SAS and GlobalWafers' Earnings Underwhelm, but the End of the Tunnel Is Near

After raising our long-term forecasts, we lift our respective fair value estimates for GlobalWafers and its parent Sino-American Silicon, or SAS, to TWD 710 per share from TWD 590, and to TWD 281 from TWD 227. Our long-term view is more bullish as the group has a clearer plan for financing its US expansion—making it more likely to enjoy a monopoly in US advanced wafer supply while rivals balk at having new US sites. SAS is undervalued and is our favorite in the sector, while GlobalWafers is fairly valued, in our view. We think the market remains worried about the current inventory correction and has overlooked the prospects regarding artificial intelligence beyond the cutting edge. The group’s expansion in the US and Japan remains on schedule.