In today’s briefing:
- Update: Shinko Electric (6967) Shorter-Dated and Break Risk Small but GAP RISK Now Much Higher
- Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing
- Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Deletion & Positioning
- Taiwan Dual-Listings Monitor: TSMC and ASE Premiums Break Down Again; ASE Spread Near 1-Year Lows
- Black Sesame IPO – Paying Up-Front for Its Monetization Potential
- Taiwan Tech Weekly: Tough Start for Nvidia and Apple Supply Chains; Asustek, Novatek Results Ahead
- UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important
- Microsoft’s Strong Q2: Solid Revenue and Earnings Growth Despite Cloud Concerns
- Intel’s Market Meltdown: Analyzing the Struggles of a Semiconductor Leader
- Daiwabo Holdings (3107 JP): Q1 FY03/25 flash update
Update: Shinko Electric (6967) Shorter-Dated and Break Risk Small but GAP RISK Now Much Higher
- When this deal was announced, it was light. But the timing, JSR influence, large-ish float, ensured FUD would make this trade wide. It traded wider.
- Nearly 7mos ago, Shinko had much-underperformed peer Ibiden, meaning downside gap risk from undisturbed was negative as spreads were wide. I reco’d a buy. Then 5mos ago, recommended taking profits.
- Ibiden has now underperformed Shinko by 25+% in 2-plus weeks. GAP RISK is higher but this is a short-timer. HUGE yield to “expected” start date, so everyone assumes a delay.
Local Market Observations on Timing Samsung Electronics 1P Discount Narrowing
- Local traders see interest rate cuts and value-up disclosures as key for timing Samsung Electronics 1P discount narrowing.
- Samsung’s only realistic value-up goal beyond 50% FCF return is improving ROE, likely through a pref-skewed buyback or cancellation program.
- If Samsung announces a value-up plan during the Bank of Korea’s rate cuts, local traders expect the 1P discount to reverse, targeting October-November for position entry.
Yuanta/P-Shares Taiwan Div+ ETF Rebalance Preview: Nuvoton Deletion & Positioning
- Nuvoton Technology (4919 TT) should be deleted from the Yuanta/P-Shares Taiwan Dividend Plus ETF in September and that will trigger selling of over 4 days of ADV.
- Nuvoton Technology (4919 TT) has underperformed most of its peers since the start of the calendar year and shorts have started to increase in the stock.
- Positioning appears light and the recent deletion from an index has increased the real float of the stock. Recent semiconductor weakness could further pressure the stock.
Taiwan Dual-Listings Monitor: TSMC and ASE Premiums Break Down Again; ASE Spread Near 1-Year Lows
- TSMC: Premium Breaks Back Down to +8.3%; 5-15% Could Now Be the Key Range
- UMC: -2.2% Discount; Good Level to Go Long the Premium
- ASE: Premium Breaks Down Again, Now Only +1.5%; Consider Going Long
Black Sesame IPO – Paying Up-Front for Its Monetization Potential
- Black Sesame Technologies (BLACKSES HK) is looking to raise US$143m in its Hong Kong IPO.
- Black Sesame International Holdings (BSIH) is an automotive-grade computing SoC and SoC-based intelligent vehicle solution provider.
- In our earlier notes, we looked at the past performance of the deal. In this note, we discuss peers and share our thoughts on valuation.
Taiwan Tech Weekly: Tough Start for Nvidia and Apple Supply Chains; Asustek, Novatek Results Ahead
- Tough Start to the Week — Negative News for Nvidia and Apple Supply Chains
- Key Events: Asustek & Novatek Results; Mediatek & TSMC July Sales Data
- UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important
UMC Signals Non-AI Industry Inventory Correction Through 2024E; Why Intel Is Increasingly Important
- UMC’s latest results indicate a mild recovery for consumer, communications, and computing industries. UMC’s capacity utilization to continue improving but industry inventory correction could last until end-2024E.
- UMC maintained 2024E capex guidance however it’s increasingly clear UMC can’t keep up the capex arms race alone. Hence we see UMC & Intel becoming closer and closer partners.
- We continue to view UMC as a long-term accumulate, and rate the stock as Structural Long, this however requires a longer than usual multi-year holding period.
Microsoft’s Strong Q2: Solid Revenue and Earnings Growth Despite Cloud Concerns
- Q2 revenue of $64.73 billion and EPS of $2.95 surpassed expectations of $64.39 billion and $2.93, respectively. Intelligent Cloud revenue reached $28.52 billion but below analysts’ $28.68 billion expectation.
- Activision acquisition boosted revenue by 3 points but cut EPS by $0.06 due to lower operating income.
- While Microsoft’s core cloud business slowed, it increased capex significantly. Uncertain GenAI monetization might shift wealth from Microsoft shareholders to Nvidia shareholders.
Intel’s Market Meltdown: Analyzing the Struggles of a Semiconductor Leader
- In a shocking turn of events, Intel Corporation, a long-standing leader in the semiconductor industry, witnessed one of its worst days on Wall Street, losing over a quarter of its market value in a single trading session.
- The drastic drop followed the company’s announcement of a $1.6 billion net loss for the second quarter of 2024, a stark contrast to the $1.47 billion profit reported in the same period the previous year.
- Intel’s share price plummeted by 27%, marking its steepest decline since 1974, as the company grappled with disappointing earnings, a bleak forecast, and a massive restructuring plan.
Daiwabo Holdings (3107 JP): Q1 FY03/25 flash update
- Revenue for FY03/22 was JPY227.8bn (+8.8% YoY), with IT Infrastructure Distribution segment revenue rising 17.4% YoY.
- Operating profit for FY03/22 was JPY4.3bn (-13.4% YoY), with a temporary drop in profit margin due to competition.
- Daiwabo Holdings’ FY03/25 forecast includes revenue of JPY1.0tn (+4.6% YoY) and net income of JPY21.8bn (+409.0% YoY).
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