Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies covered [20]. Core Insights - The demand for power, water, and energy reliability and efficiency solutions is expected to increase, driven by a push to scale clean technology [8]. - Recent legislative changes, such as the House GOP tax bill revisions impacting IRA tax credits, are likely to influence the solar sector positively [8]. - Insights from corporate conversations and EU Green Capex meetings indicate a bullish outlook on green capital expenditures [8]. Summary by Relevant Sections - **Green Capex Field Trip**: The discussions highlighted the importance of scaling clean technology and the growing demand for energy solutions across major U.S. cities [1][8]. - **Legislative Impact**: The passage of the House GOP tax bill with revisions affecting IRA tax credits is a significant development for the solar industry [8]. - **Market Themes**: The report emphasizes the transformation of the global power grid and the investment opportunities arising from this shift [8].

Investment Rating - The report suggests maintaining relatively broad Dollar shorts, indicating a bearish outlook on the USD [1][18][20] Core Insights - The Dollar's weak response to fiscal developments is attributed to bad timing and persistent deficit financing needs, leading to concerns about foreign demand for US assets [1][5] - The report highlights a potential for a stronger CNY due to improved US-China trade relations and the undervaluation of the Yuan [4][12] - The Yen is viewed as a safe haven, with expectations that higher US yields will not significantly hinder its strength [12][18] - The KRW is expected to outperform other Asian currencies, supported by discussions of foreign exchange in US-Korea trade negotiations [13] - The RON is forecasted to weaken due to elevated current account deficits despite recent political stability [14] - The TRY is stabilizing after previous volatility, with expectations of gradual depreciation [15] Summary by Sections USD - The report notes that the Dollar's response to fiscal support and higher yields has been minimal, with a focus on the US's large deficit financing needs [1][5] - Investors are advised to maintain broad Dollar shorts, with EUR and JPY as attractive hedges against risk assets [1][20] CNY - The CNY has recently strengthened, with forecasts adjusted to 7.10 and 7.00 for 6-month and 12-month horizons respectively [4] - The report emphasizes the potential for a stronger Yuan as trade relations improve and the currency remains undervalued [4][12] JPY - The Yen is considered a safe haven, with expectations that fiscal concerns in the US will not significantly impact its strength [12] - The report suggests a preference for short AUD/JPY as a hedge during risk-off periods [12] KRW - The KRW is expected to benefit from a gradually strengthening CNY and discussions in US-Korea trade negotiations [13] - The report indicates that Korean policymakers are supportive of a stronger currency [13] RON - The RON is forecasted to weaken due to higher projected fiscal deficits and a delayed fiscal adjustment [14] - The report anticipates a controlled increase in EUR/RON forecasts over the next 12 months [14] TRY - The TRY is stabilizing after significant depreciation, with expectations of a gradual slowdown in depreciation rates [15] - The report adjusts USD/TRY forecasts higher, reflecting a more stable outlook [15]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report highlights ongoing pressures in global long-end rates, particularly influenced by rising Japanese 30-year yields, US fiscal issues, and high UK inflation, suggesting a cautious outlook for long-duration assets [1] - It emphasizes the importance of demand-side signals in the US Treasury market, indicating that the current fiscal trajectory may not significantly alter deficit expectations [2] - The report suggests that the UK long-end is still facing challenges despite some improvement in economic activity, with a recommendation to maintain long positions in 10-year Gilts versus US Treasuries [16] Summary by Sections Global Rates Overview - Global long-end rates are under pressure due to various factors including Japanese yields and UK inflation, with limited relief from trade risks [1] - The report suggests a preference for shorter maturities in the US Treasury market, indicating a shift in focus from long-duration assets [5] United States and Canada - The report discusses the impact of Moody's downgrade and fiscal package progress on US Treasuries, highlighting a lack of appetite to stabilize fiscal trajectories amid waning global demand [2] - It notes that the fiscal bill is unlikely to significantly change the deficit path, maintaining a steady increase in debt burden [2] Europe - The report indicates that trade uncertainty and fiscal expansion in Germany are contributing to a steep front-end of the European curve, with a preference for 5-year HICP longs [12] - It also mentions that sovereign credit remains favorable due to improved risk sentiment and fiscal policies, with expectations for Bonos to outperform BTPs and OATs [13] UK Market - The report highlights improving activity data in the UK but warns that inflation surprises could complicate the outlook for long-end Gilts [16] - It continues to recommend long positions in 10-year Gilts versus US Treasuries, reflecting a cautious but optimistic view on UK bonds [16] Japan - The report describes the long-end JGB sell-off as a potential indicator of broader global duration risks, with technical factors dominating the price action [19] - It suggests that fiscal concerns and rising inflationary pressures may lead to higher equilibrium rates, impacting global yields [19] Australia and New Zealand - The report notes a dovish pivot from the RBA, with expectations for multiple rate cuts this year, indicating a more benign inflation outlook [24] - It suggests that the current front-end of the AUD curve is fairly priced given these expectations [24] Forecasts - The report provides forecasts for G10 10-year yields, indicating expected movements across various currencies, with a focus on the US and UK markets [30]

Investment Rating - The report indicates a focus on improving the M&A environment in Japan, suggesting a positive outlook for the market [6][29]. Core Insights - The report highlights the ongoing commitment of Japanese regulatory bodies to enhance the M&A landscape, with significant revisions to corporate governance expected in the coming months [6][29]. - The report emphasizes the importance of protecting minority shareholders during M&A transactions, which is seen as a critical factor for accelerating M&A activities in Japan [6][29]. - The report notes that the recent increase in share buybacks has led to a rise in total dividend payouts, indicating a positive trend in corporate capital return strategies [18][19]. Summary by Sections Market Overview - The TOPIX index is currently at 2,735.52, reflecting a slight decrease of 0.2%, while the NK225 index is at 37,160.47, down by 1.6% [1]. - Key sectors performing well include non-ferrous metals and pharmaceuticals, while insurance and glass & ceramics are lagging [1][20]. Corporate Actions - There has been a notable net purchase of TSE Prime cash stocks by foreign investors amounting to ¥597 billion, while individual and institutional investors have net sold ¥222 billion each [3]. - The report mentions that the total amount of share buybacks announced in the second quarter has already surpassed the total for the entire second quarter of the previous fiscal year [2][13]. Earnings and Forecasts - The report provides earnings per share (EPS) forecasts for FY24 and FY25, with expected growth rates of 10% and 2% respectively [25][30]. - The average exchange rate assumptions for the yen against the dollar are set at ¥145 for FY25, indicating a potential impact on export-oriented companies [11][29]. Sector Performance - The pharmaceutical sector has shown a 3% increase over the past week, while the defense sector has also performed well with a 3% rise [20]. - The report lists various sectors with their respective performance metrics over different time frames, highlighting the best and worst performers [21][66].

Investment Rating - The report indicates a focus on the TMT (Technology, Media, and Telecommunications) sector, which is currently favored for investment during the summer [29]. Core Insights - The NDX (Nasdaq 100 Index) experienced a 2% decline last week due to mixed headlines and overbought conditions, with the index's 200-day moving average approximately 2.5% away [3][4]. - There is a notable downward trend in cyclical stocks, with the CYCS vs DEFS pair down 6 of the last 7 days, reflecting ongoing macroeconomic uncertainty and concerns about "pull forward" dynamics [4][6]. - Investors are increasingly focused on finding new long positions with real upside potential, particularly outside of mega-cap stocks, as the market shifts towards a services-oriented framework over goods [5][6]. - Upcoming earnings reports, particularly from NVDA (Nvidia), are expected to set the tone for the summer, with a reliance on earnings revisions rather than just multiple expansions to drive market upside [7]. Summary by Sections Market Performance - The NDX's recent performance shows a consolidation phase, with several charts indicating a search for support after recent declines [3][4]. - The semiconductor sector has also faced a downturn, with the SOX index down for seven consecutive days [4][8]. Investor Sentiment - A survey of institutional investors revealed that 37% consider trade policy the biggest risk for the summer, followed by concerns about US growth (26%) and the US deficit (23%) [23]. - 97% of respondents believe that a continued rise in backend yields could pose problems for equities, with significant attention on 10-year yield levels [26]. Sector Preferences - The TMT and Financials sectors are viewed as the most favorable for investment this summer, while consumer discretionary stocks are the least favored [29]. Future Outlook - The report emphasizes the importance of macroeconomic and tariff headlines as investors prepare for the second half of the year, focusing on companies that have managed to de-risk their outlooks in recent earnings reports [7].

Investment Rating - The report assigns a "Buy" rating to HG Tech with a 12-month price target of Rmb53, indicating an upside potential of 26.6% from the current price of Rmb41.86 [16][18]. Core Insights - HG Tech is expected to benefit from multiple growth drivers, including AI infrastructure demand for optical transceivers, overseas expansion in the sensors segment, and new product introductions in laser tools [1]. - The company anticipates robust revenue and profit growth across all three business segments in 2025-26, addressing investor concerns regarding non-AI business growth [1]. Segment Summaries Sensors Segment - The sensors segment contributed over 60% of the company's net profit in 2024, with key growth drivers identified as overseas expansion and new sensor product development [2]. - HG Tech has secured a US$100 million order from a European luxury car maker, marking a significant milestone in its overseas business [2]. - A production plant in Thailand has been established with an annual capacity of 2 million units for PTC heaters, complementing the 9 million units capacity in mainland China [2]. Laser Tools Segment - The laser tools segment includes high-power tools for various industries such as automotive, metal processing, and shipbuilding [3]. - Orders from shipbuilding customers have more than quadrupled, with current orders standing at Rmb700 million, compared to Rmb3.5 billion in total revenue for the laser tool segment in 2024 [6]. Optical Transceivers Segment - HG Tech primarily supplies optical transceivers to Chinese cloud companies, benefiting from increased AI spending [8]. - The company plans to ramp up production capacity to 1 million units per month by the end of 2025, up from 500,000 units in early 2025 [8]. 3D Printing Segment - The company has initiated a joint venture in 3D printing, which is seen as a long-term growth driver across various sectors including consumer electronics and automotive [7]. - HG Tech currently offers six 3D printing products capable of producing parts ranging from 100mm to 400mm in size [7].

Investment Rating - The report assigns a "Buy" rating to Huaqin Technology with a 12-month price target of Rmb81.80, indicating an upside potential of 19.9% from the current price of Rmb68.20 [9]. Core Insights - Huaqin Technology is expected to achieve double-digit revenue growth in 2025, driven by its data center business, consumer electronics, and new ventures in automotive electronics and robotics [1][2][3]. Summary by Sections Data Center Business - Huaqin's data center product lines include AI servers, general servers, and switches, primarily targeting China cloud service providers (CSPs). The company is optimistic about ramping up its AI server production, benefiting from market share gains and increased capital expenditures in AI infrastructure in China [2][3]. Consumer Electronics - The management anticipates double-digit year-over-year growth in its PC business for 2025. The smartphone segment is expected to benefit from growing market share in the Android ODM market. Additionally, there are growth opportunities in smart wearables, driven by brand customers expanding their market share and the introduction of AI-powered wearables [3][4]. New Business Ventures - Huaqin has made strategic moves into automotive electronics and robotics, including the acquisition of HCTRobot to enhance its robotics capabilities. The company has established an R&D team focused on developing industrial robotics prototypes and is working on a smart driving domain controller [4][7]. Financial Projections - The report projects Huaqin's revenue to grow from Rmb109.88 billion in 2024 to Rmb209.38 billion by 2027. EBITDA is expected to increase from Rmb3.28 billion in 2024 to Rmb8.43 billion in 2027, with EPS projected to rise from Rmb2.88 to Rmb6.31 over the same period [9].

Si Fu, Ph.D. +852-2978-0200 | si.fu@gs.com Goldman Sachs (Asia) L.L.C. Kevin Wang, CFA +852-2978-2446 | kevin.wang@gs.com Goldman Sachs (Asia) L.L.C. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. 26 May 2025 | 12:12AM HKT China Musings The Renaissance of the Renminbi Kinger Lau, CFA +852-2978-1224 | kinger.lau@gs.com Goldman Sach ...

Investment Rating - The report assigns a "Buy" rating to Lingyi (002600.SZ) with a 12-month price target of Rmb10.10, indicating an upside potential of 24.7% from the current price of Rmb8.10 [8]. Core Insights - Lingyi's management is optimistic about growth driven by the demand for precision components in consumer electronics and server cooling modules, particularly due to the shift in smartphone form factors and the rise of AI applications [1][2]. - The company is expanding its product offerings in foldable phones and AI glasses, targeting higher dollar content per device and anticipating increased shipments [3][6]. Summary by Sections Cooling / Thermal Modules for AI Smartphones - Lingyi provides over 200 SKUs of metal precision parts for major smartphone brands, focusing on high-end models using copper materials for 2025, with plans to introduce hybrid materials in 2026 [2]. - The company's factory in India is expected to meet client demand, contingent on the capacity expansion by assemblers in the region [2]. Foldable Phones - The company supplies metal middle frames and precision parts for foldable phones, with a positive outlook on the growing trend and plans to engage with global-tier smartphone brands [3]. AI Glasses - Lingyi manufactures structural parts and cooling components for AI/AR glasses, expecting significant upside as major global technology companies plan to launch their own versions [6]. Financial Projections - Revenue projections for Lingyi are Rmb44.21 billion in 2024, increasing to Rmb79.75 billion by 2027, with EPS expected to grow from Rmb0.25 in 2024 to Rmb0.73 in 2027 [8].

Investment Rating - The report maintains a Neutral rating for Maxscend with a 12-month target price of Rmb86, indicating an upside potential of 23.2% from the current price of Rmb69.81 [2][11]. Core Insights - Management is optimistic about the company's RF modules expansion, the ramp-up of in-house capacity utilization, and new growth opportunities in the long term [1][2]. - The smartphone market is anticipated to take time to transition to the next product cycle (6G), and the shift from fabless to fab-lite may also require time to enhance efficiency and profitability [2]. Summary by Sections 2025 Business Outlook - Management expects quarterly revenues and margins to increase sequentially in 2025, driven by RF modules expansion, improved smartphone seasonality in the second half of 2025, and normalizing depreciation as utilization rates rise [3]. - Inventory levels are projected to decline but remain relatively high due to geopolitical tensions [3]. Xinzhuo Project Development Progress - The 6" and 12" wafer production lines have commenced mass production, with the 12" production line currently achieving a capacity of 4,000 wafers per month, aiming for 5,000 wafers per month by the end of 2025 [4]. - As capacity increases, the depreciation cost per wafer is expected to decrease, leading to margin improvements [4]. New Growth Opportunities - Management is positive about the potential of LEO satellite direct-to-cell functions, which could create additional RF module opportunities for Maxscend [8]. - There are also long-term prospects in high-end markets such as AI and robotics, allowing the company to leverage its in-house capacity more effectively [8].