Investment Rating - The report identifies 25 SMID Cap stocks with a "Buy" rating, focusing on high-quality and high-growth characteristics [2][10][12]. Core Insights - The report emphasizes the importance of operational quality and growth sustainability in selecting SMID Cap stocks, particularly in a challenging macroeconomic environment [3][12]. - SMID Caps have underperformed large caps by 750 basis points year-to-date, but historically, smaller caps tend to outperform larger caps by approximately 2% over the long term [3][12]. - The report combines insights from HOLT's screening criteria and UBS analysts' fundamental research to highlight underappreciated businesses in the SMID Cap segment [3][12]. Summary by Sections Investment Opportunities - The report lists 25 high-quality and high-growth SMID Cap stocks, categorized by sectors such as Industrials, Healthcare, Consumer, Financials, TMT, and Materials [10][11]. - Notable stocks include Alight Inc (ALIT) with a market cap of $2.9 billion and a price target upside of 81%, and Bio-Techne Corp (TECH) with a market cap of $7.6 billion and a price target upside of 45% [6][11]. Market Context - The report discusses the current underperformance of SMID Caps relative to the S&P 500, attributing it to higher exposure to interest rates and economic sensitivity compared to large caps [3][12]. - It highlights the need for careful stock selection and strong fundamentals in the current uncertain economic climate [3][12]. HOLT Methodology - The HOLT High Quality and Growth screen identifies companies with high and stable operational quality and strong growth characteristics, using metrics such as CFROI [16][19]. - The report indicates that the HOLT methodology provides a consistent approach to evaluating corporate profitability across a wide range of companies [17][19].

Investment Rating - The report does not explicitly state an investment rating for the oil industry but indicates a potential pause in production increases and marginally lower prices in the second half of 2025, suggesting a cautious outlook [5][3]. Core Insights - OPEC+ plans to increase oil production by an additional 411 thousand barrels per day (kb/d) in July, which aligns with market expectations [2] - The total production increase from OPEC+ members will reach 1.37 million barrels per day (Mb/d) out of the intended 2.5 Mb/d over 18 months, achieving the production level initially targeted for early 2026 [5] - The market is expected to experience a surplus of 0.3 Mb/d in the third quarter of 2025 and 0.7 Mb/d in the fourth quarter of 2025 due to the additional production [3] Summary by Sections OPEC+ Production Plans - OPEC+ members are set to add 411 kb/d in July, which was higher than the previously forecasted 138 kb/d [2] - The group has already implemented 1.37 Mb/d of the planned 2.5 Mb/d increase, indicating a significant ramp-up in production [5] Market Dynamics - The anticipated surplus in oil supply is projected to be 0.3 Mb/d in Q3 2025 and 0.7 Mb/d in Q4 2025, which could lead to downward pressure on prices if production increases continue [3] - The report suggests that demand will peak between March and August, with a decline expected in September, further influencing price dynamics [5] Price Forecast - The base case scenario anticipates a pause in production increases and a slight decrease in oil prices to approximately $62 per barrel in the second half of 2025 [5]

ab 31 May 2025 Global Research Global Electric Vehicle Battery Makers Monthly Recharge: EV Survey and US EV Policy Intention to buy BEV declines 5 ppts y/y to 41%, impacting EV battery demand Our UBS EV consumer survey covers six of the largest car markets including the US, China, and Germany. Globally, the share of people considering buying a BEV declined 5 ppts y/y to 41%. Our 2030E Global EV penetration downward revision of 8 ppts to 41% is largely driven by changes in ex-China markets. For the US/EU we ...

Alibaba Group 2025 AIC: Growth intact despite near-term margin volatilities Cloud: an accelerating growth trajectory Growth outlook: Management remains constructive on cloud outlook and is confident in an accelerating topline growth over next few quarters. This also echoes with the increased inferencing demand post DeepSeek launch. Growth is expected to be broad- based across verticals, with the increasing adoption in new verticals such as the conventional industries an encouraging sign. Margin outlook: Emp ...

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].