Investment Rating - The report maintains a "Buy" rating for Zhongji InnoLight with a target price reduced to CNY 125, implying a 54% upside from the closing price of CNY 81.19 on April 21, 2025 [5][26]. Core Insights - The company experienced significant revenue and earnings growth in FY24, with year-on-year revenue growth of 122.6% and earnings growth of 142.6%. However, 1Q25 revenue growth was subdued at 37.8% year-on-year due to a shortage of EML chips, while earnings rose 56.8% year-on-year, driven by better gross profit margins [1][2][19]. - Demand for 800G transceivers is expected to remain strong, while demand for 1.6T transceivers may slow down this year but is anticipated to ramp up next year. The easing of the EML chip shortage is expected to improve shipment volumes in the coming quarters [2][19]. - The report highlights that a temporary tariff exemption is currently easing margin pressure and may boost near-term shipments, although the risk of a tariff hike remains a concern [3][19]. Financial Summary - FY24 revenue was reported at CNY 23,862 million, with a projected revenue of CNY 37,228 million for FY25 and CNY 41,462 million for FY26. The normalized net profit for FY24 was CNY 5,171 million, with projections of CNY 8,202 million for FY25 and CNY 9,373 million for FY26 [4][10]. - The gross profit margin (GPM) is expected to improve slightly, with FY25-26F GPM raised by 0.1 percentage points due to a better product mix [16][19]. - The company is currently trading at a normalized P/E of 9.7x for FY26F, which is below the median P/E range of the China electronic/communication component companies [1][4][19].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific securities [1]. Core Insights - The model projection for USD/CNY fix is 7.2967, which is 912 pips higher than the previous projection of 7.2055, and 87 pips higher from the previous official spot close [1]. - The model projection with the counter-cyclical factor is 7.2484, indicating a 429 pips increase from the previous fix [1]. Summary by Sections - **Model Projections**: The USD/CNY fix model indicates a significant increase in projections, reflecting market expectations and potential currency fluctuations [1]. - **Analyst Contributions**: The report includes contributions from multiple analysts, indicating a collaborative approach to the analysis of the Asia FX strategy [2]. - **Event Calendar**: Key upcoming events involving China include the G-24 Finance Ministers and Central Bank Governors' Meeting on April 22, 2025, and a Politburo meeting for economic work at the end of April 2025 [9].

Investment Rating - The report indicates that Emerging Market (EM) funds remain underweight (UW) on EM Asia equities, particularly in Hong Kong/China and India, while showing some overweight (OW) positions in Taiwan and Korea [1][2]. Core Insights - EM funds' relative allocations to Hong Kong/China decreased by 0.4 percentage points month-on-month (m-m) as of end-March 2025, with 31 out of 49 funds reporting lower allocations [1][2] - Allocations to India also decreased by 0.3 percentage points m-m, with 60% of EM funds now underweight on India [3] - In contrast, relative allocations to Taiwan and Korea increased by 0.4 percentage points and 0.2 percentage points m-m, respectively [1][2] Summary by Sections Fund Allocations - As of end-March 2025, EM funds are underweight on EM Asia, except for Indonesia and Korea, with relative allocations increasing m-m for Taiwan, Korea, Brazil, and Saudi Arabia, while decreasing for Hong Kong/China and India [2][8] - The majority of funds are now underweight on Hong Kong/China compared to India or Taiwan [2] Performance Analysis - In March, 38 out of 49 funds outperformed the MSCI EM Index, but only 12 funds have outperformed month-to-date in April [4] - The report highlights that during a previous rally in September 2024, only 11 funds managed to outperform the benchmark [4] Relative Weightings - The report provides a detailed analysis of current overweight and underweight positions against the MSCI EM benchmark, showing a decrease in allocations to Hong Kong/China and India, while Taiwan and Korea saw increases [5][20]

Investment Rating - The report assigns a "Buy" rating to several companies including Ain Holdings, Tsumura, Sawai Group Holdings, Litalico, M3, JMDC, Medley, Gakken Holdings, Ship Healthcare Holdings, SMS, and Cyberdyne, while others are rated "Neutral" [29][29][29]. Core Insights - The healthcare sector is expected to show resilience against US tariffs, with a focus on defensive growth stocks that can benefit from system risks and return to growth trajectories [1][2]. - The report emphasizes the importance of stock selection based on defensive characteristics, earnings recovery potential, and contributions to the medical DX market [1][2]. - There is an anticipated recovery in earnings for companies affected by previous revisions to medical reimbursements and COVID-related subsidies, paving the way for a return to normal growth [2][3]. Summary by Relevant Sections Defensive Growth Stocks - Companies like Ain Holdings are expected to benefit from reduced reimbursement impacts and improved business efficiency through dispensing DX [1][1]. - Tsumura is projected to see growth from higher domestic sales volumes and overseas expansion due to deregulation in China [1][1]. - Sawai Group Holdings is anticipated to grow sales and improve margins by providing a stable supply of generics [1][1]. Earnings Recovery - Litalico is expected to return to profitability as disruptions from curriculum changes in the child welfare segment ease [1][1]. - M3 is forecasted to benefit from improved pharmaceutical marketing operations and increased uptake of medical institution DX [1][1]. - JMDC is expected to see higher unit prices and more projects leveraging its competitive advantages [1][1]. Growth Trajectory - Companies like Medley are expected to recover in their HR platform business and see growth in their medical platform business [1][1]. - Ship Healthcare Holdings anticipates steady demand for hospital remodeling projects and growth driven by renewed demand for replacement medical equipment [20][20]. - Cyberdyne is focusing on establishing cybernics centers in Southeast Asia and benefiting from government approvals in Japan [28][28].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The Chinese economy is facing simultaneous challenges from a declining property sector and escalating US-China trade tensions, which are expected to weaken the property market further, particularly in tier-one cities [1][2] - The Emerging Industries PMI (EPMI) has significantly dropped, indicating a bleak outlook for growth post-Q1, with expectations of a decline in the official manufacturing PMI [2] - Local governments' land sales revenues have deteriorated, reflecting ongoing fiscal challenges [3][4] Summary by Sections Economic Overview - New home sales in major cities are declining at a double-digit rate, with no signs of stabilization in the housing sector [1] - The EPMI fell by 10.2 percentage points to 49.4 in April, indicating a contraction in emerging industries [2] Fiscal Revenue and Expenditure - On-budget fiscal revenue growth improved slightly to 0.3% year-on-year in March, while tax revenue growth showed signs of recovery [3] - Local governments' land sales revenues worsened to -16.3% year-on-year in March, indicating ongoing fiscal stress [4] - On-budget fiscal expenditure growth accelerated to 5.7% year-on-year in March, driven by increased government bond issuance [5] Property Market Dynamics - Growth in property-related tax revenues improved to -0.1% year-on-year in March, but local governments' land sales revenues continued to decline [4] - New home sales volume in major cities showed a modest improvement, with tier-one cities experiencing a decline of -10.1% year-on-year [11] Trade and Shipping - Container throughput at major ports increased by 10.3% year-on-year, while cargo throughput rose by 5.1% year-on-year [11] - The China Containerized Freight Index (CCFI) increased by 1.4% from the end of March, indicating a mixed trend in shipping costs [11]

Investment Rating - The report suggests a cautious approach towards investment in the current economic climate, emphasizing the need for strategic planning and policy implementation to mitigate risks associated with the ongoing US-China trade conflict [1][5]. Core Insights - The report highlights that the ongoing US-China trade conflict is perceived as a "struggle," with calls for emergency plans to support affected businesses and accelerate policy easing measures [1][5]. - It notes that the Chinese government is not in a rush to implement specific stimulus measures, aiming to project a calm and prepared image while assessing the uncertain impacts of new tariffs [2][4]. - The report warns that the simultaneous decline of the real estate market and export sector could have destructive and structural impacts on economic growth, necessitating policies that go beyond short-term stimulus [5][6]. - It emphasizes the importance of a proactive macroeconomic policy, urging the acceleration of fiscal and monetary policy measures, including the issuance of special bonds and potential interest rate cuts [8][10]. Summary by Sections Economic Policy - The report stresses the need for a more aggressive macroeconomic policy, advocating for the timely implementation of fiscal and monetary measures to stabilize the economy [8][10]. - It predicts a 50 basis point cut in reserve requirements and a 15 basis point interest rate cut in the second quarter, with similar actions expected in the fourth quarter [8][10]. Real Estate and Exports - The report indicates that the real estate sector continues to decline, and the export industry faces significant challenges due to high tariffs, which could exacerbate economic pressures [6][12]. - It suggests that the government should focus on reforming the real estate sector and improving policies related to housing inventory management [10][12]. Employment and Agriculture - The report highlights the importance of stabilizing the labor market and agricultural prices, particularly in light of the cessation of agricultural imports from the US due to tariffs [11][12]. - It calls for enhanced domestic agricultural production to ensure food security and price stability [12]. Support for Businesses - The report emphasizes the need for multi-faceted support for struggling enterprises, including improving financing channels and promoting domestic and international trade integration [13].

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 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 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 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].