Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The overseas holding of US Treasury bonds has significantly decreased from 50% in 2012 to approximately 30% currently, with a more pronounced decline in official overseas holdings from 70% in 2014 to 45% [1][3] - Japanese institutional investors have generally favored net purchases of US Treasury bonds since 2010, benefiting from Japan's long-term low interest rate environment and LDT strategy aimed at enhancing yields, with exceptions noted in 2013 and 2022 due to Federal Reserve policy adjustments [1][4] - The Bank of Japan, as a significant holder of US Treasury bonds, exhibits a wave trading strategy, selling during interest rate increases and buying when rates decline, reflecting a flexible response to Federal Reserve policies [1][8] - The Agricultural and Forestry Central Bank has drawn attention due to substantial losses in 2024, with a high proportion of its securities investment business and an extreme application of the LDT strategy, having nearly completed its planned reduction of US Treasury bond holdings [1][10] - Japanese commercial banks typically engage in net selling during Federal Reserve rate hike cycles, indicating a strategy of optimizing investment portfolios and controlling risks through phased profit-taking or bottom-fishing [1][11] Summary by Sections US Treasury Market Dynamics - Recent volatility in the US Treasury market is driven by multiple factors, including tariff measures, concerns over US assets and stagflation, and deteriorating market liquidity [2][17] - Data does not support rumors of significant US Treasury bond reductions by Chinese and Japanese officials, as overall foreign holdings have decreased but not to the extent suggested [3][20] Japanese Institutional Investor Strategies - Japanese institutional investors have shown a consistent tendency to purchase US Treasury bonds, particularly under the LDT strategy, despite exceptions during periods of market turmoil [4][5] - In times of global financial market turbulence, Japanese institutional investors maintain a strong net buying inclination towards US Treasury bonds, leveraging their safe-haven status [5][18] - Different types of Japanese institutional investors exhibit distinct strategies, with banks operating flexibly and insurance companies employing high hedging ratios due to domestic liabilities [13][19] Impact of Federal Reserve Policies - The Federal Reserve's rate hikes typically lead to increased US Treasury yields, prompting Japanese commercial banks to engage in net selling, reflecting their adaptive strategies to international financial conditions [11][19] - The Agricultural and Forestry Central Bank's net selling actions are seen as stop-loss measures rather than primary drivers of market volatility, with its holdings being less significant compared to larger banks [12][10] Asset Allocation Trends - There is a clear trend of diversification in foreign official holdings of US Treasury bonds, decreasing from 70% to 45% over the past decade, indicating a shift towards multi-asset strategies to mitigate risks [6][21] - The Government Pension Investment Fund (GPIF) has adjusted its investment strategy to increase foreign securities in response to aging demographics, impacting the US Treasury market during stock market fluctuations [14][15]

Investment Rating - The report indicates a negative outlook for the home appliance industry due to significant tariff impacts on exports to the U.S. starting from April 2025 [1][2]. Core Insights - The direct export of home appliances from China to the U.S. accounts for approximately 20%, and this is expected to decline significantly due to tariffs, affecting overall export growth [1][2]. - Samsung's home appliance business contributes about 20% to its total revenue, while LG's contribution is around 45%, with both companies facing tariff disruptions [1][3]. - Mexico is highlighted as a tax haven benefiting from the USMCA agreement, making it crucial for home appliance companies to mitigate tariff impacts, especially in light of unfavorable negotiations in Southeast Asia [1][5]. - Companies with higher production capacities in North America or Mexico, such as Haier and Hisense, are deemed to have stronger risk resilience [1][6]. - Emerging markets like Vietnam and Malaysia are performing well, while Thailand faces challenges. Brazil's air conditioning sales have surged nearly 50%, with a projected growth of about 15% in 2025 [1][12]. Summary by Sections Tariff Impact on Exports - The report anticipates a noticeable decline in direct exports to the U.S. starting April 2025, which will negatively impact overall export growth [2][3]. Competitor Analysis - Samsung and LG are both affected by tariffs, with Samsung's black appliances showing stronger profitability compared to white appliances [3][8]. - LG focuses more on white appliances, with a significant market share in North America [8][9]. Production Capacity and Risk Assessment - Companies with substantial production in North America or Mexico are better positioned to withstand tariff impacts, while those concentrated in Southeast Asia face greater challenges [6][10]. - The competitive landscape in the U.S. white appliance market shows that Korean companies are at a disadvantage compared to Chinese firms like Haier, which have a higher local production capacity [10]. Emerging Market Performance - Southeast Asia shows varied performance, with Vietnam and Malaysia thriving, while Thailand is under pressure due to low economic growth and aging population [12][13]. - Brazil's air conditioning market is expected to continue its growth trajectory, while the Middle East's demand is heavily influenced by oil price fluctuations [15][19]. Investment Recommendations - The report suggests focusing on companies with high domestic sales and those benefiting from post-real estate cycle growth and government subsidies, while also highlighting small enterprises with high export ratios and strong brand presence [20].

Investment Rating - The report indicates a stable investment environment in the Japanese beverage market, characterized by a price-to-earnings ratio of approximately 15 times and a dividend yield of around 3% [1]. Core Insights - The Japanese beverage market is mature with low growth rates, primarily dominated by tea and bottled water, while the Chinese beverage market is experiencing medium growth with significant potential in various segments [1]. - The carbonated beverage market in Japan has seen fluctuations, with regular carbonated drinks increasing their market share, although the growth rate is declining [1][4]. - The coffee industry in Japan has matured, with significant market concentration and a shift in consumer preferences towards healthier options [1][10]. - The mineral water market in Japan is growing robustly, with per capita consumption still lower than in Western countries, indicating room for growth [1][13]. - The Chinese beverage market is characterized by a high concentration of leading companies, with the top ten brands holding a market share of 36.5%, compared to Japan's 33.5% [16]. Summary by Sections Japanese Beverage Market Overview - The Japanese beverage market has matured over the past 70 years, transitioning from rapid growth to low single-digit growth rates since 2000 [2]. - The market is primarily driven by tea and mineral water, with a notable increase in bottled water consumption [1][13]. Carbonated Beverages - Regular carbonated drinks have increased their market share, while the growth rate of low-sugar options is declining [4][7]. - Coca-Cola holds a significant market share of nearly 50% in the carbonated beverage sector [7]. Juice Market - The juice market has become fragmented, with the top three companies holding only 30% of the market share, and pure juice accounting for nearly 60% of juice sales [9][16]. Coffee Industry - The coffee sector has seen a shift in consumer preferences, with significant growth in ready-to-drink coffee and a stable market presence of major players like Suntory and Coca-Cola [10]. Tea Beverage Market - The tea beverage segment continues to grow, with Ito En holding a market share of nearly 30% [1][12]. Mineral Water Market - The mineral water market is expanding, with per capita consumption increasing from 8.6 liters in 2001 to 18.4 liters in 2006, indicating strong growth potential [13]. Emerging Trends in China - The Chinese beverage market is experiencing rapid growth in sugar-free tea and bottled water, with increasing competition among leading brands [19][21]. - New categories such as plant-based and sports drinks are emerging as potential growth areas in China [21].

Investment Rating - The report maintains a Neutral rating for Anji Microelectronics Technology and raises the target price to CNY175 from CNY157 [3][5]. Core Insights - Anji Microelectronics reported a revenue of CNY1,835 million for 2024, reflecting a year-on-year growth of 48%, driven by strong performance in photoresist solvent, which grew by 79% year-on-year [1][4]. - The company's gross margin improved to 58.5%, up 2.6 percentage points year-on-year, attributed to scale advantages and product mix improvements [1]. - Earnings for 2024 were reported at CNY534 million, a 33% increase year-on-year, but fell short of consensus estimates due to higher asset impairment losses and a reduction in government subsidies [1]. Summary by Sections 2024 Performance - Revenue reached CNY1,835 million, exceeding Bloomberg consensus by 1% [1]. - Photoresist solvent sales increased by 79% year-on-year, while CMP slurry sales grew by 44% [1]. - Gross margin was 58.5%, 0.4 percentage points above consensus [1]. 2025 Forecast - Expected sales and earnings growth of 24% and 28% year-on-year, respectively, driven by continued localization trends [2]. - Potential for increased CMP slurry penetration in key clients, with current penetration below 50% for the second and third largest clients [2]. - Anticipated better revenue growth in photoresist solvent due to low current penetration of around 20-25% [2]. Valuation and Target Price - The new target price of CNY175 is based on a 33x multiple of the 2025F EPS of CNY5.3, slightly above the historical average P/E of 32x [3][26]. - The stock currently trades at 33x 2025F P/E, indicating a modest upside of 1.2% from the closing price of CNY172.91 [5][26]. Financial Projections - Revenue projections for FY25 are set at CNY2,275 million, with net profit expected to reach CNY682 million [4][10]. - Normalized EPS is forecasted to grow by 27.7% in FY25, reaching CNY5.29 [10].

Investment Rating - The report maintains a Neutral rating on Zhejiang Jingsheng Mechanical & Electrical (JSG) and lowers the target price to CNY27 from CNY30, reflecting weaker-than-expected results and a likely continued decline in solar equipment order backlog [4][6]. Core Insights - The company's 2024 revenue declined by 2% year-on-year to CNY17,577 million, which is 9% lower than the Bloomberg consensus estimate, primarily due to a 20% decline in the materials business [1][2]. - The earnings per share (EPS) for 2024 fell by 45% year-on-year to CNY1.92, which is 36% lower than the consensus estimate, attributed to gross margin contraction, increased operating expenses, and a significant rise in asset impairment losses [1][4]. - The solar sector outlook remains negative, with solar demand softening, which is expected to continue impacting JSG's earnings in 2025 [2][3]. Financial Summary - For FY24, JSG reported revenue of CNY17,577 million, with a projected decline to CNY16,051 million in FY25F and a slight recovery to CNY16,119 million in FY26F [5]. - The reported net profit for FY24 was CNY2,510 million, with forecasts of CNY2,212 million for FY25F and CNY2,181 million for FY26F [5]. - The normalized EPS is expected to decrease to CNY1.69 for FY25F and CNY1.67 for FY26F, down from CNY2.29 and CNY2.39 respectively [4][5]. Market Position and Risks - JSG's inventory and contract liabilities have decreased by 30% and 48% year-on-year as of December 2024, indicating a softening order backlog from solar clients [2]. - The potential downside in sales and earnings could be partially mitigated by a stable semi-equipment order backlog and delayed revenue recognition from ongoing projects [3][4]. - The stock currently trades at a P/E of 17x for FY25F, while the revised target price reflects a P/E of 16x [4][6].

Investment Rating - The report has lowered its forecasts for the TOPIX and Nikkei 225 to 2,700 and 36,000 for end-2025, and 2,900 and 39,000 for end-2026, reflecting the impact of tariffs and other factors [2][70]. Core Insights - The report anticipates a 14% dent in TOPIX EPS due to tariffs, with an overall decline of approximately 7% in FY25, but expects normalization from FY26 [1][27]. - The sectors favored for investment include electric appliances & precision instruments, banks, construction, real estate, and land transportation, with longer-term themes focusing on 100-year firms, safety & security, and content [2][77]. - The report highlights that the deterioration in earnings has largely been priced in, as evidenced by a 21% decline in the TOPIX between March 26 and April 7 [1][27]. Summary by Sections Market Outlook - Earnings downside appears to have been priced in significantly, with a focus on the impact of tariffs on earnings and market sentiment [9][1]. - The report notes that the revision index for analysts' forecasts has just started to be revised down, indicating potential further declines in earnings expectations [15][28]. Supply-Demand Dynamics - Nonfinancial corporations have been the largest buyers of Japanese equities, while nonresident investors have been significant sellers, particularly through futures [31][35]. - The report indicates that share buybacks are expected to tighten equity supply-demand conditions over the long term [2][70]. Valuation and Sentiment - The report identifies considerable pessimism in the market, with the weighted DI in the QUICK Monthly Market Survey showing the highest level of pessimism since August 2020, which is viewed as a contrarian indicator [49][50]. - Current valuations show a 12-month forward P/E of over 13x, a P/B of over 1.2x, and a dividend yield of 2.8%, suggesting some support from undervaluation [56][57]. Economic Policy and Forecasts - The report emphasizes low policy uncertainty in Japan compared to the US and Europe, which is expected to provide reassurance to global investors [59][60]. - The forecast for TOPIX EPS is projected to fall from 179 in FY24 to 167 in FY25, with a return to growth expected from FY26 [72][69].

Investment Rating - The report does not explicitly provide an investment rating for the consumer electronics sector in Japan Core Insights - The potential for a decline in US consumer spending due to tariff costs being passed on to consumers warrants attention, although there are positives for companies investing in the US [1] - Companies with significant production in China are likely to face the largest impacts from tariffs, particularly in the smartphone and PC categories [2] - Companies aggressively investing in US manufacturing may benefit from tariff policies aimed at reviving the US manufacturing sector [3] - The appreciation of the yen could provide benefits that outweigh the negatives from tariffs for certain companies with low sales exposure to the US [4] Summary by Sections Consumer Spending and Tariffs - There is a risk of decline in US consumer spending as tariffs increase costs for consumer electronics, with global smartphone shipments rising 1.5% year-on-year to 304.9 million and PC shipments increasing 4.9% to 63.2 million [1] Impact of Tariffs on Production - A significant portion of smartphones and PCs are produced in China, while large appliances are primarily made in Mexico. The US has imposed additional tariffs of 145% on China and 10% on other countries, with temporary exemptions for smartphones and PCs [2] Opportunities for US Investments - Companies like Panasonic Holdings and Fujifilm Holdings are making substantial investments in US manufacturing, which may provide them with a competitive advantage over rivals lacking a US presence [3] Currency Effects - Companies with low sales exposure to the US may benefit from yen appreciation, potentially improving their cost of goods sold (COGS) ratios and profits despite tariff impacts [4]

Investment Rating - The report provides a detailed analysis of the Agency MBS market, indicating a cautious investment rating due to fluctuating issuance trends and market conditions [1]. Core Insights - The report highlights a significant decline in gross issuance of Agency MBS, with April 2025 showing a total issuance of $49.3 billion, down from $72.6 billion in March 2025, representing a decrease of approximately 32% [3]. - The net issuance also reflects a downward trend, with April 2025 reporting a net issuance of $6.4 billion, compared to $15.6 billion in March 2025, indicating a reduction of about 59% [4]. - The report emphasizes the impact of interest rate changes and market volatility on the issuance patterns, suggesting that investors should closely monitor these factors [1]. Summary by Sections Gross Issuance - In April 2025, the gross issuance of Agency MBS totaled $49.3 billion, a significant drop from $72.6 billion in March 2025, marking a 32% decline [3]. - The report details monthly gross issuance figures, showing fluctuations across different months, with February 2025 at $69.5 billion and January 2025 at $92.1 billion [3]. Net Issuance - The net issuance for April 2025 was reported at $6.4 billion, down from $15.6 billion in March 2025, reflecting a 59% decrease [4]. - The report provides a comprehensive breakdown of net issuance over the past months, indicating a consistent downward trend since the beginning of 2025 [4]. Market Trends - The report discusses the broader market trends affecting Agency MBS, including interest rate fluctuations and investor sentiment, which have contributed to the observed declines in both gross and net issuance [1]. - It suggests that ongoing economic conditions and policy changes will continue to influence the Agency MBS market dynamics in the near future [1].

Investment Rating - The report maintains a "Buy" rating for Contemporary Amperex Technology (CATL) and raises the target price to CNY 331, implying an upside of approximately 48% from the closing price of CNY 224 on April 14, 2025 [6][26]. Core Insights - CATL reported a revenue growth of 6% year-on-year to CNY 84.7 billion in 1Q25, despite an 18% quarter-on-quarter decline, attributed to lower product ASPs and a longer revenue recognition cycle in the ESS segment [1][2]. - The company's gross profit margin improved by 1.2 percentage points year-on-year to 24.4%, driven by lower material costs and effective cost control measures [1]. - Earnings grew by 33% year-on-year to CNY 14 billion, with a net margin expansion of 3.3 percentage points to 16.5%, primarily due to an improved margin profile and higher investment income [1]. Summary by Sections Financial Performance - In 1Q25, CATL achieved a gross profit of CNY 20.7 billion, reflecting an 11% increase year-on-year, while operating income adjusted was CNY 11.8 billion, a 13% increase year-on-year [16]. - The company expects revenue for FY25 to reach CNY 423.6 billion, with a normalized net profit forecasted at CNY 64.5 billion, representing a 27.2% growth [5][17]. Market Position - CATL holds a 38% global market share in EV battery usage, with a 43% share in the European market, and anticipates further market share expansion in Europe due to product competitiveness and localized manufacturing [2]. - The German plant of CATL turned profitable in 1Q25, indicating successful operational strategies in the European market [2]. Future Outlook - The report projects a slight increase in FY25-27 earnings by 4.8-5.3%, reflecting a better margin profile and higher investment gains [4]. - The target price of CNY 331 is based on a 19x FY26F EPS of CNY 17.42, which is 1x standard deviation below the historical average forward P/E [4][18].

Investment Rating - The report maintains a "Buy" rating for several companies including Bizlink, Airtac, Eclat, and Makalot, indicating a positive outlook for their performance in the market [10][12][15][25]. Core Insights - Investors are concerned about potential sales and earnings cuts due to global tariffs, leading them to focus on segments and individual stocks that are less impacted [2]. - The report highlights that any reductions in US reciprocal tariffs would be beneficial, especially for companies with diversified capacity locations like Taiwan suppliers [2]. - The demand for AI server components is expected to grow significantly, benefiting companies like Bizlink, which specializes in active electrical cables [3]. - In the consumer discretionary sector, the impact of tariffs on retail prices is expected to be minimal, with only a mid-single-digit percentage increase anticipated even if tariffs are enforced [4]. - The automotive and industrial automation sectors are facing uncertainty due to pending tariff confirmations, but government stimulus policies are expected to support growth in companies like Airtac [5]. Summary by Segment AI Component - Bizlink is expected to see stronger growth in AI server demand due to low global penetration rates and increasing demand for inference algorithms [3]. Consumer Discretionary - Concerns exist regarding textile OEMs in Southeast Asia due to high reciprocal tariffs, but retail price increases are expected to be limited, suggesting a lower-than-expected impact on companies like Makalot and Eclat [4]. Automotive / Industrial Automation and IoT - The automotive sector is awaiting tariff confirmations, with potential negative impacts on demand. However, government stimulus is expected to drive growth for Airtac [5]. - E INK faces challenges in eReader demand but is expected to benefit from its ESL project in the US, which will continue to be manufactured in Mexico [5].