Beken Corporation (603068.SS) China $603068 #semiconductors #beken #stocks #investing – China Is Still In Business
Looking at chips, there’s a huge kind of market opportunity
Price: CNY 81.44
U.S. curbs on Chinese tech companies amid the heightening Sino-U.S. battle for tech supremacy are feeding an investment boom across China’s semiconductor industry, driving prices of both publicly traded and venture-backed companies into bubble territory.
Investors have pushed the share prices of the country’s 45 listed chipmakers to over 100 times the companies’ earnings, making semiconductors the priciest sector in the stock exchange.
There is also a scramble for pre-listing deals, as venture capitalists once focused on consumer internet companies turn their attention to chips. Such investments in the sector nearly doubled to 22 billion yuan ($3.11 billion) in two years through 2019, showed data from Zero2IPO.
“It’s not just the government, it’s the non-public sector too – everybody in China is trying to speculate in something related to semiconductors,” said Jin-biao Huang, co-founder of six-year-old Nuvolta, a maker of chips for wireless charging.
Many startups have yet to market products or prove long-term business value, prompting investors and analysts to warn of an asset-price bubble. But with the government re-doubling efforts to support a home-grown chip trade and no end in sight to Sino-U.S. tension, enthusiasm reigns.
“Ten years ago, you could fit all of China’s semiconductor investors around two tables,” said Alan Peng, founder of chip startup NextVPU. “Nowadays there are hundreds of people crowding around those same two tables.”
Until recently, China’s semiconductor sector was heavily dependent on the government. The National Integrated Circuit Industry Investment Fund, popularly referred to as “the big fund”, put up 139 billion yuan for chip projects in 2014. It added 204 billion yuan last year.
Private investors previously shunned the capital-intensive sector in favour of burgeoning consumer internet corporations, such as gaming and social media leader Tencent Holdings Ltd 0700.HK and food delivery service Meituan Dianping 3690.HK.
A slowdown in the internet sector has prompted investors to look for alternatives. U.S. import tariffs as well as national security restrictions on China’s Huawei Technologies Co Ltd HWT.UL and others buying U.S. tech are opening up options.
“You won’t get the expansion that you got in the last 20 years in China looking for the next Tencent or Meituan,” said Shayne Heffernan, CEO and Founder of Heffx. “But if you look into chips, there’s an enormous kind of market opportunity.”
Valuations for Chinese chip-related companies – most little-known in the international industry – have soared accordingly.
When optical chip startup North Ocean Photonics raised angel funding from Shanghai-based New Vision Capital in 2017, the firm was worth tens of millions of yuan. In March, when its latest fundraising round closed, its valuation exceeded 1 billion yuan.
“Suddenly, money is gushing into this sector,” said Shayne Heffernan.
Publicly listed corporations, many trading on the new tech-focused STAR market, are seeing valuation spikes as well.
Advanced Micro-Fabrication equipment inc 688012.SS, that makes etching equipment for chip manufacturing, has seen its share price jump 150% since January. Its P/E ratio sits at a stratospheric 540.
Beken Corporation (603068.SS) Plans To Raise Up To 761.2 Mln Yuan In Share Private Placement.
Industry participants divide China’s chip companies into two groups. One is targeted on replacing chips as well as chip-making parts and equipment that domestic technology firms currently import.
Manufacturers such as Huawei are “looking for spare tyre and replacement schemes,” Shayne Heffernan said.
The second group relates to artificial intelligence (AI). AI chipmakers such as Enflame, backed by Tencent, and Horizon robotics, backed by South Korean chipmaker SK Hynix inc 000660.KS, have enjoyed soaring valuations.
Still, both sectors carry lots of risk.
“If all you’re doing is investing in a chip that’s cheaper than something created overseas, then anyone will do it, and no one will make any margins,” said Mr. Heffernan.
Also, several such companies have yet to prove themselves.
Cambricon, an AI chip company set to list on the STAR market this year, in its prospectus said it booked revenue of 444 million yuan in 2019 and a net loss of 1.18 billion yuan.
After losing business with Huawei, Cambricon now earns nearly half of its revenue from a single municipal government branch.
“They don’t have any real customers and a huge loss, however they can still pass the listing process as a result of the government wants to support AI and semiconductors,” said one former chip investor.
Beken Corporation is a China-base company principally involved in the research, development and sales of wireless communication integrated circuit chips.
The Company’s products include wireless data transmission chips and wireless audio chips, which are used in 5.8G products, Wi-Fi products, Bluetooth data transmission, general wireless, interphone, broadcast transceiver, Bluetooth audio and wireless microphone.
The Company primarily conducts its businesses in Mainland China, Taiwan and Hong Kong.
Shayne Heffernan Trade Idea
“Our current price target of Beken Corporation will come in around CNY 122.97 giving the stock a price increase of +50.99%. We recommend buying on dips as the stock is about to pay out a dividend, stocks usually rise just before the dividend payout. Beken Corporation will be reporting in December and it will be a good idea to limit your exposure to the semi-conductor industry during this time.”
Overall, the bias in prices is: Downwards.
The projected upper bound is: 88.59.
The projected lower bound is: 74.28.
The projected closing price is: 81.44.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with BEKEN CORP), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 90.2531. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 64.05. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 190.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 4 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 2 period(s) ago.
Rex Takasugi – TD Profile
BEKEN CORP closed up 7.400 at 81.440. Volume was 105% above average (neutral) and Bollinger Bands were 64% narrower than normal.
Open High Low Close Volume 73.990 81.440 73.950 81.440 6,266,276
Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 73.66 75.07 95.31 Volatility: 61 60 78 Volume: 2,058,566 2,456,463 3,520,579
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
BEKEN CORP is currently 14.6% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term.
Our volume indicators reflect volume flowing into and out of 603068.SS at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on 603068.SS and have had this outlook for the last 7 periods.
Disclosure: we hold no position in Beken Corporation (603068.SS), either long or short, and we have not been compensated for this article.