存储器：有希望但尚未恢复

1、March 3, 2019 06:21 AM GMTGlobal SemiconductorMemory Hope, but No RecoveryA positioning rally that caused memory stocks to perform out of sync with fundamentals is losing steam, stock-specific factors are coming into play.Memory conditions have taken a sharp turn for worse, earnings risk is mounting

2、, and our inflection signposts suggest extreme caution from here.Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Re

3、search. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not regi

4、stered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.ContributorsMORGAN STANLEY ASIA LIMITEDShawn KimEquity Analyst+852396

5、3-1005 HYPERLINK mailto:Shawn.Kim Shawn.KimMORGAN STANLEY & CO. LLCJoseph MooreEquity Analyst+1212 761-7516 HYPERLINK mailto:Joseph.Moore Joseph.MooreMORGAN STANLEY ASIA LIMITEDJonathan F GarnerEquity Strategist+8522848-7288 HYPERLINK mailto:Jonathan.Garner Jonathan.GarnerMORGAN STANLEY TAIWAN LIMIT

6、EDDaniel Yen, CFAEquity Analyst+8862 2730-2863 HYPERLINK mailto:Daniel.Yen Daniel.YenMORGAN STANLEY ASIA LIMITEDAndrew ChungResearch Associate+8522848-6575 HYPERLINK mailto:Andrew.Chung Andrew.ChungMORGAN STANLEY TAIWAN LIMITEDCharlie ChanEquity Analyst+8862 2730-1725 HYPERLINK mailto:Charlie.Chan C

7、harlie.ChanMORGAN STANLEY & CO. INTERNATIONAL PLC, SEOUL BRANCHRyan KimEquity Analyst+822 399-4939 HYPERLINK mailto:Ryan.G.Kim Ryan.G.KimMORGAN STANLEY ASIA LIMITEDYinan Zhang, Ph.D.Quantitative Analyst+8523963-3507 HYPERLINK mailto:Yinan.Zhang Yinan.ZhangMORGAN STANLEY MUFG SECURITIES CO., LTD.Kazu

8、o Yoshikawa, CFAEquity Analyst+813 6836-8408 HYPERLINK mailto:Kazuo.Yoshikawa Kazuo.YoshikawaMORGAN STANLEY ASIA LIMITEDDaisy DaiResearch Associate+8522848-7310 HYPERLINK mailto:Daisy.Dai Daisy.DaiMORGAN STANLEY & CO. LLCEthan PuritzResearch Associate+1212 761-1744 HYPERLINK mailto:Ethan.Puritz Etha

9、n.PuritzGlobal SemiconductorAMemory Hope, but No Recoverypositioning rally that caused memorystocks to perform out of sync withIndustry ViewS. Korea TechnologyCautious Greater China Technology HardwareIn-Linefundamentals is losing steam, stock-specific factors are coming into play. Memory conditions

10、 have taken a sharp turn for worse, earnings risk is mounting, and our inflection signposts suggest extreme caution from here.WHATS CHANGEDSK HynixFromToPrice Target63000.0060000.00More vulnerable after the rally. Due to a sharper deterioration in memory market conditions, with significant oversuppl

11、y ahead, we reduce our 2019-20e EPS estimates by 21-47% across global memory coverage and downgrade Nanya Tech to UW. We remain UW on stocks SK Hynix and specialty memory due to one of the most challenging cycles in history. We are now 20-40% below consensus and see 25-30% more downside to all key m

12、emory plays in this sce- nario. We see stocks moving back to trough multiples after the YTD positioning rally, and driven by earnings expectations falling sharply. Top-down, we see better value in other cyclical industries in the early phases of Chinas economic upturn cycle.One of the most challengi

13、ng memory cycles in history. We esti- mate DRAM will stay fundamentally oversupplied until 3Q20 due to a supply mismatch, inventory build throughout the year and despite demand for cloud spending, PCs and phones improving in 2H19. Supply and inventory dynamics parallel the 1996 downturn rather than

14、2016, and thus do not appear well understood by the market. Pricing should mean revert back to the long-term price/Gb trend line, and for DRAM prices this means a peak/trough DRAM ASP of -70% (or -40% from here back to 2016 lows), and NAND prices below gross margin and potentially near cash costs. T

15、his is beginning to play out but is clearly not in share prices.Inflection signposts sell signals accumulate. We would be pre- pared to become more constructive under the right conditions, but ultimately it is about inflections in the cycle and trajectory of earn- ings estimate revision breadth the

16、former relates to pre-trading a recovery post the YTD re-rating and latter to negative earnings risk mounting. Our belief is that (i) this cyclical downturn is headed into a deeper recession; (ii) recent growth indicators, such as cloud improving are masked by mounting inventory; and (iii) earnings

17、esti- mate achievability for memory stocks still appears distant. (iv) Valuation is less compelling after the YTD rally, and (v) tactically buying on weak data releases no longer makes sense; we expect better entry points in future.Conclusion. While we are negative on the memory sector, we do see op

18、portunities to generate alpha with carefully chosen stocks and recommend companies leveraged to an early cloud demand recovery: Aspeed and Intel (see Cloud capex semi plays bottoming out). We stay UW on stocks exposed to commodity-linked memory (SK Hynix, Nanya Tech, Advantest); EW Micron, WDC and S

19、amsung; and UW specialty memory stocks Giga Device, Winbond and Macronix.Contents5Memory The Sell Signals Accumulate10 1) Cycle Watch Too Early for a Second Derivative Inflection142) Growth Indicators Not Supported by Data163) Earnings Estimate Revision Indicator Deeper Sector Earnings Recession194)

20、 Valuation Less Compelling but Still Attractive22 5) Tactical Indicators How Long Will the Sentiment Rally Continue?26 Why We Think a Recovery in 2H for DRAM is Highly Unlikely28 Implications for US Semi Stocks31Implications for Asia Semi StocksImplications for Japanese Semi Cap Equipment StocksRisk

21、-Reward: Samsung Electronics (005930.KS, W47,350, EW, PT W40,000)Financial Summary: Samsung ElectronicsRisk-Reward: SK Hynix (000660.KS, W75,400, UW, PT W60,000)Financial Summary: SK HynixMemory The Sell Signals AccumulateOne of the most challenging memory cycles in history. Playing the second deriv

22、ative inflection in DRAM (meas- ured in terms of the monthly rate of change in contract pricing illustrated in HYPERLINK l _bookmark0 Exhibit HYPERLINK l _bookmark0 1 ) could still see contract pricing fall a long way as could share prices, and we fore- cast material downside for memory prices and e

23、arnings. Memory valuations are low, but earnings expectations are not. Both the cycle and demand present high downside risk, and structural growth in cloud continues to undershoot the industry long-term perceived expectations for memory demand, which has led to the current supply driven boom and bus

24、t cycle. Capex and production cuts (NAND) may provide some relief, but the need to reduce costs through technology migration continues to drive production (well above demand), which hits pricing, hence, we think it is too early for a cyclical upturn trade.Exhibit 1:The Memory Cycle Disconnect Multip

25、les Pre-Trading a Turn in the Cycle Too Soon-58%120%80%0.840%0%-40%0.42.5Exhibit 2:One of the Most Challenging Memory Cycles in History Tracking the 1996 (PC) and 2000 (Y2K) Downturns.Server DRAM at $120* Server DRAM at $100*Rebased to M-6 0.40.0M-6MM+6M+12M+18M+24M+3096 Cycle00 Cycle10 Cyc

26、le* Assuming constant server DRAM sales volume based on currentSource: WSTS, Morgan Stanley ResearchExhibit 3:But Disconnect with Share Price Performance Pricing a Cyclical RecoveryRebased to M50% to Peak1.30.920050.5200620072008200920102011201220132014201520162017 DRAM EV/Sales DRAM Contra

27、ct Price YoY (RHS)MM+6M+12M+18M+24201820192020-80% 96 Cycle*00 Cycle 15 Cycle18 Cycle* Excluded SK Hynix as the Company was private until Dec-96Source: Thomson Reuters, Morgan Stanley ResearchSource: DRAMExchange, Morgan Stanley Researchcompounded by a major leg down in earnings. We reduce our 2019-

28、20e EPS estimates by 21-47%, now 20-40% below consensus and could see 25-30% more downside to all key memory stocks in this scenario. We downgrade Nanya Tech from EW to UW with 24% downside to PT. We struggle to see any fundamental improvement this year, yet consensus for the sector remains relative

29、ly optimistic, despite major cuts since November 2018. We see most companies outlooks and guidance as likely to move sharply lower during CY1Q19, in our view, and put into question the narrative on a per- ceived second half demand recovery.Our key signposts for a trough in memory are distant. We ack

30、nowledge that a lot of bad news was priced in December, how- ever, the YTD rally has reduced the attractiveness of memory valua- tion too early. While we would not exclude the positioning rally extending further, we think fundamentals matter more than tech- nicals, and we see clear incremental risk

31、that the earnings recession ahead for our sector is even deeper and longer than we currently forecast. We expect consensus earnings estimate revisions are likely to be some of the most negative we have seen in the last three dec- ades of DRAM history, thus, investors need to pay attention to thesech

32、anges since earnings achievability will likely determine whether stocks can continue to rally, and which ones remain vulnerable. We have analyzed the signposts to watch for DRAM and NAND stabi- lization across 5 factors, which we believe are necessary to call a fundamental trough for stocks all poin

33、t to caution on valuation, with some exception:Cycle watch too early for a second derivative inflection. We have compared the current cyclical downturn against prior cycles across five peak-to-trough absolute and relative factors. Capital spending has been too high in the last two years with back-to

34、-back years of big increases in DRAM cap- ital spending, up 81% in 2017 and another 40% in 2018. This is causing an extended oversupply that we think will take much longer than previous normal cycles to reach equilib- rium. Aside from cloud, core end markets continue to deterio- rate and inventory i

35、s unlikely to clear all year, suggesting a steeper path for price erosion.Growth indicators false sense of confidence in a 2H demand recovery. Memory cycles are supply driven and the memory revenue cycle is often independent of the economic cycle, but an economic downturn (in-line with our global GD

36、P estimate) can exacerbate a memory downturn. As such, we believe the magnitude of an economic recovery would be not relevant for memory in 2H, and a fully supportive Fed policy and China stimulus would not change the cycle. Nevertheless, we expect demand for PCs and phones to improve seasonally on

37、new product cycles, and we are encouraged that the overall trajectory of cloud spending, which still appears relatively robust.Earnings still too optimistic and this is not well known. We struggle to find any fundamental EPS improvements in 2019-20 as the weakness is just beginning. We see significa

38、nt downside risks to DRAM pricing to mean revert back to pre- vious trough levels (-40% from here), with the revision breadth likely to turn significantly worse (than the 2016 downturn) before finding a bottom. NAND pricing likely moves below gross margins for most producers (ex-Sam- sung) and near

39、cash costs. We cut 2019-20e EPS forecasts by 21-47% are now 20-46% below consensus numbers. Memory stocks relative earnings estimate revisions breadth hasdeclined significantly since late last year, and while such extreme readings are typically good buying signals, we think relative performance is n

40、ow ahead of the turn in relative neg- ative revisions.Valuation appears reasonable, although less compelling after rally. Stocks are at -1SD below mid-cycle valuations and 16% and 54% from trough P/B and EV/Sales multiples, respectively. P/E is a contrarian indicator and currently stands above +1SD

41、mid-cycle multiples, but this should be looked at relative to trough EPS which is likely to decline sharply. If fur- ther evidence emerges of a deeper downturn in 2019, or if we get no signs of recovery in 2H demand, then we expect stocks to move closer to trough multiples, as in past downturns. The

42、 real problem on the upside is that we see fundamentally no driver for continued sector demand and/or EPS growth. This will limit upside to valuations, in our view.Is the stock (not fundamental) risk/reward better now? Tactically, the market appears complacent, per our strate- gists (FX Analytics: T

43、op Indicators We Are Watching), with the sentiment index (Global Risk Demand Index STGRDI*) and a recent survey showing long EM as the most crowded trade for asset managers. But the risk outlook is far from rosy increased confidence, including de-escalating trade ten- sions, became a key driver of u

44、nprecedented funds flows into risk assets in EM and semis, which we believe has created a distorted perception of the memory cycle. From a tactical perspective, we think stocks correct sharply from here to reflect underlying fundamentals after the YTD positioning rally and recommend investors stay c

45、autious. Top down, our EM strategist, Jonathan Garner, acknowledges much improved absolute and to a lesser extent relative valuations versus the MSCI EM benchmark, but see better value in other cyclical industries (most notably Materials and Industrials in the early phases of Chinas economic cycle t

46、urning up). Earnings revisions breadth has yet to turn and we think other industries will inflect upwards earlier.Exhibit 4:South Korea Semi Export vs. SK Hynix Stock Price Retracing FundamentalsExhibit 5:Funds Flow Weakening Cumulative Foreign Inflow Into Samsung + SK Hynix, Pace Slowing10000090000

47、80000700006000050000400003000020000100002010 2011 2012 2013 2014 2015 2016 2017 2018 201914000120001000080006000400020004Billions3210-1-2-3-4-5Jan-18 Feb-18Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19SK Hynix Stock PriceSouth Korea Exports-Semiconductor (RHS) S

48、aumsung + HynixRest of Kospi2Source: Bloomberg, Morgan Stanley ResearchSource: Bloomberg, Morgan Stanley ResearchExhibit 6:Samsung Electronics Shares Appears Tactically Overbought.Last Price SMAVG (50)SMAVG (100)SMAVG (200)6000055000500004500040000350003000025000200002016201720182019Source: Bloomber

49、g, Morgan Stanley ResearchExhibit 7:.as well as SK Hynix SharesLast PriceSMAVG (50)SMAVG (100)SMAVG (200)10000090000800007000060000500004000030000200002016201720182019Source: loomberg, Morgan Stanley ResearchStock implications we are warming to pure cloud exposure but not to memory. We stay UW those

50、 exposed to commodity-linked memory stocks (e.g., SK Hynix), and companies that have rallied YTD where we think them likely to miss consensus by a wide mark. We would take profits across all memory and specialty stocks. Pricing is tracking historical mean reversion on a price per gigabit basis, and

51、this should create a large incremental headwind to forecasts in 2019 and 2020. We see 11-14% downside to our base case price targets, and our bear case revolves around a longer down cycle similar to 1996, and politics and trade tensions affecting markets, where an alignment of technicals and fundame

52、ntals drive multiples closer to GFC crisis levels or 29-40% lower from here.Key event catalysts for share prices near term include: (i) pricing negotiations which have become ad hoc (no longer quarterly) and rate of change in inventory both leading indicators of the cycle; (ii) expected pre-announce

53、ments and management guidance turning to extreme caution; and (iii) potential technical impact from the upcoming MSCI country weight rebalancing impacting Index heavy- weights Samsung and SK Hynix.For US semis, our PT on EW Micron remains at book value, which implies 19% downside, and we see challen

54、ges for the company on reversing share loss in DRAM and inventory buildup. We are more constructive on EW WDC relative to Micron, as the sentiment backdrop for the stock has been quite a bit more negative a positive for the stock potential. For US semi equipment, we find market expectation on WFE fa

55、lling in the low 40s in 1Q to be overly opti- mistic, and we see further weakness in 2Q and 3Q. We down- graded Lam to EW around these concerns last week. Longer term,there is value in the semicap space, and we are more positive on equipment than on devices, but we do not see a catalyst path to be O

56、verweight given near-term downside. We recently upgraded Intel to OW as we see the opportunity to reduce memory capital spending as one of the key levers that the company can pull to move free cash flow to be closer to earnings, with substantial potential benefit. In that sense, bad news is good new

57、s, as erosion in NAND profits could force its hand.For Japan semi equipment, we see risk to a current expectations of a WFE market recovery in 2H19, which the market has already factored in starting this January. We are EW Tokyo Electron, though our target price is below the current share price leve

58、l by 18%, and our forecast of F3/20 OP is below 9% from the consensus. We reiterate UW Advantest on risk of deceleration in both memory testers, as well as SoC testers, while a prolonged memory oversupply may lead downside for the memory tester market (after doubling in 2017 and up another 50% in 20

59、18).A lone bright spot cloud. We see conditions bottoming out for cloud demand in 1H19, and upgrade Aspeed and Parade to OW while remaining OW Intel. While we are negative on the memory sector as a whole, cloud capex semi plays are a rare bright spot. The group tends to be early cycle and not vulner

60、able to inventory issues facing the rest of the semis group. Internet traffic growth, Aspeeds February order strength and capex announcements by US hyper- scalers will be key points to watch near-term, and we believe risks are now skewed to the upside. Please refer to our report: Cloud semi plays bo