Investment Rating - Caterpillar Inc. (CAT) and Cummins Inc. (CMI) are both rated as "Buy" with price targets of $418 and $431 respectively [6][7][14]. Core Insights - The report indicates a positive outlook on the sustainability of data center demand, projecting that CAT and CMI will deliver approximately 6-7 GW of backup generator supply this year, against an incremental data center computing capacity of around 13 GW [3]. - CAT is expected to benefit from turbine prime power sales, with CAT Titan 130 turbines specified in regulatory filings for various projects, potentially generating revenue of approximately $250-300 million based on 15 turbines [3]. - CMI is investing $150 million to expand its machining capacity, while CAT is investing over $700 million to upgrade its facilities, indicating high ROI potential for both companies [3]. Summary by Sections Data Center Demand and Supply - CAT and CMI are projected to supply around 6-7 GW of backup power, with data centers historically seeking to back up over 100% of their power needs [3]. - The estimated backup power requirements for 2025 range from 6.6 GW (50% coverage) to 15 GW (115% coverage) based on 13 GW of net data center additions [3]. Company Investments - CMI's investment of $150 million focuses on expanding machining capacity, while CAT's investment of over $700 million includes productivity improvements and facility upgrades [3]. - The report highlights CAT's emerging opportunity in turbine sales, with specific projects already incorporating CAT turbines [3]. Revenue Projections - The revenue from CAT turbines specified in regulatory filings is estimated to be around $250-300 million based on the number of turbines involved in various projects [3].

Investment Ratings - BYD: Buy [7][18] - XPeng: Buy [8][20] - Nio: Neutral [10][21] - Hesai: Buy [15][22] - Zhongsheng: Neutral [17][23] Core Insights - Demand & Stimulus: Management across the industry believes that government support will continue, and effective per vehicle purchase costs will not rise for consumers. Alternative forms of stimulus may emerge if trade-in programs diminish [1][14] - Industry Competition: Competition is expected to persist over the next 2-3 years, shifting focus from pricing to value. OEMs will launch new models with higher configurations at attractive prices, with market dynamics playing a larger role in pricing than government regulations [2][10] - Overseas Operations: OEMs with international exposure have reported strong overseas sales, with localized production capacities being developed to mitigate geopolitical trade tensions [3][7] - Autopilot Development: Autopilot technology is gaining traction, with improvements in functions and hardware. LiDAR adoption is increasing, and some OEMs are equipping multiple LiDARs per vehicle as they progress towards Level 3 capabilities [4][11] Summary by Company BYD - Sales Volume: BYD achieved total sales of 2.1 million units in 1H25, a 33% year-over-year increase. Inventory months decreased from 3 months in April to 2.2 months in June [8] - Overseas Expansion: BYD's overseas sales reached 464,000 units in 1H25, a 128% year-over-year increase, with multiple factories set to begin mass production [8] - Autopilot Features: The "God's Eye" autopilot system was launched, with plans for city memory autopilot capabilities by year-end [8] XPeng - Profitability Goals: XPeng aims for non-GAAP net profit break-even in 4Q25, with expectations of improved vehicle gross margins [11] - New Product Launches: XPeng plans to launch several new models, including a large EREV SUV in 4Q25, and has recently launched the G7 featuring advanced AI technology [8][11] - Sales Performance: XPeng's management is optimistic about maintaining competitive pricing while focusing on value [11] Nio - Sales Growth: Nio reported a total sales volume of 72,000 units in 2Q25, a 26% year-over-year increase, driven by new model launches [10] - Gross Margin Targets: Nio aims for a blended vehicle gross margin of over 15% by the end of 2025 [12] - Operational Efficiency: Nio is implementing operational expense reductions to improve R&D efficiency and overall profitability [10][12] Leapmotor - Sales Volume: Leapmotor achieved 222,000 units in sales volume in 1H25, a 156% year-over-year increase, with ambitious targets for future launches [14] - New Model Pipeline: The company plans to launch multiple new models in 2H25 and 2026, targeting a total delivery of 1 million units by 2026 [14] Hesai - Revenue Guidance: Hesai expects 2025 revenue between RMB 3-3.5 billion, with a gross margin around 40% [16] - Market Recognition: The company is gaining recognition from both domestic and global OEMs, with increased LiDAR adoption in the industry [16] - Production Capacity: Hesai targets an annual production capacity of 2 million units by the end of 2025 [16] Zhongsheng - Sales Performance: Zhongsheng maintains an annual sales volume target of 480,000-500,000 units, with a focus on AITO brand operations [19] - After-sales Services: The company anticipates growth in revenue from after-sales services, driven by adjustments in store operations [19]

Investment Rating - The investment rating for Sunny Optical is maintained at Neutral with a 12-month price target of HK$89.00, indicating an upside potential of 18.0% from the current price of HK$75.45 [18][16][10]. Core Insights - Handset lens shipments decreased by 13% YoY and 3% MoM to 95 million units in June, leading to a total of 594 million units in 1H25, which is a 6% decline YoY [8][9]. - Camera modules saw a slight increase of 1% YoY and 11% MoM, totaling 42 million units in June, resulting in a 21% decline YoY to 228 million units in 1H25 [9][8]. - Vehicle lens shipments grew significantly by 45% YoY and 3% MoM to 11 million units in June, contributing to a total of 65 million units in 1H25, which is a 22% increase YoY [8][9]. Summary by Sections Shipment Analysis - Handset lens shipments were 95 million units in June, down 3% MoM and 13% YoY, with 1H25 shipments totaling 594 million units, reflecting a 6% decline YoY [8]. - Camera modules increased to 42 million units in June, up 11% MoM and 1% YoY, with 1H25 shipments at 228 million units, down 21% YoY [9]. - Vehicle lens shipments reached 11 million units in June, up 3% MoM and 45% YoY, leading to 1H25 shipments of 65 million units, a 22% increase YoY [8]. Earnings Revision - Earnings for 2025-2027 have been revised upwards by 3% to 4% due to higher revenues from vehicle lens shipments and improved gross margins driven by product mix changes [10][11]. - The gross margin is expected to improve by 0.1 to 0.2 percentage points across 2025-2027 due to operational efficiencies [10]. Valuation - The target price is derived from a near-term P/E multiple of 21.6x for 2026E, reflecting a correlation between peers' P/E and net income growth [11][16]. - The target price has been raised to HK$89.0 from HK$83.1, aligning with the company's historical trading range [11][16].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report tracks four sets of high-frequency indicators: consumption and mobility, production and investment, other macro activity, and markets and policy [1] - Consumption and mobility indicators show that property transaction volumes in both primary and secondary markets are below last year's levels [2][12] - Traffic congestion is slightly below last year's levels, indicating a potential decline in mobility [8] - Total auto sales volume in June was above last year's level, suggesting a positive trend in the automotive sector [18] - New energy vehicles (NEVs) sales volume in June exceeded the 2024 level, indicating strong growth in this segment [20] - Production and investment metrics reveal that steel demand remains flat but below year-ago levels, with production also declining [23][24] - Local government special bond issuance reached RMB 2.2 trillion out of a RMB 4.4 trillion quota for 2025, indicating significant infrastructure investment [29] - Other macro activity shows that official port container throughput decreased but remained above year-ago levels, while freight volume at major ports decreased [39][43] - Interbank repo rates have edged down recently, and property high-yield credit spreads have narrowed, reflecting changes in market conditions [47][49] - The Chinese Yuan (CNY) appreciated against the USD but weakened against the CFETS basket, indicating mixed currency trends [51] - Recent macro policy announcements focus on stabilizing employment, promoting urbanization, and enhancing social security [53] Consumption and Mobility - Daily property transaction volume in the primary market was below last year's level [2] - Daily property transaction volume in the secondary market was also below last year's level [12] - Traffic congestion was slightly below last year's level [8] - Total auto sales volume in June was above last year's level [18] - New energy vehicles (NEVs) sales volume in June was above the 2024 level [20] Production and Investment - Steel demand was roughly flat but remained below year-ago levels [23] - Steel production edged down and remained below last year's level [24] - RMB 2.2 trillion local government special bonds have been issued out of the RMB 4.4 trillion quota in 2025 [29] - Daily coal consumption in coastal provinces was slightly below last year's level [30] Other Macro Activity - Official port container throughput decreased over the past two weeks but remained above year-ago levels [39] - Freight volume of departing ships at 20 major ports decreased and was below last year's level [43] - Nowcast indicates China oil demand edged up to 16.9 mb/d in the latest reading [44] Markets and Policy - Interbank repo rates edged down recently [47] - Property high-yield credit spreads narrowed in recent weeks [49] - CNY appreciated against the USD but continued to weaken against the CFETS basket [51] - Major macro policy announcements since March focus on stabilizing employment and promoting high-quality development [53]

Investment Rating - The report maintains a Neutral rating for iFlytek (002230.SZ) with a 12-month price target of Rmb54.00, indicating an upside potential of 14.9% from the current price of Rmb46.98 [1][10][26]. Core Insights - iFlytek's 2Q25 revenue guidance is expected to grow by 10% to 15% year-over-year, with a midpoint growth of 11%, which is 7% below previous estimates. The company reported a net loss in 2Q25, attributed to increased spending on AI model development [1][18]. - The company has launched new AI models, including iFlytek Spark LLM V4.0 Turbo and a new reasoning model, which are expected to enhance its project wins in AI software [2][18]. - iFlytek secured a new project worth Rmb232 million from the QinHuangDao government for AI model training and management, indicating strong momentum in AI monetization [2][18]. Financial Summary - Revenue projections for iFlytek are revised downwards for 2025-2027, with expected revenues of Rmb28,797 million in 2025, Rmb32,648 million in 2026, and Rmb38,794 million in 2027, reflecting a decrease of 1%, 3%, and 5% respectively from previous estimates [19][20]. - The report anticipates a net income of Rmb1,100 million in 2025, Rmb2,029 million in 2026, and Rmb3,316 million in 2027, with a downward revision of 24%, 23%, and 27% respectively [19][20]. - The operating margin is expected to improve from 2.3% in 2025 to 5.2% in 2026, and further to 8.1% in 2027, indicating a gradual recovery in profitability [11][20]. Valuation Metrics - The report sets a target price based on a valuation of 4.1x 2026E EV/Sales, which aligns with peer averages in the software sector. The implied 2026E P/E ratio is projected at 60x, consistent with the company's trading range since 2019 [20][26]. - Key financial ratios include a projected P/E of 98.7x for 2025, decreasing to 32.7x by 2027, and a P/B ratio of 5.8x in 2025, declining to 4.7x in 2027 [10][11].

Investment Rating - The report maintains a "Buy" rating for Asymchem, Kangji Medical, Weigao, Angelalign, and Hygeia, while Tigermed, WuXi XDC, WuXi Biologics, and Frontage are rated as "Neutral" [11][15][18][27][36]. Core Insights - The report highlights a recovery in the healthcare sector, particularly in the CDMO segment, with expectations for earnings resilience driven by new order growth and demand from both US and EU markets, as well as from Chinese biotech licensing [2][3]. - The Medtech sector is anticipated to see clearer recovery in the second half of 2025, supported by normalized hospital activity and new product contributions [3]. - The report emphasizes the importance of monitoring pricing competition and consumption recovery signals in the services sector, particularly in consumer-related categories [4]. Summary by Sections CRO/CDMO - Earnings are expected to remain resilient, especially for companies with exposure to late-stage development and manufacturing projects [2]. - Key investor focus areas include new order growth, client behavior shifts amid policy uncertainties, and pricing and margin recovery [2][13]. - EPS estimates have been revised upward by an average of 1.3% to 1.4% for 2025-2027, with target prices adjusted by an average of 4% [1]. Medtech - Recovery is expected to materialize more clearly in the second half of 2025, with key areas to watch including the pace of VBP rollout and surgical volume trends [3]. - Companies like Weigao and Kangji are ramping up new product launches and global expansions, despite some tariff-related uncertainties [3]. Services - Reimbursement control and DRG/DIP pressure are likely to persist, impacting pricing and volumes [4]. - The report notes a cautious outlook for M&A activity, with companies like Hygeia becoming more positive while others remain cautious [9]. Financial Estimates - The report provides detailed financial estimates for various companies, indicating expected sales growth and net income projections for FY25 and beyond [14][19]. - For instance, WuXi Apptec is projected to achieve a revenue growth of 10-15% for FY25, while Asymchem anticipates double-digit revenue growth alongside margin improvements [19]. Target Price Changes - Target prices for several companies have been adjusted, with Asymchem's target price increased to HK$85.5, reflecting a 13% change [11][15]. - WuXi Biologics' target price is set at HK$25.6, based on a 12-month forward P/E of 22x [15][31]. Backlog and Order Trajectory - The report includes a detailed analysis of backlog and new order trajectories for key players in the CRO/CDMO space, indicating significant year-on-year growth in sales and backlog for companies like WuXi Apptec and WuXi Biologics [17].

Investment Rating - The report does not provide a specific investment rating for Huace Navigation (300627.SZ) as it is categorized as "Not Covered" [1]. Core Insights - Huace Navigation is a leading provider of MEO satellite navigation, positioning, and mapping services in China, focusing on enterprise clients and expanding applications into various sectors including autonomous driving and robotics [1][3]. - The global LEO satellite market is expected to grow significantly, with a total addressable market (TAM) projected to increase from US$15 billion in 2024 to US$108 billion by 2035, indicating a favorable environment for companies like Huace [2]. Summary by Sections Product Development - Huace is expanding its product line to capture new use cases, including the launch of the AA10 airborne measuring system that integrates LiDAR and industrial cameras, enhancing its geospatial information offerings [4][7]. - The company is also developing autonomous driving solutions, such as the P-Box for Baidu Apollo Go's robotaxi, which provides accurate geospatial data for vehicles [7]. Market Expansion - Huace aims to expand its satellite navigation solutions into overseas markets, having established a strong distribution network across regions including Southeast Asia, Europe, and South America [8]. - In 2024, revenues from non-China markets increased by 30% year-on-year to RMB 937 million, accounting for 29% of total revenue, with expectations for continued growth in overseas contributions [8]. Competitive Advantages - Huace's competitive edges include in-house algorithm development, competitive pricing, and accumulated expertise in MEO applications, which enhance its market position [9]. - The company's GNSS analysis platform offers high precision and data compatibility, further solidifying its competitive stance in the satellite navigation market [9].

11 July 2025 | 10:28AM HKT Asia Pacific: Extended Negotiation Period For US Tariffs Prolongs Uncertainty Bottom line: Letters from US President Trump to at least 22 countries—the majority of which are in Asia—indicate that the US plans to raise tariff levels on August 1, to levels generally similar to the 'reciprocal' tariffs originally announced April 2nd. In our view, this effectively marks an extension of the tariff/trade negotiating period from July 9 to August 1. President Trump also announced a 50% ta ...

Investment Rating - The report maintains a moderately positive outlook for Asian equity markets, forecasting a 9% USD price return over the next 12 months with a revised MXAPJ index price target of 700, which is 3% above the previous target of 680 [3][47][54]. Core Insights - The macro risk environment has improved, with reduced US economic policy uncertainty and expectations of Fed rate cuts, which are likely to support regional equities [4][32]. - The tariff environment remains fluid, with potential impacts on GDP growth and earnings forecasts, but the overall growth impact may not be as negative as previously feared [14][19]. - Earnings growth is expected to be the dominant driver of returns, with forecasts of 9% and 10% EPS growth for 2025 and 2026, respectively [48][52]. Summary by Sections Current Conditions - The macro risk environment has improved due to moderated US economic policy uncertainty, eased financial conditions, and firm activity data, leading to a 25% rebound in the MXAPJ index [4][5][6]. Tariffs - The tariff situation is expected to influence equity performance, with potential higher rates but greater certainty. The final tariff rates may differ from current expectations, impacting GDP growth and earnings forecasts [14][15][19]. Rates - The Fed is expected to begin cutting rates in September, with a total of five cuts anticipated by mid-2026, which should support regional equities through a weaker dollar [32][33][36]. Returns - The report anticipates a wide dispersion of expected returns across markets, with a forecasted 9% USD price return over 12 months based on earnings growth and a revised index target [47][49][54]. Allocations - The report emphasizes North Asia, maintaining overweights in China, Japan, and Korea, while downgrading Malaysia to underweight. Sector upgrades include capital goods and tech hardware, while autos and consumer staples are downgraded [59][60][69][75].

Investment Rating - The report maintains an "Overweight" (OW) stance on both A-shares and Offshore China despite trimming the CSI300 12-month target from 4600 to 4400 due to lower earnings growth and a more conservative valuation [1][44]. Core Insights - The anticipated nationwide childbirth subsidy program in China is expected to boost GDP growth by 25 basis points (bp) annualized in the second half of 2025, although it may slightly lower GDP growth in 2026 [1]. - The report indicates a significant inflow of US$3.4 billion into Southbound investments this week, with Northbound holdings data suggesting US$3.3 billion inflows in the second quarter of 2025 [1][45]. - The 12-month forward price-to-earnings (P/E) ratios for MXCN and CSI300 are projected at 11.8x and 13.1x, respectively, with earnings per share (EPS) growth estimates of 5% for 2025 and 14% for 2026 for MXCN, and 21% for 2025 and 14% for 2026 for CSI300 [8][43]. Summary by Sections Performance - The report highlights that Real Estate and GARP (Growth at a Reasonable Price) sectors outperformed, while Materials and ROE (Return on Equity) lagged [7]. Earnings and Valuations - The report revises the earnings growth forecast for 2025/26 to 9% and 10% respectively, with a consensus EPS growth of 5% for 2025 and 14% for 2026 [43][66]. Policies and News - Onshore exchanges have issued final regulations on program trading, indicating a regulatory push towards high-quality development in the securities industry [4]. Market Update - The report notes that trade policy uncertainty has eased, and financial conditions have loosened, which may positively impact market performance [35][39]. Sectoral Insights - The report suggests that sectors such as Internet/Media/Entertainment, Consumer Retail & Durables, and Tech Hardware are positioned for growth, while Energy, Chemicals, and Utilities are underweight [44][67].