Leroy Groffier
@LeroyGroffier
the action is the juice
772 Following 1.3K Followers
MLCCs: interesting discussion by MS from yday, detailing the technical constraints (e.g., low voltage, "rapid current excursions") that are forcing accelerator boards to use higher capacitance MLCCs, dominated by TY $6976; Murata $6981; SEMCO. "...total installed capacitance per accelerator and per rack is growing faster than MLCC unit count.." Having hundreds of layers, these 47+ microfarad MLCCs suck up disproportionate share of prod capacity, inevitably leading to shortages of commodity MLCCs as well (benefiting Yageo $2327). MS raised Yageo 27-28 ests by 23-53% on 1 Jun, sees another 58% upside for stock. Sector has seen some profit-taking but my sense is estimates will continue to rise.
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MITSUI KINZOKU $5706: responded to local news of new competition from Lotte Energy Materials, promptly rallied 18%. Many Japanese tech materials companies in the same boat, prone to short squeeze.
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OPTICAL TRANSCEIVER PCBs: MS highlighting ZDT $4958 TT as beneficiary of team's recent upward revision of optical transceiver TAM. Will gain share due to technical ability & capacity to make the denser, more complex mSAP PCBs needed for 800G/1.6T transceivers, which command 2-4x the ASP of 400G. Worried about CPO pushout? Pluggable demand will remain strong.
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JAPAN REAL ESTATE - More shops pounding the table, Nomura today: "With the cost of construction labor and materials continuing to rise sharply, supplying new office buildings has become more difficult, and we expect real estate prices to continue to rise too as rents rise. We think rent increases are likely to comfortably out weigh the risk of rising interest rates for high-spec buildings in prime locations in central Tokyo, and continue to recommend companies such as Mitsubishi Estate $8802, Sumitomo Realty & Development [8830], and Mitsui Fudosan $8801 ...
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DRAM--YOU HAD YOUR FUN, NOW RESUME BUYING: Avuncular tones of Shawn Kim encourage you to gently remove your feminine hygiene product and continue buying Hynix and Sammy. 1) unique demand-driven cycle; 2) LTAs = revaluation; 3) DRAM price momentum continues. $000660; $005930
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JAPAN REAL ESTATE: Miki Shoji data show Tokyo 5 central wards ofc vacancy rate at 2.07% in May, trending to lowest since 2019. Rents trending up as vacancies -> 1% with shortage of new supply. Mizuho u/g Mitsui Fudosan $8801 yday, laggard sector has priced in BoJ hike and fundamentals are good. $8802; $8830; $3289; $8804
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$LLY emphasizing its long obesity (a "vibrant" category ffs) runway. Haven stock for the tech-fatigued. Optimistic on Reta, which is apparently more effective for men than current drugs. Current obesity market penetration at 3%.
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EQUITY SUPPLY from stock-based comp a growing source of incremental dilution ($AVGO, $NVDA, others...) "While companies may be able to manage their workforce by adopting AI, Enablers continue to see rising labor costs due to large equity grants used to recruit critical talent. Companies with the highest SBC expense have been offering growing SBC packages over time, exceeding employee headcount growth" (MS)
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DC POWER UPGRADE FUD: Market weakness begets fear and shortens investor duration, hence tendency to question pie in the sky technology stories. Power transition to 800V seeing some negative press and power names e.g., DELTA $2308; ROHM $6963; $485A; passives in general -- impacted
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OPTICAL / CPO Negativity: Optical names didn't get much boost from Computex and are underperforming during the correction. Some negativity on CPO rollout related to manufacturing yields noted by MS today. Not what the names needed (admittedly, CPO not directly relevant for all). FOCI $3363; LANDMARK $3081; SANTEC $6777; FURUKAWA $5801; SEI $5802; YOFC $6869
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$ECL holding up nicely and seeing more interest after data center liquid cooling and semiconductor water businesses gained momentum recently. Core businesses also seeing volume pickup. Recent UBS u/g and BofA "US 1 List" today.
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PE Founder Constantino Ran Firm in ‘Drunken Haze' Dude sounds like a fkn legend. COO the wet blanket as always. Compliance don't pay the rent, Sanjay.
ISETAN $3099 strong May SSSg +8.6% YoY. Domestic high and mid-end buyers confident, inbound buying also strong despite mainland falloff. Wealth effect play continues, good diversification.
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$DELL $HPE $HPQ $992 $MSFT suffice it to say that the below initial take from last week re: implications of Lenovo results -- was unequivocally wrong. If the industry experts were blindsided by the $NVDA led AI PC resurgence (Windows-on-ARM AI PC), then we probably have some runway left on the PC / trad server names.
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$DELL $HPQ skeptical view from MS: don't read too much into Lenovo $992 results (more of a catch-up move). Lenovo benefiting from China share gain & better memory supply mgmt. Also, calling for consumer falloff (and margin payback) in 2H and arguing agentic demand not yet a major contributor to enterprise orders. Personally I want to believe, which is why it is worth considering the counterarguments here.
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Tech rotation --> downstream: Lenovo and ODMs outperforming and sucking the oxygen out of semis/upstream/optical in Greater China today. Govt fund also selling down some stakes in big local semi names. Any excuse to rotate.
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LENOVO $992: I've never seen folks more bulled up on Lenovo or the PC/server OEMs in general. 5% net mgn would be remarkable.
RESONAC $4004: MS raising TP post meeting w/ CEO Takahashi-san, who emphasized Resonac's unique visibility into the semi supply chain given high market share in many different types of back-end materials. Q1 results defied weak seasonality and co's conservative F12/26 guidance is now viewed as too low. MS pegs 26e EPS 32% higher than co guide and 10% above street, for +68% OP growth and +252% net profit growth YoY. CCLs already strong but Non-conductive film (NCF) for HBM4 and hard-drive media will start to contribute significantly in 2H.
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$DELL $HPQ skeptical view from MS: don't read too much into Lenovo $992 results (more of a catch-up move). Lenovo benefiting from China share gain & better memory supply mgmt. Also, calling for consumer falloff (and margin payback) in 2H and arguing agentic demand not yet a major contributor to enterprise orders. Personally I want to believe, which is why it is worth considering the counterarguments here.
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