Morning News & Views – Asia 

A Summary of Select Global Markets Research 

Friday 03 December 2021 




Bukalapak  BUKA IJ  Buy  Neutral  IDR  1620.00  560.00  +9.8  IDR  -47.57c  –  -11.03 
Orion  271560 KS  Neutral  –  KRW  120000.00  110000.00  +10.0  KRW  7,560  7,431  8,868  8,377
Phison Electronics  8299 TT  Buy  –  TWD  480.00  546.00  +19.1  TWD  39.86  40.32  40.04  42.04

*U/D % = Potential Up/Downside % 


Asia Handsets – Demand bottoms, but recovery is only mild 

Anne Lee, CFA – NITB / Donnie Teng – NIHK / Aaron Jeng, CFA – NITB / Gillian Yen – NITB Revise our global smartphone forecasts by cutting China estimates, but raise for other EMs Revise our global smartphone volume forecasts mainly by cutting China 2021F/22F smartphone numbers by 1%/5% and raising for other EMs. We slightly revise our global smartphone (SP) volume forecasts to 1,345mn/1,381mn/ 1,417mn units for 2021F/22F/23F, with changes of +0.6%/-0.4%/-0.4% from our prior forecasts in May. Our new forecasts represent 5%/2.7%/2.6% growth in 2021F/22F/23F. Key changes in our assumptions include the following: 1) we cut China SP units estimates by 1%/5% for 2021F/22F due to ongoing slow demand, and we now forecast China SP to grow by only 1%/1% in the same period, 2) we raise our SP volume estimate for AP ex-China by 7%/5% for 2021F/22F, given the faster recovery of India SPs after the severe impact of the pandemic in 2Q21 (we now forecast India SP to grow by 7% in 2021, vs down 12% earlier), and 3) growth in Latin America looks better than our expectations (growing by 10% in 2021F, vs our prior assumption of 7% growth). 

Phison Electronics (8299 TT) (Buy) – A beneficiary of Micron and UMC settlement (TP TWD 480→TWD 546) Donnie Teng – NIHK / Aaron Jeng, CFA – NITB / CW Chung – NFIK 

Phison is likely to get more UMC capacity support to meet Micron’s orders in 2022F; raise TP to TWD546 Action: maintain Buy with higher TP of TWD546 driven by higher EPS for 2022F. After Micron (MU US, NR) and UMC (2303 TT, Buy) reaching a global settlement on 1 Dec, Micron announced its intension to expand business relationship with UMC. With the settlement, we believe Micron will be able to get more capacity support from UMC, particularly for 28/40/55/110/180nm for controllers and PMICs. As Phison is the biggest NAND controller customer of UMC with strong business relationship with Micron, we believe Phison will be a beneficiary of Micron’s and UMC’s settlement. We raise our 2022F earnings forecast by 5% and increase our TP to TWD546, based on 13x 2022F EPS of TWD42 (from previous 12x 2022F EPS of TWD40), to reflect the business upside driven by the deal with Micron, and more favorable NAND supply/demand outlook in 2022F. The stock is trading at 11x 2022F EPS. Phison likely to gain additional business from Micron in 2022F on the back of UMC’s capacity support. 

Greater China Solar – Upstream pricing downward trend may begin 

Donnie Teng – NIHK 

We lower 2021F PV demand estimate for China meaningfully, and expect better demand in 2H22F Rising upstream material/component costs have tapered solar demand, particularly in China in 2021. Due to rising upstream material/component costs, including silicon metals and polysilicon, pressure has been put on 2H21 market demand. We estimate that real global PV demand in 2021F is likely to come in at only 150-155GW, with China likely to be less than 50GW, much lower than the market consensus forecast of above 60GW in 1H21. Thus, in this report, we lower our global and China PV demand estimate for 2021F by 6.4GW/34.6GW, and raise global PV 

Production Complete: 2021-12-02 21:55 UTC

See Appendix A-1 for analyst certification, important disclosures and the status of non-US analysts. 

Nomura | Morning News & Views – Asia 3 December 2021 

demand for 2022F by 4.7GW compared with our earlier forecast in our Anchor Report: Greater China solar – Grid parity in China opens up a new chapter, published in May 2021. We think the PV demand recovery may be more meaningful in 2H22 once the polysilicon capacity to increase more meaningfully.  

Bukalapak (BUKA IJ) (Neutral) – No further significant catalysts (Buy→Neutral, TP IDR 1,620→IDR 560) Ahmad Maghfur Usman – NSM 

Downgrade to Neutral; TP cut to IDR560 

Downgrade to Neutral from Buy; TP lowered to IDR560. We downgrade our call due to limited catalysts from BUKA’s new business initiatives, 9M21 results (see our 9M21 results note) that were below consensus, and uncertainty about the use of IPO proceeds. Our TP of IDR560 (implying 10% upside) is based on 6.7x 2023F EV/Sales, a 15% discount from SEA Ltd’s 2023F EV/Sales of 7.8x. We also take into account BUKA’s strategy to prioritize its online-to-offline (O2O) business, which might limit the potential market size in comparison to the marketplace business, in our view. Going forward, BUKA’s key focus would be to offer value-added services for MSMEs, such as better logistics and software services. BUKA aims to have a higher take-rate level via service augmentation. Hence, we think that, looking at the sales trajectory should be a more relevant metric to assess BUKA’s performance. We therefore change our valuation method from EV/GMV to an EV/sales multiple. 


Japanese automakers’ US sales (November 2021) – SAAR below our expectation, but no need to worry Masataka Kunugimoto – NSC / Anindya Das – NSC 

Production for US market is already recovering, expect significant improvement in Dec November SAAR 13.14mn (13.13mn in Oct 2021; 16.07mn in Nov 2020). November SAAR for total light vehicle sales inched up slightly from October. Although some carmakers already increased production m-m in November, due to the lag between production and sales, November sales were somewhat weaker than our expectations. We expect supplies to recover through 2022, with automakers ramping up output as chip shortages ease. Thus, we believe that October marked the bottom for monthly US SAAR, and it should continue to recover sequentially in December and through 2022. Sales volume of new light vehicles fell 16% y-y to 1.02mn units (as per Autodata) in November, with one extra selling day compared to last year. Total inventory continued to rise sequentially, up 6% m m to 978k units/23 days at the end of November (Nov 2019: 3.62mn units; Nov 2020: 2.80mn units). 

US Monthly Auto Sales: Nov 2021 – SAAR below our expectation, but no need to worry Anindya Das – NSC / Masataka Kunugimoto – NSC 

Production for US market is already recovering, we expect significant improvement in December November SAAR 13.14mn (13.13mn in Oct ’21; 16.07mn in Nov ’20). November SAAR for total light vehicle sales inched up slightly from October. Although some carmakers already increased production m-m in November, due to the lag between production and sales, November sales were somewhat weaker than our expectations. We expect supplies to recover through 2022, with automakers ramping up output as chip shortages ease. Thus, we believe that October marked the bottom for monthly US SAAR, and it should continue to recover sequentially in December and through 2022. Sales volume of new light vehicles fell 16% y-y to 1.02mn units (as per Autodata) in November, with one extra selling day compared to last year. Total inventory continued to rise sequentially, up 6% m-m to 978k units/23 days at the end of November (Nov ’19: 3.62mn units; Nov ’20: 2.80mn units). Strong underlying demand allowed automakers to cut average incentives below the $2,000-mark to $1,907 per unit (down $1,868 y-y and $95 m-m). 

Matsuzawa Morning Report – Market appears uneasy about potential for policy error from the Fed, prices in rate cut in two years 

Naka Matsuzawa – NSC 

Market instability appears to be shifting from bonds to equities 

Today’s Japanese markets. In Japanese markets on Thursday, we expect equities to weaken significantly and bonds to strengthen (in overnight futures trading on the previous day, bonds were up 11 sen and equities down JPY730 over OSE). Risk sentiment recovered in Asian and European markets yesterday, but collapsed again when US markets opened. The US’s Russell 2000 index, which has a high correlation with Japanese equities, plummeted, nearing the year’s low (Figure 1). One reason for this may have been that the first Omicron case was detected in the US, which raised fears of activity restrictions, but near-term Fed rate hike expectations continued to increase and the US bond market’s yield curve flattened in a twist, while even stock market sectors that are not likely to be significantly affected by coronavirus cases (such as capital goods) took a serious hit, which indicates that the real factor may have been concerns, stoked by Fed Chair Jerome Powell’s Congressional testimony on Tuesday, about an (excessively) hawkish pivot by the Fed. 




Tech Strategy – Tech weekly: Chip strength heading into year-end 

David Wong, CFA, Ph.D. – NSL 

WSTS raised its chip growth forecasts. On 30 Nov, WSTS released an update to its global semiconductor forecast. The trade group now expects total semiconductor growth of 25.6% in 2021, followed by 8.8% growth in 2022. This is higher than the earlier WSTS forecasts issued about six months ago for growth of 19.7% in 2021 followed by 8.8% growth in 2022. Our own forecast is for 20.6% growth in 2021. The latest WSTS projections suggest potential upside to our projections, implying that month of October global chip shipment numbers, which we expect to be released this coming weekend, may well come in a fair amount above our projections. HPE reports strong enterprise hardware demand and chip shortage constraints. HPE management noted that q-q revenue growth of 7% in the October 2021 quarter just reported was above normal seasonality. Industrywide component shortages impacted revenue. The company is at record levels of backlog. 

Asia Insights – India: Sticky imports, slower exports and record-high trade deficit 

Sonal Varma – NSL / Aurodeep Nandi – NFASL 

Current account deficit is tracking 1.6% of GDP for FY22. 

The merchandise trade deficit rose to yet another record high of USD23.2bn in November, led by moderating exports and sticky imports. While oil prices have eased, the ongoing economic expansion may continue to exert upward pressure on imports. We expect the current account deficit (CAD) to widen to 3.3% of GDP in Q4 2021 from an expected 1.4% of GDP in Q3. We raise our FY22 CAD projection to 1.6% of GDP from 1.5% earlier. Trade deficit reaches a record high. Headline dynamics. Provisional trade data for November show that the trade deficit rose to a record high of USD23.2bn, from USD19.7bn in October, beating its recent high of USD22.5bn in September. Export growth moderated to 26.5% y-o-y in November from 43.1% in October, implying a 9.4% m-o-m (sa) fall in momentum, which compares with a 4.5% increase previously (Figure 1). 

First Insights – Korea: High inflation supports a January hike 

Jeong Woo Park – NSL / Albert Leung – NIHK 

We expect cost-push inflation to continue, supporting a BOK rate hike at its January meeting Key takeaways from November’s inflation. CPI inflation sharply rose to 3.7% y-o-y in November from 3.2% in October, its highest since December 2012, beating market expectations (Consensus: 3.2%; Nomura: 3.1%). The surge was driven by soaring food prices (6.1% y-o-y in November; 1.6% in October), while service prices moderated to 2.2% y-o-y in November from 3.2% in October (Figure 1). Indeed, with increased social activity and soaring agricultural prices (due to supply disruption to agricultural products after the arrival of earlier-than-expected cold weather), prices for food added 0.8pp to headline inflation, the second highest contributor to headline inflation following transportation costs, which accounted for most of the gain in November. 


Quick Note – Greater China Tech – Greater China Tech Focus Day takeaways 

Donnie Teng – NIHK / Aaron Jeng, CFA – NITB / Anne Lee, CFA – NITB 

Nomura held its virtual Greater China Tech Focus Day from 30 November to 1 December. Below are key our takeaways related to our companies under coverage Q Tech (1478 HK, Neutral): positive on CCM shipments; smartphone demand to stabilize in 2022F. Management continues to target meeting full-year CCM (camera module) shipment growth guidance of 25% y-y, which implies that monthly shipments in November and December may reach 50kk per month (up from 40kk in Oct). Smartphone demand is likely to stabilize into 2022F. The number of CCMs on smartphones may not grow meaningfully; hence, volume growth is likely to be mainly driven by market share gain. Currently, the ASP downward trend is better than the company originally expected; the market competition landscape and product mix are more critical to GPM. Non-smartphone business should grow from 2% of total sales in 2021F to 25% in the next five years, including auto, drones, AR/VR devices, etc. 


Quick Note – India autos: Nov 2021 volumes – Weaker than anticipated across segments Kapil Singh – NFASL / Siddhartha Bera, CFA – NFASL 

Nov-21 wholesales: PVs -14% y-y, MHCVs +17% y-y, 2Ws -31% y-y. Industry wholesale volumes across passenger vehicles (PVs) and two-wheelers (2Ws) were below our already toned down expectations for the month. Slowdown in mass segments remains a key headwind for 2Ws and entry-segment cars. While production constraints due to chip shortages continued, we believe the impact is more pronounced in new launches. Medium Heavy Commercial Vehicles (MHCV) demand recovery was also slower than anticipated. If the current momentum continues, there can 


be downside risks to our estimates for FY22F across companies. Current sales of EVs are supply-constrained (~1.6% in Nov 21). Hence, we believe ICE 2W scooters (or possibly even ICE 2W industry) may not cross its last peak of FY19. In e-PVs, TTMT deliveries increased to ~1.75k units from ~1.5k in Oct-21. On costs, our Commodity Cost Index is marginally down for PVs since 1QFY22. 


Orion (271560 KS) (Neutral) – Reiterate Neutral: TP cut to KRW110,000 (TP KRW 120,000→KRW 110,000) Cara Song – NFIK 

Rising food prices; stagnant market growth 

Investment view: food prices rising faster, but Orion looks hesitant to raise prices. Unlike the company’s previous expectation that raw materials prices could stabilize from 4Q21, the prices of major materials such as palm oil and shortening have continued to rise, and hence further cost burden looms for in 1H22F. Food prices are close to historical highs, according to the UN Food and Agriculture price index, and as a result our global economics team also expected a rise in food prices in October. Moreover, due to an expected decrease in inventories of major grain crops such as rice and flower until 2022F, we think the upward trend on the grain price will be continued for at least a year. Due to competitive market conditions and market share declines in major categories such as snacks in China and all categories in Vietnam and in Korea, we believe it will be difficult for Orion to pass cost increases immediately to product prices. 


Quick Note – UWC (UWC MK) (Buy) – 1QFY22 results: Decent start to the year (TP MYR 6.87) Heng Siong Kong – NSM / Rahul Dohare – NSFSPL 

Production curbs had a partial impact on financials. UWC reported 1QFY22 core earnings of MYR23mn, below expectation at 17% of both our and Bloomberg consensus estimates. Note that after facing production curbs for a major part of 4QFY21, full production was only allowed to resume from 20 August 2021, after completing COVID-19 vaccination for more than 90% of the staff. 1QFY22 revenue of MYR75mn was up 5% y-y and 18% q-q, driven by the strong growth in the semiconductor division, which accounted for 77% of revenue and went up by 40% y-y and 19% q-q. Sequential growth was also helped by better capacity utilization. Contribution from the life science segment fell to 17% (34%/20% in 1QFY21/4QFY21) as the group continues to gradually dedicate more capacity to higher margin segments and wind up on others. Net margin was stable at 31% due to higher revenues, offset by higher staff cost. 

Quick Note – Genting Group – Oct-21 US operating data review: GGR stable 

Tushar Mohata, CFA – NSM / Alpa Aggarwal, CFA – NSFSPL 

Monthly data review of Genting group’s US operations. The Genting listed entities (GENT MK, Neutral and GENM MK, Buy) have three large operating resorts in the US: 1) Resorts World New York City (RWNYC), 100% owned by GENM MK; 2) Resorts World Catskills (RWCatskills), 49% owned by GENM MK; and 3) Resorts World Las Vegas (RWLV), 100% owned by GENT MK. This monthly gross gaming revenue (GGR) tracker aims to provide periodic updates on operations at these casinos. Resorts World New York City data review. At RWNYC, total three-month GGR as of end-Oct 2021 was USD228mn, down only 2% sequentially over the prior three-month period. Note that this is 4% higher than the pre-COVID GGR for the same period in 2019. The number of operational video gaming machines (VGMs) in October was ~6,447, almost equal to the maximum capacity limit of ~6,500. 


Quick Note – Central Retail Corporation (CRC TB) (Buy) – Investing in Grab (TP THB 42) Thanatcha Jurukul – CNS, Thailand / Umang Parekh – NSFSPL 

Investment in Grab through Porto Worldwide. Central Retail Corporation (CRC) announced that it will acquire an around 26.8% stake in Grab Taxi Holdings (Thailand; unlisted) after OAL Holding Limited (unlisted) exercised its put option to sell around 133.5mn shares, or 67% ownership, in Porto Worldwide (Porto WW; unlisted) which holds a 40% stake in Grab. The remaining 33% of Porto WW is held by Central Pattana (CPN TB, Buy). The investment value is up to THB4.5bn, for which the funding will be from CRC’s cash flow and bank loans. The transaction is expected to be completed in December 2021, according to management. Gaining a right to swap shares in Grab Thailand for the NASDAQ-listed Grab. Porto WW has a one-time right to swap its share, in part or entirety, in Grab Thailand for Grab Holdings Limited (GHL), which will be listed on NASDAQ on 2 December (US time), at USD6.1629. 

Quick Note – CP ALL (CPALL TB) (Neutral) – MAKRO PO details finalized (TP THB 68) 4


Thanatcha Jurukul – CNS, Thailand 

Lower-than-planned number of shares offerings. On 2 December, Siam Makro (MAKRO TB, not rated) and its major shareholders, including CPALL, announced that they will offer up to 1.43 billion shares (including 130mn shares for a greenshoe option from CPALL) at THB43.5 each. The number of shares offerings is fewer than the initial plan announced in August with an expected 2.27 billion shares. (Quick Note – CP ALL (CPALL TB) (Neutral) – Transfer of Lotus’s business to MAKRO). In total the group can raise THB62.2bn from the public offerings, with THB39.6bn for MAKRO (910mn shares vs 1,362mn expected) and THB6.8-12.4bn for CPALL (156-286mn shares vs 363-703mn expected). Reiterate Neutral; Implications. The decrease in shares offerings could indicate less-than-expected demand for the new shares of MAKRO. In addition, this could mean CPALL should t receive less-than-expected proceeds for debt repayment. We expect limited earnings dilution from this deal for CPALL. 

Date Location Event 

Nov 29-Dec 10 Virtual Nomura Investment Forum 2021 & Nomura 

Investment Forum: AEJ Thematic Discovery 

Dec 6-7 Virtual Virtual 2022 Asia Credit Outlook 

Dec 8 Virtual Nomura Global Sustainable Finance Conference 

Dec 9 Virtual Nomura Asia Macro Outlook 2022 Webinar – Asia’s 


Dec 14-16 Virtual Nomura Virtual New Year Outlook 2022 – North Asia 

Jan 12, 2022 Virtual Nomura Virtual New Year Outlook 2022 – India 

Jan 4-5 Virtual Nomura@CES 2022 

Jan 6-13 Virtual Nomura Virtual Tech Series Jan 2022 (US) 

Jan 11-14 Virtual Virtual Indonesia Conference 2022 – Innovation and 


Feb 21-25 Virtual Nomura Global Real Estate Forum 2022, Virtual 



Last Price 1D% YTD 

TOPIX Index (Tokyo) 1926.37 -0.5% 6.7% 

Nikkei 225 27753.37 -0.7% 1.1% 

Dow Jones Industrial Average 34706.41 2.0% 13.3% 

NASDAQ 15400.06 1.0% 19.4% 

S&P 500 4584.37 1.6% 22.0% 

FTSE 100 7129.21 -0.6% 10.4% 

CAC 6795.75 -1.3% 22.4% 

Xetra DAX 15263.11 -1.4% 11.3% 

Hang Seng 23788.93 0.5% -12.6% 

Shanghai A shares 3745.77 -0.1% 2.9% 

CSI 300 4856.16 0.3% -6.8% 

HSCEI 8506.36 1.0% -20.8% 

TWSE 17724.88 0.8% 20.3% 

KOSPI 2945.27 1.6% 2.5% 

SET 1591.84 0.1% 9.8% 

Straits Times 3092.11 -0.2% 8.7% 

Kuala Lumpur Composite 1501.74 0.3% -7.7% 

Jakarta Composite Index 6583.82 1.2% 10.1% 

Philippines Stock Exchange PSEi Index 7032.54 1.2% -1.5% 

ASX 200 7225.18 -0.1% 9.7% 

SENSEX 30 58461.29 1.3% 22.4% 

Source: Bloomberg 


Last Price 1D% YTD 

Brent crude future 70.28 2.0% 39.3% 

Crude (Brent oil price) 70.28 2.0% 35.7% 

Gold spot price 1767.95 -0.8% -6.9% 

CBOE SPX Volatility 28.05 -9.9% 23.3% 

REUTERS CRB Index 219.55 0.5% 30.8% 

US Generic Govt 10 Year Yield 1.44 2.8% 58.0% 

Source: Bloomberg 

Last Price 1D% YTD 

AUD* 0.71 -0.2% -7.8% 

EURO* 1.13 -0.2% -7.5% 

GBP* 1.33 0.2% -2.7% 

JPY 113.14 0.3% -8.7% 

KRW 1176.5 -0.2% -7.7% 

CNY 6.38 0.1% 2.4% 

CNH 6.37 0.0% 2.0% 

HKD 7.79 0.0% -0.5% 

SGD 1.37 0.3% -3.5% 

* Per one US dollar, except GBP, EURO and AUD 

Source: Bloomberg 

Note: earnings changes refer to next year. 


Company Ticker Earnings Date C/E/T* 

Bumi Serpong Damai BSDE IJ Dec 3 E 

CTOS Digital CTOS MK Dec 3 E 

Indika Energy INDY IJ Dec 3 E 

SKP Resources SKP MK Dec 6 E 


Awinic 688798 CH Dec 8 E 

Shimao Services 873 HK Dec 8 E 

Soulbrain Co., Ltd 357780 KS Dec 8 E 

Source: Bloomberg 

*C- Confirmed, E- Expected, T -Tentative 

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