Chesly TV: Navigating Markets Without a Script

Only the IT and communication sectors have shown growth. This underperformance suggests that policy and institutional revaluation may be needed for recovery.

Park Se-ik noted, "China's stock indices are among the most sluggish globally year-to-date."

Significant semiconductor growth, particularly from companies like YMTC, is expected to heavily impact market indices. Projections indicate that the IT and semiconductor sectors' weighting could rise to over 25% by next year. This anticipated shift in market composition may lead to a revaluation of index-linked products as their underlying components change.

Wang Zheng stated that, "By next year, the weighting of China's IT and semiconductor sectors in the index could exceed 25%."

Based on a 20x multiple, its target market capitalization is estimated at 80 trillion won. This significant upside potential may exceed that of current energy-sector investments, positioning it as a strong long-term growth opportunity.

Wang Zheng predicted, "By 2030, this company's net profit could be around 22 billion yuan, leading to a market cap of approximately 80 trillion won."

The current market focus is on the transition of these companies to high-value AI data center (AIDC) business. However, there is a risk of quick stock price correction if industry momentum wanes, as high PBRs can make stocks vulnerable to shifts in investor sentiment.

Park Se-ik highlighted, "Such a high book value means that the company is growing very rapidly, and its market capitalization has increased sharply."

Reports suggest that China's oil stockpiles are nearly exhausted, raising concerns about energy security. This situation has led the Saudis to seek China's influence over the Houthi rebels, aiming to stabilize global oil supplies. The upcoming US-China summit is now seen as a critical event that could significantly impact the outlook for oil prices and geopolitical stability.

Hae-su Pro mentioned, "Reports are emerging from some quarters that China's strategic oil reserves are almost depleted."

Recent developments, such as the partnership between Generac and Amazon for emergency generator supply, highlight a significant trend in AI investment. The focus is broadening from core components like GPUs and servers to encompass general power infrastructure. This shift indicates a maturing AI ecosystem where reliable and scalable power solutions are becoming as crucial as computational power itself.

This expansion suggests that investors should look beyond traditional chipmakers to companies supporting the broader AI infrastructure.

Hae-su Pro observed, "This showed that the expansion of AI data center investment is extending beyond GPUs and servers to the entire power infrastructure."

This sustained period of elevated rates is prompting market participants to reassess valuations. The shift reflects a more conservative approach to pricing equities as the cost of capital remains high, influencing investment decisions across sectors.

Park Se-ik pointed out, "The S&P 500 P/E multiple has now fallen below 20 times."

By investing real money, participants are encouraged to be more serious and thorough in their analysis, fostering a disciplined approach to market predictions.

Park Se-ik explained, "It's meaningless for us to just talk about which stocks will go up; when money is involved, we take it seriously."

He noted that previous constraints were due to supply chain issues, not a lack of demand. Consequently, revenue growth estimates for fiscal year 2028 have been revised upward to approximately 70%.

Park Se-ik reported, "Jensen Huang said that as AI spreads to various industries, chip sales will double over the next year."

The compound annual growth rate (CAGR) is projected at approximately 18% for the next four years. This aggressive growth trajectory underscores the increasing demand for semiconductors across various industries.

Park Se-ik remarked, "They are projecting $3.2 trillion in 2030. From roughly $1.6 trillion to $3.2 trillion, it's a doubling, and they expect four years to be enough."

Semiconductor equipment stocks, including Applied Materials and Lam Research, have experienced P/E ratio contraction. Their current P/E multiples, ranging from 23x to 26x, are now considered more justifiable based on their underlying fundamentals. Despite the recent adjustments, strong growth potential is expected to continue through 2028. However, sensitivity to interest rate stabilization remains a key factor for future performance.

Park Se-ik noted, "The PER itself has become quite reasonable now. Applied Materials is around 23x, and Lam Research is about 26x."

CoreWeave's stock price recently declined following its announcement of a capital raising plan, including convertible bonds and a share sale, through an 8K filing. Despite projecting significant revenue growth through 2028, the company's aggressive facility expansion has led to liquidity challenges. The new issuance of $3-3.5 billion in convertible bonds and the sale of 35 million Class A shares are expected to result in an overall 15% dilution effect.

An unnamed speaker noted, "Yesterday, the stock price dropped; the company, with a market cap of about $44 billion, announced funding plans including convertible bonds via an 8K filing."

The company faces a mismatch between operating profit and interest expenses, with interest expenses peaking during its high capital expenditure phase. Cash flow is projected to be most challenging in 2027, making long-term investor patience critical.

The speaker stated, "The turnaround phase for this is likely to be 2029. So from an investment perspective, it will turn around around 2029."

The dilution effect, which reduces expected earnings per share, poses a significant risk for investors. Historical cautionary tales, such as Carnival Corporation (CCL), demonstrate that if the speed of new share issuance outpaces the growth in EPS, it can negatively impact stock performance. This highlights the importance of scrutinizing a company's capital raising activities in relation to its earnings trajectory.

The speaker mentioned, "The best example is the case of Carnival Cruise Line, where as I've mentioned before, if the increase in the number of shares is faster than the increase in EPS, this can happen."

The company maintains stable operating margins of 35-40%, supported by a strong semiconductor industry growth outlook, projected to reach $4 trillion by 2030. There is an expectation that if interest rates stabilize, AMAT's fundamentals could quickly reassert themselves, driving further price recovery.

According to an unnamed speaker, "The price seems appropriate now, especially for equipment stocks, which saw a severe drop after a rapid ascent. Now, if interest rates stabilize, I think they might quickly converge to their fundamentals."

LIG Nex1 is cited as a prime example, exhibiting strong price elasticity driven by this momentum. The underlying logic suggests that stocks with strong momentum often demonstrate the most vigorous rebound potential after market corrections, indicating underlying strength in their business fundamentals.

The speaker remarked, "A high valuation means stronger earnings momentum, doesn't it?"

Approximately 80% of the airline's operating costs are denominated in dollars, making it highly sensitive to currency fluctuations. This favorable currency condition has driven strong capital inflows into the airline sector, bolstering Korean Air's stock performance.

The speaker noted, "Even though oil prices are rising, the Korean Won has fallen significantly, which benefits Korean Air because 80% of its operating costs are in dollars."

Forecasts anticipate 3.8 trillion KRW in revenue and 660 billion KRW in operating profit for the quarter. This growth is largely supported by full-capacity utilization of Multi-Layer Ceramic Capacitors (MLCC) and Flip-Chip Ball Grid Array (FC-BGA) products, alongside product mix improvement and price hikes, rather than just volume increases.

Retail investors frequently incur losses by purchasing 'giants' at the peak of their valuation, driven by hype rather than fundamental assessment. Even for excellent, high-growth companies, acquiring them at a 'moderate' price is essential to secure profitable returns and mitigate risk.

The speaker emphasized, "When investing in growth stocks, the ultimate question is when to sell, and that part is always a concern. Ultimately, you must sell based on valuation."

Some analysts use high P/E multiples, such as 85x, to justify aggressive price targets, like 3 million KRW. However, the speaker argues that such high multiples are not appropriate. Instead, a more granular Sum-Of-The-Parts (SOTP) approach is advocated, which involves valuing each business unit separately and then summing them up.

Using SOTP valuation, a more realistic market capitalization of around 150 trillion KRW for Samsung Electro-Mechanics is suggested, contrasting sharply with targets derived from aggressive P/E multiples. This debate highlights the importance of a robust and transparent valuation process to avoid overestimating a company's worth.

Real estate is subject to a high general tax rate of 45%, and asset value increases often only keep pace with inflation, leaving minimal profit after taxes. In contrast, the domestic stock market is highlighted as a tax-efficient alternative for wealth building, allowing investors to retain a larger portion of their gains.

Park Se-ik underscored, "The stock market, especially the domestic stock market, provides opportunities to buy stocks like Gangnam apartments at half price, and there are no taxes."

Investment analysis is performed independently by team members beforehand, ensuring diverse perspectives. This dynamic format, where no one knows exactly how a stock or topic will be analyzed, is likened to an economic audition program, fostering genuine insights and discussions.

Park Se-ik explained, "It's fun because there's no script for us; we just start without one, and we never know how a particular stock will be analyzed."

The mission is to act as a "lighthouse" for individual investors navigating volatile and uncertain markets. The team remains committed to helping its followers become "financial warriors" by providing data-driven insights and unwavering guidance.

Park Se-ik expressed, "The more views we get, the heavier our shoulders become. As it grows, the burden increases, and we feel we must provide more accurate information to investors in this stormy, foggy sea—to act truly like a lighthouse."