Daily Brief Equity Bottom-Up: TSMC’s July Revenue Hits Record NT$256.95 Billion and more

• TSMC’s July 2024 revenue reached NT$256.95 billion, up 23.6% MoM and 44.7% YoY. Year-to-date revenue grew by 30.5% to NT$1.52 trillion, driven by strong orders from Apple, Intel, and Nvidia. 
• TSMC forecasts Q3 revenue of $22.4-23.2 billion, anticipating over 25% full-year growth. July revenue already at 35% of Q3 estimates. Analysts advise against assuming these results for the entire quarter.
• TSMC is capitalizing on AI and mobile demand, with analysts maintaining an “Outperform” rating with average upside of 14%, noting potential growth from 5G, HPC, and automotive sectors.

• The epicenter of the Asian ETF selloff last week was Japan, recording an outflow of nearly $100B from equity funds taking the net flows back to breakeven for the YTD.
• Seazen (Formerly Future Land) (1030 HK) and Swire Properties (1972 HK) had positive announcements while New Oriental Education & Techn (9901 HK) and Yum China Holdings (9987 HK) announced earnings.
• China Unicom Hong Kong (762 HK) shares are under pressure as the telco sector goes through a price war in cloud services and investors take profits from high dividend names.

• We believe total revenue will grow by 9% YoY and game revenue began to rise in 2Q24.
• We believe the operating margin will continue to improve YoY in 2Q24 after the seven-year high in 1Q24.
• We set the upside at 35% and the price target at HK$496 for the end of 2025.

• Monopoly was originally created as a critique of capitalism but became a massively successful business itself.
• Hasbro has grossed over $3 billion in revenue from the app version of Monopoly.
• Hasbro CEO, Chris Cox, will be discussing the development of Monopoly and other games on the podcast.

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• Hindenburg Research released a report on SEBI Chief Madhabi Puri Buch, accusing her of conflicts of interest, particularly about the Adani Group.
• Analysis of Responses given by Madhabi & Dhaval Buch, SEBI, 360 One and Adani.
• Analysis of events and allegations made by Hindenburg on Madhabi and critical assessment on that.

• We believe revenue will increase by 8% YoY in 1Q25, as most business lines have been growing.
• We believe the operating margin will be stable, as cost cut plans came to an end.
• We set an upside of 94% for March 2025, as we believe the stock is overly impacted.

• The retail deliveries of NEV (new energy vehicle) increased by 37% YoY in July.
• One of Alibaba’s supermarket chains, Freshippo, will sell its OEM goods, on Lazada.
• Tencent will formally start the game, Arena Breakout: Infinite, in August.

• Recruit Holdings (6098 JP) ’s share price has been up more than 40% YTD driven by better-than-expected earnings and an announcement to buy back ¥600bn worth shares.
• The company’s 1Q earnings beat consensus and showed some recovery across all business segments, however, the labour markets are heading towards a decline.
• It seems that the company has run out of investment options, and we would not rush to make an entry as worst is not over yet for the company.

• SDC partners with Microsoft while VCs in India prioritize deep tech startups for innovation and growth.
• Polish startup SEEDiA leads in smart urban infrastructure as AI hype in smart manufacturing is questioned for realistic outcomes.
• Non-a-Si panels expected to dominate auto displays 2024-2029 as Indian opto-semiconductor maker acquires US-based IC equipment company.

• Nippon Paint Holdings (4612 JP)‘s 2Q24 was largely uneventful, with sales up 5.4% yoy and net profit up 7.3% yoy.
• Management maintained its full-year guidance of Y184bn operating profit target in 2024 (10% growth vs. 2023).
• China was a bright spot with operating profit up 30% yoy and made up 35% of total operating profit of the company.