Investment Rating - The report maintains an easing bias for the PBOC but adopts a less dovish tone compared to Q1, indicating a cautious approach to monetary policy easing [2][3] Core Insights - The PBOC's assessment of the Chinese economy has shifted to "showing positive momentum, with sustained recovery in sentiment," reflecting a relatively optimistic growth outlook [2] - The PBOC plans to implement a "dual cut" in Q4, anticipating a significant slowdown in year-over-year real GDP growth, which includes a 10 basis point cut in the policy rate and a 50 basis point cut in the RRR [2] - The PBOC has emphasized the importance of executing existing policies, particularly targeted easing measures, to support technology innovation and consumption [2][3] Summary by Sections Monetary Policy Committee Meeting - The PBOC's Q2 MPC meeting highlighted a less dovish tone than in Q1, focusing on the flexibility of policy easing rather than committing to rate cuts [2] - The report notes a shift in language regarding the property sector from "halting the decline and stabilizing the property market" to "sustaining and consolidating the stable momentum," indicating a more optimistic stance [3] Exchange Rate Management - The PBOC has removed "the three firm commitments" and is now focused on "preventing overshooting risks," suggesting a strategy to allow the CNY to gradually appreciate against the USD [3]

Investment Rating - The report indicates a positive outlook for the S&P 500, forecasting a return of +5% over the next 12 months, reaching a target of 6500 [3][44]. Core Insights - The S&P 500 earnings per share (EPS) growth is expected to decelerate to 4% year-over-year in 2Q 2025, down from 12% in 1Q 2025, primarily due to margin contraction [2][7]. - The effective US tariff rate has increased by approximately 10 percentage points to 13%, with expectations of a further rise to 17% [2][14]. - Analysts predict that the S&P 500 will collectively exceed the low EPS growth expectations set for 2Q 2025 [2][7]. Summary by Sections Earnings Season Insights - The 2Q earnings season will commence on July 15, with 73% of S&P 500 companies reporting between July 11 and August 1 [2][4]. - Analysts forecast a modest sales growth of 4% in 2Q, down from 5% in 1Q, with a significant portion of the deceleration attributed to margin pressures [7][9]. Tariff Impact - The report highlights that if companies absorb the tariff costs, it could negatively impact their margins, with consumers expected to bear 70% of the direct costs [2][15]. - Early earnings results have shown mixed signals regarding margin outlooks, with some companies managing to offset tariff impacts through various strategies [20][21]. Sector Performance - Earnings are expected to decline the most in the Energy sector (-28% year-over-year), while Communication Services and Information Technology are projected to see growth of +28% and +18%, respectively [9][10]. - Capex revisions have been positive for AI-exposed sectors, while most other sectors have seen reductions in estimates [32][36]. Future Projections - The report anticipates S&P 500 EPS growth of +7% in 2025, aligning with bottom-up consensus estimates, while projecting a margin expansion of 29 basis points to 12.2% [38][39]. - The consensus expects solid sales growth through 2025, with nominal GDP growth forecasted at 4.5% year-over-year in 2025 [26][28].

Investment Rating - The report assigns a "Buy" rating for Xiaomi Corp. (1810.HK) with a 12-month target price of HK$69.00, representing an upside of 21.3% from the current price of HK$56.90 [1]. Core Insights - The launch of the YU7, a premium electric SUV, exceeded market expectations with 289,000 orders within the first hour, indicating strong consumer demand and solidifying Xiaomi's leadership in the premium auto market in China [1][2]. - The YU7 series is positioned to compete effectively against top premium SUVs like the Tesla Model Y, offering superior size, performance, and range [2]. - Xiaomi is expanding its ecosystem with the introduction of AI Glasses, aiming to capture a significant share of the smart glasses market in China [16]. Financial Projections - Revenue forecasts for Xiaomi are projected to grow significantly, with expected revenues of Rmb365.9 billion in 2024, Rmb481.1 billion in 2025, Rmb624.6 billion in 2026, and Rmb746.4 billion in 2027 [4][14]. - Adjusted net profit estimates for 2025-2027 have been raised by 1-4% due to stronger operating leverage from the EV segment [18]. - The report anticipates a compound annual growth rate (CAGR) of 27% for revenue and 40% for net profit from 2024 to 2027 [18]. Product and Market Positioning - The YU7 is priced competitively at Rmb253.5k for the standard version, Rmb279.9k for the Pro, and Rmb329.9k for the Max, aligning with market expectations and enhancing its competitive edge [2]. - The YU7 series features advanced technology, including an 800V platform and a long-range battery, with the standard version offering an exceptional 835 km range [29][31]. - Xiaomi's strategy includes partnerships with major automotive players to enhance its Human x Car x Home ecosystem, further strengthening brand appeal [32]. Valuation Metrics - The report provides a valuation based on a sum-of-the-parts (SOTP) approach, with a target price of HK$69, reflecting higher valuations attributed to the EV and new initiatives segment [19][26]. - Key financial ratios include a projected P/E of 16.6 for 2024, increasing to 32.5 in 2025, and a P/B of 2.4 in 2024, indicating a strong growth outlook [10]. Market Performance - Xiaomi's stock has shown significant price performance, with an absolute increase of 219.3% over the past 12 months, outperforming the Hang Seng Index [12]. - The YU7's successful launch and the ongoing demand for the SU7 have positioned Xiaomi as a leading player in the premium automotive segment in China [38].

Investment Ratings - Syngene International: Buy [5] - Neuland Labs: Buy [5] - TheraNym Bio (Aurobindo): Buy [5] - Piramal Pharma: Buy [5] - Cohance Lifesciences: Buy [5] - Laurus Labs: Sell [5] - Divi's: Neutral [5] - Sai Life Sciences: Not Covered [5] - OneSource: Not Covered [5] - Dishman Carbogen Amcis: Not Covered [5] - Aragen Life Sciences: Not Listed [5] Core Insights - The report indicates a significant shift towards geographic supply chain diversification, particularly in response to the China+1 strategy, with large pharma companies actively seeking alternatives to reduce dependence on China [4][17][28] - Investment in biologics is increasing, with several companies making substantial investments in new modalities such as ADCs and Oligos, reflecting a broader trend in the industry [7][10][35] - The CRO/CDMO sector is experiencing heightened interest from clients globally, with a notable increase in requests for proposals (RFPs) and pilot projects, particularly from big pharma [4][50][69] Summary by Company Syngene International - Syngene is witnessing a recovery in its discovery business, expecting growth in FY26 driven by increased inquiries from big pharma [16] - The company is focused on expanding its capabilities in mABs, ADCs, and Oligos, with significant investments in new facilities [19][20] - Syngene's guidance for FY26 includes low teens growth in core sales, with margins expected to moderate due to initial costs from new facilities [20] Neuland Labs - Neuland emphasizes its commitment to human health and aims to emulate companies like Lonza, focusing on niche drug development [25][26] - The company is expanding its capabilities in peptides and has secured projects from innovators looking to diversify away from China [31][30] - Neuland expects growth in FY26/27 driven by its CMS business and specialty products [32] TheraNym Bio (Aurobindo) - TheraNym is capitalizing on India's cost advantages in the bio CDMO landscape, with a significant deal with MSD for biologic CMO [38][39] - The company is building integrated bio reactors with a substantial capex plan, expecting to generate significant revenues by 2031 [38] Piramal Pharma - Piramal is optimistic about recovering its CDMO business in FY27, driven by multi-year supply orders and new facility expansions [45] - The company aims to double its CDMO revenues by FY30, focusing on key modalities like ADCs and HPAPIs [45] Cohance Lifesciences - Cohance has seen a significant increase in RFQs, indicating a strong demand for its services as clients seek to diversify supply chains [50] - The company is investing in developing a GMP ADC site and expanding its capabilities in Oligos and small molecules [51][52] Laurus Labs - Laurus is aggressively investing in capacity expansion across its segments, including human health and animal health CDMO [58] - The company is focused on diversifying its customer base and enhancing its capabilities in new modalities [61] Dishman Carbogen Amcis - Dishman has a diverse global presence and is focusing on improving capacity utilization in its Indian facilities [82] - The company expects moderate growth in FY26, with a focus on improving margins over the next few years [85] Aragen Life Sciences - Aragen is expanding its capabilities in peptide discovery and ADCs, with significant investments in new facilities [89] - The company has seen increased business from big pharma, reflecting a shift towards supply chain diversification [90]

Investment Rating - The report does not explicitly provide an investment rating for the industry discussed Core Insights - The report highlights the potential for energy prices to rise again due to geopolitical risks in the Middle East, particularly if Iranian oil supply declines or if there are disruptions in the Strait of Hormuz [1][2] - It discusses the implications of soft data on the US economy, indicating that higher tariffs may lead to a slight increase in unemployment and below-potential GDP growth, with inflation rebounding to the mid-3% range [9] - The report emphasizes the outlook for the Chinese Yuan (CNY), predicting further appreciation due to the strength of China's export sector and the currency's undervaluation against the Dollar [10][12] - It notes the expected increase in defense spending in the Euro area and the UK, projecting spending to rise to 2.7% and 2.5% of GDP respectively by 2027 [14] - The potential disruption of profit pools due to AI technology is also highlighted, with past technology transitions serving as a precedent for significant market changes [14] Summary by Sections Middle East Risks - The report indicates that while the initial market reaction to the Iran-Israel ceasefire has reversed, the situation remains uncertain, with potential for energy prices to rise significantly if Iranian oil supply is disrupted [1][2] - It estimates Brent crude oil prices could peak at around $90/bbl under certain scenarios, with extreme cases exceeding $110/bbl [1][6] Soft Data Insights - Company commentary suggests a reduction in job openings and capital spending expectations, indicating a cautious outlook due to policy uncertainty [9] - The report anticipates a slight increase in unemployment and a one-time inflation rebound, with the Federal Reserve expected to implement rate cuts [9] CNY Outlook - The report lowers USD/CNY forecasts to 7.10/7.00/6.90 for the next 3, 6, and 12 months, citing the potential for CNY appreciation [10][12] European Defense Spending - The report expresses optimism regarding the European defense renaissance, with expected increases in defense spending by 2027 [14] AI Disruption - The report discusses the potential for AI to disrupt existing profit pools, drawing parallels to previous technology transitions [14]

Investment Rating - The investment rating for 3SBio Inc. is Neutral with a 12-month price target of HK$9.37, indicating a downside potential of 58.2% from the current price of HK$22.40 [8][7]. Core Insights - The management of 3SBio Inc. highlighted the successful execution of the licensing-out deal for SSGJ-707 with Pfizer, which was negotiated in less than two months. The initiation of global clinical trials is expected to begin in the third or fourth quarter of 2025 after the deal closes [2][1]. - The company is actively seeking business development opportunities with a growing pipeline that includes assets such as TL1A, BDCA2, and multiple early-stage antibodies, as well as a pre-clinical candidate for weight loss [2][1]. - Product sales in the first half of 2024 are anticipated to be soft due to a challenging industry environment and a high sales base from key drugs, particularly TPO, which saw a growth of 23% year-on-year in the first half of 2024 [3][1]. Summary by Sections Licensing and Business Development - The licensing-out deal for SSGJ-707 is a significant milestone, with the first overseas study expected to start in late 2025. The phase 3 clinical trial for SSGJ-707 as a monotherapy has already commenced in China [2][1]. - The company is focusing on sourcing late-stage assets to enhance its product portfolio, including a recently licensed oral paclitaxel expected to drive growth in 2026 [6][1]. Financial Performance - The company anticipates earnings growth to outperform revenue growth due to savings in operating expenses, despite the soft product sales outlook for the first half of 2024 [3][1]. - The financial forecasts indicate a revenue increase from RMB 9,108 million in 2024 to RMB 11,112.7 million by 2027, with an expected EBITDA growth from RMB 2,922.2 million to RMB 3,856.6 million over the same period [8][7].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - China's property sector is experiencing renewed weakness in prices and activity, with property new starts down approximately 75% from their peak and property sales down 50% as of May 2025 [5] - Historical benchmarks indicate that housing busts typically involve a median price correction of around 30% over six years, with significant GDP growth deceleration and deflationary pressures following such downturns [4][10] - China's unique trajectory during this downturn includes substantial government-led investment in infrastructure and manufacturing, which has offset declines in residential investment [4][20] Summary by Sections Housing Bust Definition and Historical Context - Housing busts are defined as real price declines exceeding 20% from cyclical peaks, with 21 episodes identified across 15 economies since the 1960s [4][8] - The median duration of these busts is around six years, with a typical price decline of approximately 30% [10][12] China's Current Situation - China's real house prices have declined by 20% from the peak in Q4 2021 through Q4 2024, with projections indicating a potential further decline of 10% before stabilizing around 2027 [11][49] - The downturn coincided with Covid lockdowns and a subsequent reopening, complicating the growth patterns [4][5] Economic Implications - Real GDP growth typically declines by about 5 percentage points within the first two years of a housing bust, with non-residential investment being the largest growth drag [20][24] - In China, the share of residential investment in GDP has collapsed, while non-residential investment has rebounded due to government efforts [25][26] Trade and Policy Responses - Net exports as a share of GDP generally rise by 2-3 percentage points post-peak, driven by weaker imports and stronger exports, a trend currently observed in China [32][50] - China's policy response has been more measured compared to global norms, with a cautious approach to monetary and fiscal easing [36][41] Lessons from Historical Episodes - Historical evidence suggests that it may take years for housing busts to find a bottom, with the potential for further price corrections in China [49] - The report emphasizes the need for additional policy easing to prevent entrenched demand weakness, highlighting the constraints faced by Chinese policymakers [52]

Investment Rating - The investment rating for InnoCare Pharma (H share) is "Buy" with a 12-month target price of HK$12.72, indicating a downside potential of 7.6% from the current price of HK$13.76 [8][9]. Core Insights - InnoCare Pharma is on track for commercial progress, with management guiding for one major business development (BD) deal in the second half of 2025 [1][2]. - The company expects peak sales of over US$1 billion for orelabrutinib in China, driven by various indications including hematologic cancers, immune thrombocytopenic purpura (ITP), and systemic lupus erythematosus (SLE) [6][8]. - Upcoming data readouts over the next 12 months include phase 2b data for orelabrutinib on SLE and phase 3 data for ICP-488 on psoriasis [7]. Summary by Sections Business Development Focus - The management's priority for out-licensing will focus on immunology disease assets, particularly: 1. ICP-332, which has shown promising phase 2 data for atopic dermatitis and is also being studied for vitiligo and prurigo nodularis [2]. 2. ICP-488, with accelerated patient enrollment for phase 3 trials on psoriasis [2]. 3. Orelabrutinib, with global trials planned for primary progressive multiple sclerosis (PPMS) and secondary progressive multiple sclerosis (SPMS) [2]. Commercialization Progress - The company reported that commercial execution in Q2 was on track, with a year-on-year growth expectation of over 35% for orelabrutinib [3]. Financial Projections - Revenue projections for InnoCare Pharma indicate growth from Rmb1,009.4 million in 2024 to Rmb2,717.9 million by 2027, with EBITDA improving from a loss of Rmb547.3 million in 2024 to a profit of Rmb194.4 million in 2027 [9].

Investment Rating - The report suggests a shift towards diversification in investment strategies, moving away from the previously successful concentrated approach in US equities and technology [1][5][18]. Core Insights - The report emphasizes that valuation extremes can persist for extended periods, and the importance of diversification is highlighted due to record high valuation spreads between 'winners' and 'losers' in the market [2][5][18]. - The US equity market has shown unprecedented outperformance over nearly fifteen years, driven by superior fundamental profit growth, particularly in the technology sector [3][5][26]. - Recent trends indicate a potential shift as investors begin to explore cheaper markets outside the US, influenced by a more resilient Chinese economy and changes in German fiscal policy [18][39]. Summary by Sections Section 1: Market Performance - The US market has consistently outperformed other regions over the last decade, with market capitalization reaching significant highs [7][8]. - Investor allocation to US equities is at an all-time high, reflecting a lack of incentive to diversify due to lower expected returns from other markets [9][11]. Section 2: Valuation and Growth - The report notes that the valuation increases in the US were justified by the gap in fundamental growth rates compared to other regions until around 2023 [16][26]. - The PEG ratio between the US and the rest of the world has opened up in recent years, indicating a divergence in growth expectations [20]. Section 3: Currency and Global Investment - The report highlights that currency adjustments make non-US equities more attractive for USD-based investors, contributing to diversification flows [39]. - The dollar has started to weaken, which may lead to further adjustments in investment strategies as US interest rates rise [21][23]. Section 4: Sector and Style Diversification - The report discusses the bifurcation between growth and value sectors, noting that classic value sectors have started to perform strongly alongside growth stocks [49][50]. - There is an emerging opportunity for diversification across different styles and sectors, with a mix of growth and value investments becoming more favorable [50][53]. Section 5: Market Concentration - The concentration risks in global equity portfolios remain high, with a notable increase in market capitalization share among the top 10 companies [42][45]. - Despite strong earnings from dominant companies, the report suggests that the motivation for geographic diversification remains attractive due to the increasing concentration in the US market [45][49].

Investment Rating - The report upgrades the 2H 2025 LME copper price forecast to an average of $9,890 per ton from $9,140 previously, with expectations of a peak price of $10,050 in August before declining to $9,700 by December [2][4][27]. Core Insights - The ongoing US Section 232 copper investigation has led to significant dislocation between LME and COMEX copper prices, causing over-imports of approximately 400,000 tons of copper into the US this year, resulting in US inventory levels rising to over 100 days of consumption [4][6][14]. - Despite a global surplus in the copper market, fears of a regional shortage outside the US have emerged, tightening the ex-US copper market [4][14]. - The report anticipates a 25% tariff on US copper imports by September, which is expected to impact US inventories and the overall market dynamics [4][21][43]. Summary by Sections Price Forecast - The LME copper price is expected to rise to a peak of $10,050 in August 2025, driven by tariff-related reductions in ex-US stocks and resilient activity in China [4][27][28]. - The forecast reflects a significant upward revision due to higher-than-expected US over-imports and stable Chinese economic sentiment [28][34]. Market Dynamics - The report highlights a significant backwardation in LME timespreads, indicating tightness in the market, with cash contracts trading at a premium to the 3-month contracts [4][9][12]. - The anticipated tariff could lead to a reduction in US imports, tightening the ex-US market further, while US inventories are expected to increase by 150,000 tons in Q3 before declining in Q4 [21][22]. Global Supply and Demand - The global copper market is projected to remain in a modest surplus, with a refined copper surplus of approximately 400,000 tons in the US for 2025, while deficits are expected in China and the rest of the world [14][19][20]. - The report notes a slowdown in solar demand growth, which has been a significant driver of copper demand, leading to adjustments in production forecasts for major mines [38][41].