Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - June core CPI rose 0.23% month-over-month, slightly below consensus expectations, with a year-over-year rate of 2.93% [1][2] - Lower hotel prices and used car prices negatively impacted the core CPI, while increases in household furnishings, recreation commodities, apparel, and auto parts prices provided a positive boost [1][2] - The Empire manufacturing index increased significantly in July, indicating stronger-than-expected growth in employment, new orders, and shipments [1][6] Summary by Relevant Sections Core CPI Analysis - The month-over-month core CPI increase of 0.23% was below the median forecast of 0.3%, while the year-over-year rate reached 2.93% [2] - Declines in lodging prices (-2.9%), used car prices (-0.7%), and new car prices (-0.3%) weighed on the core CPI [2][4] - Positive contributions came from household furnishings (+1.0%), video and audio prices (+1.1%), and medical care services (+0.6%) [4] PCE Price Index Estimation - The core PCE price index is estimated to have risen 0.29% in June, with a year-over-year rate of +2.75% [1][5] - The headline PCE price index is expected to have increased by 0.32% in June, corresponding to a year-over-year increase of 2.55% [5] Empire Manufacturing Index - The Empire manufacturing index rose by 21.5 points to 5.5 in July, surpassing consensus expectations [6] - Key components such as employment, new orders, and shipments all showed significant increases, indicating robust manufacturing activity [6]

Investment Rating - The report assigns a "Buy" rating for Innolight with an updated 12-month target price (TP) of Rmb182, increased from Rmb160 [1][4]. Core Insights - Innolight's net profit for Q2 reached Rmb2.4 billion, marking a 79% year-over-year increase and a 53% quarter-over-quarter increase, indicating a re-acceleration in growth [1]. - The company anticipates strong demand for its products, particularly in the 800G and 1.6T segments, driven by cloud service providers and AI applications [2][11]. - Margin expansion is attributed to a better product mix and improved yields, contributing significantly to the strong Q2 performance [3][10]. Summary by Sections Financial Performance - Revenue estimates for 2025E-2027E have been revised up by 6% to 12%, and net profit estimates have been increased by 12% to 22% following better-than-expected Q2 results [4][8]. - The gross margin is projected to improve to 40.1% in 2025E, up from a previous estimate of 38.5% [8]. Demand Outlook - The company has reaffirmed a strong demand outlook from US cloud service providers for 800G products heading into the second half of 2025 and 2026, with some customers increasing orders to support AI applications [2][11]. - Innolight plans to expand its production capacity in Thailand to meet the anticipated demand [2]. Margin Improvement - The report highlights that margin improvement is driven by a shift towards higher-margin products such as 800G/1.6T optical transceivers and silicon photonics modules [3][10]. - The company is experiencing better yields, which further supports margin expansion [3]. Competitive Position - Innolight is positioned as a leading supplier in the optical transceiver market, particularly benefiting from the growth in AI and data center expansions [10][11]. - The company's strong execution in ramping up capacity and developing new products is seen as a key competitive advantage [11][13].

Investment Rating - The report maintains a "Buy" rating for Nvidia (NVDA) and highlights "Buy" ratings for Alibaba (BABA), Tencent (700.HK), and Baidu (BIDU) among cloud service providers, while GDS (GDS/9698.HK) and VNET are also rated positively among data center operators [4][29]. Core Insights - Improved chip availability is expected to enhance the ability of Chinese cloud service platforms (CSPs) to meet AI demand, particularly with Nvidia's new RTX Pro GPU tailored for China [2][4]. - The resumption of Nvidia's AI GPU exports to China is anticipated to alleviate the chip shortage that has hindered capital expenditure (capex) for CSPs and data center operators [2][3]. - There is a potential for sequential capex growth in the second half of 2025 as chip availability improves, despite cautious expectations for hyperscalers' capex and data center order volumes in the second quarter of 2025 [3]. Summary by Sections Market Reactions - The market is expected to respond positively to Nvidia's announcement regarding AI GPU exports, which could lead to increased capex spending by CSPs and improved order visibility for data center operators [2][4]. Company Performance - The report forecasts that Alibaba and Tencent's capex will likely reach a bottom in the second quarter of 2025 and recover sequentially in the latter half of the year [8]. - GDS's 12-month target price has been raised to US$40/HK$39, reflecting the net debt amount and the conversion of convertible bonds [16][17]. Future Developments - Upcoming events include the second quarter results for CSPs and data centers expected in mid-to-late August, updates on US AI chip export rules, and the listing of GDS's C-REIT [4].

Investment Rating - The report maintains a "Buy" rating for Nvidia Corp. (NVDA) with a 12-month price target of $185, indicating an upside potential of 8.4% from the current price of $170.70 [10]. Core Insights - Nvidia has received assurances from the U.S. government to provide the necessary licenses to sell its Hopper (H20) GPUs in China, reversing a previous export ban. This development is viewed positively, although there are concerns about the potential for future reversals and the stock's recent price run-up suggesting that this outcome may already be partially priced in [1][2]. - The expected reversal of the ban could add significant revenue and earnings per share (EPS) upside in the Bull scenarios for CY2026, with estimates suggesting an increase of $12 billion to $17.5 billion in revenue and $0.30 to $0.45 in non-GAAP EPS [6][9]. Summary by Sections Company Overview - Nvidia announced a $4.5 billion charge related to H20 inventory write-downs and purchase obligations due to the previous export ban, which also impacted revenue by $2.5 billion in FY1Q'26 [2]. Market Dynamics - The demand signals from China are still being evaluated, as potential customers are considering local alternatives. The company is in discussions with the U.S. government regarding potential customers in China [5]. Financial Projections - The report outlines potential upside scenarios for non-GAAP EPS in CY2026, estimating $0.30 in the Bull 1 scenario and $0.45 in the Bull 2 scenario, reflecting the anticipated revenue contributions from the reversal of the export ban [6][9]. Valuation Metrics - The report projects Nvidia's revenue to grow significantly, with estimates of $130.5 billion in revenue for FY2026, increasing to $295.5 billion by FY2028 [10].

Investment Rating - The investment rating for Baidu.com Inc. (BIDU) is "Buy" with a 12-month price target of $96.00, indicating an upside potential of 11.8% from the current price of $85.87 [10][18][22]. Core Insights - Baidu's partnership with Uber marks a significant step in the global expansion of its Apollo Go autonomous vehicle service, with initial rollouts planned for Asia and the Middle East later this year [1][3]. - The Apollo Go service currently operates in 15 cities, including Dubai and Abu Dhabi, with a fleet of 1,000 fully driverless cars and over 11 million completed rides [2][3]. - The valuation of Baidu's Robotaxi business is estimated at $3.9 billion, with expectations for rapid fleet expansion over the next 1-2 years as commercial operations increase [5][10]. Summary by Sections Global Expansion - Baidu is committed to expanding its autonomous vehicle service internationally, with recent expansions into Hong Kong, Singapore, and the Middle East, and plans to enter Europe by the end of the year [4][3]. - The user experience, safety, and adaptability of Robotaxi services to different regulatory environments are critical factors for successful overseas expansion [4]. Financial Projections - Revenue projections for the Apollo Self-Driving segment show significant growth, with expected gross transaction values increasing from RMB 161 million in 2024 to RMB 3.080 billion by 2027, reflecting a year-on-year growth rate of 350% in 2024 [9]. - The number of trips is projected to rise from 6.6 million in 2024 to 136.9 million by 2027, with the fleet size expected to grow from 1,000 vehicles to 15,000 during the same period [9]. Valuation Metrics - The valuation analysis indicates a strong upside risk if Baidu successfully accelerates its global market expansion, with a focus on improving unit economics in favorable pricing areas [5][10]. - The SOTP (Sum of the Parts) valuation reflects a significant contribution from the Robotaxi segment, which is projected to enhance Baidu's overall market valuation [10].

Investment Rating - The report indicates a modest property easing expectation for the second half of the year and beyond, aligning with incremental policy support rather than a large-scale stimulus similar to the 2015-2018 period [1][2][8]. Core Insights - The Central Urban Work Conference (CUWC) outlined key policy priorities for urban development, including urbanization facilitation, innovation encouragement, urban village renovation, a new real estate development model, improved urban infrastructure, and a green transition [1][2]. - The report suggests that the previous cash-backed shantytown redevelopment program is unlikely to be repeated due to reduced fiscal easing space, recognition of past housing boom costs, and persistently low urban housing demand [3][8]. Summary by Sections Policy Priorities - The CUWC emphasized urbanization, innovation, urban village renovation, a new real estate model, enhanced urban infrastructure, and green transition as critical areas for future development [1][2]. Property Market Outlook - The report anticipates modest property easing, with expectations for further mortgage rate reductions and targeted policy support for urban infrastructure and housing inventory purchases [8]. - It is projected that urban housing demand may remain below 5 million units per year for the foreseeable future, influenced by demographic trends and previous market speculation [7][14]. Economic Context - With H1 real GDP growth averaging 5.3% year-on-year, there is no immediate need for broad-based stimulus, leading to expectations of targeted easing measures to address property market downturns and labor market pressures [8].

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies within it Core Insights - Capital expenditure (Capex) for AI infrastructure is expected to remain strong, driven by tier-2 clouds and large enterprises diversifying their spending on data center equipment [2][3] - The transition to 800G networking is anticipated to dominate through 2026, with Ethernet potentially scaling up in networking opportunities [2][5] - Data center equipment spending is diversifying across more cloud players, with a forecasted growth rate of approximately 18% CAGR from 2024 to 2029, reaching around $925 billion [3] Summary by Sections Data Center Equipment Spending - Cloud Provider capex is projected to grow significantly, with more cloud players expected to spend over $5 billion annually, enhancing vendor customer base diversity [3] - Hyperscalers are likely to continue favoring best-of-breed networking providers, while tier-2 cloud providers will prefer full-stack solutions [3] Networking Trends - The transition to 800G is ongoing, with AI players at various stages, and the revenue recognition timeline for networking vendors has lengthened from 1-2 quarters to 2-4 quarters [5] - Vendor diversity for switching silicon is becoming increasingly important for AI workloads, with Cisco and Juniper expected to gain market share [5] Market Dynamics - The report highlights relative strength in Asia and Middle Eastern sovereign AI initiatives, indicating a robust market for data center equipment [3] - Concerns regarding data center switching market share, particularly for Arista, are viewed as somewhat exaggerated [2]

Investment Rating - The report maintains a "Buy" rating for Giant Biogene Holding (2367.HK) with a 12-month price target of HK$71.00, indicating a potential upside of 25.1% from the current price of HK$56.75 [1][15][34]. Core Insights - Giant Biogene is expected to achieve a year-on-year sales growth of 23% to RMB3,116 million and a net income growth of 20% to RMB1,183 million for 1H25, with an adjusted net profit of RMB1,205 million, reflecting a 17% increase year-on-year when excluding ESOP expenses [1][18][20]. - The company is positioned to benefit from the upcycle in China's functional skincare market, leveraging its strengths in recombinant collagen and expanding its online presence through key brands Comfy and Collgene [37][38]. Summary by Sections Financial Performance - Revenue forecasts for 2025-2027 have been revised upwards by 0-2% due to more resilient margins and faster sales recovery than previously estimated [15][34]. - The expected gross profit margin (GPM), operating profit margin (OPM), and net profit margin (NPM) for 1H25 are projected at 81.7%, 41.3%, and 38.0% respectively [25][26]. Market Trends - Online gross merchandise volume (GMV) has shown a recovery trajectory, increasing by 58% year-on-year on Douyin as of July, significantly outperforming peers [2][31]. - The report highlights a minimal contribution from KOL livestreaming, which accounted for approximately 10% of sales on Douyin in July, down from 20% in the same period last year [2]. Brand Performance - The Comfy brand is anticipated to deliver 21% growth in online sales and 16% growth in offline sales for 1H25, while the Collgene brand is expected to grow by 70% online but decline by 5% offline [23][28]. - The report emphasizes the company's strategies to revitalize brand momentum, particularly in preparation for the Double 11 shopping festival [2].

Investment Rating - The report maintains a "Buy" rating on GCE, EMC, and TUC, with target prices revised upwards to NT$420, NT$1,080, and NT$330 respectively, reflecting a 13-28% upward revision in earnings estimates for 2026-2027 [12][20][76]. Core Insights - The AI server CCL/PCB total addressable market (TAM) is projected to grow significantly, reaching US$2.3 billion for CCL and US$5.3 billion for PCB in 2025, and expanding to US$8 billion and US$17.4 billion by 2027, indicating a compound annual growth rate (CAGR) of 88% and 80% respectively from 2024 to 2027 [14][25][33]. - The demand for high-end technology is expected to increase, benefiting first-tier suppliers like GCE, EMC, and TUC, as they are likely to maintain high utilization rates and improve their product mix due to the inability of first-tier suppliers to meet solid client demand [2][32][40]. - The report anticipates that the market share of EMC and TUC in the ASIC AI server CCL market will rise from 42% in 2024 to 85% by 2027, driven by proactive capacity expansion and increasing M8 grade CCL penetration [3][37][40]. Summary by Sections AI Server Market Outlook - The overall AI server CCL TAM is expected to account for approximately 71% of EMC's total revenue in 2025, increasing to 230% by 2027, while for GCE, the AI server PCB TAM will represent 230% of its total revenue in 2025 and 500% in 2027 [2][32]. - The report highlights that the ASIC AI server CCL/PCB TAM is projected to reach US$3.8 billion and US$9.1 billion in 2027, with GCE and EMC expected to gain significant market share [37][46]. Pricing and Profitability - There is a favorable outlook for average selling price (ASP) expansion for Taiwan CCL/PCB suppliers, with expectations of ASP increases of 19%, 11%, and 10% for GCE, EMC, and TUC respectively from 2024 to 2027 [8][64]. - The gross margins (GM) for GCE, EMC, and TUC are projected to improve significantly, with ASIC AI server average GM expected to be over 45% compared to the companies' average levels [63][74]. Capacity and Supply Dynamics - The report notes that the high-end CCL industry is expected to grow at a CAGR of 40% from 2024 to 2027, driven by increasing demand for M7+ grade CCL, while capacity expansion for high-end CCL is only expected to increase by 21% during the same period, leading to a supply-demand gap [15][26][58]. - The tightening supply conditions for high-end CCL and high layer count PCB are anticipated to lead to longer lead times and potential pricing hikes, benefiting key players in the industry [54][57].

Investment Rating - The report maintains a cautious outlook for oil prices, expecting a decline by 2026, while noting potential upside risks for 2025H2 [65]. Core Insights - Brent oil price has increased over 10% to $70 due to a shift in market focus from recession risks to supply disruption risks, low OECD stocks, and declining perceived spare capacity [8][10]. - The 2025H2 Brent price forecast has been raised by $5 to $66, while the 2026 forecast remains unchanged at $56 for Brent and $52 for WTI, reflecting a balance between higher long-dated prices and a wider surplus [19][34]. - The normalization of spare capacity is expected to lead to a rebound in prices after 2026, driven by low oil reserve life, declining capital expenditures, and anticipated demand growth over the next decade [61][62]. Summary by Sections Price Forecasts - The Brent price forecast for 2025H2 is increased to $66, and WTI is raised to $63, while the 2026 averages are maintained at $56 for Brent and $52 for WTI [19][34]. - The report anticipates a 1.0 million barrels per day (mb/d) surplus in 2025 and a wider 1.7 mb/d surplus in 2026, influenced by OPEC+ production adjustments [41][68]. Supply and Demand Dynamics - Global oil demand is projected to grow by 0.7 mb/d in 2025 and 0.9 mb/d in 2026, with notable increases in non-OECD demand [41][68]. - OECD commercial stocks are expected to remain lower than anticipated, impacting short-term price dynamics more than global stocks [21][22]. Market Risks and Scenarios - Price risks are more balanced, with potential upside scenarios including reduced Iranian supply, which could push Brent prices to a peak of $90 [49][53]. - Conversely, a full unwind of OPEC cuts could lead to Brent prices falling to around $40 in a recession scenario [49][54]. Long-Term Outlook - The report expresses confidence in a price rebound post-2026 due to tightening supply drivers, including low oil reserve life and a lack of new non-OPEC projects [61][62]. - The normalization in spare capacity is expected to support higher prices later in the decade, despite short-term excess supply [60][61].