Yulia Zhestkova Grigsby +1(646)446-3905 | yulia.grigsby@gs.com 26 May 2025 | 7:59PM EDT Oil Comment: GS Top Projects Takeaways: Strong Supply in 2025-2026, Tighter Later n We identify takeaways from our equity analysts' 2025 Top Projects review of the world's major upstream oil projects. This review supports our below-the-forwards Brent/WTI oil price forecasts of $60/56 for the remainder of 2025 and $56/52 in 2026, but has positive implications for prices in the long term. n 2025-2026: Strong Non-OPEC ex Sh ...

Investment Rating - The report downgrades the investment rating of Sumitomo Metal Mining from Buy to Sell [1][18]. Core Views - The report indicates a noticeable deterioration in margins for several of Sumitomo Metal Mining's products due to a global slowdown in Battery Electric Vehicle (BEV) demand, leading to significant impairment losses in its nickel and cathode materials businesses [1][15]. - The target price has been reduced to ¥3,100 from ¥4,100, reflecting a projected 8% downside compared to the current share price [1][18]. - The report highlights a shift in technological trends in cathode materials, which may hinder Sumitomo Metal Mining's competitive edge in the market [1][15]. Financial Estimates - The FY3/26 pretax profit estimate has been cut by 30% to ¥97 billion, which is below both the company's guidance of ¥100 billion and the Bloomberg consensus of ¥105 billion [2]. - The mineral resources segment is expected to perform better than guidance, with an estimate of ¥103.4 billion, while the smelting and refining segment is projected to incur losses of ¥5.6 billion [2][12]. - The report anticipates a significant decline in total revenue growth, projecting a decrease of 6.6% for FY3/26, followed by modest growth in subsequent years [12][20]. Business Segment Performance - The report notes substantial impairment losses of ¥57.3 billion in the cathode materials business due to a transition from nickel-cobalt-aluminum oxide (NCA) to nickel-manganese-cobalt oxide (NMC) technology [15][16]. - The mineral resources segment is expected to maintain a strong performance, while the materials segment is likely to remain in the red until a successful transition to mass production of NCM is achieved [16][20]. - The report emphasizes that the competitive landscape for NCM is challenging, particularly for Japanese manufacturers like Sumitomo Metal Mining [16][20]. Market Context - The report discusses the broader market context, noting that BEV demand is slowing, particularly in the US and Europe, which may impact the company's future performance [1][32]. - It highlights that the company's share price has underperformed significantly, declining 39% since April 2022, compared to a 47% increase in the TOPIX index [18][19]. - The report also mentions potential upside risks, including increased metal prices and a renewed acceleration in BEV demand, which could positively influence the company's performance [1][29][32].

Investment Rating - The report downgrades the investment rating of IMI Plc to Neutral from Buy, with a lowered 12-month target price of 2,120p, down from 2,220p [1][11]. Core Insights - The downgrade reflects revisions in estimates due to a sharp decline in US ISM manufacturing PMIs, updated capex trackers, IMI's 1Q25 trading update, and increased foreign exchange headwinds [1][11]. - The adjusted FY25 earnings per share (EPS) forecast is lowered from 133.1p to 129.8p, moving to the lower end of the group's guidance of 129p-136p [1][11]. - The report anticipates a balanced risk-reward scenario for IMI in the upcoming quarters, with expected growth in Climate Control and Life Science & Fluid Control businesses, despite headwinds in short-cycle businesses [2][11]. Financial Forecasts - FY25 revenue is projected at £2,238.1 million, with a reduction in sales, adjusted EBIT, and adjusted net income forecasts by approximately 5% each [1][8]. - The adjusted EBIT margin forecast remains unchanged at 20.1%, reflecting a shift towards the Automation segment [1][8]. - The report indicates a 9% reduction in FY25 free cash flow forecasts due to lower earnings and an increase in capex by approximately £10 million [1][8]. Segment Analysis - The Automation segment's growth forecast has been lowered, primarily due to a 7% year-over-year decline in Q1 and a significant drop in the US ISM manufacturing PMIs [12]. - The Life Technology segment's forecast reflects a modest recovery in demand, while the Transport business is under strategic review due to anticipated declines [13]. - The Climate Control segment is expected to grow by 4.2%, benefiting from ongoing demand for energy-efficient HVAC products [13].

Investment Rating - The report assigns a "Buy" rating to PDD Holdings with a 12-month sum-of-the-parts (SOTP) based target price of US$152, indicating an upside potential of 27.5% from the current price of US$119.24 [9][10]. Core Insights - PDD Holdings reported mixed results for 1Q25, with a 10% year-over-year increase in net revenues, but a significant 36% decline in adjusted EBIT. The online marketing revenue grew by 15% year-over-year, aligning with expectations [1][2]. - The negative market reaction, with a 17% drop in pre-market trading, was primarily due to a profit miss attributed to higher-than-expected Selling & Marketing expenses during a typically low season [1][2]. - The company is focusing on investments in its platform ecosystem to support small and medium-sized enterprises (SMEs), allowing them to compete effectively on pricing [1]. Revenue Performance - Online marketing revenue for 1Q25 was reported at RMB 48.722 million, reflecting a 15% year-over-year growth, which was in line with Goldman Sachs estimates and above the Visible Alpha consensus [2][10]. - Transaction commission revenue grew by only 6% year-over-year, falling short of expectations due to a shift in Temu's business model and ongoing investments in the platform ecosystem [2][10]. Future Outlook - Key discussion points for the results call include Pinduoduo's growth drivers, the impact of ongoing investments, and the differentiation of Temu's revenue outlook amidst changing market conditions [3]. - The report highlights potential challenges such as geopolitical headwinds, increased competition, and the need for reinvestments to sustain growth, which may affect core profit margins [9].

Meituan - Investment Rating: Buy [1] - Core View: Meituan reported a solid profit beat in 1Q25, but faces challenges due to increased competition in food delivery, leading to elevated subsidies that will impact near-term profits [1] - Revenue Forecasts: 2Q core local commerce revenue growth is forecasted at +11% year-on-year, while profit is expected to decline by -35% year-on-year [1] - Adjusted EBIT: For FY25, adjusted EBIT is estimated at Rmb44.7 billion, a decrease of -15% year-on-year [1] - Target Price: The 12-month target price is lowered to HK$172 [1] Varun Beverages - Investment Rating: Initiate at Buy with a 12-month target price of Rs600 [2] - Market Position: Varun Beverages is positioned to grow in India's RTD beverages market, with Pepsi's market share increasing from 28% in 2015 to 38% in 2024 [2] - Profitability: The company has a strong track record of improving profitability in acquired territories, particularly in Africa [2] - Free Cash Flow: An inflection in free cash flow is expected over CY24-27 due to steady growth in operating cash flow and moderated capital expenditures [2] BYD - Investment Rating: Buy [4] - Promotion Impact: The impact of BYD's "618" promotion is expected to be less severe than feared, with an average price reduction of Rmb10,000 on 12 models [4] - Revenue Impact: The promotion is estimated to have a Rmb2.6 billion impact on BYD's top line, equivalent to 5% of 2025E net profit [4] - Target Price: The 12-month target price is adjusted down by 3% to Rmb424/HK$416 [4] WiseTech Global - Investment Rating: Buy [4] - Acquisition: WiseTech announced the acquisition of E2open for US$2.1 billion, which is expected to be accretive to FY27E EPS by +8% to 10% [4] - Growth Outlook: The acquisition is seen as a significant step towards WiseTech's goal of becoming the operating system for global trade and logistics [4] - Target Price: The 12-month target price is A$126 [4] Trip.com - Investment Rating: Buy [7] - Strategic Initiatives: Trip.com aims to enhance its position as a leading OTA in Asia through overseas investments and a full-funnel marketing strategy [7] - Customer Focus: The company emphasizes excellent customer service and innovation in tourism services [7] - Target Price: The 12-month target price is US$78/HK$608 [7] Mitsui Fudosan - Investment Rating: Buy [7] - Overseas Expansion: Mitsui Fudosan is looking to expand its overseas business and address rising construction costs [7] - Target Price: The 12-month target price is ¥1,500 [7] Toray Industries - Investment Rating: Buy [7] - Profit Growth: Toray expects strong profit growth supported by structural reforms and a focus on ROIC management [7] - Target Price: The 12-month target price is ¥1,030 [7]

Investment Rating - The report assigns a Neutral rating to AutoZone Inc. (AZO) with a 12-month price target of $3,811, indicating a downside potential of 0.4% from the current price of $3,826.46 [9][11]. Core Insights - AutoZone reported a 3Q25 EPS of $35.36, which was below the Goldman Sachs estimate of $35.91 and consensus of $37.11. The total company same-store sales increased by 5.4%, exceeding the GS/consensus estimates of 3.1%/3.2% [1][8]. - Domestic same-store sales rose by 5.0% year-over-year, while international same-store sales (excluding foreign exchange) increased by 8.1%. The report estimates that DIFM same-store sales grew by 9.8% year-over-year, while DIY sales increased by 3.0% [1][4]. - The EBIT margin decreased by 185 basis points year-over-year to 19.4%, which was below the GS estimate of 20.8% and consensus of 20.5%. This decline was attributed to a gross margin decrease of 77 basis points to 52.7% and an increase in SG&A as a percentage of sales to 33.3% [1][4][8]. Summary by Relevant Sections Financial Performance - AutoZone's total sales for 3Q25 were reported at $4,464 million, reflecting a sales growth of 5.4% compared to the previous year. The gross profit was $2,354 million, with a gross margin of 52.7%, which was below expectations [8]. - SG&A expenses increased by 8.9% year-over-year to $1,487 million, with the SG&A ratio at 33.3%, slightly above the GS estimate of 32.4% [4][8]. Inventory and Debt - The company ended the quarter with $6,823 million in inventory, representing a 10.8% year-over-year increase. The accounts payable to inventory ratio was 115.6%, down from 119.7% in the prior year [4][7]. - AutoZone's adjusted debt to EBITDAR ratio remained stable at 2.5x, consistent with the previous year and quarter [7]. Market Expectations - The report anticipates a negative market reaction to the earnings miss, particularly due to the lower-than-expected gross margin. Key areas of focus for future commentary include gross margin expectations for 4Q, inventory availability, and the health of the DIY consumer [6].

Investment Rating - The investment rating for Nomura Research Institute is Neutral [6][8]. Core Insights - The management meeting highlighted that while some manufacturing customers are cautious about investments, the overall business environment in Japan remains solid, with limited negative impact on earnings [4][6]. - NRI plans to gradually implement generative AI in systems development from the second half of 2025 to 2026, although the positive earnings impact is expected to take time [4][5][6]. - NRI is not actively pursuing domestic acquisitions but is exploring joint ventures and acquisitions of companies with intellectual property assets as future options [5][6]. Business Environment - NRI's sales exposure to cautious manufacturing customers is low, limiting the negative impact on overall earnings [4]. - The domestic demand environment is solid for both consulting and system integration, while overseas operations, particularly in Australia, face challenges [4][6]. - A business model shift is planned for the Australian market to improve profitability over the next few years [4][6]. Innovation in Production - NRI is ahead of the industry in applying generative AI to systems development, with gradual implementation expected from 2H25 to 2026 [4][5][6]. - The application of AI in various phases of development is progressing, but a consistent process will take time to establish [4][5]. Industry Reorganization and Corporate Acquisitions - NRI is not currently looking to acquire overseas companies due to a challenging business environment [5][6]. - The company is exploring potential joint ventures with customers and acquisitions of companies with IP assets to strengthen its business platform [5][6].

27 May 2025 | 4:37PM JST Unipres Corp. (5949.T) Stepping up cost savings to improve earnings structure, but volume outlook at major customer still unclear; stay Sell 5949.T 12m Price Target: ¥810 Price: ¥966 Downside: 16.1% Impact of Nissan restructuring not fully factored in Unipres' results briefing held on May 27 outlined the path to the company's FY3/26 operating profit guidance of ¥8 bn (vs. ¥12.2 bn in FY3/25). The company also announced its new 3-year medium-term plan for FY3/26-FY3/28. While sales a ...

Group 1: Inflation Trends in CEEMEA - Headline inflation in the CEE-3 countries showed significant declines: Poland decreased by 0.6pp to 4.3%yoy, Hungary down by 0.5pp to 4.2%yoy, and Czechia down by 0.9pp to 1.8%yoy[1][2] - In contrast, Israel experienced a notable increase in inflation from 3.3%yoy to 3.6%yoy, primarily due to a one-time 16% hike in airline fees[1] - Mixed inflation trends were observed in other regions, with Russia's inflation slightly down to 10.2%yoy, Turkey at 37.9%yoy, and South Africa up to 2.8%yoy[2] Group 2: Core Inflation Insights - Core inflation fell sharply in Czechia and Poland to 3.3%yoy and 3.6%yoy respectively, while it rose significantly in Ukraine to 11.5%yoy[3] - Core inflation remained stable in Hungary (5.2%yoy), Israel (3.1%yoy), Romania (4.7%yoy), Russia (9.4%yoy), South Africa (3.5%yoy), and Turkey (33.3%yoy)[3] Group 3: Economic Outlook and Forecasts - The CEEMEA outlook suggests a dovish stance due to ongoing disinflationary processes, with core inflation dynamics weakening across most countries except Russia, Ukraine, and Israel[4] - Average annual inflation forecasts for 2025 indicate lower expectations across several countries, with Czechia at 1.9%yoy, Hungary at 4.4%yoy, and Poland at 3.8%yoy, all below consensus[8][19][29]

Investment Rating - The report maintains a "Buy" rating for OneStream (OS), Vertex (VERX), and Waystar (WAY) based on increasing conviction following Q1 results and recent events [5][6][13]. Core Insights - The median stock in the SMID-cap software coverage is down approximately 15% year-to-date, contrasting with the S&P 500's decline of about 1%. Despite this, Q1 results were generally better than feared, with no companies lowering the high-end of their FY revenue guidance [17][19]. - The report emphasizes that management messaging has become crucial for share performance, with companies that provided clear guidance being rewarded, while those with less clarity faced negative reactions [37][39]. Key Themes Emerging from Q1 Results 1. Revenue performance was better than expected, with median revenue coming in about 1% ahead of consensus expectations [18][22]. 2. Profitability margins exceeded consensus by approximately 1.3%, although full-year outlooks remained largely unchanged [27][29]. 3. Management commentary was critical, influencing share performance more than formal guidance in some cases [37][38]. 4. Buyer behavior remained stable despite macro uncertainty, with some companies emphasizing faster time-to-value to address budget scrutiny [42][44]. 5. AI strategies are gaining focus, with companies beginning to discuss their AI roadmaps more deliberately [45][46]. Sub-Sector Takeaways - **Vertical Software**: Stocks are down about 10% year-to-date but have shown resilience with a median revenue and profitability performance coming in 2% and 9% ahead of consensus expectations, respectively [49][51]. - **Back Office Software**: Stocks are down approximately 10% year-to-date but have improved by about 16% since Q1 results, with median revenue and profitability also exceeding expectations [52][53]. - **Front Office Software**: Stocks have seen a significant decline of around 29% year-to-date, but median revenue and profitability were 1% and 6% ahead of guidance, respectively [54][56].