E International Women’s Day

It’s International Women’s Day. My avatar and birthday-sharer Aung San Suu Kyi has disgraced her sex by backing her fellow Burmese in their genocidal attacks on members of the Rohingya Muslim minority. She has just been stripped of her US Holocaust Museum human rights award, named after Eli Wiesel, for her recent support of a pogrom. However, she gets to keep the Nobel Peace Prise whe won in 1991 which she spent on a health and education trust for Burmese.

Unworthy female Nobelists include Pearl Buck, the first woman to win the Nobel Prize for literature. In my view, her 1945 book, Peony, about the Kaifeng Jewish community in China, was blatantly anti-Semitic although it was published after the horrors of the Holaucast were known. Later she opposed trying Eichmann in Israel.

Contarary to fears, the Bank of Canada, its CB, did not hike interest rates today.

Except for the weather, it is not a terrible Thursday. We have news from Canada, Mexico, Brazil, Spain, Sweden, Denmark, Israel, China, Japan, Hong Kong, Taiwan, Britain, Thailand, Japan, Chile, and Egypt.

Industrials

*Crédit Suisse this morning from London upgraded Israeli Tower Semiconductor (TSIM) to outperform with a target price of $38.50. It is now about $29. The company makes chips for smartphones, battery chargers, AC/DC adaptors, and image sensors, and likes to sell technological expertise rather than investing in factories.

Tung Le, the analyst, says TowerJazz is valued “undemandingly” and will gain from structurally growing markets like power and radio frequency. Its p/e ratio is 13x current earnings and 11x the CS estimate for 2018-9. He accepts the Tower estimate of its long-term revenues hitting $3.5 bn (up from $1.4 bn last year) and says it can more than double output from its existing fabs without having to capex. He thinks another $300 can result from modest spending and China joint venture deals (with Tacoma of Nanjing and Yeong Chin Machinery of Taiwan and China) can bring the total to $2.3 bn of sales long-term. So Atower will only have to find $1.2 bn directly, and he expects this to come with an acquisition. It expects to keep up its 30% cashflow margin level achieved last year for a long time, and he says this can actually prove conservative as it had cashflow margins as high as 40% in 2 prior years. He suggests that 35% is likely rather than merely 30%.

The only reason we don’t see a strong buy here is that wafer prices are going up and they do account for about 10% of sales, meaning sales can fall from the increase. But TSEM is using multiple supplies and signing long-term deals to control the cost increases, and also is looking to cut other input costs as well. He says ATSEM has net cash of $2.6/sh adjusted for converts.