In today’s briefing:
- Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?
- Preemptive Short Position Buildup on SFA Engineering for Samsung’s Next Stake Sale
- Samsung Electronics: Return of the King
- Micron. Clutching At AI Straws
- Delta Taiwan Vs. Thailand Monitor: Thailand Mismatch Correcting & This Could Pull Down Delta Taiwan
- ALT Co IPO Preview
- Himax Technologies: Contrarian Play on a Automotive Display Semiconductor Leader
Delta Electronics (DELTA TB): Potential SET50 Index Delete in December?
- Delta Electronics Thai (DELTA TB) has been added to the Market Surveillance Measure List twice in the last few months. That increases the probability of index deletion in December.
- Given the big turnover every time Delta Electronics is added to and deleted from the index, there could be another go at weighting the SET50 Index by free-float market cap.
- Deletion from the index will have a big impact on Delta Electronics Thai (DELTA TB) and the passive selling could help narrow the gap with Delta Electronics (2308 TT).
Preemptive Short Position Buildup on SFA Engineering for Samsung’s Next Stake Sale
- Samsung Display still holds a 5.85% stake. Hankyung reported that this remaining stake would also be disposed of in the future.
- Then the key lies in timing. Considering the ongoing pattern of block deals being exposed during the pre-sounding phase, we may be able to capture clues for preemptive trading.
- As seen from the chart depicting SFA’s loan balance and the percentage of short-selling to daily TV, we can observe a significant increase in activity just before today’s sale event.
Samsung Electronics: Return of the King
- Asia Ex-Japan investors move from underweight to a record overweight in Samsung Electronics
- Samsung has been a key beneficiary of manager rotation over the last 6-months alongside BYD, Trip Com and Meituan.
- Majority of funds positioned overweight with a record 81.4% of funds holding a position. Samsung becomes one of the highest conviction holdings in the Asia Ex-Japan region.
Micron. Clutching At AI Straws
- Micron reported FQ3’23 revenues of $3.8 billion, up 2% sequentially and down 57% year-over-year.
- Despite upbeat AI notes among others, Micron quietly delivered more bad news than good with their overall outlook worsening in many key respects.
- In the company’s own words, “Profitability and cash flow will remain extremely challenged for some time”. For “some time”, you could insert “at least 12 months”
Delta Taiwan Vs. Thailand Monitor: Thailand Mismatch Correcting & This Could Pull Down Delta Taiwan
- We have an Underperform rating for Delta Electronics Taiwan as a single stock trade due to our concerns that its valuation has been inflated by Delta Thailand.
- The extreme valuation mismatch between Delta Thailand and Delta Taiwan has corrected to some degree (Delta Thai crashed 23%) but still has a long way to go.
- Delta Thailand should be removed from the SET50 Index in our view, the stock could be at risk of just such an action by year end according to precedent.
ALT Co IPO Preview
- ALT Co is getting ready to complete its IPO in Korea in July. ALT tests high-performance non-memory semiconductors applied to various industries such as secondary batteries, artificial intelligence, and automotive.
- The bankers used four companies as comps for ALT including Lb Semicon, LB Lusem, Doosan Tesna, and Nepes Ark. These four stocks are up on average 48% YTD.
- The IPO price range is from 16,700 won to 20,500 won. The expected market cap of the company post IPO is from 150 billion won to 184 billion won.
Himax Technologies: Contrarian Play on a Automotive Display Semiconductor Leader
- We spoke with management of Himax, the global leader in chips powering displays inside automotives including EVs. Its sales have been badly impacted by China’s EV price war.
- Himax sales have fallen recently largely due to China demand weakness; 70% of the company’s sales are in China.
- Himax has underperformed peer Novatek as well as the TWSE both YTD and on a 1-year basis. We believe the less-followed stock could represent an opportunity for investors.
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