Asia Pacific Equity Research 17 October 2024 J P M O R G A N TSMC First Take: 3Q24 Strong GM beat; 4Q guidance better, with continued upside in AI in 2025; OW Our First Take: TSMC's 3Q results were a strong beat with GM coming in well above guidance (57.8% vs mid-point of guidance at 54.5% and JPMe 54.8%). 4Q revenue guidance of 13% qoq growth is also better than expected, while 4Q GM guidance suggests further GM increase. The GM uptick in 2H24 is coming in mainly from better utilization (N5 and N3 running ...

Global FX Strategy 17 October 2024 J P M O R G A N FX Macro Quant Pause macro drivers during elections Figure 1: G10 carry has shown a decent rebound after the last US payrolls; EM and Global portfolios rebounds were more moderate Total return index of nominal Global/EM/G10 carry baskets (top-bottom 5/3/2 equal USD notional). Monthly rebalancing. Calculation as of 15/10/2024. See page 16 for analyst certification and important disclosures. +6% -7% 0% 90 95 100 105 110 115 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 ...

Investment Rating - TSMC is rated **Overweight** with a price target of NT$1,280, representing a 24% upside from the current price of NT$1,035 [5] - The industry view for Greater China Technology Semiconductors is **In-Line** [5] Core Investment Thesis - TSMC's 3Q24 EPS was NT$12.54, 10% above the forecast, with a gross margin of 57.8%, significantly higher than the consensus estimate of 55% [2] - TSMC guided 4Q24 revenue to grow 13% Q/Q, exceeding the consensus estimate of 9% Q/Q, and expects full-year revenue growth of close to 30% Y/Y in USD terms [2] - The company plans to more than double its CoWoS capacity in 2025 to meet AI semiconductor demand, although it may still face challenges in fully meeting customer demand [3] - TSMC's gross margin is expected to sustain at 57-59% in 4Q24 due to high fab utilization, but 2025 margins may face headwinds from overseas fab dilution and rising electricity costs [3] Financial Performance - 3Q24 revenue was NT$759.7 billion, up 12.8% Q/Q and 39.0% Y/Y, beating both Morgan Stanley and consensus estimates [4] - Operating expenses (Opex) were NT$79.1 billion, representing 10.4% of revenue, lower than the consensus estimate of 10.8% [4] - Operating profit margin (OPM) reached 47.5%, up 494bps Q/Q and 577bps Y/Y, significantly above consensus estimates [4] AI Semiconductor Demand - TSMC believes AI demand is sustainable, citing internal adoption and strong customer interest [3] - The company's AI-related semiconductor business is expected to drive growth, with NVIDIA being a key customer contributing to higher margins [3] Valuation and Growth Outlook - TSMC's EPS is projected to grow from NT$42.19 in 2024 to NT$70.65 in 2026, with a P/E ratio expected to decline from 24.5x in 2024 to 14.7x in 2026 [5] - The company's ModelWare net income is forecasted to increase from NT$1,094 billion in 2024 to NT$1,832 billion in 2026 [5] Industry Coverage - The Greater China Technology Semiconductors sector includes key players such as TSMC, UMC, MediaTek, and SMIC, with varying ratings and price targets [16][17]

M Update TMT Credit Research | North America October 17, 2024 10:05 PM GMT NFLX Credit: 'Starting 5' Takeaways from Earnings Key Takeaways NFLX kicked off earnings within our IG TMT coverage, posting YoY revenue growth in mid-teens area for 3Q reported and 4Q guide (and low-teens for '25) 3Q global streaming paid net adds came in a bit stronger than consensus, bringing base >280mn; company is guiding to higher adds in 4Q vs. 3Q due to seasonality and slate 3Q FCF ($2.2bn) exceeded share rep. ($1.7bn); FY FC ...

Investment Rating - The report provides an "In-Line" investment rating for the Greater China Technology Hardware sector [4]. Core Insights - AI is identified as a key focus for 2025, with discussions on positioning within the AI hardware supply chain, including server ODMs versus components and GPU manufacturers like NVDA, AMD, and Intel [4]. - The report highlights the initial stage of liquid cooling adoption and the time required for immersion cooling to gain traction [4]. - Key stocks mentioned include Hon Hai, FII, AVC, Delta, Lenovo, Wistron, Wiwynn, Giga-Byte, Quanta, Lotes, GCE, Asustek, and Yageo [4]. - The demand cycle for iPhones is expected to continue, with a multi-year replacement cycle and upcoming upgrades for the iPhone 17 [4]. - The report questions whether the Android camp will differentiate itself based on AI features [4]. Summary by Sections AI Hardware Supply Chain - The report discusses strategies for positioning in the AI hardware supply chain for 2025, comparing server ODMs and components, and identifying tactical buy ideas versus long-term winners [4]. - It raises questions about the winners in GB200 and the sustainability of stock re-rating [4]. AI PCs - AI PCs are anticipated to drive the next phase of growth in the PC market, with discussions on their definition, necessity, and use cases [5]. - Key catalysts for the next 12 months are identified, along with potential winners and losers in the market [5]. Cloud & Edge AI - The report explores how Cloud & Edge AI will influence the total addressable market (TAM) for MLCC [5]. - Key stocks in this segment include Dell, HPQ, Lenovo, Asustek, SK Hynix, MediaTek, Delta, and Advantest [5]. Cyclical Components - A turnaround in cyclical components is suggested, with expectations of oversupply in ABF substrates lasting until 2025, leading to margin pressure [5]. - The report notes that MLCC inventory digestion is nearing completion, with an anticipated recovery in end-demand [5].

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Investment Rating - The report assigns a price target of HK$20.20 for Shandong Gold Mining Co. Ltd, indicating a potential upside of 20% from the current price of HK$16.88 as of October 14, 2024 [4]. Core Insights - Shandong Gold Mining Co. Ltd has guided for a 9M24 net profit range of Rmb1.85-2.25 billion, representing a year-over-year increase of 38-67%. The reported net profit for 1H24 was Rmb1.38 billion, suggesting a 3Q24 net profit range of Rmb467-867 million, compared to Rmb684 million in 2Q24. The company needs to achieve the upper end of this guidance to meet market expectations [3][4]. Financial Metrics - The fiscal year ending for Shandong Gold is December 2023, with projected earnings per share (EPS) of Rmb0.52 for FY23, increasing to Rmb0.86 in FY24e and Rmb1.25 in FY25e [4]. - Revenue projections are Rmb59.275 billion for FY23, Rmb63.878 billion for FY24e, and Rmb71.614 billion for FY25e [4]. - EBITDA is expected to grow from Rmb8.414 billion in FY23 to Rmb12.058 billion in FY24e and Rmb15.450 billion in FY25e [4]. - The company’s market capitalization is currently Rmb114.234 million, with an enterprise value of Rmb161.343 million [4]. Valuation Metrics - The report indicates a P/E ratio of 25.9 for FY23, decreasing to 17.8 for FY24e and further to 12.3 for FY25e [4]. - The EV/EBITDA ratio is projected to decline from 16.8 in FY23 to 12.8 in FY24e and 9.5 in FY25e [4].

shuinu9870 shuinu9870 shuinu9870 更多一手调研纪要和研报数据加V： 更多一手调研纪要和研报数据加V： 更多一手调研纪要和研报数据加V： 更多资料加入知识星球：水木调研纪要 关注公众号：水木纪要 shuinu9870 shuinu9870 更多一手调研纪要和研报数据加V： shuinu9870 shuinu9870 更多一手调研纪要和研报数据加V： October 14, 2024 09:00 PM GMT M Global Idea Global Technology AI Supply Chain – Confidence in AI Demand and Supply shuinu9870 更多一手调研纪要和研报数据加V： NVDA Blackwell supply hiccup has mostly been removed with shipments ready on schedule. Market focus now shifts toward AI demand outlook for 2026, where we hear a positive tone fr ...

Industry Investment Rating - The report does not explicitly provide an overall industry investment rating [1][2][3] Core Views - The primary economic challenge is the debt-deflation cycle, with deflationary pressures driven by real estate sector adjustments and excessive investment policies [8] - To break the debt-deflation cycle, a RMB 10 trillion fiscal stimulus package targeting consumption and real estate inventory clearance is deemed necessary [4] - Policymakers are hesitant to implement forceful fiscal easing due to high public debt levels (102% of GDP) and declining revenues [10][13] - Short-term fiscal measures are expected to be limited, but strong fiscal easing could be triggered if social dynamics weaken significantly [4] Fiscal Policy Analysis - China's public debt-to-GDP ratio has risen sharply from 73% in 2019 to 102% in Q2 2024, the largest increase among major economies [10][13] - Government revenue has declined from 22.4% of GDP pre-pandemic to 18.1%, with tax revenue falling from 17% to 13.5% of GDP [14][16] - Land sales revenue has contracted by 1.9 percentage points of GDP since Q1 2021, significantly impacting local government spending capacity [14] Policy Preferences - Policymakers continue to favor investment over consumption, focusing on manufacturing and infrastructure to fill the demand gap left by real estate [20] - This investment-driven approach risks exacerbating overcapacity, deflation, and debt-to-GDP ratio increases [20] - The report suggests a shift towards consumption stimulus through social security spending, trade-in programs, and inventory clearance would be more effective [33] Potential Scenarios 1) **Status Quo (4.5-5% GDP growth target, investment-focused)**: Continued deflation, accelerating debt-to-GDP ratio, worsening corporate returns [27][34] 2) **Growth Slowdown (1-2% GDP growth)**: Milder deflation than Scenario 1, slower debt growth, but faster social stability deterioration [28][34] 3) **Consumption-Driven (4-4.5% GDP growth)**: Moderate inflation recovery, stabilized debt ratio, improved corporate returns and social stability [33][34] Fiscal Stimulus Outlook - A RMB 1-2 trillion supplementary budget is expected, with only RMB 1 trillion (0.8% of GDP) for direct demand stimulus [23] - The ideal stimulus package would require RMB 6-7 trillion for social welfare spending and RMB 3-4 trillion for real estate inventory clearance [23]

Industry Investment Rating - The report does not explicitly provide an overall industry investment rating [1][2][3][4][5] Core Views - The report highlights three key remaining issues in China's economy: demand shortfall, fiscal challenges, and the debate between investment and consumption [4] - Recent policy easing measures are expected to help stabilize the property market but face challenges in boosting prices and restoring demand [4] - The property sector's drag on demand will likely result in economic growth falling short of targets [4] - Over-reliance on investment to fill demand gaps may lead to persistent overcapacity and deflationary pressures [4] - Consumption is a viable alternative growth driver but measures to boost it have been limited so far [4] Property Market Analysis - Recent property easing measures may help prevent further price declines but property activity will continue to drag on economic growth [12] - The property market tone shift is seen as meaningful support for sustained improvement in home sales [12] - Housing inventory remains high with 43 million units in primary and secondary markets and 8 million units under construction [12] - Inventory reduction will take considerable time given the current sales run rate of 8 million units annually [12] - Reducing new housing construction will further weigh on property fixed asset investment and create additional demand gaps [13] Fiscal Situation - Fiscal expansion is constrained by deflationary pressures and already high public debt levels [21] - Land sale revenues have shrunk by about one-third since 2021 peak, putting pressure on local government finances [22] - Tax revenue growth has slowed significantly, with 3-month average growth at -5.9% in August compared to 6.2% average in 2016-19 [22] - A supplementary budget of RMB 1-2 trillion is expected to be approved, potentially expanding the augmented fiscal deficit by 1.6% of GDP [27] Growth Composition Debate - Over-reliance on investment as a growth driver continues to create overcapacity and exacerbate deflationary pressures [30] - China's investment-to-GDP ratio at 41% is significantly higher than Japan's 32% in 1993 [30] - GDP deflator has averaged -0.6% over the past five quarters, worse than Japan's +1.6% in 1990-94 [30] - Shifting to consumption-driven growth could help alleviate deflationary pressures and normalize nominal GDP growth [31] Economic Indicators - Manufacturing and infrastructure FAI grew at 8% and 6.2% respectively, while property FAI declined by 10.2% [17] - Retail sales growth was 2.1%, significantly lower than investment growth rates [17] - Industrial, infrastructure and service loans increased by RMB 7.6 trillion since Q2 2019, offsetting RMB 6.4 trillion decline in property loans [17]