Investment Rating - Industry View: In-Line [5] Core Insights - Dollar Stores are experiencing significant momentum, with an expected acceleration in share gains throughout 2025, potentially driving an incremental comp growth of approximately 200-250 basis points [3][18][22] - The combined share of Dollar Stores (DG, DLTR, FIVE, OLLI) nearly doubled in Q1'25, reaching around 3% of incremental retail sales, compared to 1.6% in Q4'24 [2][13] - Major retailers like AMZN, WMT, and COST continue to dominate the market, capturing approximately 43% of every incremental dollar of retail sales, making it challenging for other retailers to gain market share [4][7] Summary by Sections Dollar Store Performance - Dollar Stores benefited from a heightened degree of share donation in Q1'25, with an estimated $3 billion of donated share, significantly higher than the previous quarter [15][18] - The share gains for Dollar Stores are attributed to bankruptcies and store closures among competitors, as well as tariff impacts on certain retailers [3][18] Major Retailers' Market Share - In Q1'25, AMZN's share of incremental retail sales decreased to 20.7%, while WMT and COST gained shares, with WMT at 11.1% and COST at 11.3% [4][9] - COST's share of incremental retail sales has shown a steady increase since 2022, reaching 11.3% in Q1'25, indicating strong momentum [9][10] Future Projections - The analysis suggests that Dollar Stores will continue to see outsized incremental sales through the end of 2025, driven by ongoing share donations from competitors [18][22] - The expected decline in Temu's sales is projected to significantly impact the market dynamics, with a forecasted 37% year-over-year decline in Q2'25 [18][22]

Investment Rating - The industry view for Greater China Materials is rated as Attractive [6]. Core Insights - The potential for a second batch of nuclear power plant approvals in the second half of 2025 remains uncertain, but may increase if economic growth requires stimulus [3]. - China National Nuclear Power (CNNP) has sufficient sites to meet an approval speed of 10 nuclear units per year, with a budgeted capital expenditure for nuclear power expected to show significant growth in 2025 [3][9]. - The commercial application of fusion reactors is projected to be a long-term endeavor, around the 2050s, while small modular reactors (SMRs) are not expected to be built on a large scale in China [4][9]. - China Nuclear Engineering Corporation (CNEC) has a strong track record, having built 64 nuclear power units and currently constructing 32 units, indicating potential for accelerated construction starts [5][9]. Nuclear Supply and Uranium Insights - China National Uranium Co., the mining arm of the group, owns domestic resources and international assets, including the Rossing mine in Namibia and a greenfield mine in Mongolia [10]. - The group is actively exploring for uranium in various countries, including Uzbekistan, Namibia, and Zimbabwe, to secure more resources [10]. - Despite some growth in domestic supply, China is expected to continue relying primarily on overseas uranium resources to fuel its expanding nuclear fleet [10].

Group 1: Investment Recommendations - Morgan Stanley recommends an "Overweight" (OW) rating on Recruit, Mercari, Kakaku.com, and LY for FY25 2H due to their growth potential and profit generation capabilities[1][5] - Kakaku.com is expected to achieve double-digit year-over-year (YoY) growth in sales and operating profit (OP) driven by digitalization trends in the restaurant sector and the success of Kyujin Box[5][7] - Mercari is in an earnings expansion phase with high domestic e-commerce profits and new advertising business opportunities[5] Group 2: Financial Performance and Forecasts - Kakaku.com's revenue is projected to grow from JPY 66,928 million in FY24 to JPY 78,435 million in FY25, reflecting a 15% YoY increase[13] - Operating profit for Kakaku.com is expected to rise from JPY 25,819 million in FY24 to JPY 29,293 million in FY25, indicating a 35% YoY growth[13] - LY is anticipated to maintain high shareholder returns and introduce AI-enabled products starting in the second half of FY25[5] Group 3: Market Conditions and Challenges - Recruit is expected to see profit growth through margin improvements despite a sales decline forecast due to macroeconomic uncertainties[5] - Askul faces challenges in achieving double-digit earnings growth due to rising fixed costs associated with logistics and platform renewals[21] - Hakuhodo DY Holdings is projected to experience moderate profit expansion amid a recovering advertising market, with a focus on restoring pre-pandemic profit levels[15]

Investment Rating - The report assigns an "In-Line" industry view for North American REITs [4] Core Insights - Apartment REITs are experiencing fundamental tailwinds with declining deliveries and solid job growth, although there are concerns about potential peaking of new lease rates [2] - Senior housing has shown strong demand, with companies like WELL and AHR actively pursuing acquisitions [6][10] - Industrial fundamentals are better than expected, with a notable slowdown in construction starts, which may serve as a tailwind [11] - Retail leasing remains robust, with capital deployment being a key differentiator among companies [6][39] - The healthcare sector is seeing strong demand in senior housing, with significant acquisition activity reported [10][57] Apartment REITs - AvalonBay Communities reported a +2.3% year-over-year effective rent change for April and May, with occupancy improving to 96.3% [21] - Camden Property Trust is actively recycling capital and has made recent acquisitions [21] - Essex Property Trust noted that job postings are near historical averages, indicating growth potential [22] Senior Housing - Senior housing demand is robust, with occupancy growth exceeding expectations [10][57] - WELL announced $6.2 billion in acquisitions and loan funding through April [57] Industrial - Prologis and EastGroup Properties reported better-than-expected fundamentals, with a focus on occupancy over pricing [11][48] - Construction starts have decreased by 50% from pre-COVID levels, which may benefit the sector [11] Retail - Simon Property Group noted solid leasing activity despite tariff uncertainties [39] - Kimco Realty reported strong leasing activity and has raised guidance due to better-than-expected bad debt collection [39] Healthcare - The healthcare sector is seeing strong demand in senior housing, with AHR acquiring a 187-unit property for $65 million [57] - Ventas raised its 2025 normalized FFO per share guidance by 7% year-over-year [57] Single Family Rentals - American Homes 4 Rent reported a 4.3% growth in new leases for May, with a strong development pipeline [30] - Invitation Homes launched a developer lending program expected to generate $200-300 million annually [31] Storage - Public Storage and Extra Space Storage are experiencing mixed results, with occupancy gains but soft rental rates [32][34] - National Storage Affiliates is targeting positive same-store revenue growth by year-end [36] Office - Highwoods Properties is on track to meet leasing targets, with a strong pipeline of new and renewal prospects [61] - Paramount Group is exploring joint venture opportunities to enhance its portfolio [62] Triple Net REITs - Agree Realty is focusing on recession-resistant retailers and has implemented AI to streamline operations [64] - Realty Income maintains a strong balance sheet and is expanding its European presence [69]

Investment Rating - The report assigns an "Overweight" rating to OMA, indicating that the stock's total return is expected to exceed the total return of the relevant country MSCI Index over the next 12-18 months [6][33]. Core Insights - OMA's total passenger traffic increased by 6.9% year-over-year (Y/Y) in May, outperforming competitors GAP (+2.9%) and ASUR (-3.0%) in Mexico. Quarter-to-date (QTD) traffic is up 12.7% [2][4]. - International traffic saw a significant increase of 19.5% Y/Y, while domestic traffic grew by 5.1% Y/Y. Notably, Monterrey traffic increased by 17.8% Y/Y [2][10]. - The expected traffic growth for 2Q25 is projected to be around 11% Y/Y, slightly above consensus estimates [3]. Summary by Sections Traffic Performance - In May 2025, Monterrey recorded 1,302,000 passengers, a 17.8% increase from May 2024, while other airports saw a decrease of 4.1% Y/Y [4]. - Total passenger traffic for OMA in May 2025 was 2,354,000, up from 2,202,000 in May 2024 [4]. Market Position - OMA's market capitalization is currently M$95,610 million, with a price target set at US$105.00, compared to a closing price of US$103.21 on June 5, 2025 [6][11]. Valuation Methodology - The price target is based on a discounted cash flow (DCF) valuation using an 8.5% weighted average cost of capital (WACC) and assumes all Mexican airport concessions expire in 2048 with no terminal value [11].

Investment Rating - The report assigns an "Overweight" rating to Novonesis with a price target of DKK 577.00, indicating a positive outlook for the stock [6]. Core Insights - The report emphasizes that Novonesis is well-positioned to capture structural growth drivers, which could lead to an EBITDA margin expansion of 120 basis points from 2026 to 2028 [1]. - Concerns regarding the company's sensitivity to oil price volatility and mid-term growth expectations are addressed, with the report suggesting that operational gearing and unique offerings can mitigate these concerns [1][2]. - The report discusses the potential for Novonesis to exceed consensus expectations, particularly in EBITDA margins, driven by conservative volume drop-through assumptions and pricing growth [2][10]. Summary by Sections Growth Expectations - The report highlights a debate on whether Novonesis can surpass consensus expectations, with a focus on margin uplift forecasts for 2025 to 2027 [8]. - It is noted that the company is guiding for a 1% pricing growth, which is crucial for achieving higher margins [9]. Market Dynamics - The report interprets Nielsen data differently, suggesting that technology and innovation are favoring Novonesis in developed markets, while emerging markets are expected to grow at higher rates due to increased penetration and effective market strategies [3][17]. - The growth in bio-energy is discussed, indicating that recent trends show a decoupling from oil price dependence, with corn-ethanol economics being a significant factor for continued growth [4][22]. Financial Projections - Financial projections for Novonesis include expected sales growth from €3,946 million in 2024 to €4,889 million by 2027, with EBITDA increasing from €1,072 million to €1,963 million in the same period [6]. - The report anticipates a net debt of €2,619 million by the end of 2025, with a net debt to EBITDA ratio of 1.6 [6].

Investment Rating - The report maintains an "Overweight" rating for Tongcheng Travel (00780) [1] Core Insights - Morgan Stanley has raised the target price for Tongcheng Travel by 8%, from HKD 26 to HKD 28, based on the latest foreign exchange forecasts, while keeping profit forecasts and other key predictions unchanged [1] - The firm anticipates that China's tourism demand will remain strong this year, with consumer spending shifting from shopping to travel or experiences [1] - Tongcheng Travel is expected to continue expanding its market share driven by growth in lower-tier cities, cross-selling opportunities, new business initiatives, and international expansion [1]

Investment Rating - The report assigns an "Overweight" rating to Kunlun Energy (00135) [1] Core Views - Morgan Stanley slightly lowered the target price for Kunlun Energy by 2.2%, from HKD 9.1 to HKD 8.9 [1] - The update includes a new model incorporating 2024 performance and introduces forecasts for 2027 [1] - The earnings forecast for the company has been reduced to reflect a more conservative outlook on overall industry growth and a decrease in natural gas sales volume growth [1] - Given the increasing concerns about the macro environment, the market is expected to place more emphasis on the stock's defensive characteristics, leading to a slight premium in valuation [1]

May 23, 2025 06:24 AM GMT Amorepacific | Asia Pacific China business bottoming out Key Takeaways In 1Q25, AP turned around China OP. We expect China OP to improve from a W96bn loss in 2024 to a W4bn profit in 2025. M Update Morgan Stanley & Co. International plc, Seoul Branch+ Kelly H Kim, CFA Equity Analyst Kelly.Kim@morganstanley.com +82 2 399-4837 Jenna Lee Equity Analyst Jenna.Lee@morganstanley.com +82 2 399-4938 Amorepacific (090430.KS, 090430 KP) S. Korea Consumer | S. Korea | Stock Rating | | | Overw ...

Investment Rating - The report assigns an "Overweight" rating to Asahi Group Holdings [6] Core Views - The report suggests that the recent share price adjustment presents a buying opportunity due to strong earnings progress in the first quarter [1][2] - Asahi plans to increase soft drink prices in October, affecting approximately 70% of its products, which is expected to boost annual earnings by ¥5-8 billion [2] - Management remains committed to aggressive shareholder returns and share buyback programs despite potential M&A activities [3] Financial Overview - The price target for Asahi Group Holdings is set at ¥2,400, with the current share price at ¥1,869 [6] - Projected revenues for fiscal years ending December 2024 to December 2027 are ¥2,939.4 billion, ¥2,948.1 billion, ¥3,008.6 billion, and ¥3,077.1 billion respectively [6] - Operating profit estimates are ¥269.1 billion for FY 12/24, increasing to ¥334.2 billion by FY 12/27 [6] - Net income is projected to rise from ¥192.1 billion in FY 12/24 to ¥243.4 billion in FY 12/27 [6] Market Context - The beverage industry is viewed as "Attractive" by the report, indicating positive expectations for performance relative to the broader market [6] - The report highlights a steady recovery in on-premise sales in Australia, with expectations for improved sales channel mix as Asahi moves towards a premium product lineup [4]