Investment Rating - The report maintains an Overweight rating for Micron Technology [2][10][17] Core Insights - Micron Technology reported strong results for the May quarter, driven by robust demand in High Bandwidth Memory (HBM) and data center applications, with HBM revenue increasing by 50% quarter-over-quarter to over $1.5 billion [1][17] - The company anticipates continued strength in demand and pricing dynamics, projecting a revenue increase of 15% quarter-over-quarter for the August quarter, reaching $10.7 billion [1][17] - Micron's gross margin for the May quarter was 39%, exceeding guidance and consensus, and is expected to rise to 42% in the August quarter [1][17] - The HBM market share is expected to align with Micron's overall global DRAM share in the second half of the calendar year, with HBM revenues projected to approach an annualized run rate of $8 billion [1][17] - The company is increasing its forward estimates and raising its price target to $165, based on anticipated earnings power in the second half of calendar year 2026 [1][10][17] Summary by Sections Financial Performance - For the May quarter (F3Q25), Micron reported revenues of $9.3 billion, a 15.5% increase quarter-over-quarter, and a net income of $2.18 billion [19][20] - The adjusted EPS for FY25 is revised to $7.75 from $6.80, with FY26 estimates initiated at $12.98 [2][21] Market Dynamics - The report highlights improving supply and demand dynamics in the DRAM market, with expectations of tight DRAM inventories persisting through the end of the calendar year [1][17] - Micron's HBM revenue is on track for $2 billion in the second half of CY25, supported by strong demand from AI infrastructure [1][17] Valuation - The price target of $165 is based on an annualized earnings power of approximately $15.00 in the second half of CY26, applying a 10-12x multiple [12][10] - The report indicates that Micron's increasing product and end-market diversification will help reduce revenue and earnings volatility [10][11]

Investment Rating - The report maintains a positive outlook on the auto parts retailing sector, highlighting it as a favorite for both offensive and defensive investment strategies [4]. Core Insights - The auto parts market is projected to grow to $170 billion, with an annual growth rate of 3-5% expected through 2025, supported by macroeconomic factors, vehicle parc dynamics, and weather conditions [4][21]. - AutoZone (AZO) is identified as a top pick at current prices, while O'Reilly Automotive (ORLY) is noted for its disciplined buying approach. Advance Auto Parts (AAP) is advised to be approached with caution due to potential share loss, and Genuine Parts Company (GPC) is expected to face challenges [4][12]. - The report emphasizes the importance of parts availability, service quality, and pricing in driving success within the sector [5]. Market Dynamics - The auto parts retail market is characterized by a significant number of SKUs (over 125,000), leading to a low inventory turnover rate of approximately 1.5 times per year. This creates a competitive advantage for larger players like the Big 4 [6]. - The report notes that the competitive landscape is shifting, with well-capitalized public companies gaining market share from smaller independents, aided by advancements in technology and inventory management [6][54]. - The report anticipates that artificial intelligence will further enhance market share for AZO and ORLY, while AAP and GPC work on resolving foundational issues [6]. Financial Projections - The report provides a detailed breakdown of the total addressable market (TAM) for auto parts, with retail sales projected to grow from $76.6 billion in 2022 to $77.6 billion in 2025, reflecting a modest growth trajectory [12]. - The commercial segment is expected to grow from $86.5 billion in 2022 to $97.3 billion by 2026, indicating a stronger performance compared to the retail segment [12]. - The report highlights that the Big 4 collectively hold a market share of approximately 30.4%, with AZO and ORLY showing significant gains in their respective shares [12]. Competitive Positioning - ORLY is recognized as the distribution gold standard, with superior parts availability driven by its extensive distribution center (DC) network and fulfillment strategies [54]. - AZO is closing the gap with ORLY through its Megahub strategy, which aims to enhance inventory density and improve service levels [55]. - AAP is attempting to replicate AZO's model but currently lags behind in terms of inventory per store and distribution efficiency [55]. Consumer Trends - The report discusses the impact of electric vehicles (EVs) on the auto parts market, suggesting that while EVs will comprise about 25% of new vehicle sales by 2030, their effect on maintenance demand will be limited in the medium term [8][68]. - Factors such as range anxiety, the need for a national charging network, and the cost of battery replacement are identified as significant hurdles to EV adoption [71]. Economic Indicators - The report outlines various economic indicators that influence the auto parts market, including real GDP growth, miles driven, and disposable income trends, all of which are expected to support market growth in the coming years [21].

Investment Rating - The report assigns an "Overweight" (OW) rating to Tenaga Nasional Berhad (TNB) and several Chinese power equipment players, indicating a positive outlook for these entities within the ASEAN Power Grid initiative [4]. Core Insights - The ASEAN Power Grid (APG) initiative is expected to gain momentum over the next 5-10 years, primarily driven by Singapore's goal to import approximately 6GW of electricity by 2035, positioning TNB as a key beneficiary [2][6]. - The report anticipates that annual grid capital expenditures (capex) will double from around $10 billion to $20 billion in the coming years, with projections of over $43 billion by 2050 [6][28]. - The APG aims to enhance energy security and efficiency across ASEAN countries by facilitating cross-border electricity trade and optimizing energy resource utilization [18][19]. Summary by Sections Investment Ratings for Thematic Stocks - TNB MK: OW, Price Target (PT) 16, Upside 12% - SG Gencos: SCI SP: OW, PT 7.6, Upside 11%; YTLP MK: UW, PT 3.0, Downside 23%; MER PM: OW, PT 620, Upside 16% - ASEAN Renewables: ADRO IJ: UW, PT 2000, Upside 12% - China Power Equipment: Sieyuan: OW, PT 86, Upside 19%; Huaming Equipment: OW, PT 19, Upside 14%; Orient Cables: OW, PT 68, Upside 35% [4]. Current Status and Future Projections - Currently, only about 3GW of the identified 25GW regional interconnections are operational, but pilot projects indicate renewed momentum for the APG [6][20]. - The report outlines that the APG could require a minimum investment of $100 billion in transmission lines by 2045 to fully integrate the power grids of Southeast Asian countries [19]. Country-Specific Grid Investment Targets - Malaysia: $9.5 billion capex from 2025-2027, with an annual grid capex of $3.2 billion [30]. - Thailand: $11.4 billion capex from 2024-2030, with an annual grid capex of $1.6 billion [30]. - Vietnam: $18.1 billion capex from 2026-2030, with an annual grid capex of $3.6 billion [30]. - Indonesia: $36 billion capex from 2025-2034, with an annual grid capex of $3.6 billion [30]. - Philippines: $19.3 billion capex from 2025-2034, with an annual grid capex of $1.9 billion [30]. Key Drivers for APG Development - Singapore's electricity import demand is a significant driver for the APG, with the country aiming to import low-carbon electricity despite high transmission costs [6][36]. - The report highlights that the APG could facilitate a transition to renewable energy sources, reducing reliance on fossil fuels and potentially lowering electricity costs [60]. Challenges to APG Implementation - The report identifies differing regulatory frameworks and market structures across ASEAN countries as major hurdles to the APG's success [73][80]. - Lack of grid infrastructure standardization and harmonization is also noted as a challenge, necessitating consistent investment in grid infrastructure to facilitate seamless cross-border power trading [80].

Investment Rating - The report maintains a full-year GDP growth forecast for China at 4.8% [5][6]. Core Insights - The report emphasizes three main themes in China's economic outlook: external uncertainty due to trade war risks, counter-cyclical economic policies to stabilize growth, and a reassessment of China's innovation capabilities [3][4]. - Economic activity showed strong growth in the first quarter of 2025, with real GDP expanding by 5.4% year-on-year, but is expected to slow down in subsequent quarters due to trade tensions and domestic challenges [4][5]. - The report highlights a significant decline in exports to the US, with a 25% month-on-month seasonally adjusted drop in April and a further 15% in May, while exports to non-US markets remained robust [9][4]. Economic Indicators - Real GDP growth is projected to slow to 3.5% in Q2, 3% in Q3, and 2.5% in Q4 of 2025, with a full-year forecast of 4.8% [5][6]. - Key economic indicators for 2023-2025 include: - Real GDP growth: 5.2% (2018-2022 average), 5.0% (2024), 4.8% (2025 forecast) - Consumption growth: 4.4% (2023), 2.2% (2024), 2.8% (2025) - Merchandise trade balance: US$594 billion (2023), US$767 billion (2024), US$829 billion (2025) [6]. - The report notes a high augmented fiscal deficit of 12.6% of GDP for 2025, indicating limited room for additional fiscal easing [37][34]. Trade Dynamics - The report discusses the impact of tariff dynamics, noting that while peak tariffs have passed, uncertainties remain, with potential for both tariff reductions and increases [7][8]. - China's exports are expected to face challenges from high US tariffs, but the trade surplus is projected to reach a new record high, with net exports contributing approximately 0.6 percentage points to GDP growth [13][9]. Domestic Economic Performance - The report indicates divergent domestic economic performance, with industrial production growth outpacing consumption growth, and high-tech sectors outperforming traditional sectors [16]. - Housing market weakness has re-emerged despite previous policy relaxations, with expectations of continued correction in 2025 [20][18]. - The success of new economy innovations, such as DeepSeek, is highlighted as a potential driver for economic recovery and private investment [24][25]. Policy Outlook - Fiscal and monetary policies are expected to remain accommodative but data-dependent, with low expectations for additional stimulus packages in the near term [34][37]. - The report emphasizes the importance of upcoming key events, including US-China trade negotiations and domestic policy meetings, which will shape the economic outlook for the second half of 2025 [39][40].

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The interplay of policy uncertainty and business cycle dynamics is crucial, with significant influences from US policy shifts in trade, immigration, fiscal, and regulatory domains affecting market sentiment [9]. - The complexity and uncertainty surrounding the global macroeconomic landscape are expected to persist in the second half of 2025, with various potential scenarios outlined for market performance [12][15]. - A US recession is not the baseline scenario, but risks remain elevated, with a potential for 100 basis points of Fed cuts between December 2025 and spring 2026 [15][24]. Summary by Sections Economic Outlook - The substantial shift in US trade policy has led to a forecasted downshift in global growth and a rotation in inflation pressures towards the US, with recession risks placed at 40% [17]. - The US GDP growth outlook has been revised down from 2.0% to 1.3% for the year, with core PCE inflation expected to reach 4.6% in Q3 and 3.4% by year-end [21]. Equities - The outlook for US equities suggests narrow market leadership and high concentration, with a potential for new highs absent major policy or geopolitical surprises [25][26]. - International equities are expected to trade favorably, with a rotation into international markets likely to continue, supported by USD weakness [26][27]. Rates - Long-end yields are expected to remain stable, with a forecast for 2-year and 10-year yields to end the year at 3.50% and 4.35%, respectively [30][31]. - The Treasury market's rapid growth has outstripped demand, leading to a potential increase in term premium over time [30]. Credit - High-grade credit remains supported by high yields and good corporate earnings, with spreads expected to remain tight [35][36]. - High-yield bond spreads are forecasted to widen by about 100 basis points to 450 basis points by year-end 2025, with a default rate expected to rise to 2.75% in 2026 [38][39]. Commodities - Oil prices are anticipated to trade in the low-to-mid $60 range for the remainder of 2025, with geopolitical tensions potentially causing short-term spikes [43][44]. - Gold prices are projected to reach an average of $3,675 per ounce by Q4 2025, supported by strong demand amid economic uncertainties [45].

Investment Rating - The report initiates coverage of Circle with an Underweight rating and a price target of $80 for December 2026, indicating concerns over the current elevated market capitalization of Circle [2][10][11]. Core Insights - Circle is well positioned in the emerging stablecoin market, benefiting from an early-mover advantage with USDC, which has a market capitalization of approximately $62 billion. The report highlights the potential for growth in various use cases, including cross-border and consumer payments [2][10][16]. - The stablecoin market is characterized as a winner-takes-most environment, with USDT and USDC dominating the space. Circle's focus on regulatory compliance is seen as a significant advantage [7][18][33]. - The report emphasizes the substantial addressable market for stablecoins, estimating it to be around $70 trillion, with potential for USDC to capture a significant share [29][63]. Summary by Sections Investment Thesis - Circle is positioned to capitalize on the growing stablecoin market, with a focus on digital cash use cases and regulatory compliance. The management team is viewed positively, but the current valuation is considered high [10][11][16]. Company Description - Circle Internet Group, Inc. is a blockchain service provider that issues stablecoins, primarily USDC, which is backed by U.S. dollars and regulatory compliant. The company aims to facilitate value transfer and storage through its stablecoin network [31][32]. Market Overview - The stablecoin market has a current capitalization of approximately $240 billion, with USDC holding about 25% market share. The market is largely dominated by USDT and USDC, which together account for around 91% of the total [46][63]. Growth Opportunities - The report identifies significant growth opportunities for stablecoins, driven by increasing adoption in digital and cryptocurrency markets, as well as potential regulatory developments that could enhance legitimacy and use cases [7][17][29]. Competitive Landscape - Circle faces competition from various new entrants and traditional financial institutions that may leverage stablecoin technology. However, USDC's regulatory compliance and established network are seen as key differentiators [24][22][18]. Valuation - The valuation of Circle is based on a P/E multiple of 45x the 2027 adjusted earnings estimate, with a price target of $80 reflecting current investor enthusiasm. The report notes that the market cap could reach approximately $58 billion if growth projections are met [11][23][29].

Investment Rating - The report assigns an "Overweight" (OW) rating to several companies in the Asia Power Equipment and China Utilities sector, indicating a positive outlook for these stocks [8][24]. Core Insights - Investor sentiment remains bullish on the electrification theme, with strong demand for power equipment and a positive outlook for companies like Hyundai Electric and LS Electric [4][5]. - There is a notable divergence in investor views regarding Korean power equipment stocks, with some investors concerned about high valuations after a recent rally, while others see potential upside due to favorable demand dynamics [2][5]. - Huaming Equipment is highlighted as a laggard in the global transformer value chain, with potential for growth given its attractive valuation compared to Korean peers [2][6]. Summary by Sections Investor Positioning - Investors are generally bullish on the electrification theme, holding large-cap names such as Nari Technology and Hyundai Electric [4]. - There has been a recent increase in positioning within the power equipment sector following a pullback in April [4]. - Hyundai Electric is favored for its significant exposure to the US market, while LS Electric is noted for its data center equipment supply [6]. Korean Power Equipment - Global investors have become more receptive to positive views on Korean power equipment, driven by strong demand and reduced trade concerns [4][5]. - Despite a recent rally, valuations for Korean names are considered reasonable compared to global peers [5]. - Key players like Hyundai Electric and LS Electric are highlighted for their growth potential, particularly in high-voltage equipment and data center supplies [6]. Chinese Power Equipment - Interest in Chinese power equipment names is low, with Huaming Equipment gaining attention as a potential recovery play [2][6]. - Investors are cautious about the fundamentals of Chinese utilities, particularly regarding natural gas volume growth and tariff cuts [7]. - Kunlun Energy is noted as a standout among Chinese utilities due to its strong cash position and consistent payout increases [7]. Valuation Comparisons - The report includes a valuation comparison table showing various metrics such as P/E ratios and market caps for companies in the sector, indicating a range of valuations across different firms [8].

Investment Rating - The report maintains a bearish outlook on the USD, indicating a potential for further weakness due to various macroeconomic factors [1][17][42]. Core Insights - The quality of USD carry has deteriorated, influenced by softer growth, lower real yields, and rising term premiums, which historically correlate with negative outcomes for the USD [17][42]. - FX hedge rebalancing from under-hedged sectors in Europe and APAC is expected to continue acting as a depressant on the dollar [17][42]. - The report emphasizes thematic differentiation across FX, favoring mid- to low-yielding currencies and highlighting the outperformance of current account surplus currencies [17][43]. Summary by Sections FX Outlook - The report suggests staying bearish on the USD, with valuation undershooting compared to rates and equities, and a lack of discrete catalysts for strength [1][17]. - Historical data indicates that significant CNY strength is not a prerequisite for USD weakness, and constructing carry-efficient short dollar proxies is recommended [1][17]. Macro Trade Recommendations - The report recommends being overweight in JPY, EUR, Scandi, and Antipodeans while underweighting USD and GBP [2][43]. - It suggests re-selling CAD/NOK as a carry-efficient EUR/USD proxy and buying 6m USD/CAD put spreads [2]. Emerging Markets FX - The report is optimistic about emerging markets FX heading into H2, supported by diminishing US exceptionalism, with a preference for EM Asia 'creditor' currencies and CEE euro-proxies [3][43]. - It advises staying selective in commodity and frontier markets [3]. FX Derivatives - FX volatility is expected to remain neutral into Q3, with a potential pickup later on, and positioning for USD skew underperformance is recommended [4][43]. - The bearish USD trend may see some pause in the summer, but it is too early to suggest a lasting bottom for the dollar [4]. Technical Strategy - The report indicates that the bearish trend for the USD is likely to continue, with key targets set for various currency pairs against the USD [42][43]. - It highlights the importance of monitoring macroeconomic indicators and central bank policies that could influence currency movements [42][43].

Investment Rating - The report maintains an "Overweight" (OW) rating for several state-owned enterprises (SOEs) in the property sector, including China Resources Land, China Overseas Land & Investment, and China Jinmao [14][17]. Core Insights - The speculation that SASAC may require SOE developers to avoid defaulting on publicly issued debt is noted, with the understanding that SOEs have historically not defaulted [1][3]. - The report highlights that while the market currently has confidence in SOEs' ability to repay public debt, the introduction of this requirement could encourage SOEs to control leverage and slow down aggressive land-banking activities [3][4]. - The potential impact of the new directive could lead to a reduction in land acquisitions, which may help in destocking inventory from a macro perspective [4]. Summary by Sections Section: SOE Developer Performance - The report discusses the balance sheet ranking of 100 developers, indicating that some SOEs have weak credit metrics despite the overall confidence in their repayment abilities [1][6]. - A table lists central government-controlled SOEs, emphasizing the importance of accountability for performance metrics [8]. Section: Land Acquisition Metrics - The report provides data on land acquisition as a percentage of contracted sales, showing that many SOEs have exceeded the typical ratio of 40% in recent months [3][10]. - Specific developers, such as China Jinmao and Poly Property, are highlighted for their high land acquisition percentages, indicating aggressive strategies in the current market [10]. Section: Investment Recommendations - Top picks for investment include CR Land, CR Mixc, and COLI based on fundamental analysis, while potential turnaround stories like Longfor and Jinmao are noted for tactical buying opportunities [4][14]. - The report emphasizes the risk-reward balance in the current market environment, suggesting that policy support may favor these companies due to softening property data [4].

Investment Rating - The report does not explicitly provide an investment rating for the industry but discusses various credit spreads and return forecasts for different segments, indicating a cautious outlook on high-yield (HY) and leveraged loans while favoring investment-grade (IG) credit [5][61][72]. Core Insights - The report emphasizes a yield-driven market for global investment-grade credit, with expectations for spreads to remain stable or widen modestly in high-yield and leveraged loan segments due to slower global growth and sticky inflation [5][61][72]. - It highlights the divergence in economic forecasts, with the US and Euro Area experiencing low growth and inflation pressures, while Asia is expected to face wider spreads due to trade risks and high valuations [9][10][81]. - The report suggests a preference for quality over cyclicality in credit investments, indicating that investors may be better compensated for taking duration risk rather than cyclical risk in the current environment [30][32][39]. Summary by Sections Global Credit Outlook - Global investment-grade credit remains attractive due to good yields, with a preference for 5-10 year maturities in the US and 15 years or more in Europe [5][61]. - High-yield spreads are expected to widen modestly, reflecting slower growth and increasing default rates, with a forecast of 3.5% for high-yield defaults [61][72]. Macro Economic Forecasts - The report forecasts US GDP growth at 1.0% for 2025, with core inflation at 3.3%, and no Federal Reserve rate cuts expected this year [10][11]. - Euro Area growth is projected at 0.8% with core inflation at 2.2%, while China is expected to grow at 4.0% with minimal inflation [10]. Sector-Specific Insights - In the US, investment-grade credit is expected to see excess returns of 2.1%, while high-yield is forecasted at 3.6% [61]. - European investment-grade credit is projected to have a total return of 2.0% in the base case, with high-yield expected to yield 4.9% [72]. Asia Credit Outlook - Asia's investment-grade spreads are anticipated to widen to 100 basis points, reflecting concerns over weaker growth and tariff uncertainties [81][83]. - The report indicates a preference for non-China investment-grade credit due to expected tariff impacts on China [84][85].