Investment Rating - The report assigns a "Buy" rating to PDD Holdings with a 12-month sum-of-the-parts (SOTP) based target price of US$152, indicating an upside potential of 27.5% from the current price of US$119.24 [9][10]. Core Insights - PDD Holdings reported mixed results for 1Q25, with a 10% year-over-year increase in net revenues, but a significant 36% decline in adjusted EBIT. The online marketing revenue grew by 15% year-over-year, aligning with expectations [1][2]. - The negative market reaction, with a 17% drop in pre-market trading, was primarily due to a profit miss attributed to higher-than-expected Selling & Marketing expenses during a typically low season [1][2]. - The company is focusing on investments in its platform ecosystem to support small and medium-sized enterprises (SMEs), allowing them to compete effectively on pricing [1]. Revenue Performance - Online marketing revenue for 1Q25 was reported at RMB 48.722 million, reflecting a 15% year-over-year growth, which was in line with Goldman Sachs estimates and above the Visible Alpha consensus [2][10]. - Transaction commission revenue grew by only 6% year-over-year, falling short of expectations due to a shift in Temu's business model and ongoing investments in the platform ecosystem [2][10]. Future Outlook - Key discussion points for the results call include Pinduoduo's growth drivers, the impact of ongoing investments, and the differentiation of Temu's revenue outlook amidst changing market conditions [3]. - The report highlights potential challenges such as geopolitical headwinds, increased competition, and the need for reinvestments to sustain growth, which may affect core profit margins [9].

Meituan - Investment Rating: Buy [1] - Core View: Meituan reported a solid profit beat in 1Q25, but faces challenges due to increased competition in food delivery, leading to elevated subsidies that will impact near-term profits [1] - Revenue Forecasts: 2Q core local commerce revenue growth is forecasted at +11% year-on-year, while profit is expected to decline by -35% year-on-year [1] - Adjusted EBIT: For FY25, adjusted EBIT is estimated at Rmb44.7 billion, a decrease of -15% year-on-year [1] - Target Price: The 12-month target price is lowered to HK$172 [1] Varun Beverages - Investment Rating: Initiate at Buy with a 12-month target price of Rs600 [2] - Market Position: Varun Beverages is positioned to grow in India's RTD beverages market, with Pepsi's market share increasing from 28% in 2015 to 38% in 2024 [2] - Profitability: The company has a strong track record of improving profitability in acquired territories, particularly in Africa [2] - Free Cash Flow: An inflection in free cash flow is expected over CY24-27 due to steady growth in operating cash flow and moderated capital expenditures [2] BYD - Investment Rating: Buy [4] - Promotion Impact: The impact of BYD's "618" promotion is expected to be less severe than feared, with an average price reduction of Rmb10,000 on 12 models [4] - Revenue Impact: The promotion is estimated to have a Rmb2.6 billion impact on BYD's top line, equivalent to 5% of 2025E net profit [4] - Target Price: The 12-month target price is adjusted down by 3% to Rmb424/HK$416 [4] WiseTech Global - Investment Rating: Buy [4] - Acquisition: WiseTech announced the acquisition of E2open for US$2.1 billion, which is expected to be accretive to FY27E EPS by +8% to 10% [4] - Growth Outlook: The acquisition is seen as a significant step towards WiseTech's goal of becoming the operating system for global trade and logistics [4] - Target Price: The 12-month target price is A$126 [4] Trip.com - Investment Rating: Buy [7] - Strategic Initiatives: Trip.com aims to enhance its position as a leading OTA in Asia through overseas investments and a full-funnel marketing strategy [7] - Customer Focus: The company emphasizes excellent customer service and innovation in tourism services [7] - Target Price: The 12-month target price is US$78/HK$608 [7] Mitsui Fudosan - Investment Rating: Buy [7] - Overseas Expansion: Mitsui Fudosan is looking to expand its overseas business and address rising construction costs [7] - Target Price: The 12-month target price is ¥1,500 [7] Toray Industries - Investment Rating: Buy [7] - Profit Growth: Toray expects strong profit growth supported by structural reforms and a focus on ROIC management [7] - Target Price: The 12-month target price is ¥1,030 [7]

Investment Rating - The report assigns a Neutral rating to AutoZone Inc. (AZO) with a 12-month price target of $3,811, indicating a downside potential of 0.4% from the current price of $3,826.46 [9][11]. Core Insights - AutoZone reported a 3Q25 EPS of $35.36, which was below the Goldman Sachs estimate of $35.91 and consensus of $37.11. The total company same-store sales increased by 5.4%, exceeding the GS/consensus estimates of 3.1%/3.2% [1][8]. - Domestic same-store sales rose by 5.0% year-over-year, while international same-store sales (excluding foreign exchange) increased by 8.1%. The report estimates that DIFM same-store sales grew by 9.8% year-over-year, while DIY sales increased by 3.0% [1][4]. - The EBIT margin decreased by 185 basis points year-over-year to 19.4%, which was below the GS estimate of 20.8% and consensus of 20.5%. This decline was attributed to a gross margin decrease of 77 basis points to 52.7% and an increase in SG&A as a percentage of sales to 33.3% [1][4][8]. Summary by Relevant Sections Financial Performance - AutoZone's total sales for 3Q25 were reported at $4,464 million, reflecting a sales growth of 5.4% compared to the previous year. The gross profit was $2,354 million, with a gross margin of 52.7%, which was below expectations [8]. - SG&A expenses increased by 8.9% year-over-year to $1,487 million, with the SG&A ratio at 33.3%, slightly above the GS estimate of 32.4% [4][8]. Inventory and Debt - The company ended the quarter with $6,823 million in inventory, representing a 10.8% year-over-year increase. The accounts payable to inventory ratio was 115.6%, down from 119.7% in the prior year [4][7]. - AutoZone's adjusted debt to EBITDAR ratio remained stable at 2.5x, consistent with the previous year and quarter [7]. Market Expectations - The report anticipates a negative market reaction to the earnings miss, particularly due to the lower-than-expected gross margin. Key areas of focus for future commentary include gross margin expectations for 4Q, inventory availability, and the health of the DIY consumer [6].

Investment Rating - The investment rating for Nomura Research Institute is Neutral [6][8]. Core Insights - The management meeting highlighted that while some manufacturing customers are cautious about investments, the overall business environment in Japan remains solid, with limited negative impact on earnings [4][6]. - NRI plans to gradually implement generative AI in systems development from the second half of 2025 to 2026, although the positive earnings impact is expected to take time [4][5][6]. - NRI is not actively pursuing domestic acquisitions but is exploring joint ventures and acquisitions of companies with intellectual property assets as future options [5][6]. Business Environment - NRI's sales exposure to cautious manufacturing customers is low, limiting the negative impact on overall earnings [4]. - The domestic demand environment is solid for both consulting and system integration, while overseas operations, particularly in Australia, face challenges [4][6]. - A business model shift is planned for the Australian market to improve profitability over the next few years [4][6]. Innovation in Production - NRI is ahead of the industry in applying generative AI to systems development, with gradual implementation expected from 2H25 to 2026 [4][5][6]. - The application of AI in various phases of development is progressing, but a consistent process will take time to establish [4][5]. Industry Reorganization and Corporate Acquisitions - NRI is not currently looking to acquire overseas companies due to a challenging business environment [5][6]. - The company is exploring potential joint ventures with customers and acquisitions of companies with IP assets to strengthen its business platform [5][6].

27 May 2025 | 4:37PM JST Unipres Corp. (5949.T) Stepping up cost savings to improve earnings structure, but volume outlook at major customer still unclear; stay Sell 5949.T 12m Price Target: ¥810 Price: ¥966 Downside: 16.1% Impact of Nissan restructuring not fully factored in Unipres' results briefing held on May 27 outlined the path to the company's FY3/26 operating profit guidance of ¥8 bn (vs. ¥12.2 bn in FY3/25). The company also announced its new 3-year medium-term plan for FY3/26-FY3/28. While sales a ...

Group 1: Inflation Trends in CEEMEA - Headline inflation in the CEE-3 countries showed significant declines: Poland decreased by 0.6pp to 4.3%yoy, Hungary down by 0.5pp to 4.2%yoy, and Czechia down by 0.9pp to 1.8%yoy[1][2] - In contrast, Israel experienced a notable increase in inflation from 3.3%yoy to 3.6%yoy, primarily due to a one-time 16% hike in airline fees[1] - Mixed inflation trends were observed in other regions, with Russia's inflation slightly down to 10.2%yoy, Turkey at 37.9%yoy, and South Africa up to 2.8%yoy[2] Group 2: Core Inflation Insights - Core inflation fell sharply in Czechia and Poland to 3.3%yoy and 3.6%yoy respectively, while it rose significantly in Ukraine to 11.5%yoy[3] - Core inflation remained stable in Hungary (5.2%yoy), Israel (3.1%yoy), Romania (4.7%yoy), Russia (9.4%yoy), South Africa (3.5%yoy), and Turkey (33.3%yoy)[3] Group 3: Economic Outlook and Forecasts - The CEEMEA outlook suggests a dovish stance due to ongoing disinflationary processes, with core inflation dynamics weakening across most countries except Russia, Ukraine, and Israel[4] - Average annual inflation forecasts for 2025 indicate lower expectations across several countries, with Czechia at 1.9%yoy, Hungary at 4.4%yoy, and Poland at 3.8%yoy, all below consensus[8][19][29]

Investment Rating - The report maintains a "Buy" rating for OneStream (OS), Vertex (VERX), and Waystar (WAY) based on increasing conviction following Q1 results and recent events [5][6][13]. Core Insights - The median stock in the SMID-cap software coverage is down approximately 15% year-to-date, contrasting with the S&P 500's decline of about 1%. Despite this, Q1 results were generally better than feared, with no companies lowering the high-end of their FY revenue guidance [17][19]. - The report emphasizes that management messaging has become crucial for share performance, with companies that provided clear guidance being rewarded, while those with less clarity faced negative reactions [37][39]. Key Themes Emerging from Q1 Results 1. Revenue performance was better than expected, with median revenue coming in about 1% ahead of consensus expectations [18][22]. 2. Profitability margins exceeded consensus by approximately 1.3%, although full-year outlooks remained largely unchanged [27][29]. 3. Management commentary was critical, influencing share performance more than formal guidance in some cases [37][38]. 4. Buyer behavior remained stable despite macro uncertainty, with some companies emphasizing faster time-to-value to address budget scrutiny [42][44]. 5. AI strategies are gaining focus, with companies beginning to discuss their AI roadmaps more deliberately [45][46]. Sub-Sector Takeaways - **Vertical Software**: Stocks are down about 10% year-to-date but have shown resilience with a median revenue and profitability performance coming in 2% and 9% ahead of consensus expectations, respectively [49][51]. - **Back Office Software**: Stocks are down approximately 10% year-to-date but have improved by about 16% since Q1 results, with median revenue and profitability also exceeding expectations [52][53]. - **Front Office Software**: Stocks have seen a significant decline of around 29% year-to-date, but median revenue and profitability were 1% and 6% ahead of guidance, respectively [54][56].

Investment Rating - The investment rating for China Tower Corp. is Neutral, with a 12-month price target of HK$12.5, representing an upside of 8.3% from the current price of HK$11.54 [8][10]. Core Insights - The report highlights that China Tower's depreciation expenses are expected to drop significantly in 2026 due to the end of the depreciable life of tower assets acquired in 2015, which will lead to a one-off strong net profit growth of approximately 46% year-over-year [2][8]. - The company maintains a capital expenditure (capex) guidance of Rmb32 billion for 2025, with allocations for new tower construction, maintenance, and non-telco business segments [3][8]. - The average tenant sharing ratio is projected to increase, with current statistics showing 1.81 tenants per tower, indicating potential for revenue growth [6][8]. Summary by Sections Depreciation - China Tower acquired 1.43 million towers in 2015, which will reach the end of their 10-year depreciable life by October 2025, resulting in a significant reduction in depreciation expenses to zero in 2026 [2][8]. - The depreciation expense associated with these towers is estimated to be Rmb7 billion in 2025, which will support strong net profit growth in 2026 [2][8]. Capital Expenditure (Capex) - The capex for 2025 is set at Rmb32 billion, with Rmb18 billion allocated for new tower construction and modifications, Rmb6-7 billion for maintenance, Rmb5 billion for non-telco segments, and Rmb2 billion for IT systems [3][8]. Accounts Receivables - The majority of accounts receivables come from China telcos, with an increase noted in 2023-24 due to longer payment cycles. However, management indicated that these receivables typically do not convert into bad debt [5][8]. Tenant Sharing Ratio - As of Q1 2025, 14%-15% of the towers have three tenants, 35% have two tenants, and 50% have only one tenant, suggesting room for improvement in the tenant sharing ratio [6][8]. Financial Projections - Revenue is projected to grow from Rmb94 billion in 2023 to Rmb100.8 billion in 2025, with net income expected to rise from Rmb9.75 billion in 2023 to Rmb11.7 billion in 2025 [7][10].

Investment Rating - The report indicates a moderate growth in total store sales, with a rating of low single-digit growth (LSD) for the latest quad-week [1]. Core Insights - Total store sales increased by 2% in the latest quad-week, driven primarily by the Dairy category, while Frozen and Alcohol categories experienced declines [1]. - The report highlights a mixed performance in the Beverages sector, with non-alcoholic categories showing stable trends for carbonated soft drinks (CSDs), sparkling water, and sports drinks, while ready-to-drink (RTD) tea and coffee saw accelerated sales growth [2]. - In the Tobacco sector, sales growth trends remained stable for the overall cigarette category, although specific companies like IMB experienced a deceleration in growth [3]. Summary by Category HPC (Household and Personal Care) - HPC sales growth improved to 2.0% from 1.5% in the previous month, primarily driven by higher pricing, despite lower volume growth [10]. - KMB continued to show robust sales growth, while PG and CL experienced slight moderation in growth [10]. - KVUE and CHD saw improvements in sales growth, with KVUE benefiting from higher volume growth and CHD from improved volume trends [10]. Beverages - Non-alcoholic beverage sales trends were mixed, with stable trends for CSDs and sparkling water, while RTD tea and coffee saw accelerated growth [2]. - Alcoholic beverage sales trends modestly decelerated across all categories, with some companies like BF showing improved trends [2]. Tobacco - Overall sales growth in the cigarette category remained stable, but IMB saw a deceleration in growth trends [3]. Food - Sales in the Food category decelerated in the latest quad-week, contrasting with the growth seen in HPC [1]. Private Label - Private label's dollar share growth remained modest at the total store level, with slight fluctuations across various categories [9].

Economic Projections - The ECB is expected to revise down the annual average headline inflation projection to 1.7% for 2026, a decrease of 0.2 percentage points (pp) from previous estimates[5] - Core inflation projections are anticipated to be lowered to 1.8% in 2026, also a reduction of 0.2pp[17] - The growth forecast for the remainder of 2025 is likely to be downgraded to 0.1% quarter-on-quarter (non-annualized)[21] Market Variables Impact - The Euro appreciated by 4% against a basket of trade-weighted currencies and by 8% against the Dollar since the last projections[5] - Spot prices for oil and gas fell by 25% during the same period, significantly impacting inflation projections[5] - Changes in market variables are estimated to subtract 0.6pp from headline inflation and 0.3pp from core inflation projections in early 2026[12] Policy Implications - The anticipated revisions in inflation and growth projections provide strong motivation for the ECB to implement a 25 basis points (bp) cut at the upcoming meeting[21] - An additional rate cut to 1.75% is expected, likely occurring in July[21] - The new projections will also consider factors such as core inflation momentum and incoming wage data, which showed a cooling trend[15]