Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies. Core Insights - Chinese consumer sentiment towards US brands appears to be relatively stable despite geopolitical tensions and tariff hikes, with a notable lack of significant consumer-initiated boycott activity [1][8][21] - The analysis indicates that brand momentum and product cycles are more influential on market share shifts than tariff policies [1][21][33] - Most Chinese consumers prioritize quality-for-money products over brand origin, suggesting a pragmatic approach to spending [1][21] Summary by Sections Boycott-Related News and Consumer Sentiment - Current boycott-related news volume is significantly lower than during previous geopolitical tensions, indicating limited consumer-driven boycott intentions towards US brands in China [8][19] - Analysis of social media comments shows that only about 14% of comments express a negative stance towards US brands, while the majority remain neutral or supportive [21][23] Sales Performance and Market Share Dynamics - In the sportswear category, Nike's sales growth has not shown a noticeable decline compared to domestic brands, even after recent tariff announcements [24][25] - Apple's market share in the mobile phone sector has been consistently declining, attributed to increasing competition from domestic brands [26][27] - Tesla's market share in China has seen a decline, but the extent of this decline has not worsened significantly in recent months [28][29] Overview of Leading US Companies in China - The net favorability of US brands in China has not deteriorated year-to-date, suggesting that consumer perceptions remain relatively stable [31][32] - Factors such as supply chain profits generated in China and the shareholder structure of US brands are important considerations for Chinese consumers [33][36]

Investment Rating - The report does not explicitly provide an investment rating for the industry or US equities Core Insights - Recent declines in US stocks, bonds, and the dollar have raised concerns about foreign investor selling, with an estimated $60 billion in US stocks sold since March 2025 [2][3] - Foreign investors held a record 18% ($17 trillion) of US equities at the start of 2025, indicating a significant potential for further selling [4][5] - Historical data shows that previous episodes of foreign selling have lasted an average of 11 months and accounted for approximately 0.6% of US equity market cap, translating to about $300 billion today [2][15] Summary by Sections Foreign Investor Activity - High-frequency fund flow data indicates that European investors have primarily driven the recent selling of US equities, while other regions have continued to buy [11][21] - The recent episode of foreign selling is shorter and shallower compared to historical averages, with only $63 billion sold over the last two months [15][21] Market Performance - Since early April 2025, the S&P 500 has declined by 4%, the trade-weighted US dollar has fallen by 3%, and the 30-year US Treasury yield has increased by 18 basis points [3][9] - In contrast to past episodes of foreign selling, where US stock prices generally continued to rise, the current situation has seen a decline in both stock prices and the dollar [16][21] Historical Context - The report highlights that in previous instances of foreign selling, the S&P 500 rose in 7 out of 10 episodes, while the dollar typically appreciated by an average of 5% [16][21] - The most recent significant foreign selling occurred from mid-2023 to early 2024, totaling $260 billion, which contrasts with the current estimated selling of $63 billion [15][21]

Investment Rating - The report does not explicitly state an investment rating for the industry [2]. Core Insights - The report highlights that China achieved a growth target of "around 5%" in 2024, with 70% of this growth driven by exports and export-related manufacturing investment [7]. - For 2025, the report anticipates a decline in real GDP growth to 4.0%, influenced by elevated US tariffs on Chinese goods, which are expected to impose a 2.2 percentage point drag on GDP growth [10][20]. - The report expresses caution regarding medium- to long-term GDP growth in China due to challenges related to demographics, debt, and de-risking, although there are moderate upside risks from faster AI adoption [9]. Summary by Sections Economic Forecasts - The report provides a detailed forecast for China's GDP growth, projecting 5.0% for 2024 and 4.0% for 2025, with a further decline to 3.5% in 2026 [15]. - It notes that domestic demand is expected to contribute positively, with consumption growth projected at 5.3% in 2025 [11]. Tariff Impact - The report indicates that the effective US tariff rate on China has reached 107%, significantly affecting trade dynamics and economic growth [20]. - It emphasizes that the ongoing policy easing in China may not fully offset the negative impacts of these tariffs [12]. Policy Measures - The report outlines expected policy measures, including further monetary easing and fiscal stimulus, to support economic growth amid external pressures [31]. - It anticipates an increase in the augmented fiscal deficit to 14.5% of GDP in 2025, up from 10.4% in 2024 [33]. Sectoral Insights - The report discusses the property sector, noting that construction activity has sharply contracted compared to previous peaks, raising questions about the sustainability of any recovery [52][56]. - It also highlights that high-tech manufacturing has been a stable growth driver over the past decade, with expectations that these sectors will continue to outperform broader manufacturing [80][84].

Investment Rating - The report does not explicitly provide an investment rating for the industry but discusses the implications of tariffs on natural gas liquids (NGLs) and their flows, particularly ethane and propane, in the context of US-China trade relations [5][17]. Core Insights - US tariffs on China plastics and reciprocal tariffs from China threaten to disrupt global NGL flows, particularly affecting ethane and propane, which are key petrochemical feedstocks [2][5]. - China’s NGL imports from the US have surged from below 50 thousand barrels per day (kb/d) in 2019 to nearly 900 kb/d in 2024, with a significant dependency on US ethane and propane [2][13]. - The report anticipates a moderate decline in US ethane flows to China due to lower US production and reduced demand from China, which may lead to a decrease in Henry Hub prices [2][26]. - Propane flows are easier to redirect compared to ethane, but full substitution of US propane exports will be challenging, necessitating deeper price discounts to attract buyers [2][3]. Summary by Sections Tariff Implications - US tariffs on energy imports are currently exempt, but significant tariffs on plastics threaten NGL flows [5][6]. - The reciprocal 125% tariff imposed by China on US imports is expected to skew the tariff burden towards the US over time [2][31]. Ethane and Propane Market Dynamics - Ethane imports from the US are critical for China, accounting for 60% of US ethane exports, while propane accounts for one-third [17][20]. - Ethane's specialized shipping and processing infrastructure complicate redirection efforts, while propane can be redirected more easily [3][20]. - The report outlines potential adjustment mechanisms for both ethane and propane markets in response to tariffs, highlighting the challenges and likelihood of each mechanism [20][25]. Production and Pricing Outlook - The report predicts a decline in US ethane and propane production due to tariff impacts and market adjustments, with potential price declines for both commodities [26][57]. - US ethane prices have already dropped by 25% since early April, while propane prices have decreased by 20% following tariff announcements [57][58]. - The long-term outlook suggests that lower US NGL production may offset some tariff impacts on petrochemical demand in China [2][60].

Investment Rating - The report maintains a "Sell" rating for Huayou Cobalt with a revised target price of Rmb27.00, indicating a downside of 20.2% from the current price of Rmb33.82 [1][2]. Core Insights - Huayou Cobalt reported a net profit of Rmb4.2 billion for 2024, reflecting a 24% year-over-year increase, primarily driven by higher profits from nickel and lithium [1][20]. - The company is facing challenges in the ternary battery materials market, with market share declining to below 20% in Q1 2025 from 27% in 2024 and 32% in 2023, leading to lower shipments and margins [2][31]. - The earnings outlook remains cautious due to depressed prices for lithium, nickel, and cobalt, which are expected to cap earnings improvements [2][31]. Financial Summary - Revenue for 2024 is estimated at Rmb60.5 billion, down 8% from 2023, with a gross profit of Rmb10.1 billion, up 12% year-over-year [28]. - The earnings per share (EPS) for 2024 is reported at Rmb2.50, a 22% increase from the previous year [28]. - The company declared a cash dividend of Rmb0.50 per share, with a payout ratio of 23%, significantly lower than the 69% in 2023 [1][28]. Earnings Estimates - Recurring earnings estimates for 2025-2026 have been revised upward by 44-55% due to higher refined nickel sales volume and lower costs for lithium [2][31]. - The projected EPS for 2025 is Rmb1.89, down from the previous estimate of Rmb1.79, reflecting ongoing market challenges [2][28]. Market Dynamics - The ternary battery materials market is expected to continue facing pressure, with increased competition and declining unit profits anticipated [31]. - The report highlights that Huayou's earnings are likely to remain depressed in 2025 due to weak prices for nickel, cobalt, and lithium [31]. Valuation Analysis - A bottom-of-the-cycle valuation analysis suggests a theoretical valuation range of Rmb7.8 to Rmb14.1 per share for Huayou, compared to the current share price of Rmb33.8 [2][31]. - The report's sum-of-the-parts (SOTP) valuation methodology indicates a valuation of Rmb22.7 per share for the battery material business [26][32].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies. Core Insights - Overall demand trends in the data center industry are positive, with companies engaged in projects extending several years into the future [2][3] - Densification of compute and liquid cooling are key elements driving design engagements, with rack power expected to rise significantly [2] - The sustainability of current demand strength is debated, with a need for new AI applications to utilize future capacity [3] Company Summaries - **NVT**: Focuses on liquid cooling solutions, including air-to-liquid and liquid-to-liquid systems, with strong demand visibility for the next two years [6] - **CARR**: Plans to roll out a 1 MW cooling product by year-end, with data center revenue expected to double from $500 million to approximately $1 billion [7] - **Motivair Corp**: A leader in liquid cooling, with expansion plans beyond North America and strong demand, booking orders through 2029 [12][14] - **VRT**: Discussed its 2.3 MW liquid-to-liquid CDU, with strong interest driven by AI training needs [13] Industry Trends - The shift from general-purpose cloud to purpose-built AI infrastructure is evident, with a focus on high-density AI factories requiring full liquid cooling [8] - The trade-off between efficiency and flexibility is highlighted, as tighter chip clustering for AI reduces future data center flexibility [8] - New AI applications are necessary to utilize the significant capacity implied by NVDA's backlog [8]

Investment Rating - The report maintains a Buy rating on AMZN, SHOP, and CHWY, indicating confidence in their resilience compared to other eCommerce stocks [24][7]. Core Insights - The digital consumer is perceived as resilient but is showing signs of slowing in Q1 operating trends, with expectations for the upcoming earnings season to reflect this dynamic [2][19]. - There is a downward risk to operating estimates in Q2 and beyond due to higher global tariffs, which could negatively impact consumer demand and gross margins for exposed platforms [2][21]. - The report revises the 2025 US eCommerce growth forecast down to +6% YoY from +7.5%, reflecting lower GDP growth expectations [2][24]. Summary by Sections Ratings, Stock Price Performance and Street Estimate Revisions - AMZN's 12-month price target is revised to $255 from $220, with a current price of $173, indicating a 27% upside [7]. - SHOP's price target is adjusted to $150 from $130, with a current price of $84, showing a 55% upside [7]. - CHWY maintains a price target of $45, with a current price of $35, reflecting a 28% upside [7]. Where is the Digital Consumer Today? - The report suggests that the digital consumer remains resilient, but there is a notable slowdown in travel trends and discretionary eCommerce goods [19][20]. - Investor fears have been more anticipatory, reacting to data points from other industries and soft consumer confidence [19][20]. Downside Analysis: What Could Happen to eCommerce Estimates? - The report highlights that eCommerce could decelerate by as much as -10 percentage points in a recession scenario, starting from a revised baseline of +6% YoY growth in 2025 [47][46]. - The analysis provides downside scenario analyses to help investors understand potential risks to estimates in more negative scenarios [46][22]. Refreshing the US eCommerce Industry Model - The report updates the US eCommerce model, reducing growth forecasts due to macroeconomic headwinds and structural views [2][24]. - The analysis indicates that eCommerce stocks face a higher risk of downward estimate revisions compared to the average company in the Internet coverage [23][24]. Key Industry Trends and High-Frequency Data Heading Into Q1 Earnings - The report discusses the impact of tariffs on consumer goods, suggesting that they could accelerate the shift of consumers towards services, benefiting sectors like experiences, travel, and mobility [23][24]. - It emphasizes the importance of diversifying sourcing to mitigate tariff impacts, particularly for companies like AMZN [54][56].

Investment Rating - The report indicates a modest increase in infrastructure investment growth, projecting an increase of 8.5% year-on-year in 2025, compared to 7.2% in 2024 [3][45]. Core Insights - Despite a solid annualized growth rate of around 7% in official infrastructure investment, domestic demand for steel and cement has remained sluggish, primarily due to the unprecedented downturn in the property sector [3][4]. - The shift in infrastructure investment priorities towards utilities and new infrastructure has reduced the marginal impact on steel and cement demand, although this impact appears minor for the post-Covid years [3][10]. - Concerns regarding the quality of fixed asset investment (FAI) data have resurfaced, with discrepancies noted between implied cement demand and official output data [3][36]. Summary by Sections Infrastructure Investment Trends - Infrastructure investment has increased by 40% in nominal terms and 27% in real terms compared to 2021, while steel and cement outputs have decreased by 2% and 17% respectively [5][11]. - The prolonged downtrend in property construction has led to a significant divergence between infrastructure and property investment growth since 2022 [11][19]. Structural Factors - The report identifies the property downturn as a major factor offsetting the boost from infrastructure stimulus to steel and cement demand [10][17]. - The marginal impact of infrastructure investment on commodity demand is estimated to be lower than that of property investment, with RMB 100 in property investment boosting ferrous metals value-added by RMB 4.5, compared to RMB 3.3 from infrastructure investment [17][20]. Future Projections - Infrastructure investment growth is expected to increase modestly in 2025, while property investment is projected to remain depressed at -10.0% year-on-year [45]. - A meaningful rise in commodity demand may require a recovery in property construction, which appears unlikely in the near term [45].

Investment Rating - The report indicates a 45% probability of a US recession over the next 12 months, suggesting a cautious investment stance in the current macroeconomic environment [1]. Core Insights - The report highlights a significant tariff-induced impact on US growth, with expectations of a slowdown in hard data by mid-to-late summer, following initial signs of weakness in soft data [1][2]. - Despite recent market reassurances from political figures regarding tariffs, the report suggests that markets are underpricing recession risks, which could lead to vulnerabilities if recession signs emerge [2]. - The report emphasizes the need for investors to seek alternative hedges against recession risks, recommending traditional safe havens such as the Yen, Swiss Franc, and gold [3][6]. Summary by Sections US Economic Outlook - The report anticipates a sizable tariff-induced hit to US growth, with a notable risk of recession [1]. - It notes that while soft data shows early signs of slowdown, hard data remains solid for now, likely due to front-loading of purchases ahead of tariffs [1]. - A full-blown recession could push the S&P 500 to around 4,600 and significantly impact the commercial real estate market [2]. China Economic Outlook - The report discusses China's economic performance, indicating that Q1 GDP growth may reflect frontloading in anticipation of US tariffs, with expectations of a significant drag from higher tariffs going forward [9]. - It predicts that Chinese policymakers will intensify easing measures, but the magnitude may not fully offset the tariff drag, leading to a sharp slowdown in GDP growth in Q2 [9]. Commodity and Market Insights - The report highlights the potential for a 25% tariff on US copper imports by mid-2025, which the market is not currently pricing in [9]. - It suggests that despite reduced attractiveness of bonds as hedges, shorter-maturity USTs and curve steepeners could provide protection in a recession scenario [6].

Investment Rating - The report provides a "Buy" rating for several companies in the basic materials sector, indicating a positive outlook for their stock performance [11]. Core Insights - The report highlights a deceleration in the downstream order book trend, with feedback from producers indicating a softening in end-user demand, particularly in sectors like solar, EV, and battery [1][5]. - Infrastructure and project funding improvements have also slowed, impacting demand for cement and construction materials [1]. - There is a noted increase in demand from the state grid for copper and aluminum, while demand for appliances and solar installations has shown early signs of weakness [1][4]. Summary by Sections Downstream Demand - The month-over-month (MoM) trend for the order book has softened, with 20% of respondents reporting a pickup in April for downstream sectors and 50% for basic materials, while 47% and 19% reported a decline [5]. - Current Chinese demand for cement and construction steel is estimated to be 2-3% lower, while metals show a year-over-year increase of 0-6% [4]. Steel Sector - The steel sector presents a stable picture, with margins and pricing remaining stable for steel, cement, and coal, while aluminum, copper, and lithium have softened [4]. Coal Sector - Weak demand persists in the coal sector, with ongoing challenges affecting pricing and margins [11]. Cement Sector - Cement pricing remains sustained to offset soft shipment volumes, indicating resilience in pricing strategies despite demand challenges [11]. Aluminum and Copper - The report notes a production cut in alumina and tighter scrap supply for copper, which may influence future pricing and availability [11]. Lithium Market - The lithium market continues to experience a surplus, which could impact pricing dynamics in the near term [11]. Paper Packaging - Seasonal demand is expected to pick up due to downstream restocking activities, providing a potential boost to the paper packaging sector [11].