Investment Rating - The report indicates a solid outlook for US power demand, with a year-over-year growth rate of 3.9% projected for 1Q2025, compared to a historical average of 1.0% over the past two decades [5]. Core Insights - US power demand growth remains robust despite macroeconomic uncertainties, with both bottom-up and top-down analyses supporting this conclusion [5]. - The average/median year-over-year growth rate for power sales in the US for 1Q2025 is reported at 2.0%/1.8%, adjusted for weather and leap-year effects [5]. - The report highlights that the differences between top-down and bottom-up approaches are primarily due to the sample of power suppliers covered, which represents approximately 25-30% of overall US power sales [9]. Summary by Sections - **Bottom-Up Analysis**: The bottom-up approach shows an average/median growth rate of 2.0%/1.8% for 1Q2025 power sales, adjusted for weather and leap-year effects, based on earnings reports from US power utilities [5]. - **Top-Down Analysis**: The top-down approach indicates a year-over-year growth rate of 3.9% for total US power demand in 1Q2025, significantly higher than the historical average [5]. - **Utility Performance**: Utilities under coverage reported that 1Q demand was mostly in line with their annual guidance, with specific companies like XEL and WEC expecting continued demand growth aligned with their forecasts [9].

Investment Rating - The report does not explicitly provide an investment rating for the oil industry but discusses expectations regarding OPEC+ production decisions and market dynamics, indicating a cautious outlook on oil prices [1][4]. Core Insights - Crude oil prices have decreased week-on-week ahead of the OPEC+ meeting, with expectations of a final production increase of 411 thousand barrels per day (kb/d) in July [1]. - The report highlights that OPEC+ is likely to maintain production levels flat after July due to anticipated new shale projects entering the market and economic growth deceleration [1]. - Geopolitical factors, including US-Iran nuclear talks and sanctions on Russia, have had mixed effects on oil prices [2]. - Brazil's new FPSO Alexandre de Gusmão and Norway's production exceeding expectations have contributed negatively to price outlooks [3]. - Trackable net supply has increased by 0.1 million barrels per day (mb/d), driven by higher production from Russia and lower demand from China [4][15]. Supply Dynamics - OPEC8+ crude and condensate exports are currently 0.4 mb/d above May 1st levels, reflecting a rise in exports coinciding with increased production quotas [14]. - Russia's liquids production nowcast has risen to 10.6 mb/d, while US Lower 48 crude production is estimated at 11.2 mb/d [15][23]. - China's oil demand has decreased by 0.1 mb/d to 16.7 mb/d, indicating a potential slowdown in consumption [15][33]. Demand Trends - Global oil demand remains resilient, with Saudi domestic oil demand increasing by 0.1 mb/d year-over-year in April [6]. - OECD Europe oil demand has edged up by 0.1 mb/d to 13.3 mb/d week-over-week, suggesting a slight recovery in consumption [15][34]. - The report notes that China’s propane imports from the US are down by 0.2 mb/d, reflecting ongoing tariff uncertainties [14][68]. Inventory and Pricing - OECD commercial stocks have increased by 7 million barrels (mb) to 2,782 mb, indicating a build in inventories [42]. - Global commercial stocks have also risen by 18 mb, reflecting a broader trend of increasing oil supplies [15][42]. - The Brent timespread has normalized, with the gap narrowing to 8 percentage points (pp) from its fair value [53]. Geopolitical and Market Positioning - Geopolitical developments, including sanctions on Russia and the situation in Venezuela, continue to influence market dynamics [2][70]. - The long-to-short oil ratio stands at the 57th percentile, indicating a relatively balanced positioning in the market [74].

Investment Rating - The report maintains a cautious outlook on the solar industry, expecting significant capacity cuts and a decline in capital expenditures, leading to a weaker pricing outlook and flattened profitability curve [4]. Core Insights - The profitability for solar value chain segments is likely to fall below pre-rush installation levels in May, with cash profitability expected to deteriorate to average levels seen in Q1 2025 [2][4]. - A rapid decline in upstream pricing is observed due to weaker demand and aggressive low-pricing strategies by Tier 2-3 players, impacting the overall market dynamics [2][19]. - Proactive price stabilization efforts by leading players are crucial to monitor in June, as inventory pressures are expected to continue increasing [2][14]. Summary by Sections Pricing Trends - As of May 15, 2025, spot prices for Poly/Wafer/Cell/Module/Glass/Film/Inverter in China showed average declines of -2%/-14%/-3%/-3%/-6%/-3% MTD, and -8%/-17%/-7%/-2%/+8%/+1% compared to pre-rush installation levels [2][19][20]. - Glass prices appear more resilient compared to other segments, primarily due to lower inventory days [20]. Profitability Metrics - Spot price implied cash gross profit margins (GPM) for various segments showed significant declines, with Tier 1 cash GPM for Poly/Wafer/Cell/Module/Glass/Film averaging flat/-13pp/+1pp/-4pp/-3pp/flat MTD [10]. - Monthly average cash profitability in May is likely to deteriorate to levels seen in Q1 2025, indicating a challenging environment for the industry [2][7]. Production and Inventory Dynamics - Production volumes are expected to decline by an average of 4% month-over-month in May, with specific declines in Poly/Wafer/Cell/Module [12]. - Inventory days are likely to rebound to an average of 30 days in May from 25 days in April, indicating a higher production-to-demand ratio [13][15]. Future Outlook - The report anticipates deeper solar capital expenditure declines of -55% year-over-year in 2025, with lower capacity utilization rates expected [4]. - Continued supply increases for Glass are projected, which may lead to a rapid inventory restock and a potential price cut to Rmb12/sqm in Q3 2025 [3][14].

Investment Rating - The report maintains a "Buy" rating on Horizon Robotics, reflecting a positive outlook on the smart driving sector driven by the AD/ADAS trend in China [2]. Core Insights - The report highlights that Black Sesame (2533.HK) is positioned to benefit from the growing demand for AD/ADAS technologies in China, with management targeting double-digit revenue growth in 2025 [1][7]. - The competitive landscape indicates that car OEMs are likely to continue diversifying their chipset suppliers, which will favor companies like Black Sesame and Horizon Robotics that provide advanced automotive chipsets [2][8]. Summary by Sections 2025 Outlook - Black Sesame's A1000 SoC will be featured in Dongfeng's new model, the eπ 007, which boasts 58 TOPS computing power and over 20 smart driving assistance functions, including highway NOA navigation and long-range autonomous parking assistance [4]. Competition Dynamics - Management believes that developing chipsets in-house is challenging for car OEMs due to the time and cost involved, which positions Black Sesame favorably in the market [8]. - The company collaborates with third-party software suppliers to enhance its algorithm development, providing flexibility for customers in choosing software solutions [8]. Company Profile - Black Sesame specializes in AD/ADAS SoCs, offering a range of products such as the A1000 series and Wudang series, which are already adopted by major OEMs like Geely and Dongfeng [3].

Global Markets Daily: Dollar Depreciation—Repatriation Not Required (Cahill/Kanter) Dollar Depreciation—Repatriation Not Required The Dollar is overvalued, and we think it has further to fall. In currency markets, valuation is not a catalyst because it is not a very strong anchor; there are no underlying cash flows like coupon payments or dividends. Instead, when we think of valuation we use it as a starting point for analysis—why is the currency over- or under-valued, and are those forces likely to shift o ...

USA: FOMC Minutes Note Committee Is "Well Positioned to Wait for More Clarity" BOTTOM LINE: The minutes to the FOMC's May meeting noted that FOMC participants believed the Committee was "well positioned to wait for more clarity" on the economic outlook, given "solid" economic growth and a "moderately restrictive" monetary policy stance. "Almost all" participants saw a risk that "inflation could prove to be more persistent than expected." At the same time, the Fed staff judged that a recession was "almost as ...

Investment Rating - The report maintains a bullish outlook on stocks related to Reliability of Power/Water/Energy, Efficiency of Energy/Resources/Land, and solutions for Aging Populations/labor strains [1][15][38] Core Insights - Sustainable funds with broader APAC regional mandates have outperformed non-ESG peers for six consecutive quarters, while those with individual country mandates have struggled [1][35] - Performance is deemed more critical than policy for the growth of Sustainable Investing's AUM penetration, with a focus on quality and governance [1][13] - The report highlights a notable increase in AUM penetration for ANZ-focused Sustainable funds, reaching 4.8% by 1Q25, up 23 basis points year-over-year [12] APAC Fund Performance and Flows - APAC-focused Sustainable equity AUM remained flat at US$212 billion, with minor outflows of -US$0.9 billion in 1Q25, primarily from Japan and Emerging Markets-focused funds [9][19] - Passive Sustainable strategies now represent 52% of total APAC-focused Sustainable AUM, attracting US$1.0 billion of inflows in 1Q25 [9][19] - Sustainable funds in the top two quintiles based on 3-year risk-adjusted returns saw cumulative inflows of +US$6.0 billion in 2024, contrasting with -US$16 billion outflows in the bottom cohort [10][12] Stock Ideas - New entrants into the E&S Leaders screen include companies like JYP Entertainment, Kweichow Moutai, and Tata Consultancy, all rated as Buy by Goldman Sachs [6][7] - Thematic stock in focus includes Harmonic Drive Systems, which aligns with Green Capex and Aging Populations Solutions themes [6] Sustainable Fund Trends - The report notes that the median performance of APAC-focused Sustainable funds was at the 45th percentile in 1Q25, indicating underperformance relative to peers [35][42] - Greater China-focused Sustainable funds have shown significant impact on median performance, comprising approximately 50% of the funds tracked [36][44] - The report emphasizes a less-is-more approach to Sustainable integration strategies, focusing on measurable metrics [38]

28 May 2025 | 10:30PM EDT USA: Court Blocks Majority of Tariff Hikes, But White House Could Reinstate Them Following Appeal or Through Other Tariff Authorities BOTTOM LINE: The Court of International Trade blocked the tariffs the Trump administration imposed under the International Emergency Economic Powers Act (IEEPA). The ruling blocks 6.7pp of tariff increase since the start of the year, including the tariffs on Canada, China, Mexico, and the 10% baseline tariff, but does not affect sectoral tariffs. As ...

Investment Rating - The report maintains a Neutral rating for Big Yellow (BYG.L) with a 12-month price target of 1,110p, implying a 12.5% upside from the current price of 987p [1]. Core Insights - Revenue growth is expected to decelerate, with occupancy forecasted to remain stable at around 80.3% to 81% for FY26E and FY27E, compared to 79.1% in FY24/25. Rate growth has moderated to 3.2% year-on-year, down from a peak of 8.6% [2][3]. - The balance sheet is solid, with a net debt to EBITDA ratio of 3.1x, an interest coverage ratio of 6.1x, and a loan-to-value ratio of 12.8%, the lowest in the sector. The development pipeline includes 14 sites, with 9 under construction, expected to generate a net operating income (NOI) of £36.6 million [3]. - Valuation appears fair, trading at a 6.3% earnings yield, above its long-term average of 4.6%, and at a 31% discount to net tangible assets (NTA), below its long-term average of 0% [4]. Revenue and Earnings Forecast - Revenue is projected to grow from £177.8 million in FY25 to £216.5 million in FY28, with adjusted EPS estimates for FY26E to FY28E showing minimal changes of 0% to -2% [1][14]. - The forecasted EPS for FY26E is 59.55p, with a dividend yield expected to increase from 4.2% in FY25 to 5.2% in FY28 [11][14]. Financial Metrics - The report highlights that the average net achieved rent per square foot has declined to 3.2% year-on-year, down from a peak of 8.6% [20]. - The company’s leverage is noted to be the lowest among its peers, with a net debt to property value ratio of 13% [22]. Market Context - The demand environment remains subdued, with forward demand indicators showing a 3% year-on-year decline in prospect numbers for FY24/25 and a decrease in Google searches for self-storage options [2][18]. - The broader UK economic context is characterized by low growth and global macroeconomic uncertainty, which may continue to impact occupancy and revenue growth [2][25].

Investment Rating - The report assigns a "Sell" rating to Vornado Realty Trust (VNO) with a 12-month price target of $33.00, indicating a downside potential of 13.1% from the current price of $37.97 [14]. Core Insights - Management believes it is in a landlord's market, with strong tenant demand for Class A office space in Manhattan and constrained new supply due to high replacement costs and interest rates [3]. - VNO's occupancy in New York decreased from 88.8% at the end of 4Q24 to 84.4% in 1Q25 but is expected to recover to the low 90% range within 12 months due to leasing activity [3]. - The company completed significant leasing transactions, including a 337k SF lease by Universal Music Group at PENN 2 and a 222k SF lease at 555 California Street in San Francisco [3][11]. - VNO's 2025 comparable FFO is expected to be flat compared to 2024, with meaningful growth anticipated by 2027 driven by the lease-up of PENN 1 and PENN 2 [4]. Financial Performance - VNO's NTM FFO is currently trading at 17.9x, below its historical average of 22.3x, while trading at a 6.0% premium relative to the REIT sector [10]. - On an AFFO basis, VNO is trading at 37.9x NTM AFFO, significantly higher than its pre-pandemic average of 32.0x, reflecting an 88% premium compared to the REITs average [10]. - The report updates estimates for VNO, with 2025 NAREIT FFO projected at $2.20, reflecting a slight decrease from previous estimates, while 2026 and 2027 show growth [12]. Valuation Trends - The report notes that VNO's premium versus the REIT sector is approaching historical average levels, indicating a potential normalization in valuation [6]. - The updated price target reflects a revised AFFO multiple of 27.0x, up from 26.2x, based on recent leasing strength and market movements [12].