Report by Your Weekend Reading

Why do China, shipping, iron ore, hardware, Brazil… all stand out if you screen high ROE’s with low valuation? Erik@YWR sees it as scepticism about global growth on which he is taking a contrarian view. Following this month’s review of YWR’s QARV rankings key themes include: 1) A massive China bull market has only just begun. 2) Opportunities in iron ore, where Fortescue, Rio Tinto and Kumba are delivering ~20% ROEs at <12x P/E despite China’s property crash. 3) The Taiwanese semiconductor supply chain stands out as highly profitable and undervalued. Everyone focuses on Nvidia and the datacentre buildout but misses the whole Taiwanese supply chain behind this. Tokyo Electron and ASML also screen well. 4) Brazil is overlooked, with names like Itau, Vale, Ambev and B3 all screening well. 5) Container shipping - supply-chain diversification could sustain tighter freight rates than investors expect.

Technology

Report by Asymmetric Advisors

Amir Anvarzadeh has been bullish the stock for much of the past 3 years and the share price is up 38% since he added SCREEN back to his buy list in early Nov 22. Despite this strong performance Amir still thinks it looks very undervalued, especially given the firm's high exposure to EUV and logic chips and its low exposure to memory which has insulated the name from weak order trends seen by its bigger peers, namely Aysmmetric's two short sell picks, TEL and Lasertec. Trading at a significant discount to its front-end equipment peers, at around 10x P/E and 4.6x EV/EBITDA, Amir thinks SCREEN should be trading closer to ¥20K (75% upside).