In today’s briefing:
- Taiwan Dual-Listings Monitor: TSMC and ASE Premiums Break Down Again; ASE Spread Near 1-Year Lows
- KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears
- UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important
- Microsoft’s Strong Q2: Solid Revenue and Earnings Growth Despite Cloud Concerns
- Taiwan Tech Weekly: Tough Start for Nvidia and Apple Supply Chains; Asustek, Novatek Results Ahead
- DFI Retail (DFI SP): 1H2024.Pivoting to Profitable Growth with RTE Foods
- [Q2 Earnings Review] ADM Falls Short of Expectations on Weak Results in AS&O & Nutrition Businesses
- Ferrari (RACE US) Q2 2024: Margin Uptrend Continues, No Demand Weakness
- Intel’s Market Meltdown: Analyzing the Struggles of a Semiconductor Leader
- New Wave – Vaulting to Glory?
Taiwan Dual-Listings Monitor: TSMC and ASE Premiums Break Down Again; ASE Spread Near 1-Year Lows
- TSMC: Premium Breaks Back Down to +8.3%; 5-15% Could Now Be the Key Range
- UMC: -2.2% Discount; Good Level to Go Long the Premium
- ASE: Premium Breaks Down Again, Now Only +1.5%; Consider Going Long
KT&G: A Strong Candidate for Outperformance Amid Increased Signs of Market Fears
- In this insight, we provide an update of KT&G Corporation (033780 KS) which is a strong candidate for outperformance amid increased signs of market fears.
- We continue to believe that there is an increasing probability of cigarette price hikes in Korea in 2H24. Last time that KT&G hiked its cigarette prices was in January 2015.
- The company’s shareholder return policy is to provide cash dividends of 1.8 trillion won and share buyback/cancellations worth 1 trillion won from 2024 to 2026.
UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important
- UMC’s latest results indicate a mild recovery for consumer, communications, and computing industries. UMC’s capacity utilization to continue improving but industry inventory correction could last until end-2024E.
- UMC maintained 2024E capex guidance however it’s increasingly clear UMC can’t keep up the capex arms race alone. Hence we see UMC & Intel becoming closer and closer partners.
- We continue to view UMC as a long-term accumulate, and rate the stock as Structural Long, this however requires a longer than usual multi-year holding period.
Microsoft’s Strong Q2: Solid Revenue and Earnings Growth Despite Cloud Concerns
- Q2 revenue of $64.73 billion and EPS of $2.95 surpassed expectations of $64.39 billion and $2.93, respectively. Intelligent Cloud revenue reached $28.52 billion but below analysts’ $28.68 billion expectation.
- Activision acquisition boosted revenue by 3 points but cut EPS by $0.06 due to lower operating income.
- While Microsoft’s core cloud business slowed, it increased capex significantly. Uncertain GenAI monetization might shift wealth from Microsoft shareholders to Nvidia shareholders.
Taiwan Tech Weekly: Tough Start for Nvidia and Apple Supply Chains; Asustek, Novatek Results Ahead
- Tough Start to the Week — Negative News for Nvidia and Apple Supply Chains
- Key Events: Asustek & Novatek Results; Mediatek & TSMC July Sales Data
- UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important
DFI Retail (DFI SP): 1H2024.Pivoting to Profitable Growth with RTE Foods
- Strong recovery in 1H2024 profit growth YoY was driven by margin improvements in the food and convenience segments.
- Double-Digit sales growth in the Ready-to-Eat (RTE) foods segment boosted margins, offsetting reduced cigarette volumes from last year’s tax increases in Hong Kong.
- While weak consumer confidence in North Asia impacted sales, good growth in the expanding Southeast Asia business provided a positive offset.
[Q2 Earnings Review] ADM Falls Short of Expectations on Weak Results in AS&O & Nutrition Businesses
- ADM’s Q2 results underperformed analyst expectations with both EPS and revenue missing analyst estimates.
- Operating profit declined for Ag Services & Oilseeds (ASO) and Nutrition, while Carbohydrate Solutions saw an uptick, driven by margin and volume expansion in Starches and Sweeteners.
- ADM expects weak Q3 for AS&O and Carbohydrate Solutions, with improvements expected in H2 2024. Nutrition is expected to perform strongly due to cost efficiency and volume expansion.
Ferrari (RACE US) Q2 2024: Margin Uptrend Continues, No Demand Weakness
- Ferrari N.V. (RACE US) reported another strong Q2 2024, with revenues up 16% and profits up 25% YoY. EBITDA margins expanded to 39% due to pricing/personalization(20%).
- The company raised its guidance on revenue/EPS by 2.3%/5%, flagging Q3 would be weak as it transitions to its new ERP, but we believe the company is being conservative.
- Trading at 48.7x FY24e, the stock seems a tad expensive, but it’s up 28% YTD because of upgrades, which we believe will continue.
Intel’s Market Meltdown: Analyzing the Struggles of a Semiconductor Leader
- In a shocking turn of events, Intel Corporation, a long-standing leader in the semiconductor industry, witnessed one of its worst days on Wall Street, losing over a quarter of its market value in a single trading session.
- The drastic drop followed the company’s announcement of a $1.6 billion net loss for the second quarter of 2024, a stark contrast to the $1.47 billion profit reported in the same period the previous year.
- Intel’s share price plummeted by 27%, marking its steepest decline since 1974, as the company grappled with disappointing earnings, a bleak forecast, and a massive restructuring plan.
New Wave – Vaulting to Glory?
- After a warm-up week of swimming, rowing and archery, the Olympics now kicks into top gear with the athletics.
- Among the hottest of track and field gold medal prospects is Armand ‘Mondo’ Duplantis of Sweden.
- On Monday evening, the 24-year-old will contest the men’s pole vault final as the defending champion from Tokyo.
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