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Asia Technology Strategy------------------------------------------------------------------------------------
Portfolio view
● Taking into account valuations and performance we would like to
position into those stocks over the coming weeks where we
believe earnings are more likely to be upgraded over the
subsequent 6-12 months (although some of these names might
actually see earnings cuts over the next few weeks).
● Our key longs in the portfolio are Samsung Electronics, ASE,
Asustek, Wistron, HTC, Wipro and HCL Tech.
● In addition, we would highlight the following: for momentum
oriented investors – Catcher, for value oriented players – LGD,
SPIL, Wipro and for those that want concept plays, we
recommend Pegatron (potential third sourcing partner of Apple).
● Although we were not shy to do so at the start of the year, now,
with the sharp underperformance of the sector, shorts/ hedges are
tougher to pin-point. However, we would still hold a negative
opinion on the following: Acer, Mediatek, LGE, Semco and TCS.
Figure 1: CS Asia ex Japan tech model portfolio
Company name Ticker Rating Price Target
price
CS Rec.
Wt.
Tilt from
MSCI
Display 6.5 88
LG Display 034220 KS O 29300 39500 4.0
TPK 3673 TT O 850 1126 2.5
Downstream
28.5
169
Asustek 2357 TT O 301 330 3.5
Catcher 2474 TT O 248.5 286 2.5
E Ink 8069 TT O 57.3 70 1.5
Hon Hai 2317 TT N 92.2 113 6.0
HTC 2498 TT O 970 1048 7.5
Pegatron 4938 TT O 34.65 48 2.5
Unimicron 3037 TT O 53.8 58 2.0
Wistron 3231 TT O 49.5 57 3.0
Diversified + Memory 29.0 406
Samsung Elec 005930 KS O 850000 1100000 29.0
Semis (ex-memory) 21.0 87
ASE 2311 TT N 32.3 36 4.0
SPIL 2325 TT N 30.1 36 3.0
TSMC 2330 TT O 73.7 83 14.0
IT services & internet 15.0 -380
HCL Tech HCLT IN O 514.80 600 3.0
Tencent 700 HK O 204.2 263.6 8.0
Wipro WPRO IN O 409.55 490 4.0
Others (solar/ LED/ equip. etc) - -369
Grand total 100.0
Source: Company data, Credit Suisse estimates
Breaking the sub-sectors further than what shows up in the Figure 1
above, we are essentially:
1) A benchmark weighting in TFT panels (valuations) but
OVERWEIGHT in the Touch space to be mildly overweight on
the display sector in aggregate.
2) OVERWEIGHT downstream through a combination of some PC
companies where we believe the companies are executing well,
smartphone and related component names. We have a
benchmark weighting in Hon Hai. We have dropped names such
as Synnex and Lenovo from the portfolio as we have dropped
coverage on the stocks due to analyst transition.
3) We are long memory (DRAM and NAND) through a large position
in Samsung Electronics. We would avoid owning any of the
Taiwanese names.
4) We are now slightly OVERWEIGHT upstream sectors via an
Overweight position in backend (earnings though could get
further cut into results), a continued UNDERWEIGHT position in
fabless and a neutral position in foundries (TSMC’s outperformance
YTD set against upcoming earnings cuts).
5) We are UNDERWEIGHT Indian IT services but are now holding
Wipro (as a cheap stock that should see growth re-emerge in two
quarters time) and HCT Tech (should see continuing upgrades).
We have a benchmark weighting in the Internet space through
Tencent.
6) We now have a zero weighting in sectors such as solar and LED.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Asia Technology Strategy------------------------------------------------------------------------------------
Portfolio view
● Taking into account valuations and performance we would like to
position into those stocks over the coming weeks where we
believe earnings are more likely to be upgraded over the
subsequent 6-12 months (although some of these names might
actually see earnings cuts over the next few weeks).
● Our key longs in the portfolio are Samsung Electronics, ASE,
Asustek, Wistron, HTC, Wipro and HCL Tech.
● In addition, we would highlight the following: for momentum
oriented investors – Catcher, for value oriented players – LGD,
SPIL, Wipro and for those that want concept plays, we
recommend Pegatron (potential third sourcing partner of Apple).
● Although we were not shy to do so at the start of the year, now,
with the sharp underperformance of the sector, shorts/ hedges are
tougher to pin-point. However, we would still hold a negative
opinion on the following: Acer, Mediatek, LGE, Semco and TCS.
Figure 1: CS Asia ex Japan tech model portfolio
Company name Ticker Rating Price Target
price
CS Rec.
Wt.
Tilt from
MSCI
Display 6.5 88
LG Display 034220 KS O 29300 39500 4.0
TPK 3673 TT O 850 1126 2.5
Downstream
28.5
169
Asustek 2357 TT O 301 330 3.5
Catcher 2474 TT O 248.5 286 2.5
E Ink 8069 TT O 57.3 70 1.5
Hon Hai 2317 TT N 92.2 113 6.0
HTC 2498 TT O 970 1048 7.5
Pegatron 4938 TT O 34.65 48 2.5
Unimicron 3037 TT O 53.8 58 2.0
Wistron 3231 TT O 49.5 57 3.0
Diversified + Memory 29.0 406
Samsung Elec 005930 KS O 850000 1100000 29.0
Semis (ex-memory) 21.0 87
ASE 2311 TT N 32.3 36 4.0
SPIL 2325 TT N 30.1 36 3.0
TSMC 2330 TT O 73.7 83 14.0
IT services & internet 15.0 -380
HCL Tech HCLT IN O 514.80 600 3.0
Tencent 700 HK O 204.2 263.6 8.0
Wipro WPRO IN O 409.55 490 4.0
Others (solar/ LED/ equip. etc) - -369
Grand total 100.0
Source: Company data, Credit Suisse estimates
Breaking the sub-sectors further than what shows up in the Figure 1
above, we are essentially:
1) A benchmark weighting in TFT panels (valuations) but
OVERWEIGHT in the Touch space to be mildly overweight on
the display sector in aggregate.
2) OVERWEIGHT downstream through a combination of some PC
companies where we believe the companies are executing well,
smartphone and related component names. We have a
benchmark weighting in Hon Hai. We have dropped names such
as Synnex and Lenovo from the portfolio as we have dropped
coverage on the stocks due to analyst transition.
3) We are long memory (DRAM and NAND) through a large position
in Samsung Electronics. We would avoid owning any of the
Taiwanese names.
4) We are now slightly OVERWEIGHT upstream sectors via an
Overweight position in backend (earnings though could get
further cut into results), a continued UNDERWEIGHT position in
fabless and a neutral position in foundries (TSMC’s outperformance
YTD set against upcoming earnings cuts).
5) We are UNDERWEIGHT Indian IT services but are now holding
Wipro (as a cheap stock that should see growth re-emerge in two
quarters time) and HCT Tech (should see continuing upgrades).
We have a benchmark weighting in the Internet space through
Tencent.
6) We now have a zero weighting in sectors such as solar and LED.
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