In today’s briefing:
- Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums
- Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts
- Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest
- Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E
- STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View
- AI Takes the Write Way
Taiwan Dual-Listings: Post CNY Market Closure, Huge ADR Premiums
- TSMC’s ADR premium is in the double digits, representing a major breakout.
- ASE Technology’s premium is also in the double digits and the company will be reporting results next week.
- Chunghwa’s premium is high for its tight range, and results will be coming out for the company this week.
Korea No Longer Collects Foreigners’ Real-Time Trade Data & Potential Increase in Spoofing Attempts
- KRX (and Korea FSS) no longer collects foreign investors’ entire trade records in real time, as foreign investors are no longer traced based on their unique registration numbers.
- Foreign investors are likely to engage in more aggressive short-term trading. We need to be prepared for significant price volatility, mainly for small and mid-cap stocks.
- System changes for trade history management changes will be completed within the third quarter. So, we will likely witness new trading patterns from the fourth quarter of this year.
Merger Arb Mondays (30 Jan) – Kanematsu, Toyo, O2Micro, Origin Energy, Warrego, Tyro, Norwest
- We summarise the latest spreads and newsflow of merger arb situations covered by us across Hong Kong, Australia, New Zealand, Singapore, Japan, Indonesia, Malaysia, Philippines, Thailand and Chinese ADRs.
- Highest spreads – Alliance Aviation Services (AQZ AU), Kanematsu Electronics (8096 JP), 21Vianet Group (VNET US), Golden Energy & Resources (GER SP), Origin Energy (ORG AU), 111 Inc (YI US).
- Lowest spreads – Essential Metals (ESS AU), Chip Eng Seng Corp (CHIP SP), Nitro Software Ltd (NTO AU), Norwest Energy NL (NWE AU), Conexio Corp (9422 JP), Nippon Steel Trading.
Intel Results PC Readthrough: Inventory Correction to Get Worse in 1Q23E
- Intel reported weak results at the end of last week, with its PC segment hit worst.
- PC total addressable market to fall by 7.5% based on Intel’s guidance.
- Asus and Acer inventory levels show the problem impacting Intel, and for the industry as a whole right now.
STMicroelectronics: Q4 Results Above Consensus And Strong Guidance Confirm Our Bullish View
- ST reported solid Q4 results, 4% above consensus expectations at the EBIT level. Q1 2023 guidance is much better than consensus expectations on sales (11% beat)
- ST confirmed its view that 2023 will be another growth year, with sales indicated at US$17.3bn, which is +7.5% year over year and well above consensus
- Stock is up 21% since our initial note. We still see over 30% upside from here
AI Takes the Write Way
- Digital Publisher BuzzFeed’s stock has seen an epic rally in the past week, with most of the gains driven by the company’s decision to use Artificial Intelligence tools like OpenAI’s ChatGPT to build quizzes and write content.
- Essentially, investors have been cheering about the potential for improved profitability and content that can be written at scale by using these various tools.
- This is a welcome change for the media outlet, which has seen its advertising revenues plummet, its site traffic decline across the board, and its balance sheet crumble.
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