From GPU Market to CGN New Energy to JSR Corp here's what you need to know this week.

The Smartkarma Weekly Starter is a newsletter published every Sunday and pulls together the ten top research notes published over the last 7-days from across our platform.

In this week's edition of the Smartkarma Weekly Starter, we get a quick rundown on the top engaged insights for the week.

Start your week off on the right foot with:

Technically Speaking: The Early Bird Gets the Worm, China Retail Buys Hong Kong

Mainland buying through the Southbound Stock Connect programs is accelerating.  Retail demand will now begin to narrow the A/H premium which has reached major resistance.

• Hong Kong market is at historically cheap valuations. So what's new?
• Capitulation bottom in late January/early February dramatically reduced shorts and now long positioning starts.
• China retail buying is taking a cue from China's government buying programs and SOE company directives.

By David Mudd in Cross Asset Strategy

Last Week in Event SPACE: JSR, Austal, Rakuten, Hyundai Home Shopping, Hanmi Science

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the week, you might have missed.

• Murakami to tender stake in JSR Corp (4185 JP)? Maybe the "double arb": i.e. short on swap, long on cash, will tender the cash, remain short the back end.
• Austal Ltd (ASB AU) rejected (for now) Hanwha Ocean (042660 KS)'s bid based on regulatory concerns.  Hanwha reckons these should not be an issue.
• If you can tolerate owning the mobile biz, buy Rakuten (4755 JP) on dips. If not, avoid Rakuten Group and Rakuten Bank short-term; buy Rakuten Bank on larger dips.

By David Blennerhassett in Event-Driven

Early Sign of AI GPU Market Inflection Point?

Early Sign of AI GPU Market Inflection Point? We see this lead time cut news short term positive but long term negative to AI GPU supply chain vendors but need more information to confirm

• Taiwan Dell said "AI GPU shortage issue has been resolved. The lead time has been cut from 40 weeks by the end of 2023 to 8-12 weeks or less now.
• We see this news short term positive but medium term negative to AI GPU supply chain vendors but need more information to confirm if this is an inflection point.
• 1. Taiwan Dell got priority supply? 2. Earlier overbooking over? 3. Lead time cut by supply upside? 4. Cooling company said the same; 5. Will lead time continue to shrink?

By Andrew Lu in Thematic (Sector/Industry)

EM Watch: China is preparing something BIG!

The below chart of ours have made the rounds in recent days and weeks as China seems to be preparing for something big given the heavy restocking...

• The below chart of ours have made the rounds in recent days and weeks as China seems to be preparing for something big given the heavy restocking efforts in Copper space.
• As the price trends are diverging in copper versus steel and iron ore, the strategic initiatives of China are becoming increasingly evident in price action across the commodity complex, but we are yet to fully understand and accept the ramifications for global rates.
• We have read plenty of bad takes on why China is building up copper reserves and the most obvious reason seems to be neglected by many.

By Andreas Steno in Macroeconomics

Beaten Down Semiconductor Could be AI Play

Maxlinear has probably been among this semiconductor cycle's worst companies, if not the worst. I think that it might be time to give them a fresh look...

• Maxlinear has probably been among this semiconductor cycle's worst companies, if not the worst.
• I think that it might be time to give them a fresh look.
• Maxlinear was founded in 2003 in Carlsbad, California, by eight engineers. Today, Kishore Seendripu (CEO/Chairmen) and Curtis Ling (CTO) are still founders and work at the company. Maxlinear is a fabless company focused on mixed-signal products in the semiconductor industry.

By Douglas O'Laughlin in Equity Bottom-Up

CGN New Energy (1811 HK): Evaluating a Potential Privatisation

The probability of an offer is high as CGN, an SOE has access to financing, and CGN New Energy’s valuation is low. We estimate a potential offer range of HK$2.80-4.30.

• Bloomberg reports that CGN, the parent and largest shareholder, is reconsidering taking CGN New Energy Holdings (1811 HK) private. 
• CGN New Energy shares have underperformed the median peer's shares since the announcement of CGN's previous aborted privatisation attempt (2 March 2020) and on the last twelve-month basis.
• The probability of an offer is high as CGN, an SOE has access to financing, and CGN New Energy’s valuation is low. We estimate a potential offer range of HK$2.80-4.30.

By Arun George in Event-Driven

Early Signs from the Reported March/1Q24 Taiwan Semi/Tech Sales

Early Signs from the Reported March/1Q24 Taiwan Semi/Tech Sales; we might see AI server, WiFi/networking, and NAND vendors in US to beat 1Q24 but 8"/12" raw wafer vendors in Japan to miss.

• Y/Y improvement for LCD, PMIC, GaAs RF, gaming card, cooling system, semi equipment&material, semi fab construction, memory, and foundry vendors but more y/y deterioration for WiFi and CMOS sensor vendors
• After 6 vendors beating consensus, we might see AI server supply chain, large panel LCD driver, WiFi/networking, and NAND flash vendors in US to report a better than expected 1Q24.
• We might see 8"/12" raw wafer (like Shin Etsu, SUMCO , National Silicon Industry, Siltronic AG) vendors in Japan, China, and Germany to report a worse than expected 1Q24.

By Andrew Lu in Thematic (Sector/Industry)

Introduction: Initiation of Coverage in the Materials Sector

We provide readers with an introduction to our initiation on commodities. We also provide a rationale as to how our coverage will be comprehensive and different.

• Investics Research will initiate coverage of the materials sector in April 2024, starting with iron ore and then gold, coal, and steel in subsequent months (in that order).
• The areas of coverage on asset classes will encompass the underlying commodity and the associated equities. 
• Areas of differentiation would include in-depth coverage of all equities (small/mid and large cap) and actionable tactical ideas on the commodity.

By Sameer Taneja in Commodities

Alibaba (BABA US) - Driving Long-Term Growth While Enhancing Shareholder Return

Alibaba remains committed to improving shareholder return by achieving loss reduction in non-core business, and enhancing share buyback and dividend payout

• We expect Alibaba to deliver in-line-with-consensus revenue growth for 4QFY24.
• Although escalated investment in international business, cloud, and Taobao and Tmall (T&T) Group, as well as strategically important new businesses is likely to put some short-term pressure on margin expansion, we remain positive on Alibaba’s long-term growth potential.
• Alibaba remains committed to improving shareholder return by achieving loss reduction in non-core business, and enhancing share buyback and dividend payout, which in our view should provide support for near-term valuation. 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

By CMB International in Equity Bottom-Up

Shortlist Of High Conviction Ideas: Income, Value, and Margin of Safety - April 2024

We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety. We filter our top picks and short investment thesis on them.

• We compile our selection of small and mid-cap names with our desired characteristics of high dividend yields, value, and margin of safety.
• Our top picks are Perfect Medical Health (1830 HK), Water Oasis (1161 HK), Taste Gourmet (8371 HK), Uchi Technologies (UCHI MK), and Ginebra San Miguel (GSMI PM).
• We recently added Dream International (1126 HK). Read: Dream International (1126 HK): Dream Valuation of 3.7x PE and 12% Div Yield, >40% of Mkt Cap In Cash 

By Sameer Taneja in Equity Bottom-Up

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