In today’s briefing:
- Taiwan Dual-Listings: TSMC Premium Hitting High Territory, ASE Shoots to 6.1%
- Nidec (6594 JP): New Valuation Benchmark
- Keyence (6861) | Better Risk/Reward at Peers
- Meta Platforms: A Value Opportunity In The Tech Environment
- China Internet Weekly (9Jan2023): Ant Group, Alibaba, Tencent, ByteDance, China Literature
- Ant Group Completed Equity Structure Adjustment
- Perfectly Imperfect
- Shanghai Junshi Bioscience (1877.HK/688180.CH)- Junshi Has Changed Its Story from Tumor to COVID-19?
Taiwan Dual-Listings: TSMC Premium Hitting High Territory, ASE Shoots to 6.1%
- TSMC’s ADR premium is entering the higher end of its range since early 2022. Earnings coming this week.
- UMC’s ADR has flipped from a discount to a moderate premium. Earnings are ahead as well.
- ASE Technology’s ADR premium has reached 6.1%, high even for this usually higher-premium trading pair.
Nidec (6594 JP): New Valuation Benchmark
- Nidec has become an auto parts and factory automation company and should be valued as such. At 24x EPS guidance for FY Mar-23, the shares do not look particularly cheap.
- 1H results were good, but heavy up-front investment in e-axle traction motor systems for electric vehicles points to deferred gratification for shareholders.
- Recession is starting to bite, the Yen is up and Japanese interest rates have only started to rise. Be careful when buying for long-term growth.
Keyence (6861) | Better Risk/Reward at Peers
- Keyence is a structural growth stock that has fallen by 31% over the past year reflecting near term risks to growth
- Although Keyence is a major beneficiary of continued investment in industrial automation, the company would need to grow significantly quicker than the industry to justify the current valuation
- We analyse Keyence’s core value drivers – revenue, margins, risk and reinvestment – but see better risk/reward in other growth stocks
Meta Platforms: A Value Opportunity In The Tech Environment
- META’s sustainable earnings come up with at least 30% to 35% upside potential.
- There is a huge margin of safety at the current price, and multiple should expand from now forward.
- Meta Platforms, Inc. (NASDAQ:META) is one of the most beaten-up stories among the FAANG, the storytelling around the Metaverse has failed to be understood by the market, and a great deal of pessimism and future catastrophic scenarios have been priced into the stock.
China Internet Weekly (9Jan2023): Ant Group, Alibaba, Tencent, ByteDance, China Literature
- A state-owned company invested in Ant Group, which boosted Alibaba’s stock price.
- Tencent obtained five new game licenses in December, three of which are imported games.
- China Literature’s daily active users increased by 80% in 2022 and reached the historical high.
Ant Group Completed Equity Structure Adjustment
- CBIRC approved the capital replenishment plan of RMB10.5bn of Ant CFC on Dec 30, 2022
- Under the regulatory guidance, Ant Group needs to complete a multifaceted rectification plan
- After the fund raising, Ant Group’s next step is to obtain FHC license and credit bureau license
Perfectly Imperfect
- Artificial Intelligence (AI) and Deep Learning Applications are all the rage, primarily thanks to the likes of OpenAI’s ChatGPT being used for text and Dall-E being used to generate digital images.
- ChatGPT’s popularity has soared, reaching a user base of 1 million users in 5 days, and OpenAI itself is benefiting from the surge in users, now valued at $29 Billion.
- Investors are already looking for the next wave of AI products that can make a big splash and potentially disrupt legacy industries.
Shanghai Junshi Bioscience (1877.HK/688180.CH)- Junshi Has Changed Its Story from Tumor to COVID-19?
- Junshi once generated sales and profits in scale, but lost money again. Its story suddenly changed from cancer drugs to COVID-19. We have lost sight of its development direction.
- Junshi’s commercialization history has lost its reference value for confirming the outlook. The calculation of peak sales doesn’t make much sense, because they cannot help Junshi turn losses into profits.
- The current market value still has too much “bubble”, and COVID-19 drug is a major “interference” to the valuation. We analyzed our thoughts on future valuation by excluding COVID-19 projects.
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