In today’s briefing:
- China Semiconductor Restrictions: How the Vice Is Becoming Tighter and Tighter
- Taiwan Dual-Listings: Premium/Discounts Mostly in the Middle, ChipMOS Opportunity
- Clinuvel Pharmaceuticals (CUV AU): Strong Start of FY23; Pipeline Progress Enhances Conviction
- Elan Microelectronics: Capacity for Share Buybacks in 2023E, Intel Event Could Provide Cycle Clarity
- TMT Short Idea: Pinterest
- Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?
China Semiconductor Restrictions: How the Vice Is Becoming Tighter and Tighter
- We provide a timeline and analysis of key measures from May 2019 to December 2022.
- How successive tightening steps led to a critical consolidation in October 2022.
- Recent developments show the U.S. has motivated additional countries to participate and more restrictions are likely in 2023E.
Taiwan Dual-Listings: Premium/Discounts Mostly in the Middle, ChipMOS Opportunity
- TSMC ADRs are trading at a small premium; 4Q22 results will be released on January 12th.
- UMC ADRs are trading at a discount; 4Q22 results will be released on January 16th.
- ChipMOS ADRs are trading at a decent discount, opening a trade opportunity.
Clinuvel Pharmaceuticals (CUV AU): Strong Start of FY23; Pipeline Progress Enhances Conviction
- Clinuvel Pharmaceuticals (CUV AU) is recording consistent profitable revenue growth backed by Scenesse. 2023 will be marked by several clinical trial progress and data readouts from the company.
- The first readouts of the DNA repair program on xeroderma pigmentosum patients treated with afamelanotide are expected to be available early in the new year.
- Clinuvel has started FY23 on a strong note, with Q1 recording highest ever customer receipts. Current cash balance of A$138 million represents sufficient funding for nearly eight quarters.
Elan Microelectronics: Capacity for Share Buybacks in 2023E, Intel Event Could Provide Cycle Clarity
- We believe Elan Microelectronics has capacity for share buybacks in 2023E, and that it could be in shareholder interests.
- Even in the coming 2023E down-year, we believe the company could generate over NT$1.7bn in EBITDA. Its balance sheet will remain net-cash.
- The company is in a strong position as a leader in touch screens, touch pads, and fingerprint sensors. Intel’s upcoming January webinar could provide clarity on the industry cycle.
TMT Short Idea: Pinterest
- Pinterest has rallied 40% over the past 5 months on hopes that its new CEO Bill Ready will pivot the company from a pure advertising model to an ecommerce juggernaut.
- Altering what consumers use online platforms for is exceedingly difficult and rarely succeeds: TripAdvisor, Yelp, Groupon, Stitchfix, eBay.
- Ultimately, unless Pinterest convinces its users to more frequently utilize the platform, efforts to boost monetization will likely fall flat.
Taiwan Apple Ecosystem Monitor: Quanta and Pegatron Shares Lagging Apple Decline?
- 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.
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