In today’s briefing:
- How Big Is the AI Accelerator Market? AMD, Broadcom, Nvidia, SK Hynix, TSMC
- The Beat Ideas: Welspun Corp- Growth, Capex, Acquisition & Revival of Bankrupt Companies
- Unloved Japan Round-Up
- China Consumption Weekly (14 Oct 2024): Tencent, Lalatech, Seres, BYD, NIO, Trip.com
- Anta Sports (2020 HK): Healthy in Financials, Leader in Market, But High in Price
- Anhui Conch (914 HK): Sharp Price Hikes Boost Our Confidence in 4Q Turnaround
- CIMC Enric (3899 HK): Mispriced, with Good Upside
- Arm Holdings plc (ARM): The Tale Of Rising Royalty Rates & New Architecture Adoption! – Major Drivers
- Super Micro Shipping Over 100,000 AI GPUs Each Quarter! What It Means for Investors
- Tri Pointe Homes Inc.: Enhanced Geographic Diversification
How Big Is the AI Accelerator Market? AMD, Broadcom, Nvidia, SK Hynix, TSMC
- Following AMD AI conference on 10 Oct, many question AMD’s estimate of the AI Accelerators market reaching US$500bn by 2028 (from $45bn in 2023).
- AI Accelerators market value is increasing by 150% in 2024, reaching US$113bn. Based on TSMC CoWoS capacity, we think reasonable to expect 115% growth over 2025-26 or US$276bn in 2026.
- TSMC makes all the chips. HBM is dominated by Hynix. Nvidia should remain the dominant vendor for years. AMD and Broadcom should grow faster than NVDA. Outsourcing: Alchip, Marvel, Mediatek.
The Beat Ideas: Welspun Corp- Growth, Capex, Acquisition & Revival of Bankrupt Companies
- Welspun Corp (WLCO IN) expanded from just SAW pipe company to DI Pipe, TMT Bars, Building solutions and PVC Pipes as well.
- Company is known for reviving bankrupt companies, On the path to revive Sintex and ABG Shipyard.
- high growth from US, Saudi and India driving the growth with capex
Unloved Japan Round-Up
- Below is a sample of the unloved Japanese stocks we focus on at Azabu Research, with key valuation metrics and latest news.
- The average PBR in this week’s list is 0.5x and the average P/E is 5.9x.
- Most of the stocks in this week’s round up are related to either the auto supply chain or the electric power grid.
China Consumption Weekly (14 Oct 2024): Tencent, Lalatech, Seres, BYD, NIO, Trip.com
- Tencent repurchased 250 million shares and the market has not paid any attention to its significant margin improvements.
- Lalatech updated its IPO file for 1H24, in which both GTV and revenue were up by 18% YoY.
- Seres expects its revenue will grow by 518% YoY to 559% YoY for 3Q24.
Anta Sports (2020 HK): Healthy in Financials, Leader in Market, But High in Price
- Anta top line outperformed competitors, both overseas and domestic brands, in China.
- We believe all margins will be stable and EPS will rise by 41% in 2024.
- However, we believe Anta is overvalued at the current price.
Anhui Conch (914 HK): Sharp Price Hikes Boost Our Confidence in 4Q Turnaround
- Recent significant clinker price hikes in Yangtze river region boost our confidence that 4Q will likely see the company’s earnings double Y/Y, ending 14 consecutive quarters of decline since 2Q21.
- Beijing’s bazooka stimulus package to lift the property market and revive economy also improve industry outlook in 2025.
- Consensus has been slow to adjust for the changes in industry dynamics. Our 2024 earnings is now 15% above consensus. We expect upward earnings revision will support P/B expansion.
CIMC Enric (3899 HK): Mispriced, with Good Upside
- CIMC Enric Holdings (3899 HK) has underperformed benchmark Indices YTD, and its business segments are undervalued based on their earnings performance.
- The clean energy segment is only valued at HK$3.4bn, or 24% of the stock’s total. However, it is the largest earnings generator in 1H24, contributing 60% of 1H24 profit.
- CLPT’s earnings contribution is 22% more than CIMC Safeway’s, but it is only valued at 27% of the latter, equivalent to an undemanding 9.8x annualised PER.
Arm Holdings plc (ARM): The Tale Of Rising Royalty Rates & New Architecture Adoption! – Major Drivers
- Arm Holdings plc recently reported its financial results for the first quarter of fiscal year 2025, showcasing a surge in revenue and solidifying its status as a key player in chip design, particularly with its focus on AI and CPU technology.
- The company’s revenue hit $939 million, up 39% year-over-year, a testament to both burgeoning license and royalty streams.
- Licensing revenue, often an indicator of future royalties, climbed by an impressive 72% due to increased demand for Arm’s technology across a multitude of applications including AI, data centers, and mobile devices.
Super Micro Shipping Over 100,000 AI GPUs Each Quarter! What It Means for Investors
- In a major development that’s turning heads on Wall Street, Super Micro Computer (SMCI) announced it is now shipping over 100,000 GPUs per quarter, specifically targeting the surging artificial intelligence (AI) market.
- This is a significant leap for the company as it seeks to capitalize on the growing demand for high-performance computing power required by AI training models and data-heavy applications.
- With AI dominating conversations across industries, GPUs have become critical components in data centers, and Super Micro’s ability to ship these units at scale, coupled with its competitive pricing, could potentially generate billions in revenue.
Tri Pointe Homes Inc.: Enhanced Geographic Diversification
- Tri Pointe Homes delivered a robust performance in the second quarter of 2024, showcasing an adept response to current market conditions and strategic planning.
- The company reported a substantial increase in home deliveries, up by 45%, leading to significant revenue growth.
- Home sales revenue rose to $1.1 billion, marking a 38% upsurge from the previous year, primarily driven by increased community counts and optimized cycle times.
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