To The Moon

Samsung Electronics (SEC) reported its 3Q22 results today. Sir Bahamut attended the results conference call today and noted 2 key takeaways that may signal Apple’s outperformance for its 3Q result tonight.

Firstly, Samsung’s premium smartphone saw a revenue growth of 10% yoy in 3Q22. This further proves that demand for premium smartphone experience is still strong even in this inflationary environment. I believe migration to 5G will continue to drive premium smartphone sales as consumers will also start to look for new smartphones when they want to experience 5G wireless technology.

Moreover, Samsung Display (sub-division of SEC) is a key vendor of OLED panels to Apple’s products. It’s estimated that Samsung supplies 40% and 100% of iPhone 14 and iPhone 14 Pro models' OLED panels respectively. In 3Q22, the revenue grew by 22% qoq (6% yoy), and Samsung attributed the growth to “premium smartphone model launches”. I believe if we isolate the revenue to just the mobile OLED panels, the revenue growth will be even higher!

This is also confirmed by LG Display, another key OLED panel vendor to Apple, in their earnings call yesterday. All these datas point to a robust iPhone’ sales in 2H22.

In fact, many listed companies in Apple’s supply chain have reported similar results. Foxconn (Hon Hai) is a key EMS and Face ID vendor to Apple, Largan and Genius are main suppliers for camera lens and camera module to Apple, and LG Chem is the main supplier of battery cell to Apple. All of them have signalled stronger sales of these components to Apple, implying that Apple’s shipment is actually very robust!

Numerous reports have already indicated that iPhone 14 Pro models outperformed whereas demand for the standard models are lacklustre. Even if shipment volume remained the same, the product mix weighting will be shifted more towards the higher-end Pro and Pro max models, which will boost Apple’s ASP and gross margins. Apple’s Ultra watches have also seemingly garnered strong interest as lead time remained long.

Share prices has rebounded for AAPL and its trading at forward PE multiple of around 23 times. Previously the risk-reward is more favourable. Nonetheless, I expect Apple to report positive results with good outlook for its portfolio of premium products tonight.

@Daily_Discussion@TigerStars