In today’s briefing:
- Nvidia, TSMC, ASML Trading Monitor – TSMC & ASML Results Indicate Cycle Bottom 2Q23E for Leaders
- Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week
- Matahari Department Store (LPPF IJ) – Normalizing with Stylish Growth
- Shangri-La Asia (69 HK): Not yet Fully Reflected China’s Comeback
- Taiwan Short Squeeze Potential: Faraday, UMC, Transcend Media Latest Stocks to Watch
- Jiangsu Hengrui Medicine (600276.CH) 2022/23Q1 – The Situation Is Not as Optimistic as Imagined
- Lunar Pioneers
- TRACKING TRAFFIC/Chinese Express: Volume Up Versus Weak Comp | Prices Down | Yunda Lags Group
Nvidia, TSMC, ASML Trading Monitor – TSMC & ASML Results Indicate Cycle Bottom 2Q23E for Leaders
- TSMC and ASML reported results last week, with both companies beating consensus earnings expectations.
- TSMC and ASML both expect their historically high margins to persist and have both shown a major decline in inventory levels.
- TSMC expects utilization to bottom in 2Q23E and improve thereafter; which we believe is strong indication of the cycle bottoming for leaders. TSMC however sees the overall industry taking longer.
Taiwan Dual-Listings: TSMC ADR Premium Hit by Large 1-Period Drop, UMC Discount & Earnings This Week
- TSMC’s ADR spread just experienced one of its largest one-period drops in recent history. The ADRs are now trading at a 2.3% premium after a 4.2% drop.
- UMC ADR’s are trading at a -1.1% discount to their Taiwan shares. The spread has mostly been trading in negative territory over the last month. UMC earnings coming this week.
- ASE ADR’s are trading at a 4.7% premium. ASE’s Taiwan shares are down 10% since end-March, compared to a 5% drop for the TAIEX Semiconductor Index.
Matahari Department Store (LPPF IJ) – Normalizing with Stylish Growth
- Matahari Department Store (LPPF IJ) 1Q2023 results reflected a normalization of sales growth at a sold +14.2% YoY, with normalisation of rentals plus minimum wage increase impacting margins temporarily.
- The company has resumed its store openings with seven new stores in 1Q2023 and 12-15 new stores planned for FY2023. New merchandising campaigns have made a strong impression in 1Q2023.
- Matahari will launch its new Suko brand in May in 20 stores plus 2H2023 will see its new modern format being rolled out. Valuations are attractive with a double-digit yield.
Shangri-La Asia (69 HK): Not yet Fully Reflected China’s Comeback
- Despite Shangri-La Asia (69 HK)‘s good share price performance YTD, it has still not yet fully reflected the strengths of and benefits from China’s re-opening. More upside to come.
- Occupancy for Hong Kong and mainland China has surged 30-45pp YoY in Mar, and with China’s RevPAR for FY22 is down 56.5% from peak, we see massive rebound in profitability.
- Share of China’s EBITDA was US$258m in FY22, from US$465m in FY16-19, suggests good room for recovery. It is cheap on ~70% discount to revalued NAV, vs. 37% in FY18.
Taiwan Short Squeeze Potential: Faraday, UMC, Transcend Media Latest Stocks to Watch
- The divergence between the Philly Semiconductor Index and the Taiwan Market has continued despite both falling moderately.
- Latest short interest data to note — Faraday Technology experienced a surge in short interest ahead of its earnings this week. UMC has high short interest and results this week.
- Institutionally underheld stock Transcend Media has experienced rising institutional ownership recently and has a very high short ratio.
Jiangsu Hengrui Medicine (600276.CH) 2022/23Q1 – The Situation Is Not as Optimistic as Imagined
- The contribution of innovative drugs cannot offset the generics revenue decline caused by VBP. Without PD-1 level big variety emerging, the pressure of VBP would continue for a long time.
- Hengrui launched Luzsana to develop global business, seeming to send “a compromise and ambiguous signal” to various complex forces within this traditional pharmaceutical empire. ADC pipeline remains to be seen.
- Hengrui still has many problems that are difficult to solve. Even though there is a rebound, Hengrui’s stock price performance may not deliver excess returns, with lower-than-expected upside elasticity.
Lunar Pioneers
- In recent months, the once-thriving Space SPAC ecosystem has faced significant deflation, brought on by operational hurdles, delays, and challenges in raising funds.
- Over the last three years, more than a dozen space-focused companies went public through SPACs, yet the majority now trade at a significant discount to their deal valuation.
- Amidst this challenging landscape, lunar-focused space company Intuitive Machines is the latest to debut last month through a SPAC deal, which valued the company at close to $1 billion.
TRACKING TRAFFIC/Chinese Express: Volume Up Versus Weak Comp | Prices Down | Yunda Lags Group
- March parcel volume growth (22.7%) improved against an easy comp (-3.1%) from 2022
- Prices are declining, too (-3.2% Y/Y) — not yet precipitous, but worst since Q1 2022
- Based on what we see, ZTO’s 2023 volume targets will still be difficult to meet
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
