In today’s briefing:
- TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
- STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
- CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
- [Xiaomi Inc. (1810 HK, BUY, TP HK$21) TP Change]: EV Traffic Is Augmenting Xiaomi’s Entire Business
- NetEase Inc.: Will The Increased Revenue From Game Innovation & Expansion Last? – Major Drivers
- Snowflake Inc.: Broadened Scope and Usability of Products & Other Major Drivers
- CSI All Share Semiconductor Index Rebalance: Lots of Changes in June
- Synopsys Inc.: Continued Momentum in Core Business & AI Investments Paying Off? – Major Drivers
- Analog Devices Inc.: Expansion in Automotive Market & AI Investments Reaping Solid Profits? – Major Drivers
- Workday Inc.: Will The Growth in the Medium Enterprise Market Benefit Their Top-Line In The Coming 3 Years? – Major Drivers
TIP Customized Taiwan Select High Dividend Index Rebalance: 13 Changes & US$5.2bn Round-Trip Trade
- There are 13 changes for the TIP Customized Taiwan Select High Dividend Index in June. The TIP Taiwan Select High Dividend ETF (00919 TW) has an AUM of US$6.4bn.
- One-Way turnover is estimated at 41% and that will result in a round-trip trade of TWD 168.8bn (US$5.2bn). There are 16 stocks that could have over 4x ADV to trade.
- The rebalance will be implemented over 8 trading days and the ETF has started trading the stocks last week.
STAR50/STAR100 Index Rebalance: Index Committee Flip-Flops on Profitability
- There are 3 changes for the SSE STAR50 (STAR50 INDEX) and 9 changes for the STAR100 Index. Implementation will take place at the close on 14 June.
- United Nova Technology (688469 CH) and Biwin Storage Technology (688525 CH) were not added at the March rebalance since they were consistently loss-making. But they have been added this time.
- United Nova Technology (688469 CH) had been trading poorly and then the stock dropped further after non-inclusion in March. That could change now with inclusion confirmed.
CES China Semiconductor Chips Index Rebalance: Adding to Impact for Some Stocks
- There are 4 changes for the CES China Semiconductor Chips Index that will be implemented at the close on 14 June.
- Biwin Storage Technology Lt (688525 CH) and Beijing Yandong Microelectroni (688172 CH) are also inclusions to other indices too and the multiple flows will increase the impact on the stocks.
- The adds have underperformed the deletes. If things go the way of the December rebalance, a long adds/ short deletes trade could do well from now to implementation.
[Xiaomi Inc. (1810 HK, BUY, TP HK$21) TP Change]: EV Traffic Is Augmenting Xiaomi’s Entire Business
- Xiaomi reported CY1Q24 revenue, non-IFRS operating income and non-IFRS net income 2.7%, in-line, and 21.7% vs. consensus;
- SU7 interest drove more and higher quality traffic to Xiaomi channels, driving higher revenue and margin for IoT and handset sales, in our view.
- We expect this augmentation to sustain higher non-EV margin and growth in the long-run, and for ADAS and battery upgrades to drive demand for its next EVs.
NetEase Inc.: Will The Increased Revenue From Game Innovation & Expansion Last? – Major Drivers
- NetEase’s first quarter earnings highlighted the company’s ongoing growth, driven in large part by its game portfolio.
- Net revenue for Q1 rose to RMB 26.9 billion, marking an accelerated YoY increase led by the company’s diversified game offerings.
- There was significant growth from established game franchises which have managed to maintain high popularity among their user bases, showcasing the sustainability of the company’s games.
Snowflake Inc.: Broadened Scope and Usability of Products & Other Major Drivers
- Snowflake Inc. reported a strong Q1 for its fiscal year 2025, with the CEO, Sridhar Ramaswamy, outlining the key priorities of learning from customers, driving execution within go-to-market teams, and fueling innovation and product delivery.
- The results presented prove that Snowflake’s core business remains robust.
- It delivered a remarkable Q1 with product revenue for the quarter rising to $790 million, a 34% increase YoY.
CSI All Share Semiconductor Index Rebalance: Lots of Changes in June
- The changes to the CSI All Share Semiconductors & Semiconductor Equipment Index were announced after market close on 31 May and will be implemented at the close on 14 June.
- There are 17 adds and 5 deletes for the index.
- The adds and deletes have underperformed the index over the last 6 months but the adds have outperformed the deletes over the last 3 months.
Synopsys Inc.: Continued Momentum in Core Business & AI Investments Paying Off? – Major Drivers
- In Q2 2024, Synopsys’s revenue increased by 15% year over year, aligning it with the high-end expectations of its guided range.
- The non-GAAP operating margin also rose by roughly three points to 37.3%, with non-GAAP EPS increasing by 26% year over year.
- These exceeding outcomes have prompted Synopsys to raise its full-year revenue and non-GAAP EPS guidance.
Analog Devices Inc.: Expansion in Automotive Market & AI Investments Reaping Solid Profits? – Major Drivers
- During the Analog Devices’ second quarter fiscal year 2024 earnings, the company reported revenue of $2.16 billion, with profitability and earnings per share exceeding expectations.
- The management believes that the business is past the low point of this cycle, with positive signs of improvement particularly in the industrial sector.
- However, there is still economic and geopolitical uncertainty that can potentially impact short-term performance, as such, careful cost and inventory management will be key.
Workday Inc.: Will The Growth in the Medium Enterprise Market Benefit Their Top-Line In The Coming 3 Years? – Major Drivers
- Workday has reported solid financial performance for its first quarter fiscal 2025, noting a 19% subscription revenue growth and 18% 12-month backlog growth.
- Non-GAAP operating margin is at 26%.
- Despite some challenging dynamics in the quarter, such as increased deal scrutiny and slower customer headcount growth, Workday is encouraged by new go-to-market initiatives that are increasing total addressable market.
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