Investment Ratings - The report includes various investment ratings for companies across different sectors, with notable upgrades and downgrades [34][35][36]. Core Insights - The report highlights the impact of the Israel-Iran conflict on oil prices, suggesting a risk premium and providing updated valuation metrics for exploration and production companies [2][14]. - E-commerce penetration is projected to rise with approximately 5% sales growth in 2025, favoring companies like Amazon (AMZN) and Walmart (WMT) [3][19]. - The gaming sector is characterized by high potential rewards despite significant risks, with a preference for regional operators due to macroeconomic uncertainties [4][22]. Summary by Sections Oil & Gas Exploration & Production - The report analyzes valuations at updated strip pricing for 2025-2027, with WTI prices projected at $68.58, $64.79, and $63.72 per barrel for those years, respectively, and an upside scenario of $80 per barrel [14]. - Key valuation metrics include free cash flow yield and EV/EBITDA multiples, with a focus on how these metrics may change under different commodity price scenarios [14]. Retail Sector - The retail sector is expected to see a rebound in e-commerce, with online penetration increasing to 22.6% of core retail sales in 2024, up 85 basis points from the previous year [19]. - Companies like Walmart are enhancing their online presence to capture a larger share of discretionary spending, particularly in general merchandise [19]. - The report identifies several favorite stocks in the retail sector, including AutoZone (AZO) and Walmart (WMT), highlighting their potential for growth [28][29]. Gaming Sector - The gaming sector is navigating regulatory uncertainties and macroeconomic pressures, with a preference for regional operators over digital gaming and Macau stocks [22][23]. - Top picks include PENN, RRR, and CZR, with a focus on their growth potential and market positioning [22][24]. Utilities - The report provides a refreshed analysis of North American utilities, ranking companies based on various metrics and highlighting ETR, CNP, XEL, and SR as leaders in their respective groups [6][32].

Investment Rating - The report maintains an Overweight rating for Daqo, while Xinyi Solar and Flat Glass are rated Neutral, and LONGi and Tongwei are rated Underweight [31][24]. Core Insights - The Chinese solar industry is facing challenges due to aggressive capacity expansion, leading to significant cash losses for many producers. The government is expected to intervene to address low-price competition and promote the exit of outdated production capacity [3][6][5]. - The WIND Solar Power Index, which includes 30 major A-share solar stocks, saw a 3% increase on July 2, 2025, following President Xi's remarks on potential supply-side reforms, while HK-listed solar stocks surged by approximately 10% [5][2]. - Current valuations for major A-share solar manufacturers are at 1.6x forward P/B multiple, while H-share solar glass makers trade at 0.8x, indicating a less attractive risk/reward scenario compared to previous supply-side reform cycles [23][24]. Summary by Sections Market Dynamics - Solar module prices have decreased from approximately Rmb 2.0/W in 2022 to Rmb 0.7/W in July 2025, and polysilicon prices dropped from Rmb 300/kg to Rmb 35/kg, primarily due to an unbalanced supply and demand outlook [6][3]. - The majority of solar manufacturers are currently generating net losses, with over 50% of module sales volume directed to overseas markets, effectively subsidizing global energy transition efforts [6][3]. Trading Implications - The sector has historically rebounded by an average of 7% during four previous instances of government intervention news, but subsequent de-rating trends have been observed [16][4]. - The report suggests a cautious approach to trading in the solar sector, as the market may already be aware of the difficulties in implementing effective policy interventions [16][24]. Company Analysis - Daqo is highlighted as a standout investment opportunity due to its undemanding valuation at 0.2x FY25 P/BV, while LONGi and Tongwei are viewed as unattractive compared to peers even under a potential supply-side reform scenario [24][31]. - The report ranks companies based on risk/reward considerations, with Daqo at the top, followed by Xinyi Solar and Flat Glass, while LONGi and Tongwei are at the bottom of the list [24][31].

Investment Rating - The report does not explicitly state an overall investment rating for the industry Core Insights - US Investment Grade (IG) spreads tightened by 8 basis points (bp) last week, resulting in an excess return of 54 bp, with 5-10 year bonds outperforming across the curve [2] - US High Yield (HY) spreads tightened by 24 bp last week, leading to an excess return of 68 bp, with single Bs outperforming [3] - US Leveraged Loans tightened by 3 bp, with total returns increasing by 31 bp and net inflows of $810 million [4] - EU Investment Grade spreads tightened by 7 bp, resulting in an excess return of 33 bp, with leisure, telecoms, and healthcare sectors delivering the highest returns [5] - EU High Yield spreads tightened by 2 bp, leading to an excess return of 12 bp, with CCC rated bonds outperforming [6] - In Asia, credit spreads narrowed by 14 bp, with high-yield segments experiencing a 61 bp tightening [7] Summary by Sections Global Credit Snapshot - US IG current spread is 77 bp, down 8 bp week-over-week, with a 1-year return of 7% [12] - EUR IG current spread is 87 bp, down 6 bp week-over-week, with a 1-year return of 3% [12] - Asia IG current spread is 72 bp, down 4 bp week-over-week, with a 1-year return of 9% [12] Performance Across Asset Classes - US HY current spread is 268 bp, down 24 bp week-over-week, with a 1-year return of 8% [12] - EUR HY current spread is 302 bp, down 2 bp week-over-week, with a 1-year return of 19% [12] - Asia HY current spread is 353 bp, down 69 bp week-over-week, with a 1-year return of 1% [12] Global Credit Demand - US IG saw net inflows of $5.75 billion last week, totaling $26.1 billion year-to-date [2] - EU IG funds experienced net inflows of $3.1 billion over the week, totaling $30.9 billion year-to-date [5] - US HY inflows slowed to $800 million, with year-to-date inflows at $9.9 billion [3] Global Credit Supply - US IG issuance reached $8 billion last week, with year-to-date supply tracking at $1 trillion, representing an 8.0% year-over-year increase [2] - EU IG issuance reached €7 billion last week, with year-to-date volumes at €430 billion, reflecting a 15.0% year-over-year increase [5] - US Leveraged Loans year-to-date issuance stands at $220 billion, down 23.8% year-over-year [4]

Investment Rating - The investment rating for Meituan is Overweight (OW) with a price target reduced to HK$150.00 from HK$160.00, indicating a potential upside of 26% from the current price of HK$118.60 [8][27]. Core Insights - The report anticipates a significant decline in operating profit (OP) for Meituan, estimating a 48% year-over-year decrease in 2Q25 to Rmb8 billion, with further declines expected in subsequent quarters due to intensified competition [1][2][3]. - Long-term profitability forecasts have been adjusted downward, with the food delivery gross transaction value (GTV) margin now projected at 2.4% and the unit economics (UE) at Rmb1.15, reflecting a decrease from previous estimates [5][39]. - The total revenue for 2025 is forecasted at Rmb276 billion, representing a 10% year-over-year growth, but with a significant drop in operating profit expected [4][26]. Financial Estimates - For 2Q25, CLC revenue is estimated at Rmb67 billion, a 10% increase year-over-year, while operating profit is expected to decline to Rmb8 billion [2]. - The full-year 2025 estimates include total revenues of Rmb371.6 billion and an operating profit of Rmb30 billion, down 43% year-over-year [4][26]. - Adjusted EBITDA forecasts have been cut by 43% for 2025 and 27% for 2026, reflecting the anticipated challenges in profitability [6]. Market Position and Competition - Meituan is expected to maintain its dominance in the food delivery market, although market share may decrease to over 65% from the current 70-75% due to increased competition [5][38]. - The total addressable market (TAM) for quick commerce is projected to expand, but the market is likely to be fragmented among multiple players [5][38]. Valuation Methodology - The valuation is based on a discounted cash flow (DCF) model with a weighted average cost of capital (WACC) of 12% and a terminal growth rate of 3% [27][32].

Investment Rating - The report assigns an "In-Line" investment rating for the China Autos industry [3]. Core Insights - The report forecasts 28.3 million units of passenger vehicle (PV) sales in China for 2025, representing a 3% year-over-year increase, and 14.9 million units of new energy vehicle (NEV) sales, which is a 22% year-over-year increase [9][10]. - The penetration of L2+ autonomous driving is expected to reach 25% in 2025, up from a previous estimate of 15% [15][17]. - The wholesale NEV penetration reached 50% in June 2025, indicating a significant shift towards electric vehicles [20]. - The report highlights the increasing competition in the EV market, with local brands gaining market share from foreign brands [43][48]. Market Overview - The China auto industry is projected to see a total of 28.3 million PV sales in 2025, with a breakdown of 22.6 million domestic sales and 5.7 million exports [9]. - NEV sales are expected to grow significantly, with battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) contributing to this growth [9]. - The report notes that Asia and Europe accounted for over 65% of China's vehicle exports in the year-to-date 2025 [51]. Competitive Landscape - The report discusses the intensifying competition in the EV market, particularly from tech heavyweights collaborating with local OEMs to develop smart EVs [43][45]. - Local brands are continuing to gain share from foreign brands, with a notable increase in market share for brands like BYD and Geely [48]. - The report emphasizes the importance of collaborations among OEMs to enhance innovation and reduce costs in vehicle development [64][67]. Future Trends - The report identifies key focuses for auto OEMs, including AI-enabled smart cockpits, autonomous vehicles, and eVTOLs [70]. - It also highlights the ongoing development of autonomous driving capabilities, with several companies advancing their technologies to achieve higher levels of automation [73][75].

Investment Rating - The investment rating for the Greater China Technology Hardware industry is "In-Line" [2]. Core Insights - The technology hardware sector has outperformed major market indexes year-to-date (YTD), with smartphone-related stocks showing significant gains [5][6]. - YTD share price performance for tech hardware stocks indicates an increase of 66% for top performers and a decrease of 38% for bottom performers, compared to HSI's increase of 19% [9]. - Demand forecasts suggest limited shipment volume growth across various segments, including servers, PCs, and smartphones, with specific projections for 2025 indicating a slight increase in server shipments to 14.5 million units [11]. Summary by Sections Performance Overview - Greater China tech hardware stocks have outperformed major market indexes YTD, except for the Hang Seng Index (HSI) [5][6]. - The share price performance of tech hardware stocks shows a range of increases from 66% for top performers to declines of 38% for the bottom performers [9]. Demand Forecasts - Limited shipment volume growth is expected across various categories, including servers, PCs, and smartphones, with specific figures indicating a forecast of 14.5 million server units for 2025 [11]. - Smartphone shipments are projected to show a cyclical recovery starting in 2024, with significant growth anticipated in 5G smartphone sales [28]. Valuation Insights - The report highlights a justified valuation premium for companies involved in the AI hardware supply chain, with specific companies showing significant AI revenue contributions [12]. - The analysis includes a detailed breakdown of AI revenue and profit mixes for various companies, indicating a strong focus on AI-related hardware [12]. Production and Cost Analysis - The report discusses the cost implications of producing Apple products in different regions, noting that iPhones produced in the US have a 75% higher FOB price compared to those made in China [15]. - A detailed cost analysis shows that the bill of materials (BoM) for iPhones varies significantly by production location, impacting overall pricing strategies [15]. Market Trends - The report identifies Xiaomi as a key player with a rich product portfolio and rapid growth in electric vehicle (EV) deliveries, indicating a diversification strategy beyond traditional tech hardware [34][36]. - The smartphone market is experiencing a cyclical recovery, with expectations for increased shipments and demand in the coming years [28].

Investment Rating - The industry investment rating is In-Line for both HK and ASEAN financials, with a preference for high total shareholder return (TSR) stocks in Singapore and Hong Kong [6][4]. Core Insights - The macroeconomic environment is expected to dominate discussions in the second half of the year, particularly regarding the impact of interest rates and potential tariffs on China and Hong Kong, as well as supply chain relocations into ASEAN [2][3]. - Singapore banks are anticipated to perform well, potentially benefiting from a lower cost of equity if revitalization measures for Singapore's equity market are implemented [2]. - Defensive stocks are favored in the current climate, with UOB being the most preferred bank in Singapore, while HSBC and Standard Chartered are expected to perform well due to dividends, share buybacks, and high return on equity (RoE) [2][4]. Summary by Sections Singapore and Hong Kong Financials - Preferred stocks include SGX, UOB, HSBC, and Standard Chartered, while Hang Seng and BoCHK are least preferred [4]. - Target prices for preferred stocks are set at 15.90 for SGX, 90.00 HKD for UOB, and 121.50 HKD for HSBC, with current prices showing slight upside potential for SGX and UOB, but downside for HSBC [8]. - The average daily traded value for UOB is 199 million USD, indicating strong liquidity [8]. Emerging Markets (EM) ASEAN - The report indicates a less favorable outlook for EM in the near term, particularly for Indonesia, where economic risks and lower commodity prices are expected to limit loan growth [3]. - The Philippines is highlighted as a preferred EM, benefiting from resilient RoE and increased retail lending penetration, with BDO and BPI being the preferred banks [3][9]. - Target prices for preferred EM banks include 10,017.00 for BCA and 8,625.00 for BRI, with current prices showing significant upside potential [9]. Financial Metrics - The report estimates a 2025 RoE of 33.3% for Singapore banks, with a target price-to-earnings ratio (PER) of 33.1 for SGX [8]. - Malaysian banks are expected to show defensive characteristics, but with stretched valuations compared to Singapore banks [2][3]. - The estimated dividend yield on target prices for preferred banks ranges from 2.3% for SGX to 6.0% for UOB in 2026 [9].

Investment Rating - The report maintains an Equal-weight rating for JD.com, Inc. with a price target cut from US$39.00 to US$28.00, reflecting a significant downward adjustment in earnings estimates due to food delivery investments [5][7][14]. Core Insights - JD.com is expected to invest over Rmb10 billion in food delivery during 2Q25, leading to a projected 63% year-over-year decline in non-GAAP net profit to Rmb5.3 billion, resulting in a non-GAAP net profit margin of 1.58% compared to 4.96% in 2Q24 [2][5]. - The report indicates no signs of cross-selling or synergies from the food delivery investments, with JDR revenue growth expected to be minimal [3][5]. - For 2025, total revenue is projected to grow by 12% year-over-year, but non-GAAP net profit is expected to decline by 43% to Rmb27.5 billion, indicating a non-GAAP net profit margin of 2.11% [5][12]. Summary by Sections 2Q25 Preview - JD.com is projected to experience a 63% year-over-year decline in non-GAAP net profit due to substantial investments in food delivery [2][5]. - The expected non-GAAP net profit margin for 2Q25 is 1.58%, a significant drop from the previous year [2]. 3Q25 Outlook - The report forecasts a 10% year-over-year increase in total revenue for 3Q25, but a 73% decline in non-GAAP net profit to Rmb3.6 billion, resulting in a non-GAAP net profit margin of 1.25% [4][5]. 2025 Financial Outlook - Total revenue is expected to reach Rmb1,298.39 billion in 2025, with a non-GAAP net profit of Rmb27.5 billion, reflecting a 43% year-over-year decline [5][12]. - The report highlights a significant reduction in earnings estimates for 2025, 2026, and 2027, with cuts of 39%, 32%, and 30% respectively [12][14]. Valuation - The price target of US$28 implies an 11x non-GAAP P/E for 2025, which is considered justified compared to Alibaba's e-commerce business [5][14]. - The report utilizes a DCF valuation methodology with a 13% WACC and a 3% terminal growth rate assumption [14].

Investment Rating - The industry view is characterized as In-Line, with a hardware budget growth expectation of 1.5% year-over-year (Y/Y) for 2025, unchanged from the previous quarter [7][9]. Core Insights - The 2Q25 CIO Survey indicates that hardware spending plans for 2025 remain largely unchanged compared to 1Q25, with a slight improvement from earlier cautious expectations of 0.7% growth [3][7]. - Small and medium-sized business (SMB) hardware spending intentions improved, while large enterprises expect a robust growth of 2.4% in 2025 [7][15]. - Despite the overall tepid growth in hardware spending, the impact of AI initiatives is seen as a potential tailwind for hardware budgets, with 66% of AI projects expected to be in production by 2026 [7][30]. Summary by Sections Hardware Spending Expectations - CIOs expect hardware spending to grow by 1.5% Y/Y in 2025, which is a deceleration of 20 basis points from the previous year and below the 10-year average of 1.8% [3][11][13]. - The current enterprise hardware spending environment is described as stable but sensitive to macroeconomic uncertainties, which could lead to further spending volatility in the second half of 2025 [3][7]. Company Size Insights - Large enterprises with revenues over $10 billion anticipate a 2.4% increase in hardware spending, while SMBs with revenues between $500 million and $1 billion expect a growth of approximately 1% Y/Y [15][17]. - The deceleration in hardware spending growth is primarily attributed to SMBs and mid-market customers, while large enterprises show a positive outlook [16][20]. AI and Hardware Spending - Gen AI initiatives are not expected to cannibalize existing hardware budgets, with 39% of CIOs indicating that funding for Gen AI will come from new IT budget dollars [30][31]. - The majority of AI projects are projected to be in production beyond 2025, suggesting a longer-term opportunity for hardware spending growth [30][33]. Market Valuation and Stock Performance - Hardware stocks are currently trading at approximately 19x P/E, which is significantly above historical averages, leading to a cautious outlook for the group [35][39]. - The report favors enterprise hardware stocks with exposure to AI and data centers, while remaining cautious on traditional hardware OEMs and consumer hardware names [36].

Investment Rating - The report maintains a persistent deflation baseline into 2026, indicating a cautious outlook on the industry [1]. Core Insights - The renewed supply-side reform in China is characterized as "new wine in an old bottle," suggesting that while the initiative is returning, the current industrial landscape and macro environment are more complex than during the previous reform period from 2015 to 2018 [1][3]. - The "anti-involution" initiative launched in July 2024 aims to address excessive competition and overinvestment, with recent signals from leadership indicating a more systematic approach to these challenges [2][3]. - The report highlights that the current overcapacity challenge is different due to several factors, including a more decentralized industrial landscape dominated by private firms and a weaker economy with constrained fiscal space [8][18]. Summary by Sections Introduction - The concept of "involution" has led to the "anti-involution" initiative aimed at sustainable growth and societal well-being [2]. - The initiative is a response to renewed price wars and entrenched deflation, indicating a need for deeper analysis of overinvestment causes [2]. Supply-Side Reform Comparison - The current supply-side reform (Anti-involution 1.0) differs from the previous reform (Supply-side Reform 1.0) in targeted sectors, firm ownership, and the approach to overcapacity [5]. - The current reform focuses on mid-to-downstream sectors and is more nuanced compared to the administrative orders of the past [5]. Economic Context - The report notes that the economy is starting from a weaker position, necessitating demand-side stimulus to counteract supply reductions [8][18]. - High government debt levels (~100% of GDP) may limit the ability to undertake aggressive fiscal expansion [8]. Implementation Challenges - The complexities of the current industrial landscape, including advanced utilized capacity and the dominance of private firms, complicate the coordination of mergers and capacity closures [8][18]. - The report suggests that while there is rhetoric around anti-involution, clear timelines and actionable plans are still lacking, reflecting the complexities in implementation [15][16]. Conclusion - The report concludes that rapid reflation is contingent on demand improvement, contrasting the previous period's reliance on housing and exports [17]. - The renewed focus on anti-involution is seen as a positive step, but the tools available are softer, and the macro backdrop is weaker compared to 2015-2018 [18].