2412中華電_1090224_CS.pdf

Catcher Technology | Asia Pacific
Our View for 2020 iPhone Casing Business Outlook
The Economic Daily News reported today that Catcher has obtained iPhone SE2
orders from Apple in cooperation with Biel Crystal (not listed). Catcher will be in
charge of two new iPhone models scheduled to be released this year, better than
expected, which will support Catcher's operations in 2H20 and boost its gross
margin to as high as 30%, as casing for 5G iPhones has higher production
complexity.

Taiwan Telecoms Sector
CHT and FET paid NT$4.1 bn to prevent TWM and TSTAR from spectrum sharing in phase 2
auction
CHT bid NT$2.1 bn to secure the “best” 3.42GHz-3.51GHz
spectrum while FET bid NT$2.0 bn to secure the neighboring
3.34GHz-3.42GHz, leaving contiguous 100MHz block sharing
between TWM and TSTAR impossible.


Taiwan Display Sector
Quick Take: February panel price increase accelerating
Omdia (formerly IHS) announced February panel prices on 21 February. Panel pricing for smaller-sized
TV panels (32-43") increased by 9-13% MoM and larger-sized TV panels (50" and above) also went up
by 5-9% MoM, both of which were ahead of revised expectation of $3-5 increase (+5-9% MoM) in early
February as well as original expectation of $1-2 increase.


Nanya Technology (2408 TT)
Upside risk on pricing in 2020
Key points
 We maintain our Outperform rating. We are raising our target price but
lowering our 2020/21 estimates 4-6% on lower non-op contributions.
 We remain bullish on DRAM supply/demand outlook in 2020/21 following
conservative capex (2H18-2020) and inventory depletion in 2H19.
 We expect a positive ASP trend starting from 1Q20. Nanya Tech is our top
pick in the Taiwan memory space.


Vanguard 5347.TWO 5347 TT
Lower-than-expected 1Q20F and 2020F GPM
GPM guidance much lower than consensus due to new Fab; reiterate Reduce
At today’s analysts’ briefing, Vanguard’s 1Q20 GPM guidance of 29-31% was a negative
surprise for the Street (Bloomberg consensus 32%), and management guided for
a negative 5ppts GPM y-y in 2020 vs 36.5% in 2019 (3.5ppts from the new Singapore fab,
and remaining 1.5ppts owing to unfavorable currency). The GPM guidance was also
below Bloomberg consensus of 3ppts y-y decline. Since April 2019 we have pointed out
that the Street might underestimate the magnitude of the margin dilution (refer to our
report, and our downgrade report in Sep 2019), and today’s GPM guidance reaffirms our
view. That said, as we flagged in our Dec-19 (report), we believe a recovery in 8-inch
foundry demand is set to begin due to the strong demand from CIS for ultra-slim
fingerprint, LDDIC restocking, and lean channel inventory in global IDMs. However, we
believe that today’s GPM guidance could result in consensus earnings revisions and the
share price could react negatively, especially in view of the record-high current valuation
(20x 2020F EPS of TWD3.8). We, thus, reiterate our Reduce rating and TP of TWD64 for
Vanguard. We prefer TSMC (2330 TT, Buy). We are reviewing our earnings estimates for
Vanguard.


ASMedia Technology Inc | Asia Pacific
Announces share swap to acquire 22.4% of WT Microelectronics


WIN Semiconductors | Asia Pacific
Likely to capture additional PA content in new 5G iPhone – OW


Yageo Corp. | Asia Pacific
Underestimated pricing power
Our latest checks suggest stronger-than-expected price hikes
in 1H20 at ~30% vs our prior assumption of ~10%. This new
development drives up our PT further to NT$555.