-7R antagonist, offering a differentiated mechanism of action to other available biologics that currently dominate the UC market. We expect the next major catalyst for OSE to be the initiation of the Phase III trial for lead asset Tedopi, anticipated to commence imminently (previous guided timeline was Q224).
Tesla’s Bold Ambitions vs. Harsh Realities Of Product Delays & Slowing Growth Of EV Demand! – Major Drivers
- Tesla remains a polarizing entity in the stock market, consistently capturing the imagination of investors with its bold vision and ambitious projects.
- The company’s latest earnings highlighted both its impressive achievements and notable challenges, leaving a mixed bag for potential investors, resulting in the stock going down.
- On the positive side, Tesla continues to lead the electric vehicle (EV) market with record revenues and promising advancements in autonomous driving technology.
Verizon Communications: New Brand Strategy & Expansion of Fixed Wireless Access (FWA) Are The Highlights! – Major Drivers
- Verizon Communications Inc. had a successful second quarter of 2024 as the company reports strong results, with wireless service revenue climbing 3.5% year-over-year, adjusted EBITDA rise by 2.8%, and free cash flow increasing by 3% compared to last year.
- In addition, the company’s customer-centric measures such as myPlan and Verizon Business Complete are resonating with its consumers, leading to further growth and stronger customer relationships.
- The company’s impressive results follow its commitment to innovation and the implementation of a brand refresh, signifying its evolution and future visions for connectivity.
Visa Inc.: Consistent Strong Performance in Value-Added Services (VAS) & Other Major Drivers
- Visa Inc.’s fiscal third quarter of 2024 reveals a strong financial position, but also indicates room for improvement.
- Net revenue was $8.9B, notching a 10% YoY increase and included a 12% YoY rise for EPS, indicating an increased level of profitability.
- One of Visa’s strongest areas this past quarter has been its focus on global client engagement, resulting in a 3-pt increase in their global Net Promoter Score (NPS) to 76.
Cadence Design Systems: Increasing Demand for 3D-IC Technology & Recurring Revenue Growth Makes This A ‘Buy’? – Major Drivers
- Cadence Design Systems, Inc. reported strong results and exceeded expectations for their second quarter of 2024, with broad-based momentum seen across their product portfolio.
- The company also posted stronger bookings than anticipated, leading to a strong backlog, demonstrating the robust demand for their innovative products.
- Cadence updated its revenue guidance for the year to over 13% year-over-year growth, reflecting its strong performance.
discoverIE Group – FY25 earnings expectations maintained
discoverIE’s Q125 trading update confirmed that underlying earnings expectations for FY25 are unchanged. While the Q125 revenue decline reflects the lower bookings environment in previous quarters, book-to-bill was above one and bookings increased organically year-on-year despite ongoing destocking by customers in the industrial market. Robust gross margins and a well-controlled cost base support the company’s 13.5% target operating margin for FY25 and we maintain our forecasts.