Investment Rating - The report assigns a neutral rating to the company, down from a previous buy rating [3][7][14]. Core Insights - The company is well-positioned to benefit from the growth trend in the AIGC industry, with 67% of its 2024 revenue coming from video creative products, primarily AI-enabled Filmora and Virbo [3][14]. - Revenue is expected to recover in 2025 with a projected year-on-year growth of 15%, following a decline of 3% in 2024 due to a strategic shift from PC to mobile [4][12]. - The company has launched an upgraded AI video model, Tianmu 2.0, which enhances video quality and production efficiency, further solidifying its position in the content generation sector [5][12]. Revenue and Profitability Outlook - The company anticipates a return to revenue growth in 2025, driven by new application launches and user growth, despite high marketing expenses expected to remain at 53% [4][12]. - The net profit margin is projected to turn positive at 3.7% in 2025, benefiting from operational leverage and improved efficiency from AI integration [13][14]. Valuation and Financial Metrics - The target price has been adjusted from RMB 72.00 to RMB 70.00, reflecting a new DCF valuation that corresponds to a 7.8x EV/Sales for 2025E [6][34]. - The company's current stock price of RMB 68.47 implies a valuation slightly above its historical average of 7.1x EV/Sales [6][36]. - Revenue forecasts for 2025-2027 have been reduced by 7-15%, primarily due to the weak revenue performance in 2024 [6][32]. Market Position and Competitive Landscape - The company faces increasing competition from emerging AI-native startups and established players like CapCut, which may limit its short-term profit upside [14][12]. - The report highlights the importance of maintaining a competitive edge through continuous product upgrades and effective marketing strategies to attract a broader consumer base [4][14].

Investment Rating - The report maintains a "Buy" rating for Analog Devices (ADI), Allegro MicroSystems (ALGM), Microchip Technology (MCHP), and Texas Instruments (TXN), while Onsemi (ON) is rated as "Neutral" [10][11]. Core Insights - The semiconductor industry is experiencing strong near-term demand, but there are signs of demand pull-ins due to tariff-related concerns, which is a key investor worry [2][3]. - Distributor inventory levels have normalized, particularly for Microchip Technology, which has seen a significant reduction in inventory [4][8]. - Pricing across the sector remains generally stable, with ON experiencing notable pricing pressure as it attempts to defend market share [2][4]. Semiconductor Purchaser Survey - The quarterly B2B survey indicates a net increase in demand of +75%, with expectations for future demand remaining strong at +73% [15][17]. - Nearly half of the respondents are exploring alternative supply sources outside the US or China, which is seen as a positive for European analog suppliers [3][18]. - The percentage of respondents indicating their analog semiconductor inventory is above target has significantly decreased, suggesting a healthier demand environment [3][15]. Inventory Financial Reporting Deep Dive - The report highlights that Analog Devices and Microchip Technology have lean inventory levels, positioning them well for an upcycle, while ON continues to face headwinds with high inventory levels [7][8]. - MCHP has successfully executed a turnaround plan, reducing inventory and production significantly [8][10]. - The overall inventory days for major companies like ADI, MCHP, and TXN are being closely monitored, with MCHP showing the largest decline in inventory [4][15]. Pricing Trends - Pricing for true analog semiconductors has remained flat, while power analog pricing has slightly declined, particularly for ON [4][10]. - The report notes that 68% of respondents have reported price increases, with expectations for further increases strengthening to 62% [17][18]. Market Outlook - The semiconductor market is expected to see a recovery, with TXN maintaining elevated inventory levels in anticipation of a sharp upcycle [8][10]. - The report suggests that the channel will likely begin rebuilding inventory, flipping the delta between sell-in and sell-through [8][10]. - Overall, the demand picture is improving, with significant increases in net demand expectations across various sectors, particularly in data centers [32][46].

Investment Rating - The report provides a "Buy" rating for several companies including Carrier, Eaton, Honeywell, Johnson Controls, 3M, and Trane Technologies, while Dover, Emerson Electric, Fastenal, Fortive, and Rockwell Automation are rated as "Neutral" [10][56]. Core Insights - The outlook for the Electrical Equipment and Multi-Industry sector is optimistic, with expectations for industrial equities to continue rising. The report highlights the importance of stock selection and notes that demand destruction has not been observed so far [12][39]. - The upcoming earnings season is anticipated to show positive results due to price/cost and foreign exchange tailwinds, along with order reacceleration [12]. - The report emphasizes the structural support mechanisms for equity value, including strong consumer and corporate balance sheets, and a return of small business confidence [12]. - Tax incentives related to nearshoring are expected to bolster capital expenditures, contributing to a favorable investment environment [12]. - The report identifies key companies such as Johnson Controls, 3M, and Honeywell as having significant earnings potential and structural improvement opportunities [12][38][39]. Summary by Sections Comparative Valuation - The report includes a detailed comparative valuation table for various companies, showing metrics such as market cap, EV/EBITDA, P/E ratios, and target prices [10]. - For example, Carrier has a market cap of $65 billion with a "Buy" rating and a target price of $81, while Dover has a market cap of $26 billion with a "Neutral" rating and a target price of $211 [10]. Investment Framework - The report outlines an investment framework focusing on stock selection and the potential for further upside in a reacceleration scenario, estimating a 30% increase in stock prices if demand returns [12]. - Specific companies are highlighted for their growth potential, including Johnson Controls, which is expected to see a 70% increase in earnings power over the next three years due to a new CEO [12][37]. Earnings Projections - Earnings projections for Johnson Controls indicate a sales growth from $23.3 billion in 2025 to $27.7 billion by 2028, with a targeted EBIT margin improvement [37]. - The report also discusses the complexities within Johnson Controls' business structure, indicating areas for potential improvement and synergies [38][40]. Market Dynamics - The report notes that the industrial sector has experienced significant volatility, with historical data showing a peak-to-trough decline of 19% as of December 2024 [23]. - It also discusses the impact of tariffs on U.S. consumers, with a reduction in the estimated tariff burden from over $700 billion to approximately $300 billion [22]. Long-term Outlook - The report expresses confidence in the long-term growth potential of the sector, driven by structural changes and improvements within key companies [39]. - The anticipated return on investment in manufacturing structures is projected to yield significant benefits over the coming years [28].

Investment Rating - The report maintains a Neutral rating on Vale, RIO, BHP, and FMG, with a Sell rating on KIO [7] Core Insights - The iron ore market is expected to move into surplus starting in the second half of 2025, with prices projected to average around $90 per ton in 2026 due to increased supply from Australian projects and Simandou in Guinea [5][10] - Metallurgical coal prices are anticipated to remain range-bound at approximately $180 per ton over the next 1-2 years, with limited downside risk [6][15] Iron Ore Fundamentals - Supply and demand fundamentals for iron ore were initially tight in early 2025 but softened in the second quarter as seaborne supply recovered and steel production moderated [5] - Iron ore prices have softened since mid-May, influenced by elevated inventories at ports and mills in China, alongside moderating steel production [7] - The report expects a balanced market in 2025, transitioning to a surplus in 2026/27, driven by increased supply from major producers [10][13] Metallurgical Coal Fundamentals - Demand for metallurgical coal is challenged in regions like India and China due to high domestic production and increased supply from Mongolia [6] - The medium-term outlook for metallurgical coal is more favorable, but the market needs to absorb new supply over the next 1-2 years [6] - The report suggests that while prices are expected to remain stable, the market may rebalance by 2027/28 as demand grows and supply is curtailed [15] Supply and Demand Projections - Iron ore supply is expected to grow by approximately 3% annually in 2026 and 2027, with significant contributions from Australia and Brazil [11] - The report anticipates that China's steel demand will decline by about 1% per annum over the next 3-5 years, impacting iron ore demand [12] - For metallurgical coal, the report predicts a moderate growth in seaborne demand of 1-2% in the medium term, supported by new blast furnaces being constructed in India and Southeast Asia [15]

Investment Rating - The report assigns a "Buy" rating to major companies in the China Internet sector, including Alibaba, JD.com, Meituan, and Tencent [28]. Core Insights - The quick commerce sector in China is experiencing rapid growth, with a projected market size of Rmb760 billion by 2025, representing 4-5% of the e-commerce market [3]. - Major players like Alibaba and Meituan are significantly increasing their investments to capture market share, with Alibaba committing Rmb50 billion and Meituan surpassing 120 million daily orders [2][3]. - The competition is described as a "game of chicken," with companies expected to continue heavy investments until at least the Double 11 shopping festival [4]. Summary by Sections Quick Commerce Competition - Competition in quick commerce is intensifying, driven by substantial platform subsidies from major players [2]. - Alibaba's Taobao InstaShopping and Meituan are leading in daily order volumes, with Alibaba achieving 80 million combined daily orders and Meituan surpassing 120 million [2]. Market Size and Growth - The total addressable market (TAM) for quick commerce is expected to grow by 30% by 2025, primarily taking market share from traditional retail rather than e-commerce [3]. - The rapid increase in order volume is attributed to consumer behavior and effective coupon utilization strategies [3]. Financial Implications - Earnings cuts are anticipated across e-commerce giants due to the competitive landscape, with expected annual investments of Rmb25 billion from JD, Rmb25-30 billion from Alibaba, and Rmb25 billion from Meituan [4]. - The report forecasts a market share split of 50% for Meituan, 30% for Alibaba, and 20% for JD in the medium term [4]. Stock Recommendations - The report suggests a cautious approach towards Meituan due to high earnings expectations and valuation concerns, while recommending Alibaba for potential value extraction if executed well [7]. - JD's valuation is considered undemanding, and its performance will be monitored as trade in subsidies fades [7].

Investment Rating - The report provides a positive outlook for the global software industry, particularly in the ERP sector, with a growth forecast of 5.7% for ERP spending in 2025, consistent with 2024's rate [2][21]. Core Insights - AI is recognized as a significant driver for ERP modernization and consolidation, with 53% of respondents indicating that AI-related initiatives have accelerated their core financials upgrade timelines [2][55]. - The survey indicates a strong intention among organizations to upgrade their core financial systems, with 72% planning an upgrade within the next two years, despite a slight decrease from 76% in 2023 [2][49]. - The average age of core financial systems is decreasing, currently reported at 3.45 years, down from 3.94 years in the previous year, indicating ongoing modernization efforts [48][50]. Summary by Sections IT Budget Growth - The mean expectation for IT budget growth in 2025 is 5.4%, an increase from 4.8% in 2024, with ERP software and cloud growth slightly higher at 5.7% [7][22]. - China shows the strongest growth outlook at 7.1%, while Germany has the lowest at 3.6% [24]. AI Adoption and Impact - 56% of respondents reported that their core financials provider offers AI capabilities, with 66% of this group currently using these functionalities [3][59]. - The average cost increase per user due to AI adoption is reported at 14% for both core financials and HCM [3][66]. Vendor Landscape - Microsoft remains the most widely used vendor for core financials at 32%, followed by SAP at 25% and Oracle at 12% [12][35]. - The Net Promoter Score (NPS) for Microsoft is the highest among major vendors at 42, while SAP's NPS has declined to 15 [39][40]. Upgrade Plans - 26% of organizations plan to upgrade their core financial systems this year, with an additional 43% planning upgrades in 2026 [49][50]. - The report highlights that 61% of respondents believe their AI strategy has accelerated their ERP upgrade timelines, up from 51% in the previous survey [55][56]. Pricing Trends - 85% of respondents have experienced or been informed of planned price increases, averaging 6.2%, with the highest expected increase in China at 7.6% [19][70]. - Microsoft customers anticipate the highest price increase at 6.3%, while SAP customers expect the lowest at 5.6% [19][70].

Investment Rating - The report suggests a neutral view on Energy and recommends a Long EU IG vs. Itrax Main strategy to benefit from potential summer volatility [1][6]. Core Insights - Investors perceive tariffs as the primary risk, with expectations of a negotiated trade deal following potential tariff implementations [2][4]. - Credit spreads have tightened significantly, indicating market complacency regarding tariff outcomes [2][3]. - The report highlights a divergence in investor positioning, with some maintaining cash reserves to capitalize on potential market dislocations [3][4]. Summary by Sections Investor Positioning - Global investor positioning has split into two camps: those with a long risk stance and those underweight in credit risk, now chasing benchmarks [3]. - Cash balances for EU funds were historically high at the start of June, allowing for deployment in primary deals [3][4]. Economic Outlook - The report anticipates a gradual economic slowdown in the US, with tariffs expected to impact growth, though the timing remains uncertain [4][6]. - A low-volume, low-volatility summer is anticipated if tariff deadlines do not lead to significant market disruptions [4]. Credit Market Dynamics - The report models a scenario favoring high yield (HY) over investment grade (IG) in Q3 2025, particularly in tariffs-sensitive sectors [6]. - The analysis indicates limited correlation between oil prices and credit spreads, suggesting macro rather than micro impacts on credit [7][8]. Trade Strategies - The report advocates for receiving July/September ECB contracts as a hedge for fixed income portfolios, offering better asymmetry for credit portfolios [1][2]. - A tactical opportunity is identified in a Long EU IG Cash vs. Itrax Main position, driven by macro sensitivity, seasonality, momentum, and risk-reward positioning [6].

Investment Rating - The report assigns a 12-month rating of "Buy" for Alibaba Group with a price target of US$158.00, down from a prior target of US$178.00 [4][29]. Core Insights - The report anticipates a revenue increase of 1% year-over-year to Rmb246 billion for 1QFY26, impacted by the deconsolidation of 1P offline retail assets [2]. - The growth in the Taobao Tmall Group (TTG) and local services is expected to see a GMV increase of 5% year-over-year, with a faster growth in CMR at 11% year-over-year due to structural take rate improvements [2]. - Quick commerce investments are projected to reach Rmb10 billion in the quarter, leading to a significant decline in EBITA for TTG and local services [2]. - Cloud revenue growth is expected to accelerate to 22% year-over-year, driven by increased demand following the launch of DeepSeek [2]. - The international commerce segment is projected to grow by 19% year-over-year, with a narrowing EBITA loss expected [2]. Summary by Sections Revenue and Earnings Forecast - Total revenues for FY1Q26E are estimated at Rmb245.639 billion, reflecting a 1.0% year-over-year increase [10]. - The adjusted EBITA is projected at Rmb38.074 billion, down 15.5% year-over-year [10]. - Non-GAAP diluted EPS is expected to be Rmb15.2, representing a 7.7% decrease year-over-year [10]. Segment Performance - Taobao & Tmall revenues are expected to reach Rmb123.029 billion, an 8.5% increase year-over-year [10]. - Cloud revenue is anticipated to grow to Rmb32.390 billion, a 22% increase year-over-year [10]. - International commerce is expected to generate Rmb34.785 billion, an 18.7% increase year-over-year [10]. Valuation and Market Metrics - The report indicates a valuation of 13x FY26E P/E, suggesting that Alibaba remains one of the cheapest AI stocks globally [9]. - The market capitalization of Alibaba is noted to be US$254 billion, with a free float of 97% [4]. - The average daily trading volume is approximately 2,076,000 shares [4].

Investment Rating - The report maintains an overweight rating on China within the MSCI Emerging Markets (EM) index, highlighting resilient earnings and improving return on invested capital (ROIC) among listed manufacturers in China [8]. Core Insights - China's export volumes have surged by 20%, significantly outpacing a 6% rise in the rest of the world, marking the strongest outperformance since its WTO accession [2]. - Emerging Markets (EM) now account for over half of China's exports and trade surplus, indicating a deeper penetration into various sectors beyond just low prices [2][27]. - The report suggests that China's rising export competitiveness may negatively impact growth in the rest of EM, with manufacturing/GDP ratios near COVID lows and weakening orders [3][74]. Summary by Sections Export Dynamics - China's exports are increasingly directed towards EM, with a notable rise in its trade surplus with these regions [27][65]. - The report indicates that China's share of world exports has reached its highest level in approximately 20 years, with significant gains in various sectors [36][37]. Economic Implications - The macroeconomic data suggests that EM ex-China is experiencing challenges such as decelerating foreign direct investment (FDI) inflows and subdued credit impulses, which may be exacerbated by China's competitive exports [3][4]. - The report highlights that manufacturing margins in EM ex-China are near decadal highs, but rising competition from China could pressure these margins [10][11]. Asset Implications - The report identifies that MSCI China equities are trading at a 20% discount compared to historical averages, presenting potential upside risks due to elevated equity risk premia and high household savings [8]. - It emphasizes the need for a selective approach within MSCI EM ex-China, with Brazil and Greece appearing more insulated from the impacts of Chinese competition [10][11]. Currency and Fixed Income Outlook - The report suggests that the dollar downturn should be approached selectively in EM, as competition from China could structurally impact EM FX carry and FDI inflows [12][13]. - It expresses concerns about further curve steepening in EM local debt markets, projecting GDP growth to fall to decade lows relative to interest rates [13].

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report highlights flow-driven factor rotations due to rising volatility from external shocks and policy changes, leading to frequent shifts in investor positions and flows [5][8] - Retail Trading Proportion (RTP) is used as a proxy to gauge investor sentiment, indicating that capturing alpha from flow-based signals is easier during flow-driven markets, especially with high retail participation [8] - The best investment ideas identified are Offshore Ownership and High-Dividend stocks, which serve as informative indicators for stock picking [122] Market Overview - China's domestic equity market offers diverse investable universes with approximately 2,700 eligible names as of April 2025, facilitated by the Stock Connect program [13] - The market capitalization distribution across various indices shows significant liquidity and varying P/E ratios, with the CSI300 index having a P/E ratio of 28.7 and a dividend yield of 2.3% [14] Performance Comparison - The annualized return for the CSI300 index is 7.5%, while the CSI500 and CSI1000 indices show returns of 10.2% and 10.6% respectively, indicating a performance trend favoring smaller-cap indices [17] - The maximum drawdown for the CSI300 index is -71%, highlighting the volatility in the market [17] Policy Highlights - Key policy events have influenced market volatility, including liquidity improvements from policy easing in February 2019 and the impact of COVID-19 in February 2020, which led to significant market recovery [24][25] - Recent policies in November 2023 focused on regulating algo-trading, indicating a shift towards more structured trading environments [25] Investor Landscape - Retail investors account for approximately 40% of market capitalization and contribute around half of the total market turnover, indicating their significant role in market dynamics [31] - Northbound investors hold over RMB 2 trillion in market capitalization, contributing about 7% of total market turnover, while Southbound investors have seen substantial inflows since 2017 [48][56] Factor Rotation - The report discusses three phases of factor rotation in the market, with the current phase characterized by increased volatility and frequent shifts in investor sentiment between fear and greed [90][93] - A factor timing strategy based on retail investor sentiment has generated an annualized return of 9.6% since 2018, outperforming an equal-weight factor model [118] Smart Money Analysis - The report identifies smart money trends amid volatility, emphasizing the importance of onshore margin financing and short selling as indicators of market sentiment [120] - Offshore ownership and high-dividend stocks are highlighted as key areas for capturing alpha in the current market environment [122]