In today’s briefing:
- Hollysys (HOLI US): In Court Today …
- Taiwan Top 50 ETF Rebalance: Alchip (3661 TT) Going Back-To-Back?
- Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date
- Taiwan Tech Weekly: Nvidia Results Today; Taiwan Market Surged But Why It Might Be Still Underowned
- Taiwan Dual Listings Monitor: TSMC Premium Slumps; CHT & ChipMOS at Rare Opportunity Levels
- [NetEase, Inc.(NTES US,BUY,TP US$138)TP Change]: Raise TP for Upcoming and Highly Anticipated Titles
- As Expected from Our Earlier BOM/CoWoS Analysis, Consensus to Raise Nvidia Estimates Inevitably
- TSMC (2330.TT; TSM.US): N2 Technology Is Scheduled in 2025F.
- KS (Kuaishou 1024 HK): 3Q23, High Growth and Higher Margin
- [Kanzhun Ltd.(BZ US, SELL, TP US$14.5) TP Change]: Growth Target Cannot Justify High Valuation
Hollysys (HOLI US): In Court Today …
- A fortnight after co-COOs pitched a US$25/share indicative Offer for Hollysys (HOLI US), Ascendent Capital, holding 13.7%, tabled a US$26/share Offer. The Recco/Dazheng consortium offered US$26.50 a week later.
- There is currently a dispute over the ownership and control of Ace Lead’s shares in Hollysys, which was subject to an injunction hearing in the Hong Kong High Court.
- That hearing took place today. So I went along to hear first-hand the key arguments from both sides.
Taiwan Top 50 ETF Rebalance: Alchip (3661 TT) Going Back-To-Back?
- Alchip Technologies (3661 TT) could replace Feng Tay Enterprise (9910 TT) in the Yuanta/P-Shares Taiwan Top 50 ETF at the December rebalance.
- This ETF inclusion for Alchip Technologies (3661 TT) could come back-to-back with another index inclusion scheduled for the end of November.
- Shorts in Alchip Technologies (3661 TT) have been building up while shorts in Feng Tay Enterprise (9910 TT) have surged over the last few months.
Tata Consultancy Services (TCS IN): US$2bn Mega Buyback; Two More Trading Days Before Ex-Date
- Indian IT services giant Tata Consultancy Svcs (TCS IN) launched a US$2bn Buyback last week.
- The company will buy up to 40,963,855 shares in a Tender Offer-style Buyback at a Buyback Price of INR4,150/share (an 18% premium to today’s close).
- In this insight, we take a closer look at the indicative timeline of key events in this Buyback, the company’s Buybacks history, proration details, and what this means for investors.
Taiwan Tech Weekly: Nvidia Results Today; Taiwan Market Surged But Why It Might Be Still Underowned
- Nvidia Results Today U.S. Time — Taiwan Market Surged Recently on Improving AI/Semiconductor Expectations and Potential for Easing U.S.-China Tensions.
- Taiwan: Underowned, Yet Gaining on Peers. Our Fellow Insight Provider Analyzes Why Taiwan Might Still Be Underowned.
- Asia Geopolitics: Following Biden-Xi Meeting, Asia Is a Safer Place For Now.
Taiwan Dual Listings Monitor: TSMC Premium Slumps; CHT & ChipMOS at Rare Opportunity Levels
- TSMC: 7.4% Premium — Previous Short Has Worked, Now Wait For Better Levels
- ChipMOS: -2.0% Discount — Good Level to Go Long the Spread
- CHT: -1.2% Discount — Good Level to Go Long the Spread
[NetEase, Inc.(NTES US,BUY,TP US$138)TP Change]: Raise TP for Upcoming and Highly Anticipated Titles
- NetEase reported revenue/non-GAAP operating profit/GAAP net income inline/5.24%/16.2% vs. our estimation.
- The bottom-line beats were primarily attributed to the operational efficiency achieved through the usage of AIGC tools, and reduced S&M expenses resulting from organic traffic generated by high-quality game content.
- We maintain our BUY rating and raised TP to $138 for future game releases, implying 19x PE, and it is currently trading at 17x PE in 2024
As Expected from Our Earlier BOM/CoWoS Analysis, Consensus to Raise Nvidia Estimates Inevitably
- Nvidia reports/guides a better than expected 3Q/4Q23 sales, margin, and EPS on stronger AI GPU sales growth of nearly 3x.
- Nvidia reports a healthy 3.04 MOI, down 5% q/q and down 37% y/y and contributes nicely to account for 9% of TSMC sales.
- In spite of concerns on good news priced in, seasonal weaker 1Q24, and MI300X/ASIC alternative AI solutions, we expect more raise to come in 2024-2025E.
TSMC (2330.TT; TSM.US): N2 Technology Is Scheduled in 2025F.
- TSMC’s N2 technology is currently undergoing verification for a 256Mb SRAM, and it will be implemented in Hsinchu and Kaohsiung, Taiwan.
- The TSMC N3 technology capacity was 65kwpm in 3Q23, and the current version is N3B, which were adopted by Apple for the iPhone 15 this year.
- Both N3E and N2 only have 20 layers EUV masks.
KS (Kuaishou 1024 HK): 3Q23, High Growth and Higher Margin
- Total revenue grew by 21% YoY in 3Q23, as both advertising and e-commerce expanded strongly.
- KS achieved historical high operating margin and operating profit, as the company continue to cut all operating expenses.
- We believe the stock has an upside of 63% and a price target of HK$95. Buy.
[Kanzhun Ltd.(BZ US, SELL, TP US$14.5) TP Change]: Growth Target Cannot Justify High Valuation
- BZ reported 3Q23 cash billing 0.8% higher than our est., revenue beat our estimate/consensus 5.2%/3.8%, non-GAAP NI beat our estimate/consensus by 103%/50%.
- Cost saving and investment income are the main reasons for bottom-line beat, which we think are not sustainable.
- Even BZ can deliver its “3 years with 100mn new users” target until 2025, we think its 20% earnings CAGR in 2023-25E still cannot justify its high valuation (TBC)
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