Investment Rating - Maintain Buy on Chenbro, Auras, and E Ink [2] Core Insights - Chenbro's May revenues declined by 7% MoM to NT$1.8 billion, primarily due to FX impact and a high base, but new rack products are expected to support growth in 3Q25 [5][10] - Auras experienced a 20% MoM revenue decline in May due to FX impact and diversification of production sites, but is expected to benefit from rising liquid cooling adoption and expansion into ASIC AI servers [21][23] - E Ink's April revenues exceeded expectations, with a 50% YoY increase, driven by strong demand for e-readers and e-labels, although FX impact may affect future growth [38][39] Chenbro Summary - May revenues were NT$1.8 billion, 12% below estimates, with expectations for June revenues to remain stable [5][10] - 3Q25 revenues are anticipated to be supported by new noise-cancellation rack products and increased market share in ASIC AI servers [5][10] - Earnings revisions reflect a 3% reduction in net income estimates for 2025-27E due to lower revenues and higher operating expenses [11][12] Auras Summary - May revenues fell to NT$1.62 billion, with expectations for June revenues to remain at similar levels [21][26] - The company is projected to see a 19% QoQ revenue growth in 2Q25, driven by liquid cooling components and AI server expansion [21][23] - Earnings revisions indicate a slight increase in revenue estimates for 2025-27E, reflecting higher growth expectations in liquid cooling [27][28] E Ink Summary - April revenues were NT$3.31 billion, 14% above estimates, with a strong YoY growth of 50% [39][42] - The company expects revenues to stabilize in May and June, with 2Q25 revenues projected at NT$9.26 billion [42] - Earnings revisions show a reduction in net income estimates for 2025-27E due to macro uncertainties, but a positive outlook on e-paper adoption remains [44][45]

Investment Rating - The report assigns a "Buy" rating to Innovent Biologics with a revised 12-month price target of HK$74.95, reflecting an upside potential of 15.2% from the current price of HK$65.05 [15][9]. Core Insights - Innovent Biologics has shown encouraging survival benefits for its drug IBI363 in various cancer indications, particularly in IO-treated squamous and adeno NSCLC, with improved overall response rate (ORR) and progression-free survival (PFS) data compared to previous reports [1][2][12]. - The risk-adjusted sales forecast for IBI363 has been raised to US$3.2 billion by 2035, up from US$1.4 billion, due to the addition of 2L adeno NSCLC and an increase in the probability of success (POS) for other indications [1][9]. - The report highlights the importance of randomized controlled trials (RCT) to further validate the long-term benefits of IBI363, especially in the context of its mechanism of action that enhances the immune environment [7][12]. Summary by Sections Clinical Data - The updated phase 1 data for IBI363 indicates a median PFS of 9.3 months for the high-dose cohort, an increase from 7.3 months previously reported, and a median overall survival (mOS) of 15.3 months, suggesting a strong conversion from PFS to OS [2][7]. - In adeno NSCLC, the median PFS was shorter at 5.6 months, but the overall survival data remains competitive, indicating potential lasting benefits post-disease progression [3][7]. Market Position and Valuation - Innovent Biologics is positioned as a leading biopharma company in China with a robust pipeline of over 30 assets, including the leading PD-1 inhibitor sintilimab [12]. - The report emphasizes that Innovent is undervalued at current levels, with a high market-implied weighted average cost of capital (WACC) that does not fully reflect its strong revenue potential and pipeline [12]. Future Outlook - The ongoing phase 1b/2 trial for IBI363 in combination with chemotherapy in the first-line setting is expected to generate further discussions regarding its competitive safety profile and efficacy [8][12]. - The report anticipates that the company will maintain its leading position in the biotech sector in China, supported by strong commercialization capabilities and collaborations with global partners [12].

Investment Rating - The report maintains a positive outlook on cement, copper, and incrementally positive on steel and aluminium, while holding a negative view on coal and lithium [1][9]. Core Insights - Earnings estimates for China commodities have been refreshed, reflecting mark-to-market price changes for 1H25, with target price changes ranging from -13% to +12% [1][9]. - The report highlights a positive outlook for hog pricing/margin in 2H25E due to improved supply discipline [1][9]. Summary by Sector Steel - Earnings forecasts for Baosteel and Angang have been revised up by 1-4% for 2025E, while the loss-making forecast for Maanshan has been cut by 11% [10]. - Maintain Buy on Baosteel with a new target price of Rmb8.8/sh [10]. Coal - The thermal coal market is expected to remain balanced in 2025E, with a decline in demand driven by renewable energy expansion [11]. - Earnings forecasts for Shenhua, Chinacoal, and Yankuang have been cut by 2-11% for 2025E and 10-27% for 2026-27E [12]. Cement - Unit gross profit forecasts for cement have been revised down by Rmb2-6/t for 2025E, but a positive view is maintained for 2H25E due to supply discipline [13]. - Earnings estimates for CNBM, WCC, BBMG-H/A, Conch-H/A, and CRBMT have been cut by 6% to 18% for 2025E [14]. Aluminum - Earnings estimates for Hongqiao have been revised up by 5-27% for 2025-27E, reflecting higher industry spread forecasts [17]. - Maintain Neutral on Hongqiao with a target price of HK$12.5/sh [17]. Copper - The benchmark copper price forecast has been revised to an average of US$4.20/lb in 2025E and US$4.61/lb in 2026E [18]. - Earnings estimates for CMOC-H/A, JXC-H/A, and MMG have been cut by 1-18% for 2025-26E [18]. Lithium - Earnings estimates for Ganfeng, Tianqi, and Yongxing have been cut by 3-4% for 2025E due to lower lithium prices [20]. - Yongxing's 2027E earnings have been cut by 37% based on flat lithium price forecasts [20]. Paper - Earnings forecasts for ND Paper have been revised up by 3-4%, while Sunpaper's earnings have been cut by 3% [22].

Investment Rating - The report does not explicitly provide an investment rating for the industry or assets discussed Core Insights - Fiscal sustainability has gained increased attention from investors in the US, UK, and Japan, particularly regarding the US's persistent deficit and its impact on foreign demand for US assets [2][4] - The relationship between fiscal expansion and the Dollar is mixed, generally depending on the business cycle and monetary policy, but historically, greater US net issuance tends to be positive for the Dollar [4][5][21] - Concerns about fiscal sustainability and a declining appetite for US assets from foreign investors could lead to higher yields and a weaker Dollar, altering the historical relationship between fiscal expansion and currency strength [5][21] Summary by Sections Fiscal Risks and the Dollar - Investors are increasingly focused on fiscal sustainability, particularly in the context of the US's large and persistent deficit [2][4] - The effect of fiscal expansion on the Dollar varies, but on average, increased US net issuance is typically Dollar-positive due to structural foreign demand for Treasuries [4][5][14] Market Reactions - Pricing of US fiscal risks shows different implications across various foreign exchange (FX) pairs, with high-yielding currencies being more affected by steepening US yield curves [4][18] - A widening in US credit default swaps is often linked to underperformance in cyclical currencies [18][21] Historical Context - Historically, greater net issuance in the US has been associated with a stronger Dollar, but this relationship may not hold as foreign demand for US assets diminishes [5][14][21] - Other G4 economies do not exhibit the same positive relationship between net issuance and currency returns as seen in the US [10][11] Implications for Investors - Investors have accepted higher yields as compensation for holding US debt, but concerns about fiscal sustainability may now lead to a weaker Dollar as well [21] - The report suggests that the historical relationship between US issuance, foreign inflows, and the Dollar may begin to resemble that of other economies if current trends continue [14][21]

Investment Rating - The report indicates a positive outlook for the S&P 500 with a return forecast of +8% over the next 12 months, targeting a price of 6500 [3][46]. Core Insights - The report emphasizes the resilience of hard economic data, with nonfarm payrolls increasing by 139,000 in May and the unemployment rate steady at 4.2%. However, a softening of economic data is expected in the coming months [2][4]. - Market rotations suggest that investors are pricing in an optimistic growth outlook, reflected in the performance of cyclical versus defensive stocks, which indicates a real GDP growth environment of approximately 2% [6][2]. - Goldman Sachs economists forecast a slowdown in real GDP growth to 0.4% on a quarter-over-quarter annualized basis in Q4 2025, followed by a rebound to 2.0% by Q4 2026 [5][20]. Summary by Sections Economic Data - The report highlights that while hard economic data remains strong, soft data has shown signs of recovery, which typically precedes improvements in hard data during past recessions [12][16]. - The S&P 500 has been more correlated with soft data than hard data, suggesting that continued improvement in soft data could support equity returns even if hard data weakens [16][30]. Market Outlook - Investors appear to be looking beyond near-term economic weakness, with expectations of a rebound in GDP growth by 2026, supported by improvements in soft data and favorable trade policy signals [20][36]. - The report notes that the market's pricing of economic growth may be less optimistic than indicated by the cyclical versus defensive stock performance, as high operating leverage stocks are trading at a significant valuation discount compared to low operating leverage stocks [30][31]. Sector Analysis - The report discusses sector-neutral baskets of economically sensitive stocks, indicating that cyclical stocks have lagged behind defensive stocks year-to-date, suggesting a cautious market sentiment [26][30]. - The valuation for high operating leverage stocks indicates that the market is pricing in downside risks to the economic growth outlook, with a historic valuation discount observed [30][33].

Investment Rating - The report assigns a "Buy" rating to Costco Wholesale (COST) with a 12-month price target of $1,133, indicating an upside potential of 7.3% from the current price of $1,055.59 [9][10]. Core Insights - Costco's May same-store sales (SSS) growth was +6.0%, slightly below the consensus estimate of +6.2% and down from +6.7% in April. U.S. comparable sales (ex-gas) were +5.5%, also below the consensus of +6.4% and down from +7.1% in April. The company noted a negative impact from cannibalization of approximately 70 basis points in May [1]. - Worldwide traffic growth decelerated to +3.4% in May, compared to +4.2% in April. U.S. traffic growth also slowed to +2.8% from +5.0% in April, while global ticket sales (ex-gas/FX) increased by an estimated +2.6% [2]. Sales Performance - The report highlights that the Fresh category saw high-single-digit growth, driven by strong performance in meat and bakery. Food & Sundries grew mid-single-digit to high-single-digit, while non-foods increased mid-single-digit. The ancillary business, however, decreased low-single-digit to mid-single-digit [8]. Financial Metrics - The report provides financial forecasts for Costco, projecting revenues of $254.45 billion for the current year, increasing to $310.24 billion by 2027. EBITDA is expected to grow from $11.52 billion to $15.45 billion over the same period. The earnings per share (EPS) is forecasted to rise from $16.56 to $21.51 [10].

Investment Rating - The report gives a "green light" for the short-term outlook of US equities, indicating a positive investment sentiment [2]. Core Insights - The market is experiencing upward momentum until summer technicals and economic data come into play, with investors likely to be halted before any significant drawdown occurs [3]. - Retail investors are actively buying dips in US equities, while institutional activity remains muted [2]. - Robust liquidity is noted, with top of book liquidity at $11.08 million, above the one-year average of $10.65 million, supporting healthy trading in the near term [7][8]. Summary by Sections Market Setup - The report highlights a preference for specific trades, including SPX call spreads and hedging strategies for long positions [5]. - The liquidity environment is described as supportive for trading, although it may lose momentum as summer approaches [8]. Trading Activity - US equities have seen net buying for six consecutive sessions, with a notable increase in long buys, indicating strong market interest [27]. - The overall gross leverage has increased to 289.2%, placing it in the 95th percentile for the past year, driven by short leverage [28][29]. Seasonal Trends - The report notes that early to mid-June typically sees moderate market increases, providing a favorable trading environment, especially for bearish long-term views [64]. ETF Flows - Significant inflows into factor ETFs were observed, with May being the best month for inflows since the election, indicating strong investor interest in momentum strategies [43][50]. - The report also mentions a growing interest from global investors in emerging market equities due to USD weakness and US growth uncertainty [54].

Investment Rating - The report assigns a "Buy" rating to Xiaomi Corp. with a 12-month target price of HK$65, indicating an upside potential of 27.6% from the current price of HK$50.95 [17][20]. Core Insights - Xiaomi's GMV (Gross Merchandise Value) during the first phase of the 6.18 shopping festival reached Rmb16.9 billion, representing a 64% year-over-year increase compared to Rmb10.3 billion at the same time in 2024 [3][5]. - The report highlights that Xiaomi's flagship series did not make the top 10 list this year, attributed to aggressive inventory clearance by Apple, which temporarily increased competition in the premium segment [1][3]. - Xiaomi's discount level during the 6.18 festival is noted to be more disciplined at around 16%, compared to 22% during the same period last year, with potential discounts reaching up to 29% when considering national subsidies [4][16]. Summary by Sections Sales Performance - Xiaomi ranked No.1/2 in sales volume and GMV among domestic smartphone brands on JD.com, maintaining four of the top 10 best-selling models [3][7]. - The company experienced stronger GMV growth in smartphones (+46%/110% year-over-year) compared to AIoT products (+39%/91% year-over-year) at its proprietary channels [7]. Competitive Landscape - Apple's aggressive inventory clearance has led to a temporary recovery in its market share in China, with a noted increase of 6.6 percentage points year-over-year [1][13]. - The report anticipates that the ratio of Phase I GMV to total shopping festival GMV for this year's 6.18 shopping festival will be around 50%, higher than previous years [3][10]. Future Outlook - Xiaomi is positioned for multi-year ecosystem expansion with projected revenue and EPS CAGRs of 26% and 39% from 2024 to 2027, supported by its "Human x Car x Home" strategy [17][18]. - The report emphasizes Xiaomi's robust balance sheet and competitive advantages in the EV supply chain, enhancing its appeal in the electric vehicle market [17].

Investment Rating - The report maintains a Neutral rating for HUTCHMED (HCM) with a 12-month price target of $18 for the ADR listed in the US, indicating a potential upside of 32.4% from the current price of $13.60 [12][14]. Core Insights - Increased investor focus is expected on savolitinib following data presentations at ASCO, with the company highlighting severe under-detection of MET amplification when using NGS testing compared to FISH testing [1][2]. - The company’s internal unpublished data suggests that only about 30% of patients who test positive for MET amplification via FISH would also test positive using the NGS method [2]. - The global Phase 3 SAFRON study of savolitinib in combination with osimertinib will offer patients the option of two companion diagnostics: FISH and IHC methods [2]. Summary by Sections MET Amplification Testing - Testing for MET amplification is crucial for patient selection, with a cross-study analysis indicating that NGS testing severely under-detects the biomarker compared to FISH [2]. - The MARIPOSA-2 study detected MET amplification in 14% of patients using ctDNA NGS, while the SACHI study showed approximately 30% detection using tissue FISH [5]. Clinical Efficacy - The SACHI study demonstrated a median progression-free survival (PFS) of 8.2 months for the savolitinib plus osimertinib combination compared to 4.5 months for chemotherapy, with a statistically significant hazard ratio of 0.34 [5][6]. - For patients previously treated with a 3rd-generation EGFR TKI, the median PFS was 6.9 months for the combination arm versus 3.0 months for chemotherapy, also showing a significant difference [6]. Safety Profile - The SAVANNAH study indicated a promising PFS curve separation with a manageable safety profile, although adverse events leading to dose interruption of savolitinib occurred in approximately 48% of patients [9].

Investment Rating - The report assigns a "Buy" rating to Xtep International Holdings with a 12-month price target of HK$7.00, indicating an upside potential of 19.9% from the current price of HK$5.84 [10][11]. Core Insights - The company has reiterated its full-year guidance, expecting positive sales growth at the group level, with Saucony and Merrell brands projected to achieve 30%-40% sales growth and over 10% year-on-year net profit growth [2][10]. - Xtep's core business has maintained stable discount levels in the second quarter of 2025, attributed to healthy inventory levels [7][10]. - Management believes that Xtep's established brand recognition and ecosystem provide a competitive advantage in the growing running category [7][10]. Summary by Sections Full Year Guidance - The company expects to deliver positive sales growth at the group level, with Saucony and Merrell brands projected to achieve 30%-40% sales growth and over 10% year-on-year net profit growth [2][10]. Xtep Core - The discount level has remained stable in the second quarter of 2025 due to healthy inventory levels, and the brand is focusing on maintaining stable profit margins [7][10]. Saucony Brand - In the second half of 2025, management anticipates a broader product assortment to meet functional and fashion demands, including new fabrics and an increased focus on women's products, aiming to raise the female sales mix from 10-20% to 30% within the next 1-2 years [4][8]. - The company aims to double Saucony's revenue by 2027 through store expansion, targeting 30-50 new stores annually and enhancing store productivity [4][8].