Investment Rating - The report assigns a Neutral rating to Pop Mart with a 12-month price target of HK$260, indicating a downside potential of 7.4% from the current price of HK$280.80 [17][18]. Core Insights - Pop Mart reported a significant year-on-year revenue growth of 204% and a net profit increase of 396% for the first half of 2025, surpassing Goldman Sachs estimates by 1% and 10% respectively [1][4]. - The strong performance was driven by robust sales growth in both domestic (135% YoY) and overseas markets (440% YoY), with the overseas sales mix increasing to 40.3% from 22.7% in the previous year [2][10]. - The company's core operating profit margin (OPM) expanded by 17 percentage points year-on-year to 42%, attributed to a higher gross profit margin (GPM) and strong operational leverage [2][12]. Summary by Sections Financial Performance - Total sales reached Rmb 13,876 million in 1H25, slightly above Goldman Sachs estimates [4][16]. - Net income attributable to equity holders was Rmb 4,574 million, exceeding estimates by 10% [14][16]. - The gross profit margin was reported at 70.3%, above the expected 69.4% [13][16]. Sales Breakdown - Sales in the PRC increased by 135% YoY to Rmb 8,283 million, while overseas sales surged by 440% YoY to Rmb 5,593 million [10][11]. - Proprietary products sales grew by 214% YoY, with the Monsters IP sales increasing by 668% YoY to Rmb 4.8 billion, representing 35% of total sales [11][12]. Market Expansion - The number of retail stores in the PRC increased to 443, while overseas stores reached 128, with significant growth in the Americas [13][10]. - The company plans to continue expanding its store count, with guidance for over 100 new stores for the full year [3][10]. Future Outlook - The report emphasizes the importance of management's guidance update and strategies for IP portfolio expansion during the upcoming earnings meeting [2][3]. - Continued strong growth visibility into the second half of 2025 is expected, supported by the popularity of IPs and customer base expansion [2][3].

Investment Rating - The report indicates a cautious approach towards the Hong Kong dollar, suggesting a light holding of positions due to market volatility and uncertainty in exchange rate direction [4]. Core Insights - The rising cost of Hong Kong dollar funding poses risks, necessitating banks to maintain higher liquidity buffers. Market liquidity has decreased, exacerbating market anxiety among carry traders [1][2]. - The yield curve is flattening, with short-term financing costs remaining high. The market is seeking yield protection for 1 to 3-month terms, with 3-month rates recently exceeding 2% [1][3]. - The report highlights the potential for arbitrage opportunities in the Hong Kong dollar, but emphasizes the importance of risk-reward ratios and timing for entry [5]. Summary by Sections Hong Kong Dollar Analysis - The significant volatility in the Hong Kong dollar is attributed to a general complacency in the market, with banks needing to hold higher liquidity buffers due to large settlement demands [2]. - The current state of the spot market is chaotic, with a preference for light positions until further evidence of exchange rate direction emerges [4]. Yield Curve and Market Behavior - During the initial volatility, there was increased interest in long-term sports betting, reflecting expectations that Hong Kong dollar arbitrage remains attractive despite recent price declines [3]. - The yield curve is currently flat, with a concentration of price movements at the front end, indicating a market focus on short-term yield protection [3]. Taiwan Dollar and Indian Rupee Insights - The Taiwan dollar is expected to appreciate moderately in the second half of the year, with increased hedging to mitigate liquidity ratio deterioration risks [7]. - The Indian rupee faces pressure due to changing trade sentiments and capital outflows, with expectations of reaching a target of around 87 by year-end [10].

Investment Rating - The report maintains a Neutral rating for Cisco (CSCO) following its earnings report, with a downgrade to Neutral from a previous rating due to a significant miss in adjusted EBITDA and a below-expectations guidance [3][7]. Core Insights - Cisco's earnings report showed solid results but lacked significant surprises, leading to debates on whether it is a core long-term investment or likely to consolidate due to a lack of upward revisions [3][6]. - There are positive indicators for Cisco, including strong demand for WiFi 7 orders and a potential upgrade cycle for its enterprise campus products, which could provide tailwinds in the future [4][5]. - Investor sentiment around Nvidia (NVDA) remains high, with a notable increase in stock price since April, but recent performance has raised questions about its relative value and market positioning [12][13]. - The software sector is experiencing a cautious sentiment, with many stocks showing signs of being oversold, leading to frustration and confusion among investors regarding the lack of price support despite solid earnings [14][16][17]. - Apple (AAPL) has outperformed the Nasdaq 100 index recently, but September is historically a challenging month for the stock, raising concerns about future performance [19][20]. Summary by Sections Cisco (CSCO) - Cisco's Q4 EPS beat expectations by only 1%, the smallest percentage beat since April 2022, leading to discussions about its long-term viability as a core holding [3][6]. - The company is seeing early demand signals for campus refreshes, particularly with WiFi 7 orders increasing significantly [4][5]. - Security revenue growth was slightly below consensus, raising concerns about Cisco's ability to meet its previous outlook for security and observability [6][7]. Nvidia (NVDA) - Nvidia's stock has increased approximately 100% since April, but recent performance has lagged behind semiconductor indices, prompting discussions about its valuation [12][13]. - Investor confidence in the AI theme remains high, but there are tactical discussions about risk-reward dynamics ahead of upcoming earnings [12][19]. Software Sector - The software sector is currently viewed with caution, with many stocks experiencing significant declines and showing oversold conditions [14][16]. - There is a mix of sentiment among investors, ranging from frustration to optimism about potential opportunities in the sector [17][18]. Apple (AAPL) - Apple has recently outperformed the Nasdaq 100, but the upcoming September period is traditionally challenging for the stock, which could impact future performance [19][20]. Size Factor - The report highlights significant movements in the size factor, indicating notable volatility between small and large-cap stocks, marking one of the largest shifts in the past five years [21][22].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings, with a target price increase to HK$701 from HK$658 [1][9][31]. Core Insights - Tencent's strong second-quarter results demonstrate the fastest top-line growth in four years, supported by record gross margins, positioning the company favorably within the Chinese internet sector to leverage AI applications across its business lines [2][20]. - Revenue and EPS estimates for FY25E-27E have been revised upward by 1-6% due to the stability of the games business, growth in marketing services, recovering fintech, and cloud/eCommerce acceleration [2][31]. - The report highlights the significant role of AI in driving growth across various segments, including games, advertising, fintech, and cloud services, with increased capital expenditures projected for FY25E and FY26E [2][20][27]. Summary by Sections Financial Performance - Tencent's total revenue for FY25E is estimated at Rmb746.72 billion, with a growth rate of 13.1% year-on-year, and for FY26E, it is projected at Rmb820.27 billion, reflecting a 9.9% growth [4][31]. - The company expects an EBITDA of Rmb343.45 billion for FY25E, with an EBITDA margin of 46% [4][12]. - EPS is forecasted to be Rmb27.69 for FY25E, showing a growth of 17% [4][31]. Business Segments - The gaming segment is projected to grow by 18% and 11% year-on-year for FY25E and FY26E, respectively, driven by strong titles and a robust pipeline [21][22]. - Marketing services revenue is expected to grow by 19% and 16% for FY25E and FY26E, supported by AI-driven adtech improvements and increased engagement on WeChat [25][26]. - Fintech and business services are anticipated to see revenue growth of 9% and 8% for FY25E and FY26E, respectively, aided by a recovery in transaction volumes and cloud service expansion [26][27]. AI and Technology Integration - AI investments are central to Tencent's growth strategy, with significant capital expenditures planned to enhance AI capabilities across its platforms [20][27]. - The report notes improvements in advertising effectiveness due to AI upgrades, leading to higher click-through rates and revenue per click [25][26]. - Tencent's ongoing development of AI functionalities within WeChat aims to enhance user experience and transaction capabilities [20][28]. Market Position and Outlook - Tencent is positioned as a key beneficiary of AI applications, with expectations of compounding earnings growth through macroeconomic cycles [28]. - The company is recognized as a top player in the public cloud sector in China, further solidifying its market position [28].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The labor market is perceived to be weak, with a consensus within the Federal Reserve that the overall unemployment rate may not fully reflect the actual situation, primarily due to a slowdown in labor supply [1] - The possibility of a 50 basis point rate cut in September is considered very low, as more evidence is needed to indicate an economic downturn [1][7] - The Federal Reserve's independence is safeguarded through its structure and culture, ensuring decisions are not influenced by political factors [9][10] Summary by Sections Federal Reserve Insights - The Federal Reserve's meeting process is rigorous, with members communicating extensively before meetings, leading to clear positions by the time of the meeting [5] - Recent weak employment data does not constitute a significant shock, but the upcoming August data is crucial for confirming the trend of a weak hiring market [1][6] - The current interest rate level (5.25%-5.5%) is considered restrictive, but there is still some room for potential rate cuts [1][7] Labor Market Analysis - The labor market is believed to be weaker than what the overall unemployment rate suggests, with hiring stagnating and a reduction in labor supply due to immigration policy impacts [3][6] - Economic growth is currently weak, around 1%, with factors such as government spending cuts and insufficient consumer demand contributing to this situation [6] Financial Industry Changes - The financial industry has seen significant changes, including a more mature capital market and an increase in the share of hedge funds and investment funds [2][12] - There is a notable decentralization in global financial markets, and internal collaboration within companies has significantly improved, leading to more integrated operations across departments [2][13]

Investment Rating - The report indicates a selective recovery in capital expenditures in Europe expected after 2026, driven by energy transition, security demands, and government support [1][2][4]. Core Insights - European capital expenditures as a percentage of sales reached a historical low in 2023, but are projected to rebound selectively post-2026 due to structural factors and government incentives [1][2][4]. - Global capital expenditure growth is expected to be slightly below 5% in 2025, up from 4% in 2024, with large project orders being delayed rather than canceled [1][6]. - Key growth areas identified include data centers, utilities, and defense sectors, driven by electrification, artificial intelligence, and government support [1][7][21]. Summary by Sections Current Investment Trends - European companies have historically focused on shareholder returns through dividends and buybacks, resulting in lower capital expenditures [2]. - Despite macroeconomic uncertainties, there is renewed investment demand in capital-intensive industries driven by themes such as energy transition and digitalization [3][4]. Sector Performance - The technology sector, particularly data centers and semiconductors, has maintained stable growth of over 15% in the past two years [8]. - Utilities, especially in the power grid sector, have shown mid to high single-digit growth, while mining capital expenditures are projected to grow at 7% [8][18]. Future Opportunities - Significant growth is anticipated in data centers, utilities, and defense sectors, with specific investment baskets available for targeted exposure [7][28][32]. - Companies like Schneider and Legrand are highlighted as key players in the data center market, while Atlas Copco is noted for its strong growth potential in the semiconductor sector [17][26]. Challenges and Market Dynamics - Traditional heavy industries and consumer-related sectors are experiencing weaker performance, with food and beverage industries showing below-average prospects [9]. - Tariff issues have impacted large project investment decisions, but resolving these could lead to a resurgence in capital expenditures in 2026 [13][34]. Investment Baskets and Strategies - Various investment baskets are recommended for capital expenditure beneficiaries, including those focused on defense, AI infrastructure, and broader capital spending themes [30][31][32]. - The report emphasizes the importance of focusing on thematic trends rather than individual company performance in the current economic environment [27].

Investment Rating - The report maintains a "Buy" rating on CATL's A-Shares and downgrades H-Shares to "Neutral" based on valuation [1][15]. Core Insights - CATL's 2Q25 earnings exceeded expectations, with revenue of Rmb94 billion, an 8% year-over-year growth, and a net profit of Rmb16.5 billion, up 34% year-over-year [1][17]. - The battery unit gross profit (GP) showed mixed results, with a blended unit GP of Rmb135/kWh, slightly lower than Rmb136/kWh in 1Q25, indicating domestic market pressures [2][17]. - The report anticipates that the domestic EV battery unit GP will bottom out in 2026, a shift from the previous expectation of 2025 [2][29]. Financial Performance - CATL's 2Q25 results included a sales volume of approximately 150 GWh, a 34% increase year-over-year, but 5% below expectations [1][17]. - The company's total gross profit for 2Q25 was Rmb24 billion, missing estimates by Rmb2.3 billion, but offset by stronger financial gains and operating expense savings [1][17]. - The report revises earnings forecasts for 2025-2027 down by 1%, 5%, and 3% respectively, primarily due to lower battery unit GP assumptions [15][29]. Market Position and Strategy - CATL's capital expenditure (CAPEX) is expected to rise from 13% in 2024 to 24% in 2025, supporting market share gains [15][29]. - The company is leading in R&D for all-solid-state battery products, with small-scale production expected by 2027, although commercialization is still a few years away [15][29]. - The report highlights the installation of new battery technologies, including fast-charging LFP batteries and sodium-ion batteries, in the upcoming quarters [15][29]. Valuation Metrics - The 12-month price target for CATL's A-Shares is set at Rmb328, reflecting an 18.4% upside from the current price of Rmb277.09 [1][15]. - For H-Shares, the price target is raised to HK$436, indicating a 2.2% upside from the current price of HK$426.60 [1][15]. - The report provides various financial ratios, including a projected P/E ratio of 17.4 for 2024 and a dividend yield of 2.9% [4][9].

Investment Rating - The report upgrades the Brent crude oil price forecast for the remainder of 2025 to $66 per barrel, with expectations of further price increases due to rising price premiums and shifting market risk concerns towards supply disruptions [1][2]. Core Insights - The cautious outlook for oil prices in 2026 is based on anticipated oversupply of approximately 1.7 million barrels per day due to the ramp-up of non-OPEC projects and the development of U.S. shale oil [1][2]. - The refining industry is currently in an upward cycle, driven by supply factors, with a projected net increase in global refining capacity of only 0.2 million barrels per day in 2025 and 0.4 million barrels per day in 2026 [8]. Summary by Sections Oil Price Forecast - The Brent crude oil price is expected to rise to $66 per barrel for the remainder of 2025, supported by low global inventory levels, particularly in OECD countries, and concerns over supply disruptions [2][3]. - A cautious forecast for 2026 predicts a decline to around $50 per barrel due to oversupply from non-OPEC projects [1][2]. Refining Industry Dynamics - The refining sector is experiencing high profit margins, particularly in diesel, driven by low inventory levels and the permanent closure of several refineries [7][8]. - The global refining system is under pressure due to a tight supply-demand balance, with significant growth expected in the demand for middle distillates like diesel and jet fuel [8]. Geopolitical and Supply Risks - Current market risks include supply disruptions and geopolitical instability, with a recommendation for conservative yet flexible trading strategies, such as purchasing call options and utilizing spot and forward contracts for hedging [5][6]. - The impact of Iranian oil production on market prices is significant, with potential price spikes if production increases dramatically [6]. OPEC and Non-OPEC Supply - The report highlights the uncertainty surrounding OPEC's spare capacity, which supports forward oil prices, and the potential for oversupply if new projects come online as planned [3][4]. - The refining industry is expected to benefit from the complexities of companies like Reliance Industries, which can leverage OPEC supply increases while also growing in other sectors [8].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report emphasizes a preference for short dollar and long gold positions as a hedge against concerns regarding Fed independence and potential tariff shocks [2] - It highlights the economic implications of potential tariff scenarios in the US, predicting an increase in the effective tariff rate (ETR) by 17 percentage points by 2027, which could lead to a cumulative boost in core PCE prices by about 1.7% over the next 2-3 years [26][28] - The report notes that the MAS is expected to reduce the slope of the SGD NEER to flat at the upcoming meeting on July 30, reflecting a softer inflation outlook and downside risks to growth [20][21] Summary by Sections Global Views - The report discusses the expectation of a return to Fed easing, which is anticipated to lower US Treasury yields and the dollar while boosting global equities and gold [2] Asia FX Views - The report provides insights into various Asian currencies, indicating low activity flows primarily driven by profit-taking and unwinding positions, particularly in USD/TWD and USD/HKD [17] - It mentions that the market for USD/KRW is expected to face unpriced risks to the upside due to impending tariffs [18] MAS Meeting Insights - The report anticipates that the MAS will adjust its monetary policy stance to a flat slope, reflecting a cautious outlook on inflation and growth [20][21] Economic Implications of Tariffs - The report outlines the expected rise in the US effective tariff rate and its potential impact on inflation, projecting core PCE inflation rates for December 2025, 2026, and 2027 [26][28] Thailand Central Bank Leadership - The report notes the appointment of Vitai as the new Governor of the Bank of Thailand, who is expected to advocate for more aggressive monetary easing to support the economy [31][33]

Investment Rating - The report indicates a positive outlook for the semiconductor industry, particularly in the silicon wafer and silicon carbide sectors, driven by strong demand from electric vehicles and artificial intelligence applications [1][2]. Core Insights - The price of silicon wafers in China has been declining, with a forecast for stabilization by 2027 due to capacity expansion [1]. - The market for silicon carbide is significantly influenced by the electric vehicle sector, with penetration rates expected to reach 28% in 2025 and 40% in 2026 [1][7]. - The Chinese silicon wafer market is dominated by five companies, holding a 57% global market share, with significant improvements in technology quality [1][5]. - Geopolitical factors are impacting the semiconductor industry, necessitating careful consideration of tariffs and policies [1][14]. Summary by Sections Silicon Wafer Market - In 2024, the price of silicon wafers in China decreased by 17%, with further declines of 8% in 2025 and an expected 5% in 2026 [4]. - The market is expected to stabilize in 2027 as production capacity continues to expand [4]. Silicon Carbide Market - The price of silicon carbide fell by 16% in 2024 and is projected to decrease by 17% in 2025, driven by strong demand from the electric vehicle market [5][6]. - Local manufacturers are significantly increasing their output, contributing to the optimistic market outlook for silicon carbide substrate manufacturers [8]. Key Companies to Watch - Notable companies include Nora (silicon carbide and nitride equipment supplier), Xingyi and Sankexing (leaders in AI server orders), and SICC (local silicon carbide substrate leader) [2][15]. - Infineon is highlighted for its strong performance in silicon carbide strategy, with capabilities in IGBT and silicon wafer production, as well as involvement in AI power chips [1][16]. Geopolitical Considerations - The semiconductor industry faces pressures from geopolitical factors, including tariffs and trade policies, which could affect pricing and market dynamics [1][14]. - Investors are advised to weigh these geopolitical influences carefully when considering investments in the sector [14].