Investment Rating - The industry view is rated as Attractive, with a preference for gold, cement, building materials, and steel for 2Q25 [7]. Core Insights - Demand in the materials sector showed signs of recovery in 1Q25, but the outlook for 2Q25 is uncertain due to tariff concerns. Domestic excavator sales increased by 38% YoY, and orders from cathode producers rose by 20% due to strong demand from electric vehicles (EV) and energy storage [2]. - The report anticipates that metals-related stocks may outperform in 2H25 as further stimulus is expected [1][6]. - The tariff impact is projected to weigh heavily on the materials space, with a forecasted GDP growth reduction of 30 basis points to 4.2% for 2025 due to tariff shocks and domestic demand impacts [2][18]. Summary by Sections Gold - Gold is identified as the top pick within commodities, supported by ongoing central bank buying and rising ETF inflows. Lower Treasury yields are expected to enhance gold's macro backdrop. Preferred stocks include Zhaojin (1818.HK) and Zijin Mining (2899.HK, 601899.SS) [3]. Cement and Steel - Cement supply-side controls were announced in November 2024, leading to a focus on profitability rather than price wars. The report expects a significant increase in gross profit per ton due to lower coal prices and higher cement prices. For steel, a production cut of 30 million tons and an export cut of 15-20 million tons are anticipated in 2025. Preferred stocks include Anhui Conch (0914.HK, 600585.SS), CNBM (3323.HK), and Baosteel (600019.SS) [4]. Copper and Aluminum - In 2H25, copper and aluminum are expected to outperform due to continued demand from grid and EV-related green infrastructure. Additional fiscal stimulus could further support demand. Preferred stocks include Zijin (2899.HK, 601899.SS), CMOC (3993.HK, 603993.SS), and Hongqiao (1378.HK) [5]. Tariff Impact - The report highlights that the current cumulative US tariffs could have a more significant growth drag than in 2018-19, with expectations of trade talks to lower tariffs to 34% by year-end. The tariff shocks are expected to impact both trade channels and domestic demand [17][18].

Investment Rating - The industry investment rating is In-Line [8] Core Insights - The report indicates that uncertainties regarding US tariffs on electronic products persist, leading to an unattractive risk-reward scenario for the tech hardware supply chain [3][4] - A scenario analysis suggests a potential 17-18% downside to earnings estimates for 2025-26, with consumer tech being the most affected segment [3][4][36] - The report emphasizes the need for diversification of production capacity, particularly away from China, although this may incur high costs [5][26] Summary by Sections Tariff Impact Analysis - The analysis presents three scenarios (bear, base, bull) regarding tariff impacts, with the base case indicating a 17% earnings estimate cut for 2025 and 18% for 2026 [14][16] - The bear case suggests a prolonged downturn lasting six to eight quarters, while the bull case anticipates limited tariff disruption [19][22] Consumer Technology Sector - Companies heavily exposed to consumer tech, such as those in the Apple supply chain, face significant profit pressures due to price inflation and demand slowdown [4][10][36] - The report forecasts only 8% and 16% YoY earnings growth for the Apple supply chain and PC/NB peers, respectively, in 2025 [18][36] Production Capacity and Costs - Current production capacity for Apple hardware remains over 70% in China, and shifting to regional production will likely increase costs significantly [5][25] - The FOB price for iPhones produced in the US could be 75% higher than in China due to tariffs [5] Stock Implications - The report advises selective investment in stocks, particularly favoring data center infrastructure plays due to sustained AI demand growth [39] - Several consumer tech stocks have been downgraded, with a total of seven stocks adjusted, including five moved to Underweight [33][36]

Investment Rating - The industry view is rated as Cautious [3] Core Insights - TSMC is expected to achieve a gross margin of over 53% if not involved in an Intel joint venture operation [20] - Global semiconductor revenue peaked in Q3 2024, with a forecasted decline in foundry demand due to potential new tariffs [10][27] - TSMC's revenue guidance for Q2 2025 is projected between US$28.4 billion to US$29.2 billion, reflecting a 13% quarter-over-quarter increase at the midpoint [25] Summary by Sections TSMC Financial Performance - TSMC reported Q1 2025 revenue of NT$839.254 million, a decrease of 3.4% quarter-over-quarter but an increase of 41.6% year-over-year [22] - The company anticipates Q2 2025 revenue to be between US$28.4 billion and US$29.2 billion, indicating a 29.8% year-over-year increase at the midpoint [25] Market Trends and Demand - Global semiconductor inventory days declined at the end of 2024, with non-AI semiconductor demand recovery being a key factor for 2025 [29] - AI computing wafer consumption is projected to reach US$16.1 billion in 2025, with NVIDIA expected to account for the majority [59] Semiconductor Production Equipment - Disco reported a 4Q shipment value of ¥92.5 billion, a decrease of 2.6% year-over-year, with sales increasing by 15.7% to ¥120.7 billion [76] - The company expects a significant increase in shipments for HBM applications in the first quarter of F3/26 [76]

Investment Rating - The industry view for mid-cap CRO/CDMOs is rated as Attractive [5] Core Insights - Direct tariff exposure for major China CRO/CDMO companies is estimated to be between 0%-10%, which is manageable for most leading firms in the sector [3][8] - Increasing macro uncertainties, including tariffs and funding dynamics, are expected to lead to softer funding beta and more cautious R&D budgets in 2025 [3][21] - The FDA's proposal to phase out animal testing is unlikely to have an immediate impact on most CROs, as alternatives are limited [8][14] Company-Level Picks - Pharmaron-H is highlighted as the most preferred pick due to its strong alpha from CMC and minimal tariff exposure [4] - GenScript is favored for its turnaround in non-cell business and robust contributions from its CGT investment [4] - Asymchem is noted for its growth in the GLP-1 area, though there are concerns about its overseas facility loss in 2025 [4] - Joinn Lab and Tigermed are viewed positively for their long-term prospects, despite expectations of a slower domestic funding recovery [4] Market Dynamics - The report indicates that the general outlook for CRO/CDMO companies is improving in 2025, but remains softer than earlier expectations due to disrupted global funding momentum [21] - Quality players with unique barriers and visionary overseas facility deployment are expected to outperform their peers [21] Financial Forecasts and Valuations - Tigermed's revenue growth forecasts for 2025-2027 have been adjusted to 3.1%, 8.1%, and 11.6% YoY, reflecting a cautious outlook [26] - The price target for Tigermed has been reduced from Rmb57.5 to Rmb37.7 due to updated earnings estimations [28]

April 22, 2025 03:23 AM GMT Apple, Inc. | North America Survey Says: Stronger Than Expected Apple Intelligence Perception and iPhone Upgrade Rates M Amidst a challenging fundamental backdrop, our March '25 AlphaWise US iPhone survey screens positively and highlights 1) better-than-expected Apple Intelligence adoption, perception, willingness to pay, 2) record N12M US upgrade intentions, and 3) strong interest in a thin and foldable iPhone. Key Takeaways While the tariff backdrop creates myriad uncertainties ...

Investment Rating - The report maintains a positive outlook for the China equity market, with a base case index target for MXCN at HK$80 for 2025, implying a 30% upside from current levels [17][26]. Core Insights - The report indicates a broad-based recovery in the MXCN/CSI300 indices, driven by national team buying and expectations of new policy easing, with a modest increase of 1.6% week-on-week [8]. - The report highlights a potential easing of US-China trade tensions, with improved macro data from China leading to a more favorable QMI reading [9]. - The investment strategy suggests a focus on high-yield sectors such as Energy, IT, and Utilities, while advising caution in Consumer Discretionary and Materials [10][36]. Market & Sector Performance - The report provides detailed sector performance metrics, showing Consumer Discretionary up 1.5% week-on-week but down 20.2% month-to-date, while Real Estate outperformed with a 3.0% increase [6]. - The MSCI China index showed a 1.5% increase over the week but a decline of 14.6% month-to-date [6]. Catalyst Calendar - The report outlines key upcoming macroeconomic events in China, including LPR announcements and housing transaction data, which could influence market movements [13]. Consensus Macro Forecasts - The report presents GDP growth forecasts for China, projecting 5.0% for Q1 2025, slightly revised from previous estimates [15]. QMI & Index Targets - The report sets specific index targets for MSCI-China and CSI-300, with the latter projected at 3,772 RMB for 2025, indicating a 10% upside potential [18]. Investment Recommendations - The report recommends a barbell strategy focusing on high-yielders and selected thematic plays in Internet and AI sectors, while advising a rotation into quality laggards [36][38]. - Specific sector recommendations include Overweight (OW) for Energy, IT, and Utilities, while downgrading Consumer Discretionary and Materials to Underweight (UW) [38].

Investment Ratings - Texas Instruments (TXN): Underweight [2][20] - Lam Research (LRCX): Equal-weight [5][45] - Intel Corporation (INTC): Equal-weight [9][66] Core Insights - The semiconductor industry is facing short-term pressures from tariffs and inventory corrections, but long-term demand remains a focus [1][2] - Texas Instruments is expected to report in-line results, with margins and cash flow under pressure due to tariff impacts and inventory management strategies [4][14] - Lam Research is anticipated to experience near-term memory weakness but has medium-term opportunities in NAND upgrades [41][51] - Intel's near-term outlook appears stable, but the focus is on long-term strategic direction amid a CEO transition [9][64] Summary by Sections Texas Instruments (TXN) - Expected to report results in line with consensus, with revenue forecasted at $3.906 billion for the March quarter, down 2.5% quarter-over-quarter but up 6.7% year-over-year [17] - Gross margin guidance for March is positioned below the long-term trendline, with a focus on stabilizing inventories [4][16] - The company is committed to a capital expenditure of $5 billion this year, with any reduction viewed positively [4][16] Lam Research (LRCX) - Forecasted revenue for the March quarter is $4.657 billion, up 6.4% quarter-over-quarter and 22.7% year-over-year, above consensus [42] - The June quarter outlook projects revenue of $4.326 billion, down 7.1% quarter-over-quarter but up 11.7% year-over-year [43] - The company is expected to benefit from NAND upgrades despite facing near-term headwinds in DRAM [51][50] Intel Corporation (INTC) - Projected revenue for the March quarter is $12.217 billion, down 14.3% quarter-over-quarter and down 4.0% year-over-year [65] - The June quarter is expected to show a slight recovery with revenue forecasted at $12.851 billion, up 5.2% quarter-over-quarter [65] - The focus remains on the long-term strategy and potential shifts under new leadership, with a cautious outlook on the foundry business [10][64]

Investment Rating - The investment rating for Wanhua Chemical is Underweight [2][8][76] Core Views - The report indicates that Wanhua Chemical is facing multiple geopolitical headwinds, including US export tariffs on MDI, China's import tariffs on ethane, and an anti-dumping investigation by the US, which are expected to negatively impact volume, price, and earnings [8][12][13] - The price target for Wanhua Chemical has been reduced to Rmb51.00, reflecting a 5% decrease based on updated financial data and a target multiple of 15x 2025e P/E [5][8][12] Summary by Sections Price Target and Earnings Estimates - The price target for Wanhua Chemical is set at Rmb51.00, down from Rmb54.00, based on a target multiple of 15x 2025e P/E [5][8] - The estimated EPS for 2025 is revised to Rmb3.42, down from Rmb3.61 [2][8] Financial Performance and Projections - The report projects a decline in net profit by 5% for 2025 and 6% for 2026, leading to a downward revision of earnings estimates [5][8] - MDI prices are expected to be Rmb12,305 per ton in 2025, with unit gross profit projected at Rmb2,892 per ton [16] Market Conditions and Risks - The geopolitical risks are anticipated to exert downward pressure on MDI prices and spreads, affecting overall earnings visibility for non-MDI products [8][12][13] - The report highlights that the valuation is no longer appealing, contributing to the Underweight rating [8][12]

Investment Rating - The report initiates coverage on Tongce Medical with a "Reduce" rating and sets a target price of 34 CNY by December 2025 [1][3][7]. Core Insights - The oral healthcare service industry faces both short-term and long-term challenges, leading to pressure on profitability. The earnings per share (EPS) forecasts for 2025 and 2026 are 8% and 10% lower than market consensus, respectively [1][4][7]. - Tongce Medical's revenue is heavily reliant on Zhejiang Province, with 90% of its income generated from this region. The company has struggled with slow expansion outside the province and lower profitability in those areas [4][7][19]. - The report highlights that the industry is fragmented, with only about 3% of dental institutions operating in a chain model, limiting pricing power. Additionally, weak consumer spending has reduced demand for high-margin orthodontic and implant services [4][24]. Summary by Sections Company Overview - Tongce Medical operates 84 medical institutions and has approximately 3,100 dental chairs as of Q3 2024 [1][7]. - The company was founded in 1995 and is one of the leading dental chains in China [7]. Financial Projections - Revenue is projected to grow from 2,847 million CNY in FY23 to 3,125 million CNY in FY25, with a compound annual growth rate (CAGR) of 10% expected from 2024 to 2027 [6][13]. - Adjusted net profit is forecasted to increase from 500 million CNY in FY23 to 609 million CNY in FY26 [6][13]. Market Dynamics - The report anticipates a 7% CAGR for the domestic oral healthcare service market from 2024 to 2028, reaching 193 billion CNY [25][29]. - The market has seen a decline in growth rates due to the pandemic and changing consumer behavior, with a CAGR of only 0.5% from 2019 to 2023 [25][29]. Competitive Landscape - The report notes that the private sector dominates the oral healthcare market, accounting for over 70% of total revenue, with approximately 92.5% of dental institutions being privately operated [30][31]. - The competitive environment is characterized by price sensitivity among consumers, leading to increased competition from smaller clinics [24][25]. Valuation and Risks - The report finds Tongce Medical's valuation at approximately 35.5 times the expected 2025 earnings, which is considered high compared to peers [19][21]. - The report suggests that the company's growth visibility is low, making the premium valuation unjustifiable [19][21].

Investment Rating - The investment rating for China Tourism Group Duty Free is Equal-weight [8] Core Insights - Hainan's offline duty-free sales showed a year-over-year decline of 5% in March 2025, which is an improvement from a 13% decline in the first two months of 2025. The average daily sales were RMB 94 million [4][11] - The daily shopper count decreased by 26% year-over-year to 17,700, while spending per shopper increased by 28% to RMB 6,500. The growth in average spending per shopper may be attributed to a rise in electronic product sales, although this may not significantly impact margins [4][11] - The macroeconomic outlook remains uncertain, particularly with potential tariff escalations expected to impact the second half of 2025. The performance of Hainan's duty-free market is closely tied to middle-class spending [2][11] - The Hainan government is anticipated to release details regarding the free-trade-zone policy later this year, which could affect duty-free operators [3] Summary by Sections Sales Trends - In March 2025, Hainan's offline duty-free sales were RMB 94 million per day, reflecting a 5% year-over-year decline, which is an improvement from the 13% decline observed in the first two months of 2025. Daily sales were 35% lower than in the first two months of 2025 and 25% lower than the pre-COVID seasonality of March 2015-2019 [4][11] - Assuming that the sales trends from April to December 2025 follow pre-COVID seasonality, the year-over-year decline in sales may remain in the low to mid-single digits for the second and third quarters of 2025. However, a lower year-over-year comparison base in the fourth quarter of 2025 may lead to positive sales growth for the full year [11] Economic Factors - The report highlights that the macroeconomic conditions are critical for Hainan's duty-free market, which is more sensitive to middle-class spending. The uncertainty in the macro outlook and potential tariff impacts are significant considerations for future performance [2][11] - The anticipated free-trade-zone policy from the Hainan government is expected to be released later this year, which could have implications for duty-free operators [3]