My 2nd post in Substack, after I’ve left my last sell-side job.
The Semi craze continues, for a lot of good reasons – but valuations still matter.
Asia ex Japan TECH is ok
AxJ Tech is trading at + 1 standard deviation on 2024 earnings but on average PEx on 2025. Expensive short-term, properly priced on next year earnings.
This assumes that consensus is correct about very high earnings growth: +67% in 2024 and +36% in 2025 (that’s YoY, sum of US$ net income of top 80 Tech firms Asia-ex). What’s driving this high growth is 1) Korea Memory contributes 3/4th of the growth 2) Taiwan Semi most of the rest.
Consensus also expects 15% earnings growth in 2026, implying that the structural factors continue (AI, HBM) and cyclicality is positive (I guess we all expect lower inflation and rates).
Trailing valuations:
Avg PEx since 2019: 18.8x
Now : 24.8x
Forward valuatio…