Investment Rating - The report assigns a Neutral rating to Chow Tai Fook Jewellery Group with a 12-month target price of HK$9.00, indicating a downside potential of 26.7% from the current price of HK$12.28 [21][23]. Core Insights - Chow Tai Fook's FY25 dividend payout, QTD tracking, and FY26 operating profit guidance were weaker than market expectations, with a FY26 topline/SSSG target of low single-digit to mid-single-digit percentage growth under pressure due to negative SSSG in April and May [1][5]. - The company reported a 15.1% year-over-year decrease in total sales for 2HFY25, with a basic dividend of HK$0.32 per share, which was below the expected HK$0.50 [2][6]. - The management highlighted a focus on brand transformation and new product launches, including a high jewelry collection aimed at high-value clients, as a strategic move to enhance market presence [5][18]. Summary by Sections FY25 Results - 2HFY25 net income and operating profit were 4% and 2% below Goldman Sachs estimates, respectively, primarily due to less gross profit margin expansion [2]. - The gross profit margin for 2HFY25 was reported at 28.0%, up 480 basis points year-over-year, driven by a surge in gold prices and an improved product mix, although it was slightly below the expected 28.8% [10]. - The company declared a full-year dividend of HK$0.52 per share, which translates to a dividend yield of 4% [2][12]. QTD SSSG Tracking - The QTD same-store sales growth (SSSG) for April and May was -2.7% for direct stores in Mainland China and +1.3% in Hong Kong and Macau, both below expectations [3][13]. - The management noted a sequential month-over-month improvement in SSSG, but the outlook for June is expected to show a decline due to a tougher comparison base [3][14]. FY26 Outlook - The company anticipates a low single-digit to mid-single-digit percentage sales growth for FY26, with expectations of a decline in gross profit margin and operating profit margin due to less support from gold price surges [4][15]. - Management expects to maintain inventory turnover days at 320 days and plans to open 20 new image stores in FY26, focusing on store quality and productivity [14][16]. - The product pipeline includes continued launches of new collections, with a specific emphasis on high jewelry to cater to high-value clients [18].

Investment Rating - The report indicates a positive shift in sentiment within the healthcare sector, particularly among biopharma and MedTech companies, suggesting a constructive outlook for investment opportunities [3][6][11]. Core Insights - There is a notable constructive engagement between biopharma companies and the administration regarding drug pricing, although visibility on future actions remains low [3][7]. - The MedTech environment is characterized by robust capital expenditure and stable utilization trends, indicating a healthy operational landscape [6][11]. - Companies are actively pursuing business development and M&A opportunities, particularly in therapeutic areas like immunology and obesity [6][8]. - The report highlights a focus on upcoming catalysts and events that could influence market dynamics, including key conferences and regulatory approvals [9][19]. Summary by Sections US Pharma - Large-cap pharma companies expressed a continued appetite for business development, with a focus on immunology and internal medicine [5][6]. - Pricing dynamics in the obesity sector are under scrutiny, with companies like LLY and PFE discussing their strategies amidst evolving market conditions [8][11]. EU Pharma - Uncertainty remains regarding the timing and impact of tariffs, with companies exploring inventory management and manufacturing strategies to mitigate risks [11][12]. - The implementation of Most Favored Nation (MFN) pricing is still unclear, but companies are strategizing to protect against potential impacts [11][12]. Biotechnology - Companies like AMGN and GILD are actively engaging with policymakers to advocate for patient access and value, while also monitoring the impact of tariffs on their operations [16][18]. - The focus on M&A and business development remains strong, with companies looking for innovative opportunities to enhance their pipelines [27][28]. Key Upcoming Catalysts - Significant upcoming events include the ADA conference and various PDUFA dates, which are expected to provide critical data and insights into ongoing developments in the sector [9][19][20]. - Companies are preparing for important readouts and regulatory decisions that could shape their future growth trajectories [19][30].

Investment Rating - The report maintains a Neutral rating for Hikvision with a 12-month target price of Rmb30.6, reflecting a cautious view on the saturated surveillance market and macro uncertainties [1][13][15]. Core Insights - Hikvision is expected to see a gradual recovery in revenues, projecting a 5% year-over-year growth in 2Q25, reaching Rmb24.7 billion, driven by overseas and innovative business expansion [1]. - The company is focusing on higher-margin business segments and leveraging AI technology to enhance its product offerings, including the launch of the Guanlan AI Model for complex scenario analysis [2][15]. - Earnings estimates for 2025-2027 have been revised down by 26%, 19%, and 18% respectively, primarily due to weaker-than-expected performance in the China Public Sector Business (PBG) and Small-medium Enterprise Business (SMBG) [3][7]. Revenue and Earnings Projections - Revenue projections for 2025 have been adjusted from Rmb115.1 billion to Rmb106.4 billion, reflecting an 8% decrease [7]. - The gross profit (GP) for 2025 is revised down to Rmb46.9 billion, also an 8% reduction from previous estimates [7]. - Net income for 2025 is expected to be Rmb14.3 billion, a 26% decrease from earlier forecasts [7]. Margin Analysis - The gross margin (GM) for 2025 is revised to 44.1%, a slight decrease of 0.2 percentage points [7]. - Operating profit margin (OPM) is expected to decline to 14.4% in 2025, down from 18.6% [7]. - Net margin (NM) is projected to be 13.5% for 2025, reflecting a decrease of 3.3 percentage points [7]. Valuation Metrics - The target price of Rmb30.6 is based on a 16.5x target P/E multiple applied to the 2026 EPS estimate, which is consistent with the company's historical P/E trading range [7][13]. - The report indicates that the new target multiple is derived from the correlation between P/E and net income growth [9][13]. Market Position and Strategy - Hikvision is positioned as a global leader in the surveillance industry, benefiting from potential industry consolidation and expanding into AI surveillance and innovative business areas [15]. - The company is focusing on diversifying its solutions to include emergency response, safe production, and cost-saving technologies [1][15].

Investment Rating - The report maintains a "Buy" rating for several companies in the healthcare sector, including Asymchem, InnoCare, Samsung Biologics, Shandong Weigao Group, United Imaging, and Zai Lab [29][30]. Core Insights - The China biotech sector has seen a significant re-rating, with a year-to-date increase of 72%, driven by a surge in licensing-out deals, particularly in PD-1/VEGF bispecifics, which has validated asset quality and innovation [1][2]. - Investors are optimistic about the sustainability of this momentum, with expectations for more licensing deals to follow, including potential major deals from CSPC and Sino Biopharma [2]. - The CRO/CDMO sector has also benefited from increased licensing activity, with a 25% year-to-date growth, and companies like Tigermed and WuXi AppTec are highlighted for their resilience [8]. - Medtech is showing signs of recovery, with equipment tendering up 91% year-over-year in May, although revenue recognition remains a challenge due to inventory digestion and centralized procurement processes [8][10]. Summary by Sections China Biotech Licensing and Global Pharma Engagement - The rebound in China biotech is largely attributed to licensing deals with global pharma, enhancing confidence in the quality and innovation of Chinese biotech assets [2]. - Notable licensing deals include Akeso to Summit and 3S Bio to Pfizer, which have allowed companies to monetize global market valuations through royalties [2]. CDMO/CRO Implications - The CRO/CDMO sector has seen a 25% increase year-to-date, with Tigermed reporting a 20% year-over-year increase in new orders for Q1 [8]. - WuXi AppTec and Asymchem are expected to deliver resilient earnings due to their focus on late-stage and commercial manufacturing [8]. Medtech Recovery and Tendering Trends - Medtech has faced challenges, with a year-to-date decline of 4%, but there are signs of recovery in equipment tendering, which increased by 91% year-over-year in May [8][10]. - Companies like United Imaging and Mindray are expected to turn positive in their growth trajectories in the coming quarters [8]. Global Pharma Engagement - Global large pharma continues to recognize the importance of China in their business development strategies, particularly in the context of biopharma innovation cycles [10]. - Companies like GE Healthcare and Philips remain cautious about the capital equipment procurement environment in China, despite positive tendering momentum [10].

Investment Rating - The report maintains a "Buy" rating on Eastroc, Tingyi, CR Beverage, and Nongfu, with a preference for the beverage sector within staples due to growth potential and earnings visibility [9]. Core Insights - The beverage sector in China has shown a year-to-date rally of 19%, outperforming the MSCI China staples index, which increased by 8% [1]. - Despite rising competition, the sector is expected to sustain long-term volume growth and profit visibility into 2025, driven by a solid product cycle and cost benefits [9]. - Key debates in the beverage space include the impact of freshly made drinks (FMD) due to intensified food delivery subsidies, the ongoing product cycle, and margin resilience amid competition [1][2][8]. Summary by Sections Impact of Freshly Made Drinks (FMD) - FMD has seen a volume boost from delivery subsidies, with a potential short-term impact on ready-to-drink (RTD) soft drinks due to cannibalization [2]. - The analysis suggests a limited overall impact on the beverage industry, primarily affecting nearby soft drink points of sale (POS) [2]. - A scenario analysis indicates a potential low single-digit to mid-single-digit percentage impact on daily volume sold by RTD soft drinks, assuming a 50% cannibalization rate [19]. Product Cycle Dynamics - The product cycle remains a critical driver, with sugar-free drinks, new flavors, and sports/energy drinks gaining traction [3][39]. - New product launches, such as Eastroc's Ice Tea and UPC's sugar-free tea, are expected to contribute significantly to sales in 2025 [7][41]. - The focus on health and functional benefits continues to shape consumer preferences, leading to a rise in innovative beverage offerings [39][40]. Margin Resilience and Cost Benefits - The report highlights manageable impacts from competition risks, with cost benefits expected to continue into the second half of 2025 [8]. - Unit cost deflation is revised to 2.3% to 6.3% for the beverage segments, which is anticipated to offset potential declines in average selling prices (ASP) [8][64]. - Companies are adjusting promotional strategies and scaling down promotions for classic SKUs while benefiting from ASP hikes on larger pack beverages [64].

16 June 2025 | 6:02PM HKT Asia Economics Analyst China's Demand for New Homes to Stay Low (Shan) Andrew Tilton +852-2978-1802 | andrew.tilton@gs.com Goldman Sachs (Asia) L.L.C. Hui Shan +852-2978-6634 | hui.shan@gs.com Goldman Sachs (Asia) L.L.C. Lisheng Wang +852-3966-4004 | lisheng.wang@gs.com Goldman Sachs (Asia) L.L.C. Xinquan Chen +852-2978-2418 | xinquan.chen@gs.com Goldman Sachs (Asia) L.L.C. n In 2021, we first presented our estimates of Chinese demand for new urban housing through 2050. However, ou ...

Investment Rating - The report indicates a mixed investment outlook for the industry, with industrial production rated at 0, fixed asset investment at -1, and retail sales at +2 [2]. Core Insights - The report highlights that China's industrial production and fixed asset investment missed market expectations, while retail sales showed significant growth, indicating a divergence in economic performance across sectors [1][17]. - The report emphasizes the importance of government policy in stimulating domestic demand, particularly through consumer goods trade-in programs, amidst ongoing deflationary pressures and a prolonged downturn in the property market [1][17]. Summary by Sections Industrial Production - Industrial production (IP) growth moderated to 5.8% year-on-year in May from 6.1% in April, primarily due to slowing export growth linked to increased US tariffs [8][11]. - Sequentially, IP is estimated to have contracted by 0.1% month-on-month non-annualized in May [8]. - Key sectors such as electrical machinery and chemical manufacturing experienced slower output growth, overshadowing gains in automobile production [8][11]. Fixed Asset Investment - Fixed asset investment (FAI) growth slowed to 2.9% year-on-year in May from 3.6% in April, driven mainly by declines in infrastructure and property investments [10][11]. - Manufacturing investment growth remained robust at 7.8% year-on-year in May, contrasting with the overall slowdown in FAI [10]. Retail Sales - Retail sales growth surged to 6.4% year-on-year in May, significantly above market consensus, driven by strong sales in home appliances and communication equipment [11][12]. - The growth in online and offline goods sales improved, with notable increases in restaurant sales revenue as well [11]. - The report cautions that the recent retail sales improvement may not be sustainable due to potential payback effects and funding shortages in consumer goods trade-in programs [1][11]. Property Market - Property-related activity remained weak, with property sales declining by 3.3% year-on-year in volume and 5.9% in value terms in May [13]. - New home starts and completions also showed significant year-on-year declines, indicating ongoing challenges in the real estate sector [13]. Labor Market - The nationwide unemployment rate edged down to 5.0% in May from 5.1% in April, reflecting seasonal patterns, while the unemployment rate for migrant workers increased slightly [14][17]. - Youth unemployment rates showed some moderation but are expected to rise amid the upcoming college graduation season [14][17].

Investment Rating - The report assigns a "Buy" rating to Hengrui Medicine with a 12-month price target of Rmb55.90, indicating an upside potential of 3.7% from the current price of Rmb53.89 [13][15]. Core Insights - Hengrui Medicine is positioned as a second-tier player in the GLP-1 space, with a comprehensive product offering that includes both oral and injectable formulations, as well as single and dual agonists. The company is expected to launch its innovative drug HRS9531 in 2026 after filing for NDA by the end of 2025 [3][13]. - The oral peptide HRS9531 has shown promising preliminary efficacy, with a placebo-adjusted mean weight loss of -3.5% at Day 29, comparable to orforglipron's -3%. However, it is less effective than Hengrui's injectable HRS-7535, which achieved -5.5% weight loss at week 4 [2][3]. - The injectable form of HRS9531 demonstrated durable weight loss, achieving a placebo-adjusted weight loss of -16.7% at week 24 and maintaining weight stability from week 32 to week 52, with changes ranging from -0.76% to 0.01% [3]. Summary by Sections Product Efficacy - The oral form of HRS9531 showed comparable efficacy to orforglipron, with a weight loss of -3.5% at Day 29, while the injectable form achieved a weight loss of -9.3% at week 4 [2][7]. - The injectable HRS9531 has completed patient enrollment for phase 3 clinical trials and is expected to file for NDA by the end of 2025 [3]. Market Position - Hengrui's competitive advantage lies in its diverse product portfolio and commercial capabilities in metabolic diseases, which could create synergies in the market [3][13]. - The company is projected to see revenue growth, with estimates of Rmb30.37 billion in 2025 and Rmb37.09 billion in 2027 [15].

Investment Rating - The semiconductor/SPE sector has a positive investment rating with specific companies like Advantest, Disco, and Tokyo Electron rated as "Buy" [2][15][24]. Core Insights - Investor sentiment towards the semiconductor/SPE sector has improved, particularly due to strong demand for AI semiconductors, with back-end companies like Advantest and Disco gaining significant interest [3][4]. - The WFE market is expected to experience low single-digit growth in both CY25 and CY26, while memory investments (DRAM/NAND) are anticipated to grow at a higher rate [2][3]. Summary by Sections Investor Sentiment - Investor sentiment has shifted positively compared to earlier observations, driven by strong AI semiconductor demand and recent earnings reports from major players like Nvidia and Broadcom [3][4]. - There is a growing focus on micro-level factors rather than macroeconomic concerns, as many semiconductor products are currently exempt from US tariffs [4][7]. Company Highlights - Advantest is highlighted as a "Buy" due to potential upward revisions in guidance, while Disco is also rated "Buy" for its new growth drivers beyond existing technologies [2][8]. - Tokyo Electron is noted for its growth potential and is rated "Buy" as well [15]. Market Outlook - The WFE market is projected to grow at low single-digit percentages in CY25 and CY26, contrasting with higher growth expectations in memory investments [2][3]. - The discussions indicate a selective approach among investors, focusing on specific stocks rather than the overall sector [7]. Company-Specific Insights - Among mid/small-cap stocks, Tokyo Seimitsu is rated "Sell" due to stagnant profit margins, while JEOL and Ulvac are seen as undervalued with "Buy" ratings, pending market recovery confirmations [9]. - Kioxia Holdings is under observation for its competitive position in the enterprise SSD market and potential threats from competitors [8].

Investment Rating - The report indicates a negative trend in the primary property market, with a weighted average property price decline of 2.4% month-over-month annualized in May, following a decline of 1.8% in April [2][10]. Core Insights - The National Bureau of Statistics (NBS) data shows that the primary market experienced a broad-based decline in property prices across all city tiers, with year-on-year changes reflecting a decrease of 3.5% in May compared to 4.0% in April [1][7]. - Despite ongoing easing policies, the number of cities with sequentially higher property prices has decreased in both primary and secondary markets [7][15]. - The report highlights that Tier-1 and Tier-2 cities saw declines of 0.8% and 2.2% month-over-month annualized in May, while Tier-3 cities experienced a decline of 3.5% [7][14]. - Local housing easing measures have been implemented, but challenges remain, particularly in lower-tier cities due to weaker growth fundamentals and oversupply issues [8][7]. Summary by Sections Primary Market Performance - The weighted average property price in the primary market fell by 2.4% month-over-month annualized in May, with a year-on-year decline of 3.5% [2][10]. - The sequential decline was observed across all city tiers, with Tier-1 and Tier-2 cities showing declines of 0.8% and 2.2% respectively, and Tier-3 cities declining by 3.5% [7][14]. Market Dynamics - The report notes an 8% year-on-year increase in new home transaction volume in June month-to-date, indicating some recovery in major cities [8]. - Inventory months in major cities decreased slightly, primarily driven by Tier-3 cities [8]. Policy Response - Policymakers have intensified housing easing efforts, including a focus on a new real estate development model and the "good housing initiative" [8]. - Continued measures are expected to stabilize home prices and support the delivery of pre-sold homes, including potential cuts to mortgage rates and expanded bank lending for specific property projects [8].