Weekly Roundup 2022-07-08

Lunar Capital Weekly Roundup

Index / Fund / Rate Start of Year Last week This Week % change YTD
JSE ALSI 73 723 65 662 68 327 -10.92%
NASDAQ Composite 15 833 11 128 11 635 -28.87%
S&P 500 4 797 3 825 3 899 -19.74%
Prime Lending Rate 7.25% 8.25% 8.25% 13.79%
Lunar BCI WW Flexible Fund 165.68 137.95 144.63 -16.74%
USD/ZAR 15.96 16.34 16.90 2.45%
EUR/ZAR 17.95 17.00 17.21 -6.23%
Brent Crude 77.86 111.38 107.08 37.53%

Source: iress

Why Numbers Matter – Lunar Capital Virtual Event

Join us this Wednesday at 18H00 as we will be hosting our client event: Why Numbers Matter

Numbers were used to predict trends and influence decisions during the Covid 19 epidemic, and Ridhwaan Suliman was at the forefront of making sense of these. The numbers paved the way to helping the world understand the pandemic and how to handle it. Lunar Capital also use numbers to determine market trends and the valuations of companies they invest in. Join Lunar Capital as Ridhwaan and Sabir explore and discuss the relevance of numbers in their respective fields and how Lunar Capital uses these to manage risk and grow your investments.

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Company and Market News

ASML

On Monday last week, A Bloomberg article reported that there were rumours that the US Government wanted to restrict ASML from selling some of their older semiconductor equipment like the DUV (Deep Ultraviolet) lithography equipment to China. A spokesperson from ASML said that, “No decisions have been made, and we do not want to speculate or comment on rumours.” Shares for ASML U.S. dropped from $449.96 on the Monday before the article was released to $432.21 by the end of Tuesday. However – by the end of the week the share price for ASML was $452.95.

Lithography and semiconductor equipment require licenses to sell overseas. Since 2019,The Dutch Government in conjunction with the US Government have not granted ASML the license to sell their Lithography machines, that use EUV (Extreme Ultraviolet) light waves to make high-powered semiconductor chips, to China. However ASML were still able to sell older equipment, that uses DUV technology, to Chinese customers. Of the €18.6 bl revenue in 2021, 14.7% of revenue still came from China. It accounted for the third largest revenue figure behind Taiwan (39.4%) and South Korea (33.4%).

As of Friday 8 July 2022, ASML was trading $452.95 on the Nasdaq compared to $796.14 at the beginning of the year. This represents a decrease in the share price of just under 40%, compared to the tech heavy NASDAQ which is down 26.51% since the beginning of the year.

Since the begging of 2019, revenue for ASML have grown at a CAGR rate of 19.36%, and net profits have grown at a CAGR rate of 31.43%. The company has averaged a net-margin of 25.66% since 2018. The company was trading at a PE of 34.55 as of Friday 8 June 2022. At Lunar Capital, we believe that the company has strong fundamentals and is still really well positioned due to ASML effectively having a monopoly on selling Lithography equipment in an industry with a high demand for semiconductors.

 

Disclosure: ASML is held in the Lunar BCI Worldwide Flexible Fund.

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The Lunar BCI Worldwide Flexible Fund Fact Sheet together with our Disclaimers can be read here.

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