Daily Brief Equity Bottom-Up: Taiwan Tech Weekly: TSMC Apple Arizona Production Milestone and more

• TSMC’s U.S. Production Strategy Achieves Major Milestone – Begins Production of Apple A16 Chips in Arizona
• Reports of Apple’s Disappointing Initial iPhone 16 Sales Data; Key Taiwan Suppliers Top Losers Recently
• Samsung Falling Behind TSMC – New Report of Low Yields Continuing to Plague Samsung’s 3nm AI Processors

• Explosive pagers linked to Hezbollah attacks spark controversy for a Taiwanese brand.
• Not just Lebanon – today it was reported that the South Korean military removed Chinese-made CCTV cameras after secret backdoors were detected.
• A counter-intuitive conclusion: Despite recent news, is the trend ultimately positive for Taiwanese tech hardware makers?

• The new transformer model requires significant amount of inference and multilevel reasoning
• The demand for inference compute is skyrocketing, surpassing current silicon architecture capabilities
• OpenAI’s new model showcases the future potential of AI, but also highlights the gap in semiconductor architectures and computing infrastructure

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• India has become one of the most expensive markets globally, trading at a PE of close to 28. Quality stocks now trade consistently around 50-90x PEs. 
• We have screened 80 names (market cap agnostic) that trade at PEs between 5 and 45, with an average PE of 20 and an average ROEs of 26%. 
• We treat this only as a filter and aim to do due diligence on all these stocks over the next few months. 

• Japan Eyewear Holdings (5889 JP) reported 30% YoY revenue growth in H1FY25. Profit margins also remained high, with operating profit margin exceeding 33% and operating profit reaching ¥2.7B, 1.5x YoY.
• The company has left FY25 guidance unchanged. The company’s cautious stance, yen appreciation, and darkening outlook of China amid weak economic data are the major downside risks.
• We think reactions are overdone. Limited downside is expected from here. Encouraging SSS growth through continuous increases in unit price and accelerated store expansion will remain the key growth drivers.

• GoTo Gojek Tokopedia together with Alibaba Group Holding announced a strategic partnership that locks the latter in for the next 5-years, with GOTO committing to utilising Alibaba Cloud.
• This move lifts a significant share price overhang and should provide GOTO with both cost benefits and AI capabilities cementing and aligning the interests of the two companies. 
• GoTo Gojek Tokopedia (GOTO IJ) continues to move the needle on its progress towards adjusted EBITDA breakeven by 4Q2024 led by product-led initiatives. 

• Timee Inc (215A JP) ’s share price has declined 26% over the last five days with the company reporting 3QFY10/2024 earnings on 12th September 2024.
• As we expected, top line growth has further slowed down while OPM for the quarter has dropped both QoQ and YoY concerning investors over Timee’s ability to generate sustainable margins.
• Timee’s proven business model has attracted Mercari and Sharefull to offer similar services, nevertheless, we would not be too concerned as Timee has the first mover advantage.

• kopi-C with GuocoLand’s Group CEO: ‘We have twin engines for growth’ Real estate company GuocoLand’s Group Chief Executive Officer Cheng Hsing Yao shares how focusing on development and investment has driven its growth and prepared it for the future.
• GuocoLand Limited (“GuocoLand”) and its subsidiaries (“the Group”) is a leading real estate group that is focused on its twin engines of growth in Property Investment and Property Development.

• In reviewing the latest results from Edwards Lifesciences, notable elements of growth and development paired with challenges shed light on the company’s financial and operational trajectory during the second quarter of 2024.
• With total company sales reaching $1.6 billion, this marked an 8% increase on a constant currency basis compared to the same period last year.
• While Transcatheter Aortic Valve Replacement (TAVR) growth was not as robust as expected, increasing by 6% globally, the Transcatheter Mitral and Tricuspid Therapies (TMTT) segment demonstrated impressive growth, with a 75% increase in sales.

• Gold Apollo denies involvement in Lebanon pager explosions, while Taiwan’s MOEA confirms pager assembly happening in Taiwan.
• Taiwan’s wafer foundry industry set to grow in 3Q 2024; can new orders and cost reductions drive Intel’s recovery?
• E Ink Prism technology revolutionizing automotive and consumer electronics;CATL looking to expand in solar-storage market.