Brief Singapore: Sharp MoM Decline In January Semi WFE Sales Casts A Spanner In Second Half Recovery Works. and more

In this briefing:

1. Sharp MoM Decline In January Semi WFE Sales Casts A Spanner In Second Half Recovery Works.
2. CSE Global: Gaining Momentum

1. Sharp MoM Decline In January Semi WFE Sales Casts A Spanner In Second Half Recovery Works.

According to SEMI, North American (NA) WFE sales for January 2019 fell to $1.9 billion, down ~10% sequentially and ~20% YoY. This was an abrupt reversal of the recovery trend implied by the December 2018 sales of $2.1 billion and is the biggest monthly sales YoY decline since June 2013.

Just as declining monthly WFE sales preceded the current semiconductor downturn by some six months, the continuation of December’s MoM WFE decline reversal trend was a prerequisite for a second half recovery in the broader semiconductor sector. With that trend well and truly broken,  we now anticipate a more delayed, gradual and prolonged recovery, one which is now unlikely to materialise until late third, early fourth quarter 2019. 

2. CSE Global: Gaining Momentum

• Investors who have bought CSE Global on dips since my last note would have profited ~18%.
• The upbeat guidance by management and supply-demand environment should give some legs to the recent rebound.
• While risks of slower global growth may weigh on the stock, the stock is trading below its five-year average PE despite significantly improved cash flow from operations and a healthy order intake (three-year high).