Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● During the past two days (9 Feb close*), Taiwan tech gave up two
months worth of performance. YTD, both MSCI AxJ tech and
TWSEELEC are now flat.
● Performance continues to remain quite lopsided. Of the 20 USD3
bn+ tech stocks in Taiwan, only six are up whereas the other 14
are down YTD. Only ten of the 28 3 bn+ stocks in Korea/Taiwan
tech are witness 2011 EPS upgrades.
● As we argued last month, we did not expect the mismatch
between macro trade (buy developed market proxies) and the
bottom-up tech reality to last for too long – either underlying data
needed to improve or stock prices would correct. Data, particularly
on PC units and overall earnings, has weighed in worse than
expected in recent weeks and we believe earnings cuts have
further to go.
● Two of our top sell ideas (Mediatek, Acer) are already down
significantly YTD but we believe Mediatek could have more
downside. Quanta appears susceptible as PC units remain weak
and margins could disappoint. In Korea, LGE and Semco appear
worrying to us.
● Our already selective portfolio leaves little room for us to cut
further without starting to hold cash.
Taiwan: The small list of positive YTD performers in Taiwan tech is
largely reflective of how 2011 EPS estimates have changed – more
cuts than upgrades. We believe EPS momentum in Taiwan tech
would get worse before it gets better, as positive revisions in semis
have run their course whereas the full negative impact of currency and
China wages would show up for the supply chain in 1Q. In addition,
PC numbers continue to get revised down.
Korea: In Korea tech, optimism seems to be running for a little bit
longer with stocks still holding on to their gains, despite pretty
meaningful EPS cuts. Domestic institutional money plays a bigger role
in Korea than in Taiwan and that may be one of the reasons why
Korean tech has held up firmer than Taiwan tech. However, we
believe that over any meaningful time duration, stock moves cannot
continue to be against earnings moves.
India: Indian tech companies are seeing EPS upgrades but are still
underperforming regional tech as India gets aggressively sold.
However, most of these names are outperforming India, as they
should. We would buy into Infosys and HCL Tech.
Summary portfolio: Our strategy has been to buy the smartphone/
tablets component plays and semis related to that theme (Samsung,
TSMC, ASE). However, worries on TSMC/ASE have risen given
performance and the fact that a part of the recent upgrade in numbers
has been driven by customer inventory build. Within the tablets/
smartphones space we would still hold on to HTC and would buy a
basket of TPK/Wintek/Youngfast, the substrate plays like Unimicron/
Tripod/Kinsus (though next month or so could be challenging) and
laggard plays from the PC space that could potentially make it in the
new world order (Pegatron/Lenovo). AUO/CMI now appear cheap, but
our structural view on the space remains as bleak as earlier.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
● During the past two days (9 Feb close*), Taiwan tech gave up two
months worth of performance. YTD, both MSCI AxJ tech and
TWSEELEC are now flat.
● Performance continues to remain quite lopsided. Of the 20 USD3
bn+ tech stocks in Taiwan, only six are up whereas the other 14
are down YTD. Only ten of the 28 3 bn+ stocks in Korea/Taiwan
tech are witness 2011 EPS upgrades.
● As we argued last month, we did not expect the mismatch
between macro trade (buy developed market proxies) and the
bottom-up tech reality to last for too long – either underlying data
needed to improve or stock prices would correct. Data, particularly
on PC units and overall earnings, has weighed in worse than
expected in recent weeks and we believe earnings cuts have
further to go.
● Two of our top sell ideas (Mediatek, Acer) are already down
significantly YTD but we believe Mediatek could have more
downside. Quanta appears susceptible as PC units remain weak
and margins could disappoint. In Korea, LGE and Semco appear
worrying to us.
● Our already selective portfolio leaves little room for us to cut
further without starting to hold cash.
Taiwan: The small list of positive YTD performers in Taiwan tech is
largely reflective of how 2011 EPS estimates have changed – more
cuts than upgrades. We believe EPS momentum in Taiwan tech
would get worse before it gets better, as positive revisions in semis
have run their course whereas the full negative impact of currency and
China wages would show up for the supply chain in 1Q. In addition,
PC numbers continue to get revised down.
Korea: In Korea tech, optimism seems to be running for a little bit
longer with stocks still holding on to their gains, despite pretty
meaningful EPS cuts. Domestic institutional money plays a bigger role
in Korea than in Taiwan and that may be one of the reasons why
Korean tech has held up firmer than Taiwan tech. However, we
believe that over any meaningful time duration, stock moves cannot
continue to be against earnings moves.
India: Indian tech companies are seeing EPS upgrades but are still
underperforming regional tech as India gets aggressively sold.
However, most of these names are outperforming India, as they
should. We would buy into Infosys and HCL Tech.
Summary portfolio: Our strategy has been to buy the smartphone/
tablets component plays and semis related to that theme (Samsung,
TSMC, ASE). However, worries on TSMC/ASE have risen given
performance and the fact that a part of the recent upgrade in numbers
has been driven by customer inventory build. Within the tablets/
smartphones space we would still hold on to HTC and would buy a
basket of TPK/Wintek/Youngfast, the substrate plays like Unimicron/
Tripod/Kinsus (though next month or so could be challenging) and
laggard plays from the PC space that could potentially make it in the
new world order (Pegatron/Lenovo). AUO/CMI now appear cheap, but
our structural view on the space remains as bleak as earlier.
No comments:
Post a Comment