ab 6 June 2025 Global Research Drug-related news China Healthcare Weekly recap: EU's market access restrictions for Chinese medtech firms A and H healthcare indices maintained upward trend this week Over 2-6 June, HSHCI rose 4.1% and HSHKBIO rose 4.5%. SW healthcare A/H rose 1.1%/1.9%, ranking 17th/13th among A/H share sectors, with chemicals outperforming both in A (up 1.7%) and H (up 3.8%), mainly due to the positive ASCO data presentations of multiple companies, in our view. Our top picks: Wuxi Apptec an ...

Global Research ab 6 June 2025 Global Semiconductor SIA April Data: Semis Sales Retreated After Sales in April declined from March's record high Following March's high sales, total semiconductor sales in April experienced an 11.7% M/M decline, which is in line with the 5-yr seasonal average, but ~120 bps below the 10- yr seasonal average. Excluding memory, IC sales dropped 8.3% M/M, which is ~150 bps worse than normal seasonal averages. Despite the positive tariff-related pull-in effect since "Liberation Da ...

Recent EU and to a lesser extent US economic data have surprised to the upside - our proprietary economic risk measure now less negative vs. 3m ago - challenging our initial recessionary scenario (Scenario 1 - here). While some front-loading of exports might be temporarily boosting Q2'25 EU growth, we expect momentum to fade later this year, aligning with our base case of weaker growth in Q3-Q4'25. With the US administration considering a 50% tariff on EU goods, our downside scenario implies an effective ta ...

Investment Rating - The report maintains a "Most Preferred" rating for several companies in the APAC Tech sector, including TSMC, SK Hynix, and Samsung Electronics, all rated as "Buy" [11][12]. Core Views - The report highlights the significant impact of tariff outcomes on end-demand, indicating that while the effect is material, the exact degree is difficult to quantify [9]. - AI demand is confirmed to be on track, with Nvidia's supply chain accelerating [9]. - A weakening memory cycle is anticipated, with expectations of oversupply for NAND and DDR DRAM from Q3 2025 to Q2 2026 [9]. Summary by Sections Market Overview - The smartphone unit growth forecast has been lowered to flat YoY for 2025-2026, while PC growth is expected at +2% for both years [10]. - The report forecasts that the 3MMA YoY semiconductor revenue growth peaked in April 2025, with the next trough expected in Q2 2026 [10]. Key Stock Coverage - Top picks include TSMC and SK Hynix, both rated "Buy," with price targets indicating significant upside potential [11]. - Other recommended stocks include Samsung Electronics, SEMCO, and LG Innotek, all with favorable ratings and price targets suggesting substantial upside [12]. Sector Preferences - The report categorizes APAC Tech stocks into "Most Preferred" and "Least Preferred," with a clear bias towards value stocks in the technology sector [12]. - The report indicates an overweight position in leading-edge foundries and memory semiconductors, while being underweight in back-end equipment and displays [12]. Model Portfolio Performance - The "Most Preferred" portfolio has shown a year-to-date return of -8.5%, while the "Least Preferred" portfolio has returned 9.0% [13]. - Overall, the portfolio has achieved a significant return since inception, indicating strong long-term performance despite recent volatility [13].

Investment Rating - The report assigns a "Buy" rating to both Tokyo Ohka Kogyo and Toray Industries, indicating a positive outlook for these companies [26]. Core Insights - The overall interest in Japanese equities has been stronger than anticipated, with a positive medium-term outlook despite global economic uncertainties [4][5]. - The panel discussion on Japan's economic future highlighted a bright outlook for Japan's economy, with expectations of moderate growth and inflation continuing [3]. - Investors are increasingly viewing Japanese stocks as a stable investment compared to other markets, particularly in Asia [5]. Sector Summaries ESG Sector - The discussion on ESG emphasized the transformative impact of climate change and the need for international cooperation in sustainability efforts [8]. - Companies in the climate tech sector are viewing decarbonization as a source of earnings and competitiveness, despite potential challenges from changing US policies [8]. Machinery Sector - There is strong interest in Japanese machinery stocks among global institutional investors, with discussions focusing on capital expenditure (capex) recovery and earnings growth [9]. - Key companies of interest include Komatsu, Daifuku, and Japan Elevator Service Holdings, which are expected to achieve earnings growth due to unique factors [9]. Chemical Sector - Investors are exhibiting caution towards the chemical sector due to uncertainties surrounding US tariff policies and their potential impact on earnings [10]. - Despite the cautious stance, Toray Industries and Tokyo Ohka Kogyo are preferred by investors, with expectations for cost reduction and strategic pricing to yield positive results [10].

Investment Rating - The report assigns a 12-month investment rating of "Buy" for NVIDIA Corp with a price target of US$175.00 [3] Core Insights - The report highlights NVIDIA's strong revenue growth potential, particularly in the data center segment, with visibility into a pipeline that could yield approximately US$400 billion annually over the next 2-3 years [4][5] - The gaming segment has shown significant improvement, with a nearly 50% quarter-over-quarter increase in revenue, driven by recovering supply chains and demand [7] - The report emphasizes the importance of NVLink technology in driving networking revenue growth, which increased by 64% quarter-over-quarter [5] Financial Summary - Revenues are projected to grow from US$26.97 billion in 2023 to US$204.78 billion in 2026, representing a 56.9% increase [8] - Net earnings are expected to rise from US$8.37 billion in 2023 to US$110.20 billion in 2026, reflecting a 48.4% growth [8] - The diluted EPS is forecasted to increase from US$0.33 in 2023 to US$4.48 in 2026, indicating a 49.6% growth [8] Valuation Metrics - The report maintains a price target of US$175 based on a target multiple of approximately 29x and an EPS estimate of US$6.05 for FY27 [6] - The P/E ratio is projected to decrease from 53.7 in 2023 to 22.7 in 2027, indicating a more favorable valuation over time [9] - The report notes a significant increase in gross profit margin, expected to stabilize around mid-70% by the end of FY26 [7] Market Position - NVIDIA's market capitalization is reported at US$3,363 billion, with a free float of 96% [3] - The company is positioned strongly in the semiconductor industry, particularly in graphics processing units and AI infrastructure [11]

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies within it. Core Insights - Top 100 developers' contract sales weakened by 10% YoY in May 2025, slightly worsening from a 9% decline in April 2025, while MoM sales increased by 3% [2][6][19] - The decline in sales is attributed to macro uncertainties amid the trade war, impacting homebuyer confidence, particularly in export-heavy cities like Ningbo and Guangzhou [2] - Tier-1 cities continue to drive the primary market, with primary sales volume in these cities increasing by 26% on a 30-day moving average basis, compared to a mere 3% for 30 cities combined [2] - SOE developers outperformed the overall market with a 4% YoY decline in contract sales, while semi-SOE and POE developers saw declines of 22% and 15% respectively [4][23] - The luxury housing market remains active, with notable sales such as Shanghai's Kangding 19 project, which sold out 91 units in 41 minutes with a 265% oversubscription rate [2] Summary by Sections Sales Performance - In May 2025, the combined sales of the top 100 developers dropped 10% YoY, with a 3% MoM increase, reflecting ongoing market challenges [6][19] - For the first five months of 2025, combined sales declined 8% YoY, consistent with the previous month [2][19] Secondary Market Activity - Secondary listings in 50 cities increased by 8.7% YoY and 7.8% YTD, while Tier-1 cities saw a 4.3% YoY and 5.6% YTD increase [3][9] - The secondary transaction volume for 12 cities increased by 7% YoY in May, although this was a slowdown from 17% in April [3][29] Developer Performance - SOE developers maintained a market share of 53%, outperforming POE developers at 32%, with Jinmao and COLI showing significant contract sales growth of 72% and 21% YoY respectively [4][23] - The report indicates a potential shift in sales models from presale to completed properties, which may favor SOE developers due to their lower financing costs [4] Market Outlook - The report anticipates stabilization in the property market, indicated by positive land sales YoY after three years of decline and a robust luxury housing market [2]

Investment Rating - The report maintains a "Buy" rating for several companies in the tech hardware and semiconductors sector, including ASE, Hon Hai Precision, MediaTek, and TSMC, among others [8]. Core Insights - The outlook for AI adoption remains strong, with significant momentum in enterprise AI, leading to supply constraints for major customers [2][3]. - TSMC aims to double its CoWoS capacity year-over-year in 2025, despite facing gross profit margin dilution due to overseas expansion [3]. - Samsung reports robust memory demand, particularly from PC and smartphone sectors, supporting DDR pricing [4]. - The report highlights a value bias within the APAC tech sector, indicating a preference for certain stocks over others [5]. Summary by Sections AI and Technology Hardware - AI-related developments are driving enterprise adoption, with Microsoft noting strong demand from large customers [2]. - The ramp-up of Blackwell rack assembly is on track, with Quanta expecting to meet server test cycle targets by the end of Q2 2025 [2]. Semiconductor Industry - TSMC's gross margin is negatively impacted by NTD appreciation against USD, with a 40-basis point decline for every 1% appreciation [3]. - MediaTek maintains its Q2 gross margin guidance at 47% despite foreign exchange pressures [3]. - ASE targets $1.6 billion in revenue from advanced packaging and testing in 2025, up from $600 million in 2024 [30]. Market Dynamics - Samsung anticipates strong demand for memory products, which is expected to support pricing in the DDR segment [4]. - The report notes a potential decline in revenue for certain ICs, indicating a cooling off from earlier pull-ins [3]. Company-Specific Insights - ASE is focused on expanding its advanced packaging and testing business, targeting significant revenue growth [30]. - MediaTek is aggressively pursuing the N2 process migration, with expectations of reaching $1 billion in cloud ASIC revenue by 2026 [39]. - Quanta's server business is expected to grow, with AI servers making up a significant portion of sales [24]. Preferred Companies - The report lists preferred companies in the APAC tech sector, highlighting those with strong growth potential and favorable valuations [8].

Investment Rating - The report assigns a 12-month rating of "Buy" for Futu Holdings with a price target of US$149.00 [6][24]. Core Insights - Futu Holdings is expanding its crypto-related capabilities, having launched crypto trading services in Hong Kong in Q3 2024 and introduced crypto deposit services, which have been well-received by the Web3 community [2]. - The company is positioned to benefit from the recent Stablecoin Bill passed in Hong Kong, which allows for public sales of stablecoins, and is exploring new stablecoin-based solutions for cross-border transactions through Airstar Bank [2]. - Futu expects limited earnings pressure from falling HIBOR due to its currency mix, where HKD accounts for a smaller portion of interest-earning assets compared to borrowings [3]. - The company anticipates significant growth potential in Hong Kong, aiming for a 40% retail investor penetration in the medium term by enhancing its product offerings and services [4]. Financial Projections - Revenue projections for Futu Holdings show a growth trajectory from HK$7.32 billion in 2022 to an estimated HK$39.83 billion by 2029 [5]. - Pre-tax profit is expected to increase from HK$3.36 billion in 2022 to HK$30.65 billion by 2029 [5]. - Net earnings are projected to rise from HK$2.95 billion in 2022 to HK$25.13 billion by 2029 [5]. - The diluted EPS is forecasted to grow from HK$20.47 in 2022 to HK$178.20 by 2029 [5]. Market Metrics - Futu Holdings has a market capitalization of US$14.4 billion and an average daily trading volume of 2.786 million shares [6]. - The stock price as of May 30, 2025, was US$101.93, with a 52-week range of US$128.93 to US$55.54 [6]. Forecast Returns - The forecast price appreciation for Futu Holdings is estimated at 38.3%, with no expected dividend yield, leading to a total forecast stock return of 38.3% [8].

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, international freight flights, and land transportation [2] - Container throughput at key ports in China showed an acceleration, with a year-on-year increase of 11% compared to 6% in the previous week [3] - The spot container freight rate between China and the US increased significantly, with a 58% rise on the West Coast and 46% on the East Coast week-on-week [4] - Early signs of port congestion are noted in Europe due to strikes, tariffs, and climate change, with an 8% increase in global average waiting time for container ships over 8k TEU [5][28] - Import volume estimates at the Port of Los Angeles indicated a year-on-year decline of 2% in week 25, an improvement from a 12% decline in week 24 [8][2] Summary by Sections Trade Flows - The report tracks trade flows amid changing US tariffs, gathering data from various sources to present the latest trends [2] - The number of international freight flights rose by 21% year-on-year last week, indicating increased shipping activity [31] Port Activity - Container throughput at China's key ports increased by 11% year-on-year, while showing a slight week-on-week decline of 1% [6][7] - The average waiting time at the Port of Singapore increased by 9% week-on-week [19] Shipping Rates - The Shanghai Containerized Freight Index (SCFI) rose by 31% week-on-week but showed a year-on-year decline of 32% [11] - Container ship newbuild prices remained flat, with a slight increase of 0.4% year-on-year [25] Freight and Transportation - Direct shipping volume from China to ASEAN decreased by 7% week-on-week, while shipping volume from China to the US increased by 7% [14] - China expressway truck traffic decreased by 4% year-on-year last week [26]