Investment Rating - The report maintains a "Buy" rating for LG Chem and BYD, while it has a "Sell" rating for POSCO Future M and EcoPro BM [6][31]. Core Insights - The global share of consumers considering buying a Battery Electric Vehicle (BEV) has declined by 5 percentage points year-on-year to 41%, leading to a downward revision of the 2030 global EV penetration forecast by 8 percentage points to 41% [2][10][16]. - The US and EU markets are particularly affected, with expected 2030 EV penetration reduced by approximately 9 percentage points to 24% and 10 percentage points to 38%, respectively, resulting in a significant reduction in global EV battery demand [2][18][27]. - Battery-related issues, particularly range anxiety, have overtaken purchase price as the main consumer concern regarding BEV purchases [2][17]. Summary by Sections Global Electric Vehicle Battery Makers - The Korea EV supply chain is the most negatively impacted by the decline in BEV purchase intentions, especially in ex-China markets [2][16]. - The report highlights that BYD has become a global player, rapidly increasing its exports despite trade barriers, while Tesla has lost its brand image in Europe [2][11]. US Autos, Auto Parts and Auto-tech - The report indicates a significant decline in US consumer interest in BEVs, with purchase intention dropping 5 percentage points to 32% [21][25]. - The potential removal of the $7,500 consumer clean vehicle tax credit and slower rollout of charging infrastructure are key factors contributing to the revised forecasts [21][41]. Lithium Market - The lithium market is currently oversupplied, with spot prices trading into the cost curve, leading to a downward revision of long-term spodumene prices to $1,200 per ton [4][54]. - The report anticipates a 12% reduction in lithium demand forecasts, primarily due to the weaker outlook for EVs [54][55]. Top Picks - The preferred order for the Korea EV supply chain is LG Chem > Samsung SDI > LG Energy Solution > SK Innovation > EcoPro BM > POSCO Future M [6][19]. - BYD is highlighted as the only Chinese OEM with rapidly growing traction in export markets, benefiting from the vacuum left by Tesla [31][32].

Investment Rating - The report assigns a 12-month rating of "Buy" for Alibaba Group with a price target of US$178.00, while the current price is US$117.18 [4][26]. Core Insights - The growth outlook for Alibaba's cloud services remains positive, with management confident in accelerating topline growth driven by increased inferencing demand and broad-based adoption across various verticals [2]. - The local services segment is focusing on long-term growth through a Rmb10bn quick commerce initiative, capitalizing on the trend towards immediate delivery services [3]. - Taobao Tmall is expected to maintain its GMV share despite quarterly fluctuations, with take rate drivers remaining intact due to new service fees and promotional tools [8][9]. Summary by Sections Cloud Services - Management emphasizes AI implementation and user engagement over immediate profit margins, expecting cloud margins to remain stable at high single-digit percentages [2]. - AliCloud's strategy includes a multi-chip approach to mitigate chip supply constraints, with a commitment to a Rmb380bn investment in AI over three years [2]. Local Services - The quick commerce initiative aims to enhance ROI by addressing consumer preferences for immediate delivery, which is less price-sensitive [3]. - Management has noted a peak of 40 million daily orders combining food and non-food quick commerce, indicating strong user engagement [3]. Taobao Tmall - The platform is in an investment phase, anticipating fluctuations in EBITA but maintaining take rate drivers through new fees and promotional tools [8]. - The introduction of a software service fee and the advantages of large language models are expected to enhance user recommendations and boost GMV conversion [8]. Valuation - Alibaba is trading at an undemanding 12x FY26E P/E, positioning it as the cheapest AI stock globally, with significant long-term growth opportunities in AI [9]. - Forecast returns indicate a potential price appreciation of 51.9% and a dividend yield of 1.6%, leading to an overall forecast stock return of 53.5% [10].

Investment Rating - The report upgrades ACMR to Buy and identifies NAURA as the most preferred stock in the China wafer fabrication equipment (WFE) sector [4][7]. Core Viewpoints - The market has significantly underestimated the resilience of China WFE demand, forecasting a modest decline of 9.5% YoY in 2025, followed by a growth of 6.0% YoY in 2026, contrasting with the consensus expectation of a 20% decline [4][19][20]. - The report highlights that over 70% of survey respondents expect higher or flat capacity expansion in 2025, indicating stronger demand than previously anticipated [5][19]. - The top three Chinese vendors are expected to increase their market share to 25-30% by 2027, driven by localization and tighter US export controls [6][60]. Summary by Sections Market Demand Forecast - China WFE demand is projected to reach US$33.5 billion in 2025, reflecting a 9.5% YoY decline, and US$35.5 billion in 2026, indicating a 6.0% YoY increase [20][24]. - Domestic fabs' capacity expansion is identified as a major driver for sustained demand, with a projected CAGR of 9.0% from 2023 to 2027 [20][24]. Vendor Performance and Market Share - The combined revenue of the top three Chinese WFE suppliers is expected to reach US$10.8 billion by 2027, representing a significant increase in domestic market share from 13% in 2024 [60][61]. - The report emphasizes the narrowing technology gap and increasing willingness of domestic fabs to procure local equipment as key factors for market share gains [66][67]. Investment Dynamics - The report notes that 35% of foundry respondents and 29% of memory respondents indicated plans for higher capital expenditures in 2025, suggesting a positive outlook for the sector [28][41]. - The analysis of semiconductor production equipment imports indicates strong demand in Guangdong, which has not been fully reflected in prior forecasts [5][54]. Competitive Landscape - The report outlines that Chinese WFE companies have achieved higher revenue growth compared to the industry average, with a CAGR of 41%-82% from 2020 to 2024 [67][71]. - Tighter export controls are expected to expand the total addressable market for local vendors, as US companies face limitations in accessing the Chinese market [73][76].

ab Global Research 30 May 2025 US Economics Weekly Courting tariff confusion Economic Comment: tariffs stalled, not yet stopped The Court of International Trade struck down a significant share of the tariffs imposed by the Trump Administration, including the April 2 tariffs imposed by the President as well as the border/fentanyl tariffs on Canada, Mexico, and China. The U.S. Court of Appeals for the Federal Circuit subsequently granted a temporary stay allowing the tariffs to stay in place while the appeals ...

Investment Rating - The report does not explicitly provide an investment rating for the FX industry Core Insights - US fiscal concerns are increasingly impacting market sentiment, with the recent budget reconciliation bill raising sustainability worries rather than growth expectations [1] - The divergence between the USD and long-term yields has been notable, with 30-year yields increasing by over 50 basis points since April 2, while the BBDXY index has decreased by approximately 5% [2] - Structural headwinds for the USD are evident, as both safe-haven currencies like JPY and pro-risk currencies like NZD are outperforming their short-term fair values [6] Summary by Sections Market Dynamics - The relationship between the USD and long-term yields has broken down, indicating broader weakness in the USD beyond just core G10 currencies [2] - The report highlights that much of the USD selling has occurred during the Asian trading hours, with China being a significant net seller of US Treasuries [10][11] M&A Activity - The inbound cross-border US merger pipeline appears positive, with an increase in both inbound and outbound M&A deal flows [12][13] - US foreign direct investment (FDI) is expected to remain balanced as a percentage of GDP in H1 2025, which may not support the USD if portfolio outflows from US bonds and equities increase significantly [12] Currency Performance - The report notes that USD weakness has been concentrated, with various currencies showing different performance metrics against the USD [7] - The macro factor attribution analysis indicates that the EURUSD has a net impulse of 0.99, while USDJPY shows a negative impulse of -1.95, reflecting varying influences on currency movements [19][21] Positioning and Flows - The positioning data from CFTC Commitments of Traders shows leveraged funds and asset managers' positions in various currency pairs, indicating market sentiment and potential future movements [44][45] - The report discusses equity ETF flows, noting that foreign buying of US equities was slower but not negative in March, suggesting a complex interplay of inflows and outflows [15][16]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report highlights the impact of changing US tariffs on trade flows with China, focusing on shipping, shipbuilding, ports, and land transportation [2] - Container throughput at key ports in China showed better-than-expected performance, with increases of 7% and 6% year-over-year for weeks 20 and 21 respectively [3][6] - The shipping rate between China and the US increased by 7% week-over-week, indicating a busy international freight market [4] - Vietnam and South Korea experienced strong export growth, with Vietnam's exports rising by 15% year-over-year in early May and South Korea's exports increasing by 20% year-over-year [3][18] Summary by Sections Trade Flows - The report tracks trade flows amid high US tariffs on China, gathering data from various sources to present recent trends [2] - Container throughput at China's key ports increased by 4% week-over-week and 6% year-over-year last week [6][7] Shipping Rates - The spot container freight rate between China and the US rose by 7% week-over-week, with specific increases of 6% on the West Coast and 5% on the East Coast [4] - The number of international freight flights increased by 3% week-over-week and 22% year-over-year last week [32] Sector Observations - The operating rate of China's vehicle tyre makers remained flat week-over-week but decreased by 1 percentage point year-over-year [28] - Polyester makers in China saw a notable recovery in operating profit, increasing by Rmb64 per ton week-over-week, although they still reported a loss of Rmb46 per ton [5][34]

Investment Rating - The report suggests a GDP growth forecast of 4% for 2025E, indicating a cautious outlook amid tariff shocks and property downturns [47]. Core Insights - The economic outlook for China in 2024 shows an uneven recovery characterized by a deep property decline, soft consumption, robust capital expenditure (CAPEX), and strong exports. For 2025, a less severe property downturn is anticipated alongside tariff shocks and policy stimulus [4][10]. - The report highlights significant policy easing measures, including cuts in reserve requirement ratios (RRR), interest rates, and increased fiscal spending to support local governments and stimulate the economy [18][19]. - The property market is expected to continue its downturn but at a reduced pace, with sales, starts, and real estate investment (REI) projected to decline by 5-10%, 10-15%, and 5-10% respectively in 2025E, which is less severe than the declines seen in 2024 [48][49]. Summary by Sections Economic Growth - Real GDP growth is projected at 4% for 2025E, down from 5.4% in 2023 and 5.0% in 2024 [2]. - Consumption growth is expected to stabilize at 4.6% in 2025E, following a rebound from 8.8% in 2023 [2]. Investment Trends - Fixed investment growth is forecasted to increase to 4.2% in 2025E, recovering from 2.1% in 2023 [2]. - Infrastructure fixed asset investment (FAI) is anticipated to pick up to 10-12% in 2025E, driven by policy support [48]. Trade and Exports - Exports are expected to weaken in 2025-26E due to higher US tariffs, despite a robust performance in 2024 [47][48]. - The report notes that 57% of Chinese goods are subject to additional tariffs, impacting trade dynamics [25]. Policy Measures - The report outlines extensive policy easing measures, including a 50 basis points cut in RRR and a significant increase in local government bond issuance to support financing [18][19]. - Structural policies are being implemented to boost employment, support mid-and-low-income households, and enhance foreign investment [18]. Property Market - The property market is experiencing its sharpest downturn in history, with a projected further decline in 2025E, albeit less severe than in 2024 [49]. - Policy measures are being introduced to facilitate property destocking and support home delivery, including cuts in mortgage rates and down payment requirements [18][49].

Investment Rating - The report initiates coverage on Shengquan Group with a "Buy" rating, indicating a positive outlook on the company's growth potential and valuation [1][7][4]. Core Insights - Shengquan Group is positioned as a unique player in the AI and EV materials sector, leveraging its advanced material platform to drive new growth opportunities. The company is expected to achieve a net profit CAGR of 28% from 2024 to 2027, significantly improving from a 0% CAGR from 2020 to 2024 [1][9][11]. - The report highlights the strong growth potential in the new materials segment, particularly in electronic and battery materials, driven by the rising demand for AI servers and electric vehicle batteries. The expected CAGR for these materials is projected at 52% from 2024 to 2027 [9][29][11]. Summary by Sections New Materials - Shengquan is one of the few manufacturers globally capable of mass-producing polyphenylene oxide (PPO) and other high-speed resins, which are critical for printed circuit boards (PCBs) in AI servers. The potential market size for PPO is expected to reach 4 billion RMB by 2027, doubling from 2024 [2][45]. - The company is also focusing on porous carbon materials for silicon-carbon anodes in battery applications, with a projected market size of 10 billion RMB by 2030, representing a 60-fold increase from 2024 [2][11]. Bulk Materials - Shengquan has maintained a leading market share of 20-30% in synthetic resin, particularly in phenolic and furan resins, with a forecasted gross profit growth of 10% annually. The company is expected to benefit from the recovery of resin prices and increased production capacity [3][10][25]. Valuation - The current stock price corresponds to an 18x PE ratio for 2025E, with a target price set at 36.00 RMB, indicating a 35% upside potential. The valuation is supported by a DCF analysis suggesting a 25x PE for 2025E [4][26][11]. Financial Projections - Revenue projections show a steady increase from 9.6 billion RMB in 2022 to 20.0 billion RMB by 2029, with net profit expected to rise from 703 million RMB in 2022 to 2.3 billion RMB by 2029 [5][11]. - The report anticipates a significant improvement in profitability, with the gross margin for new materials expected to rise from 14% in 2024 to 41% by 2027 [9][11][29].

Investment Rating - The report provides a positive outlook for the global oil and gas industry, indicating a bullish sentiment towards oil prices and market conditions [3][4]. Core Insights - The report forecasts Brent crude oil prices to average $65.99 per barrel in 2025, with a gradual increase to $75.00 by 2028 [3]. - Global oil demand is expected to grow by 0.7 million barrels per day (Mb/d) in 2025 and 0.8 Mb/d in 2026, with a projected peak before a moderate decline [31][34]. - Supply growth is anticipated at 1.4 Mb/d in 2025, primarily driven by non-OPEC+ countries, with a slowdown in US supply growth expected [65][111]. Summary by Sections Global Oil Market Outlook - The global oil market is projected to remain balanced, with a surplus expected in 2025 and 2026 [22]. - Demand growth is primarily driven by regions such as the US and China, while other OECD countries show slower growth [28][31]. Price Forecasts - The report outlines a detailed price forecast for Brent and WTI crude oil, with Brent prices expected to be $74.97 in Q1 2025 and $62.00 in Q3 and Q4 2025 [3]. Supply and Demand Balance - The quarterly global oil supply and demand balance indicates a slight surplus, with demand expected to outpace supply in the near term [27][22]. - The report highlights that OPEC+ compliance and geopolitical tensions will significantly impact supply dynamics [78][92]. Demand by Region - Global oil demand is projected to expand across various regions, with significant contributions from China and the US, while other regions may experience stagnation [28][31]. Impact of Electric Vehicles (EVs) - The penetration of EVs is expected to displace approximately 9 Mb/d of oil demand by 2040, significantly impacting traditional oil consumption patterns [49][53]. US Supply Dynamics - US crude oil production growth is forecasted to slow, with an increase of only 0.4 Mb/d in 2025, influenced by declining rig counts and drilling activity [111][115]. Geopolitical Factors - Geopolitical tensions, particularly involving Iran, Libya, and Venezuela, pose risks to oil supply stability, which could affect global prices and availability [92][94].

Investment Rating - The report maintains a positive outlook on the semiconductor industry, particularly favoring companies like TI, Renesas, and Infineon due to improving inventory levels and stable pricing trends [2][3]. Core Insights - The semiconductor inventory in the channel is approaching healthier levels, with a notable decline in MCU inventories over the past three months, which is supportive for companies like MCHP and STM [2][3]. - Pricing across all product categories has shown a slight increase, with an overall rise of 3% month-over-month and 13% year-over-year, indicating a favorable pricing environment [3][8]. - The report highlights a continued digestion of MCU inventories, which had previously remained elevated, suggesting a longer-term positive trend for the industry [3][5]. Summary by Product Area - **MCUs**: Normalized unit inventory has decreased by 4% month-over-month after a 24% decline last month, with pricing up 2% month-over-month and flat year-over-year [4][13]. - **Transistors**: Inventory down 1% this month, while pricing increased by 5% month-over-month and 16% year-over-year, driven largely by bipolar transistors [4][13]. - **Amplifiers and Data Converters**: Pricing slightly increased, with inventories showing mixed trends; amplifiers down slightly while data converters were stable [4][13]. - **MLCC**: Inventory increased by 10% month-over-month in April, reflecting potential front-loading due to US tariff policies, but showed a decline of 1% through mid-May [4][13]. - **Overall Trends**: The report indicates that pricing and inventory trends are generally stable, with the notable exception of the ongoing digestion of MCU inventories [5][9].