Daily Brief Equity Bottom-Up: TSMC Sees Continued Weakness and more

• TSMC reported earnings. They beat Q2 estimates, but importantly they guided down Q3 and FY 2023 estimates.
• The Q2 beat was widely expected regarding revenue, given that TSMC reports monthly revenue, but the Q3 guide was not.
• The midpoint of the guidance has the year-over-year decline decelerating, which I didn’t expect. Moreover, the -10% annual guide throws some water on the second-half recovery. Yes, the second half will be higher than the first, but the recovery is much more muted than historical. And what’s more, margins are looking worse for N3 than a typical node.

• This is the First of a series of reports on Nippon Paint Holdings (4612 JP) and in this insight, we deep dive into the company’s Japanese business.
• The automotive coating biz in Japan is heavily reliant on the domestic automotive market while decorative paints is facing challenges due to slowdown in population in the country.
• The outlook for Japan biz remains stagnant with growth rates slowing down and margins on a downward trend.

• Ownership levels in Voltronic Power Technology rise as EM funds open new positions.
• A record 15.7% of EM long-only funds own a position, with Wasatch and Morgan Stanley among the high conviction holders.
• Voltronic Power Technology is now the 12th most widely owned stock in Taiwan and the 7th most overweighted company.  

• Pharmaessentia Corp (6446 TT) has reported record-high revenue of NT$509 million for June 2023, representing growth of 84% YoY and 22% MoM, mainly driven by its sole marketed product Besremi.
• Besremi got marketing approval in Japan this year. Besremi’s marketing application is also under review process in China, Hong Kong, Singapore, and Malaysia.
• In April, Pharmaessentia has raised $462.74M through the issuance of 34M GDS to accelerate commercialization of Besremi and global clinical trials. The company has also announced NT$9.6B equity buyback program.

• Digital Realty Trust, Inc. is executing a phenomenal strategy, with additional pipeline developments coming online soon.
• Digital Realty is faced with cyclical valuation concerns, we think they will be short-lived.
• Digital Realty Trust, Inc. (NYSE:DLR) presents an interesting talking point

OpGen has announced that Curetis (its German subsidiary) has met its objectives agreed under its extended R&D collaboration with FIND (a global non-profit alliance for diagnostics), triggering a $0.2m milestone payment to OpGen. Under the expanded scope of the feasibility study for the Unyvero A30 RQ platform, OpGen was required to provide three more deliverables: an antimicrobial stewardship module, a ‘data everywhere’ concept and next-generation sequencing (NGS) strain analysis. While successful completion of the feasibility stage supports Unyvero A30’s applicability in low-to-middle income countries (LMICs), it also paves the way for a subsequent R&D agreement with FIND in developing LMIC-specific Unyvero A30 antimicrobial resistance (AMR) solutions. We await further details from management on the next potential steps of the collaboration.

Ahead of Wheaton Precious Metals’ (WPM’s) Q223 results, scheduled for 10 August, we have honed our forecasts to reflect, principally (1) Newmont’s suspension of mining at Penasquito since 8 June, (2) updated metals prices, (3) estimated production from Salobo in the light of Vale’s Q223 production and sales report (released on 18 July) and (4) the closure of the Minto mine on 13 May. As a result, we have reduced our Q223 basic EPS forecast by 5 US cents per share to 28 cents per share and our FY23 adjusted basic EPS by 8 cents per share (or 6.1%) to 124 cents per share.