In today’s briefing:
- Unexpected Inheritance Tax Rate Reduction Included in July Tax Reform: Impact on Value-Up Trading
- China CRSC (3969 HK): Well Worth the Premium
- TechChain Insights: Q&A with TSMC Supplier Kinik; Diamond Capex Implies Industry Strength Visibility
Unexpected Inheritance Tax Rate Reduction Included in July Tax Reform: Impact on Value-Up Trading
- Senior Presidential Secretary said this morning that a tax reform, including reducing inheritance tax rates to the OECD average, will be disclosed in late July with the tax reform plan.
- Stocks sensitive to reduced inheritance tax, notably Hyundai Motor Group subsidiaries like Hyundai Glovis and Hyundai Motor, could see significant attention amid governance restructuring efforts under Chung Eui-sun.
- Retroactive application and its extent may impact markets, potentially affecting groups like Samsung, influencing diverse investment strategies based on specifics.
China CRSC (3969 HK): Well Worth the Premium
- China Railway Signal & Communication (3969 HK)‘s latest order backlog is estimated to be Rmb173.7bn, enough to cover FY24F revenue by 4.4x.
- Gross margin has sustained expansion, reaching a record high of 27.8% in 1Q24. Higher R&D expenses will benefit its medium-term earnings.
- Net cash equals 59% of the share price, allowing it to maintain over 50% payout and potentially higher going forward. Operating cash flow has also turned around to positive.
TechChain Insights: Q&A with TSMC Supplier Kinik; Diamond Capex Implies Industry Strength Visibility
- We conducted a Q&A with Kinik, who is a key supplier to companies including TSMC, UMC, and Micron.
- Kinik is dramatically expanding its diamond disk capacity; these products are critical to the production of wafers for advanced semiconductor nodes.
- We believe Kinik has high visibility into future industry demand. Gross margins are likely to expand in the coming years as advanced diamond products become increasingly important to wafer production.
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