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Taiwan shares once again set a new all-time high at 14,050. Wang Rongxu, an analyst at Wanbao Investment Consultants, said the index can peak in a long position. Under the general trend, the focus is on stock selection. The characteristic of a long position is a round raise. UMC (2303-TW) only offset the increase in the second half of the year, and this year’s cumulative increase has reached 1.5 times. The increase in overtaking TSMC shows that it is not the first to raise and then win.
Based on the analysis in the previous column, Nanya (2408-TW) and Winbond (2344-TW), which have not risen much this year, have accumulated negative returns of 13% and 6% respectively as of Monday (11/30) . It is expected to offset the improvement in memory market conditions next year. In just three days of trading, the two were up 16% and 18% respectively, and the market was incredible.
And the memory supercycle can begin. There are two main needs for DRAM servers and mobile phones. The former will be replenished in the first quarter of next year after inventory adjustments in the third and fourth quarters. Mobile phones will gradually recover. These two represent more than 70% of the DRAM market. Overall demand for DRAM next year will outpace supply growth.
Recently, module manufacturers have been considering raising the price of DRAM modules. The share price is sure to lead the answer. The price is expected to rise in the first quarter of next year. Micron has raised its financial forecast for the latest quarter and the stock price has risen 40% last month. During the same period, Hynix also increased 44%, each of which set a new record for the past 20 years.
Wang Rongxu, an analyst at Wanbao Investment Consulting, noted that this memory supercycle can be even higher than that of 2017 to 2018. In addition to memory manufacturers benefiting from price increases, module manufacturers and distributors with a large Amount of inexpensive inventory on your hands have also increased in value.
The 2020 supercycle will also include panels, passive components and silicon wafers. Panel prices have increased since June this year. AUO (2409-TW) and Innolux (3481-TW) went from loss to profit in the third quarter. The EPS for one season was 0.3 yuan and 0.16 yuan, respectively. In particular, the price of small and medium panels has increased considerably, and Innolux and Caijing (6116-TW), which have relatively high small and medium products, have benefited.
Among them, Caijing is a subsidiary of Huaxin Group, and is compared with the group’s accounting quotes at the end of the year. It is also used by the passive component factories of the Huaxinke (2492-TW), Xinchang Electric (6173-TW) and Jiabang (6284-TW) group. Out of stock product and price increase theme.
Low temperature fired ceramic (LTCC) products are in short supply and LTCC’s two main domestic factories, Huaxinke and Chilixin (2456-TW), will benefit the most. Shipments of 5G mobile phones next year are estimated to reach 500 million, a substantial increase from this year. LTCC consumption in the 5G era is 40% higher than in the 4G era. It is not ruled out that the price of LTCC will increase next year. Huaxinke’s EPS is estimated to be 18-20 yuan next year, and the price-earnings ratio is about 10-12 times higher than the current passive component maker Guoju (2327). Next year’s EPS is estimated at RMB 32 ~ 36, and the P / E ratio is 12 ~ 14 times. As Yageo’s share price approaches the RMB 500 mark, the price comparison margin for Huaxinke will expand.
Two years ago, silicon wafer leader Global Crystal (6488-TW), which also benefited from the passive component supercycle, had its share price take the rewrite to a new high of 674 yuan. At that time, the passive component manufacturer Yageo’s share price rushed to 1,300 yuan. Now the passive components The increase is relatively behind that of silicon wafers, and if it can be expected that the passive components will also keep up. The supercycle of the four major industries should not be underestimated.
Wang Rongxu, an analyst at Wanbao Investment Consulting, noted that under the broadening of the price ratio of Global Crystal leading stocks, it is worth noting that small and medium-sized silicon wafers fabs Syntec (6182-TW) and Han Lei (3707 – TW), has just started to supplement the increase. In addition, the price of LED lighting chips in China is reported to have increased by 10-20%, and next year Mini LED business opportunities are about to explode. It is also worth tracking LEDs that have not moved for a long time. The relationship is limited. There is more potential stock analysis, to be shared with LINE fan club readers. Welcome to join for free.
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Wang Rongxu, Chief Investor, LINE Fan Group
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