Investment Rating - The report maintains a real GDP growth forecast of 4% for 2025, with a revised export volume growth forecast for 2025 adjusted to -5% from -10% previously, indicating a more resilient export performance than initially expected [1][3]. Core Insights - Chinese exports showed unexpected strength in April, with a year-over-year increase of 8.1% in USD terms, which was significantly above market expectations. This resilience is attributed to trade re-routing and front-loading activities during a temporary tariff pause [2][3]. - The report suggests that the better-than-expected export performance reduces immediate pressure on Beijing for aggressive policy easing, with the next critical milestone for potential easing being the July Politburo meeting [4][9]. - The forecast for overall real domestic demand growth has been slightly lowered to 4.5% for 2025, down from 5.0%, reflecting a delay in the rotation towards domestic demand due to sustained export strength [9][21]. Summary by Sections Export Performance - The report highlights that despite weaker signals from manufacturing PMIs, actual trade data showed resilience, with exports expected to decline by 5% in 2025, a revision from a previous forecast of -10% [3][4]. - The net export contribution to GDP is now forecasted at -0.5 percentage points, an improvement from the earlier estimate of -1.0 percentage points [3]. Policy Outlook - Following recent monetary policy adjustments, including a 50 basis point cut in the reserve requirement ratio and a 10 basis point policy rate cut, the report anticipates further policy rate cuts of 20 basis points for the remainder of the year [4][8]. - The augmented fiscal deficit is projected to widen from 10.4% of GDP in 2024 to 13.5% in 2025, indicating a more significant fiscal stimulus than previously expected [8][16]. Inflation and Trade Uncertainty - The report anticipates continued PPI deflation, with forecasts for PPI inflation at -2.1% for 2025 and -0.6% for 2026, reflecting sluggish domestic demand and overcapacity in various industries [10][19]. - There remains high uncertainty regarding US-China trade relations, with expectations that bilateral tariffs may decrease from current levels of over 100% to around 50-60% in the near future [11][20].

Investment Rating - The report indicates a positive outlook for Emerging Market (EM) equities, suggesting a strong case for relative outperformance against US equities [4][12][17]. Core Insights - EM equities have shown unusual outperformance, with MSCI EM returning +6% year-to-date, significantly outperforming SPX at -5% and its implied returns at -6% [8][12]. - The report highlights a growing need for diversification away from US assets, which could support stronger medium-term returns for EM equities, particularly domestic cyclicals [4][17][28]. - The macro environment is favorable for EM local fixed income, benefiting from a weaker US Dollar and lower commodity prices, leading to one of the best year-to-date performances in the past decade [33][37]. - EM currencies have recently appreciated against the Dollar, driven by improving global risk sentiment and repatriation flows, particularly in Asian low-yielders [50][58]. Summary by Sections EM Equities - EM equities have outperformed both SPX and historical betas, with a 15% rally since April lows and a current position only 1% lower than the February peak [4][12]. - The report notes that much of the rally is attributed to a decline in risk premia, despite weak earnings sentiment [12][17]. - Domestic cyclicals in EM are expected to perform better in an optimistic medium-term scenario, particularly in Brazil and South Africa [28][31]. EM Local Rates - The macro environment for EM local fixed income is supportive, with a broad-based rally driven by a weaker US Dollar and disinflationary trends [33][37]. - Recent EM inflation data has surprised to the downside, suggesting inflation could fall within central bank targets by year-end, providing more room for policy responses [41][44]. EM FX - EM FX has recently outperformed G9 FX, with Asian low-yielders leading the appreciation due to improved sentiment and repatriation flows [50][58]. - The report emphasizes that while recession risks remain elevated, there are growing right-tail risks for EM FX appreciation if market conditions improve [65]. EM Sovereign Credit - Recent widening of EM sovereign credit spreads has opened up some value, but the asymmetry remains unattractive due to high recession risks [70][74]. - The report suggests focusing on 'high-quality' sovereigns with solid fiscal outlooks and relatively attractive spread entry levels [70][74].

Investment Rating - The report does not explicitly state an investment rating for the steel industry Core Insights - The steel market is experiencing varied price movements across different regions, with the US showing the highest year-to-date price increase of 34% and Europe at 28% [3] - China's crude steel production increased by 18% month-on-month in March 2025, indicating a recovery from previous declines [3] - The report highlights that India is the main growth driver in steel production, with an 8% year-on-year increase [3] Global Prices - In April, hot-rolled coil (HRC) prices in Brazil declined by 1% month-on-month, while prices in China, Japan, and the US fell by 3%, 2%, and 2% respectively [3] - On a year-to-date basis, the highest price increases have occurred in the US (+34%) and Europe (+28%) [3][6] Regional Production Insights - China's crude steel production showed a year-on-year growth of 5% in March, recovering from earlier declines [3] - EU crude steel production rose by 16% month-on-month in March but remained flat year-on-year [3] - Latin America saw a 9% month-on-month increase in crude steel production in March, reverting to a 7% year-on-year growth [3] Price Performance - HRC price performance in various regions for April shows the following: EU at $745 (+7.6% month-on-month, +28% year-to-date), US at $1,020 (-2.1% month-on-month, +34.1% year-to-date), and China at $449 (-3.4% month-on-month, -4.7% year-to-date) [6] - Rebar prices in the EU increased by 6.3% month-on-month and 17% year-to-date, while in China, prices decreased by 4.3% month-on-month [13] Capacity Utilization - Global effective steel capacity utilization is reported at varying levels, with China showing a utilization rate of 91.6% in April 2025 [36] - The report indicates that spare capacity by region is significant, with China having the highest spare capacity at 80 million tonnes [25] Trade and Demand - The report notes an increase in flat steel demand, which is above last year's levels, indicating a positive trend in the market [55] - Long steel demand has also increased over the past two weeks, suggesting a recovery in this segment [59] Steelmakers' Profitability - The profitability of steelmakers is under pressure as HRC prices decreased by 3% month-on-month and rebar prices by 4% month-on-month in China [62] - The report highlights that the spreads for HRC and rebar have decreased, impacting overall profitability [66]

Investment Rating - The report assigns a "Buy" rating to Huaqin Technology (603296.SS) with a 12-month price target of Rmb81.80, indicating an upside potential of 13.6% from the current price of Rmb71.99 [9]. Core Insights - Huaqin Technology's management is optimistic about the growth of its AI server business and expects continued solid growth in consumer electronics, including smartphones and PCs. The company is also exploring new business opportunities in automotive electronics and robotics [1]. - The report highlights Huaqin's diversified product lines, which have shown strong growth in data center infrastructure, smart wearables, and automotive components, contributing significantly to the company's revenue mix [6]. - Huaqin is positioned well in the smart devices market, with expectations for steady growth in smartphone shipments and leadership in smart wearables, driven by generative AI and market share gains from brand customers [6]. - The outlook for Huaqin's PC and server business remains strong, with continued market share gains in the notebook and tablet ODM markets, benefiting from the AI localization trend in China [6][7]. Summary by Sections Business Expansion - Huaqin is expanding its product lines beyond smartphones and PCs to include data center infrastructure, automotive components, and IoT products, with significant revenue growth in these areas [6]. - The data center business revenue is expected to grow at a triple-digit rate, while smart wearables and automotive components are projected to see strong double-digit growth [6]. Market Position - Huaqin has a long-standing experience in ODM for smartphones and is expected to maintain steady growth in shipments due to increasing ODM penetration rates [6]. - The company leads in the Android TWS and smartwatch segments, with generative AI driving growth and brand customers gaining market share from white box competitors [6]. Financial Projections - The report provides financial forecasts, projecting revenues of Rmb109.88 billion in 2024, increasing to Rmb209.38 billion by 2027, with corresponding EBITDA growth [9]. - Huaqin's EPS is expected to grow from Rmb2.88 in 2024 to Rmb6.31 by 2027, reflecting strong earnings growth potential [9].

Investment Rating - The report maintains a "Buy" rating for Giant Biogene and Shanghai Jahwa, reflecting their potential for growth and turnaround [11][26]. Core Insights - The China beauty sector is showing signs of stabilization, with demand shifting from negative year-over-year (yoy) growth to a flat performance, particularly noted during Women's Day [1]. - Onshore sales growth in 1Q25 re-accelerated to 3.2% yoy, surpassing the full-year estimate of 1.2% yoy, although this was countered by a decline in the DFS channel [1]. - The sector has experienced a 50% rerating, with the 12-month price-to-earnings (PE) ratio moving from 20x to 30x, indicating a recovery towards mid-cycle valuation levels [1][7]. Summary by Sections Sales Performance - The covered companies in the China cosmetics sector reported mixed results for 2024/1Q25, with most missing sales expectations except for Giant Biogene, which outperformed due to effective cost management [2][25]. - The average selling expenses ratio decreased by 6.8 percentage points yoy in 4Q24 and 3.7 percentage points yoy in 1Q25, indicating improved cost discipline across the sector [2][25]. Competitive Landscape - Local brands are gaining market share, with emerging leaders like Giant Biogene, Marubi, and Chicmax achieving over 30% sales growth, while global brands are pulling back on promotions to focus on quality growth [3][13]. - The premium segment remains largely dominated by global brands, but local brands are expected to capture more market share over the next 5-10 years [6]. Valuation Trends - The beauty sector's valuation has rebounded to around 30x PE, reflecting a recovery from downcycle lows and aligning more closely with global peers [7][8]. - Limited valuation upside is anticipated as the sector stabilizes at mid-cycle levels, with potential idiosyncratic rerating drivers emerging from new product categories and brand expansions [8]. Catalysts for Growth - Key upcoming events include the 618 shopping festival and increased activity in the medical aesthetics space, which could provide growth opportunities for companies like Giant Biogene [9][10]. - The report highlights the importance of effective execution and brand expansion as critical factors for sustained growth in the sector [8][11]. Stock Preferences - The report favors emerging leaders such as Giant Biogene and Shanghai Jahwa, while maintaining a neutral stance on MGP, Proya, and Botanee due to concerns over growth visibility and execution [11][26]. - A sell rating is assigned to Bloomage, reflecting challenges in revitalizing its cosmetics business amid intensified competition [11][26].

Investment Rating - The report indicates a divergence in export performance among Asian economies due to US tariff impacts, suggesting a cautious outlook for investments in the affected sectors [2][22]. Core Insights - The report highlights that US tariffs on imports from mainland China surged to over 100%, while tariffs on goods from other Asian economies remained below 20%, leading to significant disparities in export performance [3][4]. - China's exports to the US fell by approximately 20% month-on-month seasonally adjusted in April, while exports from Korea, Taiwan, and Vietnam showed moderate gains despite an increase in their average effective tariffs [7][16]. - The emerging divergence in US-bound exports between China and other Asian countries warrants close monitoring, as it may reflect a reallocation of trade away from China due to tariff differentials [16][22]. Summary by Sections Trade Data Analysis - The analysis focuses on trade data from Korea, Vietnam, Taiwan, and mainland China, which collectively account for over half of the regional trade and have similar sectoral compositions [2][6]. - The report notes that while China's exports to the US plummeted, its exports to non-US destinations improved, indicating a trend towards export diversification [7][14]. Sectoral Performance - Exports of autos and metals from Korea, Vietnam, and Taiwan to the US remained subdued due to sectoral tariffs, while electronics exports increased significantly, benefiting from temporary tariff exemptions [11][12]. - The report suggests that the sectoral composition of exports is skewed towards manufacturing goods, particularly in technology and textiles, while being underrepresented in energy and food sectors [6][11]. Future Outlook - The report projects that regional divergence in exports to the US will likely widen, estimating a 2% decline in overall regional exports to the US by 2025, primarily due to elevated tariffs on imports from China [22][24]. - In a risk scenario with no tariff relief, Asia's exports to the US could drop by 5% on average in 2025, mirroring declines seen during the Global Financial Crisis [22][24].

Investment Rating - The report presents a refreshed China Growth Portfolio, screening for 30 names across 11 GICS Industry Groups, aimed at identifying growth opportunities with strong risk/reward profiles [1][69]. Core Insights - Offshore-listed companies continue to outperform A-shares, with MSCI China showing a 14% year-over-year profit growth compared to 0% for CSI300 [3][9]. - Revenue growth for listed companies has reached record lows, with a decline of 1% year-over-year, primarily due to deflation affecting upstream sectors [10][14]. - Aggregate net profits for all listed Chinese companies grew by 4% year-over-year in FY2024, which is below the nominal GDP growth of 5% [9][14]. - Capital expenditure (Capex) growth has slowed to historical lows, decreasing by 4% year-over-year amid weak demand and overcapacity concerns [5][33]. - Total dividends and buybacks reached RMB 3.5 trillion in 2024, resulting in a total shareholder return yield of 3.6%, the highest level recorded [36][39]. - Consumer-related sectors showed resilience with aggregate revenue growth of 7% year-over-year in FY24, with services outpacing goods [46][47]. Summary by Sections Earnings Performance - FY24 profit growth for MSCI China was 14% year-over-year, while CSI300 remained flat [3][9]. - Aggregate earnings for all listed companies in FY2024 grew by 4% year-over-year, with a notable decline in 4Q24 earnings by 3% year-over-year [9][14]. Revenue Trends - Revenue growth for all listed companies fell below zero for the first time, recording a decline of 1% year-over-year due to deflation [14][10]. - Upstream sectors such as Energy, Property, and Materials were particularly affected by PPI deflation [14][10]. Capital Expenditure - Capex growth for the listed universe fell to negative territory for the first time since 2015, with a 4% year-over-year decline [33][28]. - The emergence of AI technologies is expected to influence future Capex decisions positively [27][33]. Shareholder Returns - Total shareholder returns reached a historical high of 3.6% in 2024, driven by significant buybacks and dividends totaling RMB 3.5 trillion [36][39]. - The net buyback ratio for MSCI China turned positive for the first time, indicating a shift towards accretive shareholder returns [39][36]. Consumer Sector Insights - Consumer-related sectors experienced resilient revenue growth of 7% year-over-year, with services consumption leading the growth [46][47]. - Earnings growth in goods consumption was supported by consumer goods trade-in programs, while services showed better performance due to improved Capex and cost discipline [46][47]. Property and Labor Market Conditions - The property market remains soft, with 60% of listed developers reporting losses in FY24 [52][48]. - The workforce saw nearly no expansion, with the total number of employees in listed companies remaining at 40 million in 2024 [52][52]. Government Subsidies - Direct government subsidies to A-share listed companies decreased to RMB 211 billion in 2024, accounting for 3.8% of total net income [63][58]. Key Themes from Earnings Calls - Tariffs and AI were prominent topics during earnings calls, with companies expressing concerns over trade policies and optimism regarding AI advancements [64][68].

11 May 2025 | 7:49PM HKT China eCommerce: Cross-border expert session takeaways: Focusing on post-tariff pricing adjustments, supply-chain responses and Temu We hosted an expert session on cross-border eCommerce with investors on May 9, where we invited Mr. Zuozhou Zhang, an entrepreneur with extensive experience in cross-border e-commerce and cross-border logistics. Key topics discussed include 1) Pricing dynamics amongst cross-border ecommerce platforms post-tariff implementation, where the expert notes T ...

Investment Rating - The report assigns a "Sell" rating on YOFC-A due to expectations of soft demand through 2025E [13][16]. Core Insights - YOFC's 1Q25 net profit reached Rmb152 million, exceeding expectations by 19%, driven by strong performance in the datacom segment, particularly from AI and datacenter demand [1][9]. - The datacom segment is projected to grow significantly due to increased capital expenditure from Chinese cloud companies, while the telecom segment remains weak, contributing over 60% of YOFC's revenue in 2024 [2][9]. - A key uncertainty is the upcoming fiber cable tender from China Mobile, which could impact pricing and overall growth momentum [2][13]. Summary by Sections Financial Performance - YOFC's revenue estimates for 2025E have been revised up by approximately 2%, with net profit estimates increased by 7% to 12% [9][10]. - The 12-month price target for YOFC-H is revised to HK$12.5, based on a 9x 2026E P/E, while the A-share target is set at Rmb28.6, based on a 22x 2026E P/E [9][16]. Market Dynamics - The datacom segment is expected to benefit from strong demand, while the telecom market is currently experiencing muted demand [2][13]. - YOFC's pricing estimates for fiber cables in 2025E have factored in a 6% price drop compared to 2024 [2][9]. Future Outlook - The report suggests that a recovery in demand in 2025 could lead to a more positive outlook for YOFC, particularly if the China Mobile tender results in improved pricing dynamics [13][14]. - Key upside risks include stronger-than-expected demand and pricing resilience, which could enhance margins and net profit outlook [14][17].

更多资料加入知识星球：水木调研纪要 关注公众号：水木Alpha 6 May 2025 | 3:50PM SGT Sea Ltd. (SE) Buy 5.5 tracking shows slight uptick in consumer promotions vs 4.4 SE 12m Price Target: $167.00 Price: $142.50 Upside: 17.2% Following our prior tracking in April for 4.4, we highlight promotions given by Sea's Shopee & peers during the 5.5 sale period. Key observations: 1) In Indonesia, both Shopee & Tiktok increased promotions relative to 4.4 (reflected by lower final cost to consumer on average in our price sampling) though the trend w ...