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<Research> M Stanley Adds SK Hynix (000660.KS) and Wiwynn (6669.TW) to Asia Pacific and Global Emerging Markets Focus List
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Morgan Stanley issued a report adding SK Hynix (000660.KS) and Wiwynn (6669.TW) to its Asia Pacific (ex-Japan) and Global Emerging Markets Focus List. At the same time, the bank removed Telstra (TLS.AX) and Keppel (KPLM.SI) from the Asia Pacific (ex-Japan) Focus List, and removed Capitec Bank Holdings Ltd (CPIJ.J) and JBS SA (JBS.N) from the Global Emerging Markets Focus List. Following the recent market correction, the bank increased exposure to IT stocks within the Focus List, bringing the portfolios weighting in the sector closer to the benchmark index. The bank added SK Hynix as more long-term agreements (LTAs) are expected to transform its traditionally cyclical business into a high-margin, long-term revenue stream. Such agreements were seen during previous semiconductor boom cycles, but the recent LTAs differ from earlier versions that had weaker binding terms. The new agreements may include substantial prepayments to secure shipment commitments from manufacturers, with shortfalls to be offset against future deliveries. LTAs can enhance stability, improve earnings visibility, and reduce the risk of overcapacity expansion among memory companies through better supply management. Even in the event of oversupply driven by capacity expansion, committed volumes under LTAs could provide a buffer for pricing and gross margins, mitigating the severity of downturns in the memory cycle. The team has raised its EPS forecasts for SK Hynix through 2028 to reflect the downside protection offered by LTAs, stronger commodity price assumptions, and more robust HBM pricing resets in 2027. (ad/da) Auto-translated by AI This article was automatically translated by AI, the original language version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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