Investment Rating - 12-month rating: Buy [5] - 12-month price target: US$152.00, up from US$133.00 [5][10] Core Insights - NetEase reported a strong Q1 2025 with significant bottom line beats, driven by mobile and PC game revenue growth [2][4] - PC game revenue grew 85% YoY, primarily due to the successful launch of Marvel Rivals and strong performance from existing titles [3] - Mobile game revenue decline narrowed to 4% YoY, with expectations for further improvement [3] - Management indicated a more prudent marketing strategy, resulting in lower selling and marketing expenses [3] - Despite a strong Q1, the company may enter a quieter period until the next major title launch [4] Financial Performance - Q1 2025 total revenues: Rmb28,829 million, a 7.4% YoY growth [11] - Net income (GAAP) for Q1 2025: Rmb10,301 million, a 35.6% increase YoY [11] - Gross margin improved to 64.1% in Q1 2025, up from 60.7% [11] - Expected revenues for FY 2025: Rmb113,876 million, with net earnings projected at Rmb40,226 million [8][11] Valuation Metrics - Current trading at 14x 2025E PE, below the 5-year mean of 15x [4] - DCF derived price target reflects a reasonable valuation compared to global gaming companies averaging 31x 2025 PE [4][10] - Forecast stock return of 27.6%, with a price appreciation of 25.1% and a dividend yield of 2.5% [13] Game Pipeline and Future Outlook - New game pipeline for 2025 includes MARVEL Mystic Mayhem and Destiny: Rising, with limited expectations [3] - Anticipated PC game growth of 46% in 2025, contingent on user engagement and updates for Marvel Rivals [3] - Management maintains a conservative outlook on sustaining current low marketing expenses in the near term [3]

Investment Rating - The report downgrades the investment rating for Insurance Australia Group (IAG) from Buy to Neutral, reflecting moderate value upside from the recent acquisition of RAC Insurance [2][6]. Core Views - IAG's acquisition of RAC Insurance is strategically and financially attractive, adding approximately 8% to IAG's Gross Written Premium (GWP) and increasing its market share in Western Australia (WA) from 8% to about 55% in Home and Motor insurance, pending ACCC approval [2][4][13]. - The total upfront consideration for the acquisition is A$1,350 million, which is internally funded and implies an annualized price-to-earnings (PE) ratio of 8.7x for 1H25, increasing to 10.8x post distribution costs [2][15]. - The deal is expected to be 6-10% accretive to earnings per share (EPS) post-synergies, with targeted synergies of A$100 million anticipated [3][19]. Summary by Sections Financial Metrics - IAG's FY25E EPS is revised up by 1.6%, FY26E remains flat, and FY27E is increased by 5.2%, reflecting better-than-expected catastrophe (CAT) outcomes and the incorporation of RAC Insurance from FY27E [5][28]. - The report estimates IAG's FY27E PE at 18x, which is considered fair value, with a price target raised to A$9.30 per share from A$8.30 [5][6]. Market Position - The acquisition will significantly enhance IAG's market position in WA, with RACI being the largest Home/Motor insurer in the region, holding approximately 47% market share [4][18]. - Post-acquisition, IAG's combined market share in WA is projected to reach around 55%, with 66% in Motor and 42% in Home insurance [20][21]. Profitability and Valuation - RACI's profitability metrics indicate a reported combined operating ratio (COR) of 84% and an insurance trading result (ITR) margin of 17.8% in 1H25, suggesting strong underlying performance [19][17]. - The report highlights that the targeted synergies from the acquisition are expected to outweigh the amortization charges associated with the distribution agreement [19][15].

Investment Rating - The report provides a general overview of the Singapore Real Estate Investment Trusts (SREITs) and Business Trusts, indicating a mixed performance with SREITs down 0.9% year-to-date and Developers up 2.8% [2]. Core Insights - SREITs are currently trading at a 6.18% estimated yield for 2025, which is 375 basis points higher than 10-year government bonds. The expected growth in Distribution Per Unit (DPU) for SREITs is projected at 0.3% per annum from 2024 to 2026, driven primarily by Healthcare (+9.3%) and Diversified sectors (+1.1%) [3]. - Investor sentiment remains positive regarding the data center thesis, particularly for Keppel DC REIT (KDC), with confidence in near-term rental growth. However, there are concerns about long-term visibility post-2027 for Singapore-based data centers [4]. - The report emphasizes a "barbell strategy" for investment, recommending a combination of KDC for growth and CapitaLand Integrated Commercial Trust (CICT) for defensive income to balance resilience and reflation [4]. Summary by Sections Market Overview - The combined market capitalization of the 40 listed REITs and Business Trusts in Singapore is approximately US$70.6 billion [2]. Performance Metrics - Year-to-date performance shows SREITs down 0.9% while Developers have increased by 2.8% [2]. - The report highlights specific price performances of various REITs, with Dasin Retail Trust showing a significant decline of 25% year-to-date, while BHG Retail REIT has increased by 17.8% [6]. Preferred Investments - Recommended SREITs for exposure include Keppel DC REIT, CapitaLand Integrated Commercial Trust, and CapitaLand Ascendas [5]. Price Performance Analysis - The report includes detailed price performance metrics for various REITs, indicating fluctuations over different time frames, with some REITs experiencing significant gains while others faced declines [8].

Investment Rating - The report assigns a Neutral rating to Inventec with a 12-month price target of NT$45, down from a previous target of NT$50 [7]. Core Insights - Inventec reported Q125 earnings with sales of NT$157.0 billion, reflecting a 21% decrease QoQ but a 20% increase YoY. The sales mix shifted to 49% notebooks and 48% servers, with AI servers constituting 50% of server sales [2][12]. - The company anticipates a 10% QoQ increase in Q225 sales to NT$173.0 billion, driven by strong demand for Blackwell HGX servers, although a stronger NT$ may dampen growth [3]. - Growth expectations for 2025 have been trimmed from 4% YoY to 2% YoY, influenced by flat demand in the second half and tariff impacts [4][19]. Financial Performance - For 2025, the expected EPS is NT$2.57, below the street estimate of NT$2.63, with a price target reduction reflecting a valuation of 16x 2026 EPS [5][27]. - The company's revenue projections show a gradual increase, with expected revenues of NT$663.8 billion in 2025 and NT$726.0 billion in 2026 [6][20]. Market Position and Valuation - Inventec is trading at a premium valuation of 17x/15x 2025-26 P/E, higher than its peers, indicating that the market has largely priced in growth expectations [10][27]. - The company has a solid market share in general servers and AI server motherboards, but may lag behind competitors like HonHai and Quanta in ramping up production [5][10]. Cash Flow and Dividends - The report indicates that Inventec's cash flows have been affected by cyclical earnings in PCs, but a return to positive free cash flow is projected in the coming years [21]. - A cash dividend of NT$1.70 has been declared, yielding approximately 4% at current levels, reflecting a high payout rate [21].

Investment Rating - The report assigns a "Buy" rating for the company with a 12-month target price of RMB 50.00, down from the previous target of RMB 58.00 [5][24]. Core Insights - The company's revenue for 2024 is projected to be RMB 2.18 billion, representing a year-on-year growth of 12.4%, while net profit is expected to decline by 58% to RMB 190 million due to a significant drop in valine prices and lower-than-expected sales of new products [1][2]. - In Q1, the company reported a net profit of RMB 51.1 million, a decrease of 41% year-on-year but an increase of 160% quarter-on-quarter, primarily driven by a 9.5% rise in the average price of valine [1][2]. - The company is focusing on new product sales and has adjusted some production lines to flexible production to respond to market conditions [3]. Summary by Sections Financial Performance - The company's amino acid product revenue grew by 3% to RMB 1.51 billion in 2024, but gross margin decreased by 13.32 percentage points to 30% due to a 37% drop in the average market price of valine [2]. - Vitamin product revenue fell by 5% to RMB 207 million, with a gross margin decline of 34.33 percentage points to 21% due to significant price drops in products like myo-inositol and D-calcium pantothenate [2]. - Other products, including malic acid and arbutin, saw a revenue increase of 319% to RMB 89 million, although gross margin decreased by 13.93 percentage points to 29% [2]. Product Development - The company is actively advancing projects for alternating production of amino acids and is implementing flexible production capabilities for products like succinic acid and malic acid [3]. Valuation - The target price has been adjusted to RMB 50 based on a DCF valuation method, reflecting a 22-51% downward revision in profit forecasts for 2025-2027 [4].

ab 18 October 2024 Global Research Life Sciences & Diagnostic Tools China Pharma Mfg Returned to Double-digit Growth in Sept. | --- | --- | |------------|-------| | Equities | | | Americas | | | Healthcare | | Bottom Line We track China's monthly industrial output data as a key indicator for the China end market health in our Life Sciences Tools coverage. The September high-technology manufacturing output growth was +10.1% vs. +8.6% in August. Pharma manufacturing output returned to double-digit growth in S ...

Investment Rating - The report indicates a cautious stance on emerging markets (EM) with a focus on selective opportunities, particularly in Chinese equities, while maintaining a skeptical view on broader EM asset performance [4][5][6]. Core Insights - The report highlights that the recent Chinese stimulus package is expected to primarily benefit Chinese assets, with equities trading at approximately a 30% price-to-book (P/B) discount compared to EM peers [5][9]. - There is skepticism regarding the effectiveness of the stimulus and Federal Reserve easing in accelerating growth, suggesting that the market may be under-positioned and could react positively in the short term [4][6]. - The report emphasizes that while local equities in China are likely to benefit, the risk/reward for commodities and the Chinese yuan (RMB) appears weaker [6][7]. Summary by Sections Global Strategy - The report notes that sentiment towards EM has improved, driven by significant developments including China's stimulus and the Fed's interest rate cuts, but remains cautious about long-term reflation [4][6]. - It suggests that the market may experience a short-term rally in EM assets, particularly in the lead-up to the US elections [4]. Chinese Market Focus - Chinese equities are viewed as inexpensive, with a strong potential for growth due to fiscal support for consumers, despite the lack of focus on housing recovery [5][9]. - The report indicates that while Chinese exporters have outperformed, the stimulus measures are more likely to impact market sentiment rather than macroeconomic realities [19]. Regional Opportunities - Other Asian markets, such as Korea and South Africa, are identified as potential beneficiaries of easing headwinds from China, with favorable valuations and growth outlooks [7][9]. - The report suggests a selective approach to foreign exchange (FX) carry trades, with a preference for currencies like the South African rand (ZAR) and Brazilian real (BRL) against certain peers [7][8].

ab 12 September 2024 Global Research and Evidence Lab | --- | --- | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------| | | | | Eu ...

ab 28 August 2024 Global Research and Evidence Lab China Economic Perspectives Home Destocking Debate and Property Forecast Downgrade Economics China Where are we now in the property downturn? China's property activities have not bottomed since the unprecedented sharp downturn in 2021. The decline in urban housing prices has accelerated since H2 2023 amid elevated inventory pressure, weighing on household home purchase intention, consumption confidence and local government finances. China has eased property ...

ab 26 August 2024 Global Research and Evidence Lab US Equity Strategy Earnings Brief 2Q24: August 26 NVDA (6.6% of S&P 500 market cap) reports earnings on Wednesday. EPS is expected to grow 137% (vs. 462% in 1Q24, and expectations of 76% in 3Q24). Reported earnings have beaten estimates for the past 5 quarters. 90.2% of the S&P 500's market cap has reported. 2Q expectations are for revenues to grow 5.1% and EPS by 11.3%. Growth among groups varies significantly, as shown in the table below (a blend of conse ...