Macro Commentary - The Chinese government has pragmatically lowered the economic growth target for 2026, reflecting a willingness to tolerate short-term slowdown for higher quality long-term development [2] - The focus of policy is shifting towards stabilizing investment, with increased fiscal resources aimed at attracting private capital into emerging sectors such as AI infrastructure, digital industries, and green industries [2] - The government has explicitly set re-inflation as a policy goal, aiming for a moderate recovery in price levels through supply-demand rebalancing [2] Market Performance - The Hang Seng Index closed at 25,321, up 0.28% for the day but down 1.21% year-to-date [2] - The Shanghai Composite Index rose 0.64%, while the Shenzhen Composite Index increased by 1.17% [2] - The US markets saw declines, with the Dow Jones down 1.61% and the S&P 500 down 0.56% [4] Automotive Industry Commentary - In February, the average discount in the Chinese automotive industry remained stable compared to January, but discounts for German brands narrowed due to significant price reductions by BMW and Mercedes [5] - New model launches in March and April may act as positive catalysts for stock prices, despite weak first-quarter earnings expectations [5] - Traditional automakers like Geely and Great Wall Motors saw increases in average discounts, with Geely reaching a new high of 13.1% [6][7] New Energy Vehicles - Ideal's average discount remained stable at 5.3%, while XPeng's increased to 5.7%, indicating a need for new popular models to support sales growth [6] - NIO's average discount slightly increased to 1.6%, driven by larger discounts on specific models [6] - The new energy vehicle market is facing pressure from rising competition and the need for innovative products to maintain sales momentum [6] Company Insights - Reshaping Energy (2570 HK) is expected to benefit from a new round of hydrogen energy subsidies, potentially doubling the total subsidy amount compared to the previous round [8] - The company is projected to maintain an 18% market share in fuel cell systems, with sales expected to reach 1,200 units in FY25, generating revenue of 660 million yuan [9] - JD Group (JD US) reported a revenue of 352.3 billion yuan for Q4 2025, a 1.5% year-on-year increase, with expectations for steady growth in core business profitability [10] - Bilibili (BILI US) achieved a total revenue of 8.32 billion yuan in Q4 2025, driven by strong advertising performance, with an expected revenue growth of 6% in Q1 2026 [10]

Investment Rating - The report assigns a "BUY" rating for JD.com, indicating a potential return of over 15% over the next 12 months [19]. Core Insights - JD.com reported 4Q25 results with revenue of RMB352.3 billion, reflecting a 1.5% year-over-year increase, which was 1% above forecasts [1]. - Non-GAAP net profit was RMB1.1 billion, down 90% year-over-year, primarily due to investments in food delivery and a high base effect, but still exceeded forecasts [1]. - The operating loss for new businesses in 4Q25 was RMB14.8 billion, slightly higher than estimates, but a 20% quarter-over-quarter decrease in operating loss from the food delivery business was in line with expectations [1]. - Revenue and non-GAAP net profit forecasts for 2026-27 have been raised by 3% and 1-6% respectively, driven by better-than-expected growth in electronics and home appliances [1]. - The target price has been lifted by 2% to US$47.5, supported by improved visibility on group-level earnings growth and shareholder returns [1][13]. Financial Performance - JD.com achieved a revenue of RMB1,309.1 billion in FY25, with a year-over-year growth of 13% [9]. - For FY26, revenue is projected to reach RMB1,402.3 billion, representing a 7.1% growth [11]. - The adjusted net profit for FY26 is estimated at RMB29.1 billion, with a non-GAAP net margin of 2.1% [11]. - The company plans to narrow the operating loss from the food delivery business in 2026, targeting improvements in unit economics and operational efficiency [8]. Shareholder Returns - In 2025, JD.com repurchased approximately 91.6 million ADSs for about US$3.0 billion, representing around 6.3% of outstanding ADSs [8]. - An annual cash dividend of US$1.0 per ADS for 2025 was announced, totaling approximately US$1.4 billion [8]. Market Data - JD.com has a market capitalization of approximately US$37.9 billion and a current stock price of US$25.47, indicating an upside potential of 86.5% to the target price [2][3]. - The stock has experienced a decline of 19% over the past six months [5]. Business Segments - JD Retail reported revenue of RMB301.9 billion in 4Q25, down 1.7% year-over-year, but still better than consensus estimates [8]. - General merchandise revenue increased by 12.1% year-over-year in 4Q25, while electronics and home appliances revenue decreased by 12% [8]. - The marketplace and advertising revenue rose by 15% year-over-year in 4Q25, driven by balanced growth in advertising and commission revenue [8]. Valuation - The DCF-based target price of US$47.5 is derived from a WACC of 11.8% and a terminal growth rate of 1.0% [13]. - The report indicates a P/E ratio of 10.4x for FY26, suggesting a favorable valuation compared to historical performance [16].

Investment Rating - The report maintains a "BUY" rating for Bilibili, indicating a potential return of over 15% over the next 12 months [22]. Core Insights - Bilibili's total revenue for 4Q25 increased by 8% year-over-year to RMB8.32 billion, surpassing Bloomberg's consensus estimate by 2%, primarily driven by a robust advertising business that grew by 27% year-over-year [1]. - Adjusted net income rose significantly by 94% year-over-year to RMB878 million, exceeding consensus estimates by 10%, attributed to operating leverage and effective cost control [1]. - The company anticipates total revenue growth of 6% in 1Q26 and 8% in FY26, mainly fueled by the advertising sector, although margin expansion may slow due to increased investments in AI [1]. - The target price for Bilibili has been adjusted to US$30.5 from the previous US$31.0, reflecting a 19.4% upside from the current price of US$25.55 [3]. Financial Performance - For FY26E, total revenue is projected at RMB32.785 billion, with a year-over-year growth rate of 8% [2]. - The adjusted net profit for FY26E is estimated at RMB2.959 billion, reflecting a growth of 14.3% year-over-year [2]. - The gross margin is expected to improve to 37.3% in FY26E, while the adjusted net margin is projected to reach 9.0% [10]. Business Segments - The Value-Added Services (VAS) revenue increased by 6% year-over-year to RMB3.26 billion, supported by the growth of the live streaming business [9]. - Advertising revenue surged by 27% year-over-year to RMB3.04 billion, with AI-related ad budgets increasing by approximately 180% year-over-year in 4Q25 [9]. - Mobile games revenue declined by 14% year-over-year to RMB1.54 billion, impacted by a decrease in revenue from existing titles, although new game launches are anticipated in 2026 [9]. AI Investment and Community Development - Bilibili is focusing on AI as a key driver for community growth and monetization, providing creators with AI-generated content tools and translation services [9]. - The company has seen a significant increase in ad spending aimed at deep conversion, growing over 40% year-over-year, and the smart ad delivery system has improved campaign success rates by approximately 300% year-over-year [9]. Valuation - The SOTP valuation indicates a target price of US$30.5 per ADS, with the advertising business contributing US$16.3, VAS at US$6.8, and mobile games at US$7.1 [13][14][15].

Report Summary 1. Industry Investment Rating The report does not mention any industry investment ratings. 2. Core Viewpoints - The fixed - income market shows a mixed performance with different trends across various sectors such as Chinese IG, HK, Chinese properties, SE Asia, KR, the Middle East, and AT1s. The market is also influenced by macro - economic factors and company - specific news [2][6]. - West China Cement is recommended for investment due to its strong operating results, overseas expansion, and relieved refinancing risk. Yanlord is considered a survivor in the non - state - owned property sector but is expected to have slow sales momentum and a likely normalization of gross margin [7][9]. - China's economy is facing softening growth momentum in early 2026, and policymakers may use fiscal measures to underpin the economy, with a possible lower GDP growth target [16][19]. 3. Summary by Relevant Catalogs Trading Desk Comments - Yesterday, NORBK 4.683 03/10/31 and NORBK 5.356 03/16/36 tightened 5 - 7bps before noon, but more than half of the spread gains were pared. MEITUA widened 5 - 10bps after S&P downgraded its rating. WESCHI 26 - 29 were unchanged to 0.4pt lower. In HK, MTRC/HKE/LINREI had better buying but spreads closed unchanged, NWDEVL dropped 0.7 - 1.8pts, and VDNWDLs were unchanged to 0.3pt lower. In Chinese properties, VNKRLE 27 - 29/FUTLAN 28/FTLNHD 26 - 29/LNGFOR 27 - 32 leaked 0.2 - 0.5pt. In SE Asia, PCORPM Perps were unchanged to 0.2pt lower. In KR, DAESECs traded 2 - 4bps tighter. In the Middle East, selling flows dominated, and Yankee AT1s recovered [2]. - This morning, financial IG bonds and recent new issues NORBK 31 - 36s tightened 3 - 5bps, and Chinese IG space also traded 3 - 5bps tighter. MEITUAs were unchanged [3]. Macro News Recap - On Wednesday, S&P (+0.78%), Dow (+0.49%), and Nasdaq (+1.29%) were higher. China's Feb'26 Manufacturing PMI was 49.0, lower than the market expectation. The US Feb'26 S&P Global Services PMI was 51.7, lower than the forecast, while the US Feb'26 ISM Non - Manufacturing PMI was 56.1, higher than the expectation. The US Crude Oil Inventories were +3.475mn, higher than the forecast. UST yield was higher, with 2/5/10/30 - year yield at 3.54%/3.67%/4.09%/4.72% [6]. Desk Analyst Comments - WESCHI: The company announced a positive profit alert for FY25, with profit attributable to owners expected to increase 33 - 43% to RMB832.8 - 895.5mn. The drivers are an uptick in international cement sales, lower COGS in China, and negative goodwill from an acquisition. After two tender offers, the outstanding amount of WESCHI 4.95 07/08/26 reduced from USD600mn to USD52.0mn. The analyst maintains buy on WESCHI 9.9 12/04/28 and initiates buy on WESCHI 10 ½ 11/11/29 [7][8]. - YLLGSP: Yanlord had mixed FY25 results with lower revenue but higher gross margin and profit before tax, boosted by a Shenzhen URP. Total contract sales declined 37.1% to RMB14.0bn in FY25, and in 2M26, contract sales were cRMB10bn, down c60% yoy. The analyst has a neutral recommendation on YLLGSP 5 ⅛ 05/20/26. Yanlord is considered a survivor in the non - state - owned property sector, with stable net debt and a manageable debt maturity profile. It may use internal resources to repay the USD bond due May'26, and the decision depends on market conditions [9][10][11]. China Economy - China's manufacturing PMI softened in Feb due to CNY distortions. Demand and production deteriorated, with new order and export indexes dropping to new lows, while reflation continued. Non - manufacturing PMI remained in contraction. The 2026 GDP growth target may be lowered to "4.5 - 5%", and policymakers may keep the broad fiscal deficit at around 8% of GDP, including RMB5.9tn general budget deficit, RMB1.3tn ultra - long central government special bonds, and RMB4.5tn local government special bonds [16][19]. Offshore Asia New Issues - There were no offshore Asia new issues priced today. Industrial Bank Co., Ltd. HK Branch has a pipeline issue of USD 3 - year with a pricing of SOFR+100 and an issue rating of Baa2/-/- [21][22]. News and Market Color - Yesterday, 97 credit bonds were issued onshore with an amount of RMB82bn, and month - to - date, 220 credit bonds were issued with RMB186bn raised, a 10.4% yoy increase. Fitch revised Indonesia's outlook to negative and affirmed BBB rating. Several Chinese financial firms are scaling back exposure to Middle Eastern debt. There are also various company - specific news such as S&P downgrading Meituan's rating, Orix selling a stake, etc. [24]

Macro Commentary - In February, China's manufacturing PMI weakened significantly due to the impact of the Spring Festival, with both new orders and export indices hitting new lows. Despite this, raw material and factory prices continued to expand, indicating ongoing re-inflation. The non-manufacturing PMI also contracted as construction sites largely halted during the holiday [2] - The National People's Congress is expected to maintain the broad fiscal deficit at around 8% of GDP for 2026, which includes a general budget deficit of CNY 5.9 trillion (4% of GDP) and various special bonds. The GDP growth target for 2026 may be adjusted down to a range of 4.5%-5% [2] Market Performance - The Hang Seng Index closed at 25,249, down 2.01% for the day and down 1.49% year-to-date. The Hang Seng Tech Index fell by 0.96%, down 12.45% year-to-date [2] - The Shanghai Composite Index decreased by 0.98%, while the Shenzhen Composite Index fell by 0.53%. The US markets showed a rebound, with the Nasdaq rising by 1.29% [4] Industry Commentary Aluminum Industry - Qatar's Qatalum announced a controlled shutdown of aluminum production starting March 3 due to local natural gas supply constraints. The shutdown is expected to last until the end of March, with full production resumption potentially taking 6 to 12 months [5] - Qatalum has an annual rated capacity of 648,000 tons, contributing approximately 0.9% to global aluminum production. The shutdown, combined with uncertainties surrounding Iran's 620,000 tons of capacity, is expected to exacerbate supply tightness in 2026, leading to a projected 15% year-on-year increase in aluminum prices [6] - Chinese aluminum producers are viewed as good hedges against risks from the Iranian crisis, with a "buy" rating reiterated for China Hongqiao (1378 HK) and Innovation Industry (2788 HK) [6] Internet/Semiconductor Industry - The performance of leading TMT companies in Q4 2025 indicates that AI continues to drive growth in internet companies, with cloud service revenues growing by 30% year-on-year. This trend is expected to support semiconductor companies' performance outlook [6] - Major internet and cloud firms are raising their capital expenditure forecasts for FY26, which may lead to concerns about investment efficiency amidst high industry valuations. The semiconductor sector is expected to outperform the software sector in the short term [6] - Companies like Microsoft, Meta, Datadog, Amazon, and Google are recommended for their potential to benefit from the generative AI era and drive revenue growth [6]

Report Summary 1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints - Yesterday, there was a wave of selling on 10 - yr IG papers, with spreads closing 3 - 5bps wider, while there was better buying on CCAMCL/NTT FRNs. Greater China higher - yielding space, including NWDEVLs and VDNWDLs, showed price declines. In contrast, LGFV remained resilient and stable, with selected higher - yielding names tightening 15 - 30bps [2][3]. - This morning, new NORBK bonds tightened 7 - 10bps, and the new GUOTJU Float tightened 1 - 2bps. Long - end ARAMCO/KSA were 0.3pt weaker, and NWDEVL/VDNWDL were unchanged to 0.3pt higher. There was better selling on JP AT1s and insurance subs [4]. - Petron will redeem the remaining USD162.6mn of PCORPM 5.95 Perp at par on 19 Apr'26. The report maintains a buy on PCORPM 7.35 Perp as a low - beta carry play [4][8]. 3. Summary by Related Catalogs Trading Desk Comments - Yesterday, 10 - yr IG papers like LINREI/KUAISH/HKE/TW lifers/BBLTB/NTT/SUMI/SUMITR saw selling, with spreads widening 3 - 5bps. CCAMCL/NTT FRNs had better buying. NWDEVLs were down 0.3 - 2.4pts, VDNWDLs were 0.1 - 0.2pt lower. MTRC Perps/HYSANs/LASUDE 26 were 0.1 - 0.6pt lower, LIFUNGs leaked 0.4 - 1.4pts. Macau gaming complex was unchanged to 0.4pt lower. In Chinese properties, VNKRLE 27' and 29' lost 1.1pts, LNGFOR 27 - 32 were unchanged to 0.3pt lower. In SE Asian space, GLPSPs/VEDLN 28 - 33s lost 0.1 - 0.6pt, IHFLIN 27 - 30 were 0.1 - 0.2pt lower, PCORPM Perps were unchanged. In KR space, sentiment was weak, and spreads of DAESEC/POHANG/LGENSO/HYNMTR/HYUELE widened 3 - 5bps. In JP space, RESLIF 6.875 Perp lost 0.8pt, NOMURA 7 Perp was 0.3pt lower, and other Japanese and Yankee AT1s and insurance subs lowered by 0.5 - 1.0pt. Middle Eastern bonds leaked 0.3 - 0.8pt [2]. - This morning, new NORBK 4.683 03/10/31 and NORBK 5.356 03/16/36 tightened 7 - 10bps, new GUOTJU Float 09/06/29 tightened 1 - 2bps. Long - end ARAMCO/KSA were 0.3pt weaker, NWDEVL/VDNWDL were unchanged to 0.3pt higher. There was better selling on JP AT1s and insurance subs, and two - way flows on European counterparts. PCORPMs were unchanged to 0.1pt lower, and CKHHs were unchanged [4]. Top Performers and Underperformers - Top Performers: CHGDNU 4.8 09/11/48 price was 94.6 with a change of 0.8; HILOHO 9 3/4 02/05/30 price was 60.5 with a change of 0.6; INFRAB 14 1/2 11/15/28 price was 107.3 with a change of 0.6; ACNRGY 5.1 PERP price was 87.4 with a change of 0.4; MDLNIJ 6 04/30/27 price was 33.4 with a change of 0.3 [5]. - Top Underperformers: CNOOC 5 3/4 01/26/41 price was 109.3 with a change of - 2.5; NWDEVL 5 1/4 PERP price was 78.7 with a change of - 2.4; NWDEVL 10.131 PERP price was 81.0 with a change of - 1.8; NWDEVL 4 1/2 05/19/30 price was 82.6 with a change of - 1.6; FORTEB 9 3/4 PERP price was 100.0 with a change of - 1.5 [5]. Macro News Recap - On Tuesday, S&P (- 0.94%), Dow (- 0.83%), and Nasdaq (- 1.02%) were lower. The EU CPI increased by 1.9% yoy in Feb'26, higher than the market expectation of 1.7%. UST yield bear flattened, with 2/5/10/30 - year yield at 3.51%/3.63%/4.06%/4.70% [7]. Desk Analyst Comments - Petron will redeem the remaining USD162.6mn of PCORPM 5.95 Perp at par on 19 Apr'26, the first call and coupon reset date. The report maintains a buy on PCORPM 7.35 Perp (first coupon reset in Sep'28) as a low - beta carry play (YTC: 6.1%) due to Petron's smooth access to diverse funding channels and lower refinancing pressure after the exchange and tender offers for PCORPM 5.95 Perp [8]. - In FY25, Petron's revenue declined by 7% yoy to PHP810bn due to lower international prices. However, net income grew 84% yoy to PHP15.6bn, and operating income increased by 28% yoy to PHP37.3bn, reflecting higher sales volumes (up 3% yoy to 113.4mn barrels) and higher refining margin. Petron captured 27.8% of the local oil market share and 25.1% of the LPG sector [9]. - As of Sep'25, Petron's free cash flow jumped 361% to PHP47bn in 9M25 from 9M24, attributable to lower net working capital and capex. Petron spent PHP5bn in capex in 9M25, 45% of the full - year budget. After the exchange offer and new issuance of PCORPM 7.35 Perp in 3Q25, there were net cash inflows of PHP1.8bn. Cash and ST investments increased to PHP42bn from PHP31bn, net leverage was lower, and cash to short - term debt increased to 0.4x. Petron has good access to bank borrowings for refinancing [10]. Offshore Asia New Issues - Priced: Guotai Junan International Holdings issued 400mn USD, 3.5 - yr bonds with a coupon of SOFR + 50 and an issue rating of -/BBB+/-; Norinchukin Bank issued 500mn USD 5 - yr bonds with a coupon of 4.683% and 500mn USD 10 - yr bonds with a coupon of 5.356%, with an issue rating of A1/A/- [11]. - Pipeline: No offshore Asia new issues pipeline today [11]. News and Market Color - Regarding onshore primary issuances, 45 credit bonds were issued yesterday with an amount of RMB45bn. Month - to - date, 124 credit bonds were issued with a total amount of RMB102bn, a 58% yoy increase [13]. - ADNOC delays debut dim - sum bond sale amid Middle East hostilities; BHP halted investment in Queensland due to coal royalties; H&H expects up to 6% rise in adjusted EBITDA for FY25; CK Hutchison is in talks to sell 41 global ports; First Pacific unit Maynilad will spend USD132.3mn to reduce unbilled water, and Meralco seeks regulatory approval to recover USD137.5mn in costs; Blackstone talks on USD4bn NWD deal stall over control; Pertamina shipping arm hopes for safe passage of 2 tankers in Persian Gulf; S&P lowered SoftBank's credit rating outlook to negative from stable; China Vanke obtained UOB approval to extend RMB323mn of loans by one year [13].

Core Insights - The report highlights the launch of the iPhone 17e and M4 iPad Air, which are expected to positively impact Apple's supply chain due to their competitive pricing and enhanced specifications [2] - The iPhone 17e starts at $599 with doubled base storage of 256GB, while the M4 iPad Air maintains its price at $599 for the 11-inch version and $799 for the 13-inch version, featuring significant performance upgrades [2] - Apple's vertical integration strategy, including the introduction of the C1X modem and N1 network chip, is anticipated to improve gross margins and supply chain management [2] - The report predicts that the new budget iPhone and mid-range iPad will strengthen Apple's position in the mid-tier smartphone and tablet markets, especially as competitors face memory cost pressures [2] - A positive impact on Apple's supply chain is expected in the first half of 2026 due to increased market share and product replenishment, with further product launches in the second half of 2026 anticipated to drive stronger upgrade cycles [2] Industry Commentary - The global market has shown mixed performance, with major indices like the Hang Seng Index and the S&P 500 experiencing declines, while the energy sector has seen price increases due to geopolitical tensions [5] - Semiconductor and technology sectors have been particularly affected, with significant drops in stock prices, reflecting broader market volatility [5] - The report notes that the offshore RMB has depreciated against the USD, influenced by rising energy prices and market sentiment [5] - The report emphasizes the importance of companies with high sales exposure to Apple, such as Luxshare Precision, Hongteng Precision, and AAC Technologies, which are expected to benefit from Apple's product launches [6]

Core Insights - The report highlights that the aluminum price is expected to be supported by potential supply constraints in the Middle East, particularly due to the ongoing conflict in Iran, which could disrupt aluminum production and transportation in the region [2]. Industry Commentary - The aluminum production in the Middle East, including GCC countries and Iran, is projected to account for approximately 9% of the global output of 73.8 million tons by 2025. The conflict in Iran may adversely affect its aluminum production of around 620,000 tons, which represents 0.8% of the global total for 2025, if the country's power infrastructure and logistics are damaged [2]. - The blockade of the Strait of Hormuz could impact the transportation of alumina and bauxite throughout the Middle East, affecting aluminum exports from the region [2]. - The report anticipates that supply chain instability will support aluminum prices, benefiting companies such as China Hongqiao (1378 HK, Buy) and Innovation Industry (2788 HK, Buy), with the latter's capacity in Saudi Arabia still under construction, thus expected to be less affected by the current situation [2].

Report Industry Investment Rating - No information provided Core Viewpoints of the Report - Maintain a buy rating on VDNWDL 9 Perp despite weaker 1HFY26 results, considering the higher certainty of coupon payments [7] - The US-Israel bombing against Iran may lead to lower UST rates and wider credit spreads in the Middle East, with varying impacts on different credit segments [13] Summary by Relevant Catalogs Trading Desk Comments - On last Friday, SUMITR Float 29s tightened 6bps, SUMITR Float 31s tightened 15bps; fixed-rate SUMITR 29s were unchanged, SUMITR 31s tightened 6bps, and SUMITR 36s widened 5bps [2] - Chinese IG space: belly-to-long-end TMT names LENOVO/XIAOMI/JD/KUAISH/MEITUA widened 1 - 6bps, while AMC space held firm; Taiwanese lifers traded 1 - 5bps wider; in HK, LINREI and HKE 36 softened up to 5bps wider; NWDEVL/VDNWDL complex leaked up to 1.1pts; NWD will defer coupon payment on USD1.3bn NWDEVL 6.25 Perp due on 7 Mar'26, and its 1H26 core operating profit dropped 18% yoy to HKD3.64bn (cUSD465.3mn) [2] - Chinese properties: FTLNHD 27 rose 1.8pts, FTLNHD 26 was 0.1pt higher, FTLNHD 29/FUTLAN 28 were 0.3 - 0.4pt lower; VNKRLE 27 - 29 dropped 2.6 - 2.9pts [2] - SE Asian space: long-end PETMK widened 6bps, OCBCSP 36 widened 3bps, GLPSP 4.5 Perp lost 1.0pts, ReNew Energy complex edged 0.1 - 0.3pt higher, VLLPM 27 - 29 recovered 1.0 - 1.4pts, SMCGL Perps were unchanged to 0.2pt higher [2] - KR space: POHANG/HYNMTR/LGENSO traded 2 - 4bps wider, lower-spread/bank-guaranteed names SKBTAM/KHFC/HYUELE closed 1 - 3bps wider, and the new issue DAESEC 31 softened to 5bps wider [2] - JP space: heavy selling on bank 10yr fixed tranches MIZUHO/SUMIBK/MUFG, which widened up to 8bps; insurance subs were 0.1pt weaker, led by RESLIF 6.875 Perp; Yankee AT1s were down by 0.4 - 0.9pt, led by UBS 7 Perp/BNP 6.875 Perp/INTNED 6.5 Perp [2] - FRN space: solid buying support for CCAMCL and EU/JP/AU bank FRNs [2] - This morning, AT1s and JP insurance subs were down another 0.1 - 0.5pt; Asian IG space initially widened 5 - 10bps and later recovered 2 - 3bps; heavy selling on XIAOMIs and TW lifers, and two-way flows on Middle Eastern names; FTLNHD 27 edged 0.3pt higher, while VLLPM 29/ACPM 4.85 Perp were 1.2 - 1.7pts lower [3] - In LGFV space, overall balanced two-way flows in moderate size across the credit curve, and prices remained largely stable [4] Last Trading Day's Top Movers - Top Performers: HMELIN 5 1/4 04/28/27 rose 2.1pts to 102.3; FTLNHD 11.88 09/30/27 rose 1.8pts to 97.4; VLLPM 9 3/8 07/29/29 rose 1.4pts to 42.0; VLLPM 7 1/4 07/20/27 rose 1.0pts to 53.2; CHGRID 4.85 05/07/44 rose 1.0pts to 103.2 [5] - Top Underperformers: VNKRLE 3.975 11/09/27 dropped 2.9pts to 44.5; VNKRLE 3 1/2 11/12/29 dropped 2.6pts to 42.0; NWDEVL 6 1/4 PERP dropped 1.1pts to 67.7; GLPSP 4 1/2 PERP dropped 1.0pts to 69.5; UBS 7 PERP dropped 0.9pts to 100.8 [5] Macro News Recap - Last Friday, S&P (-0.43%), Dow (-1.05%), and Nasdaq (-0.92%) were lower; over the weekends, US-Israel struck Iran, and Iran counterattacked across the Middle East; US Jan'26 PPI was +0.5% mom, higher than the market expectation of +0.3% mom; US Feb'26 Chicago PMI was 57.7, higher than the market expectation of 52.0; UST yield was lower on last Friday, with 2/5/10/30 year yield at 3.38%/3.51%/3.97%/4.64% [6] Desk Analyst Comments - Maintain buy on VDNWDL 9 Perp, as NWD confirmed the continued suspension of ordinary dividends and coupon payments on its USD NWDEVL Perps; it is exploring all available funding channels to optimize cash flow and has no imminent rights issues or share placements plan [7] - NWD reported weaker 1HFY26 results with core operating profit falling 18% yoy to HKD3.6bn, due to a 50% yoy decline in revenue from fewer property projects delivered in mainland China and a drop in construction revenue, partly offset by an 18% yoy decrease in G&A expenses; gross profit declined 25% yoy, and gross margin increased to 60.0%; attributable net loss narrowed to HKD3.7bn from HKD6.6bn in 1HFY25 [8] - Contract sales and non-core disposals (NCD) totaled HKD13.8bn in 1HFY26, on track to meet its FY26 target of HKD27bn; pre-sales of some projects were well received; available saleable resources in HK in 2HFY26 include Pavilia Rosa, Grand Austin Bohemian, The Pavilia Farm; 1HFY26 capex was contained at HKD3.5bn against a full-year target of below HKD12bn [9] - As of Dec'25, net debt edged up marginally to HKD131.9bn from HKD129.6bn in Jun'25 due to lower cash balance; net gearing rose to 59.7% from 58.1%; NWD completed the exchange offer for USD bonds and perps in Nov'25, reducing outstanding perps and bonds by cHKD8.7bn and cHKD0.4bn respectively, totaled cHKD9.1bn; debts maturing over the next two years dropped to HKD36bn from HKD65bn; gross finance costs fell 11% yoy to HKD2.3bn in 1HFY26, and the average funding cost dropped to 3.9% from 4.7% in 1HFY25 [10][11] Quick Thoughts on US-Israel's Bombing Against Iran - Immediate impact: lower UST rates and wider credit spread of Middle East names; this morning, Asia opened with a wait-and-see tone; 10-yr UST opened 6 - 7bps lower and the decline narrowed to 3 - 4bps; credit spread of the Middle East widened 5 - 10bps; two-way flows on Middle East credits with selling in banks and buying in oil names; Brent Crude rose to cUSD77 a barrel this morning from cUSD73 on last Friday [13] - Prolonged and escalated conflict: the conflict may last longer and spill over wider than the 12-day War in last June; the key difference is the killings of Iranian supreme leader and his families; there are incentives for the US and Iran to contain the conflict, but how Iran and its allies will retaliate and how the US and Israel will respond are highly uncertain [14] - Varying impacts on credits: negative to Middle East credits in general; more negative impact on port operators, properties, and banks; higher oil and commodity prices could benefit oil and mining companies, quasi-sovereigns, and sovereigns, assuming the conflict does not materially affect oil production and FDI in GCC countries [15] Offshore Asia New Issues - No offshore Asia new issues were priced today [19] - Pipeline: Chang Development International plans a 3yr USD issue with a 5.4% coupon and a Baa2/-/- rating; Government of Mongolia plans a 6yr USD issue with a 6.3% coupon and a B1/BB-/- rating; Shaoxing Shangyu State-owned plans a 3yr USD issue with a 4.35% coupon and a -/-/BBB- rating [21] News and Market Color - On last Friday, 36 credit bonds were issued onshore with an amount of RMB21bn; in Feb'26, 1,075 credit bonds were issued with a total amount of RMB816bn, a 34.2% yoy decrease [24] - China new home prices posted the steepest drop in more than three years in Feb'26 [24] - Macau gaming revenue for Feb'26 rose 4.5% yoy to MOP20.6bn [24] - CTF Services plans full early redemption of HKD850m convertible bonds due 2027 [24] - Dalian Wanda Commercial Management sold Shanghai Zhuanqiao Wanda Plaza for RMB2.1bn (cUSD298mn) [24] - Fosun International plans to repurchase up to HKD1bn (cUSD127.8m) of its shares [24] - Minmetals Land's scheme of arrangement to take the company private became effective on 27 Feb'26 [24] - SoftBank Group will invest an additional USD30bn in OpenAI as part of a USD110bn financing round at a USD730bn pre-money valuation [24] - Swire Pacific agreed to sell a 30% stake in its Coca-Cola bottling operations in Vietnam for USD221.1m in cash [24] - China Vanke terminated its RMB15bn (cUSD2.2bn) share issuance plan initiated in 2005 [24] - HKEx is still reviewing ENN Natural Gas listing application related to ENN Energy's privatisation [24]

Industry Overview - The Chinese automotive industry has seen weaker-than-expected performance in the first two months for new energy vehicles, with a focus on the upcoming new car releases in March to drive demand recovery [2] - Li Auto's February delivery volume decreased by only 5% month-on-month to approximately 26,000 units, outperforming most peers, primarily due to the contribution from the i6 model launched in September 2025 [2] - NIO's February delivery volume fell by 23% month-on-month to about 21,000 units, with the NIO brand contributing approximately 15,000 units [2] - XPeng's February delivery volume decreased by 24% month-on-month to around 15,000 units, falling short of expectations, with a cumulative year-on-year decline of 42% for January and February [2] Sales Forecast - The forecast for February 2026 indicates a 15% month-on-month decline in retail sales of new energy passenger vehicles to approximately 480,000 units, with a year-on-year decline of 23% for January and February [6] - The market share of new energy vehicles is expected to drop to around 40% following a reduction in purchase tax incentives starting January 2026, but is anticipated to rebound starting in March with the release of new models [6] Company Insights - NIO is expected to face challenges in 2026 due to a faster-than-expected decline in orders for new models, despite achieving its first non-GAAP net profit in Q4 2025 [5] - BYD's wholesale sales of passenger vehicles in February fell by 9% month-on-month to approximately 188,000 units, with a cumulative year-on-year decline of 36% for January and February [5] - Geely's new energy vehicle sales, including the Zeekr brand, increased by 10% year-on-year in the first two months of 2026, supported by positive market feedback for new models [5] - Leap Motor's February wholesale sales decreased by 12% month-on-month to about 28,000 units, with a cumulative year-on-year decline of 19% for January and February [5] AI in Pharmaceutical Industry - The MSCI China Healthcare Index has risen by 5.0% since early 2026, outperforming the MSCI China Index by 6.2%, despite a recent pullback in the pharmaceutical sector [6] - AI is expected to significantly change the paradigm of innovative drug development, with rapid advancements in AI applications within the pharmaceutical industry [7] - Major global pharmaceutical companies are increasingly privatizing and upgrading their core AI infrastructure to build high data barriers [7] - The launch of LillyPod by Eli Lilly, equipped with NVIDIA technology, exemplifies the integration of AI in clinical development and manufacturing processes [7] Company Recommendations - Recommended stocks include 3SBio (1530 HK), JAC (1167 HK), Genscript (2273 HK), WuXi AppTec (2268 HK), and China Biologic Products (1177 HK) [9]