20 May 2025 | 7:01AM CST China Property Weekly Wrap Week 20 Wrap - Transactions rebounded with more upbeat performance from export-oriented cities Key highlights for the week: Our tariff impact assessment (Exhibit 1 to Exhibit 4, more details on methodology) showcases more upbeat performance from export-reliant cities: 1) transaction: under web-registration metrics, the most export-reliant cities outperformed in primary (+26% wow in aggregated volume vs. flattish for rest cities) but lagged peers in seconda ...

Investment Rating - The report maintains a positive outlook on the eCommerce sector, with a recommendation for a dual-pronged stock picking approach focusing on domestic policy beneficiaries and defensive games [2][12]. Core Insights - April online retail growth was healthy at +6% year-over-year (yoy), consistent with the first quarter of 2025, despite softer overall retail sales [2][8]. - Anticipation of strong online retail growth in May due to the front-loading of the 618 shopping festival sales, which began mid-May [2][9]. - Positive outlook for the second quarter from eCommerce platforms like Alibaba and JD, with estimated revenue growth of +10% yoy for Alibaba and +14% yoy for JD in June [2][12]. - Resumption of direct air-shipment SKUs on the Temu US platform following the reduction of US trade tariffs on China [2][11]. Summary by Sections Online Retail Performance - April online retail goods GMV grew by +6% yoy, driven by strong performance in the consumption trade-in category [8][33]. - Overall retail sales growth was +5.1% yoy in April, below expectations, with notable growth in appliances at +39% yoy and communication devices at +20% yoy [8][32]. 618 Shopping Festival Insights - Key observations from the 618 shopping festival include extended sales periods, simplified discount structures, and collaboration with content platforms [9][12]. - Major platforms initiated sales earlier than the previous year, indicating a strategic shift to enhance consumer engagement [9]. eCommerce Platform Performance - Both Alibaba and JD reported strong first-quarter results, with Alibaba's CMR and Taobao-Tmall Group EBITA growth exceeding expectations [12][36]. - JD's management lifted its full-year growth targets, indicating confidence in its operational leverage and food delivery initiatives [12][36]. Mobile App Engagement - Total time spent on China's top mobile apps grew by +6% yoy in April, with eCommerce and gaming categories showing positive trends [2][13]. - JD's engagement growth was particularly strong, attributed to its aggressive food delivery initiatives [13][14]. Cross-Border eCommerce Trends - Temu has gradually resumed its full-entrusted direct air shipment model for select SKUs on its US site, following tariff reductions [11][12]. - The report anticipates further shifts in Temu's business model towards local warehouses for US and European markets [11][12].

Investment Rating - The report maintains a neutral investment rating with a focus on diversification in asset allocation and an overweight position in cash [7]. Core Insights - Investor concerns have shifted from growth to long-dated rates, with US 30-year rates nearing 5%, reflecting a trend towards higher yields [2]. - The report indicates that the US 10-year yield is expected to reach 4.5% and 30-year yields at 4.9% by the end of 2025, suggesting a less dovish policy path for central banks [2]. - The equity risk premium is currently low, and further increases in bond yields may negatively impact equities, especially given the ongoing fiscal concerns [7]. Summary by Sections Market Overview - Risky assets have shown recovery, with the S&P 500 up 5% week-over-week and Nasdaq up over 6.5% [1]. - Gold prices decreased by 5% week-over-week to around $3,200 per troy ounce [1]. Bond Market Dynamics - Long-dated yields are at multi-decade highs, with Japan and the UK experiencing significant increases [2]. - The report notes a negative correlation between equities and bonds, which may continue if bond yields rise further [2][7]. Asset Allocation Recommendations - The report suggests an overweight position in cash and a neutral stance on equities after a strong rally, anticipating headwinds from a slowdown in hard data [7]. - The credit team has shifted to a more neutral stance on credit quality, favoring EUR over USD [7]. Forecasts and Projections - The report projects that the US 10-year yield will stabilize around 4.5% and the 30-year yield at 4.9% by the end of 2025 [2]. - The report highlights a potential for increased bond term premia, which could further weigh on equities [7].

Investment Rating - The investment rating for Kweichow Moutai is "Buy" with a 12-month price target of Rmb2,017, indicating an upside potential of 27.7% from the current price of Rmb1,578.98 [8][10][19]. Core Insights - Kweichow Moutai's management expressed confidence in achieving a 9% year-on-year sales growth by 2025, supported by a diversified channel strategy and strong brand equity [2][6]. - The company has implemented a "4+6" channel layout to enhance consumer reach, consisting of 4 key direct sales channels and 6 wholesale channels [2][11]. - The product strategy focuses on maintaining pricing stability and a structured product portfolio, with Classic Feitian Moutai as the cornerstone [2][11]. - Long-term strategies include globalization efforts, with early progress noted in Southeast Asia and Japan, and targeting the younger generation through product and technological innovations [6][11]. - Kweichow Moutai has initiated share buybacks exceeding Rmb4 billion, aiming to fulfill its buyback commitment of Rmb3-6 billion soon, with plans for a new round of buybacks in progress [2][6]. Financial Targets and Strategies - The company aims for a sales growth of 9% year-on-year by 2025, supported by a diversified channel strategy and brand equity [2][6]. - The pricing system and product portfolio structure will remain stable, focusing on various product sizes and types, including cultural Moutai spirits and vintage collections [11]. - The management sees a rational spending sentiment emerging in the macro environment, which they believe will benefit leading brands during industry transitions [6][11].

19 May 2025 | 8:51AM EDT US Economics Analyst A Slightly Larger Tax Cut Still Won't Offset the Drag From Tariffs (Phillips) Jan Hatzius +1(212)902-0394 | jan.hatzius@gs.com Goldman Sachs & Co. LLC Alec Phillips +1(202)637-3746 | alec.phillips@gs.com Goldman Sachs & Co. LLC David Mericle +1(212)357-2619 | david.mericle@gs.com Goldman Sachs & Co. LLC Ronnie Walker +1(917)343-4543 | ronnie.walker@gs.com Goldman Sachs & Co. LLC Manuel Abecasis +1(212)902-8357 | manuel.abecasis@gs.com Goldman Sachs & Co. LLC Inv ...

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The ongoing impact of tariffs is significantly affecting global freight flows, with a notable shift in sentiment regarding trade with China [1] - A resurgence in trade with China is anticipated, particularly in retail and consumer goods, as shippers prepare for back-to-school and peak season [1] - Trade uncertainty continues to keep shippers in a cautious 'wait and see' mode, particularly regarding the impact of 30% tariffs on demand [4][10] Summary by Sections Weekly Data Observations - Year-over-year (YoY) laden container vessels from China to the US have decreased by -11.1%, showing a sequential increase of approximately 6% from the previous week [15] - TEU imports into the Port of Los Angeles are expected to surge by 16% sequentially next week, but forecasts indicate a potential drop of -41% in vessels two weeks out [4][10] - The report highlights the volatility of weekly data, suggesting that trends should be assessed over a multi-week basis [7] Trade Scenarios for 2025 - Two potential scenarios for 2025 are identified: a surge in pull-forward activity ahead of a 90-day tariff pause, or a slowdown in orders due to uncertainty [8] - The report suggests a shift towards the first scenario, complicating predictions for transport volumes and earnings [9] Container and TEU Trends - TEUs from China to the US have dropped to -7.1% YoY, improving from -17.5% the previous week, indicating a pause in activity after a surge in April [23] - The report notes that container rates remain flat despite expected demand increases from China, possibly due to an oversupply of ships [11] Port Activity and Freight Rates - Planned TEUs into the Port of Los Angeles were down -14% YoY, with forecasts indicating a sharp increase of 57% YoY next week, followed by a drop of -35% [42] - The report indicates that intermodal traffic on the West Coast was up 4% on average, reflecting front-loaded traffic from earlier weeks [51] Inventory and Economic Indicators - The Logistics Managers Index (LMI) shows upstream inventory expansion slowing to 57.6 in April from 58.9 in March, while downstream inventory expansion also slowed significantly [74]

Investment Rating - The report assigns a "Buy" rating for Xiaomi Corp. (1810.HK) with a 12-month target price of HK$62.00, representing an upside potential of 21.6% from the current price of HK$51.00 [1]. Core Insights - Strong sales in the AIoT segment are expected to drive higher profits in 1Q25, with significant growth in various product categories [1][2]. - The upcoming strategic product launch event is anticipated to unveil key innovations, including the XRING O1 chip and new premium smartphone models, which could enhance Xiaomi's competitive position [2][3]. - The report highlights Xiaomi's structural market share gains in China, particularly against competitors like Apple and Honor, despite a less optimistic overseas shipment outlook [3]. Financial Performance - Revenue forecasts for 2025-2027 remain largely unchanged, while adjusted net profit forecasts have been raised by 3-6% due to stronger IoT sales and gross profit outlook [17]. - For 1Q25, revenue is projected to grow by 45% year-on-year to RMB 109.5 billion, with adjusted net profit expected to increase by 70% year-on-year to RMB 9.4 billion [17]. Market Position and Growth - In the AIoT segment, Xiaomi's domestic sales of air conditioners, washing machines, and refrigerators saw year-on-year growth of 103%, 184%, and 145%, respectively, in 1Q25 [16]. - Xiaomi's tablet shipments grew by 57% year-on-year in 1Q25, achieving a No.3 market share globally and in China [16]. - The report anticipates that sales from large appliances and tablets will contribute approximately 40% of AIoT sales by 2027, up from around 30% in 2024 [16][37]. Valuation and Price Target - The 12-month SOTP-based target price for Xiaomi has been adjusted to HK$62, based on a 23x 2026E EV/NOPAT for Xiaomi core and a DCF-based valuation for Xiaomi EV at US$74 billion [18]. - The report indicates multiple share price catalysts in the coming months, including the strategic product launch event and 1Q25 results [19].

Investment Rating - The report maintains a "Buy" rating for JD.com Inc. with target prices of US$50 and HK$194, indicating a potential upside of 39.9% and 43.3% respectively [2][28]. Core Insights - JD.com is viewed as an under-appreciated differentiated business in the Chinese internet sector, benefiting from domestic consumption policies and category expansion, which are expected to drive valuation multiple expansion [2]. - The company reported its fastest quarterly active customer growth since 2021, achieving a 20% year-over-year increase in 1Q25, with strong double-digit growth across all categories [1]. - JD's food delivery service is seen as a synergistic extension of its retail business, with daily order volumes nearing 20 million, contributing to increased user engagement and retention [1][11]. - The company is committed to shareholder returns, having executed a cumulative US$1.5 billion in share repurchases year-to-date 2025, with an additional US$3.5 billion available under its three-year repurchase program [1][10]. Summary by Sections JD Retail Growth - JD Retail experienced a 20% year-over-year growth in active customers in 1Q25, with expectations for double-digit top line and profit growth throughout the year [1]. - The company anticipates a healthy trend during the 618 shopping festival while maintaining disciplined spending [1]. Food Delivery Business - JD views its food delivery service as integral to its retail strategy, enhancing user frequency and attracting new customers [1]. - The company aims to differentiate its food delivery service through quality offerings, rider benefits, and lower merchant charges, leveraging its logistics expertise [1][11]. Shareholder Returns - JD.com has executed a cumulative US$1.5 billion in share repurchases in 2025, with a remaining US$3.5 billion available until August 2027 [1][10].

Investment Rating - The report indicates a negative trend in the primary property market, with a weighted average property price decrease of 1.7% month-over-month annualized in April, and a year-over-year decline of 4.0% [2][6]. Core Insights - The divergence in property prices between top-tier and lower-tier cities continues, with Tier-1 cities experiencing a sequential increase in primary home prices, while Tier-2 and Tier-3 cities saw declines [6][10]. - Despite ongoing easing policies, the number of cities with sequentially higher property prices has decreased in both primary and secondary markets [6][10]. - The report emphasizes that the 70-city data pertains only to primary market transactions, with secondary market data indicating price declines of 5%-15% over the past year [6][10]. Summary by Sections Price Changes - The weighted average property price in the primary market fell by 1.7% month-over-month annualized in April, compared to a 2.0% decline in March [2][6]. - Year-on-year, the weighted average new home prices decreased by 4.0% in April, an improvement from the 4.5% decline in March [2][6]. City Tier Analysis - Tier-1 cities saw a sequential increase in property prices of 1.7% month-over-month annualized in April, up from 0.8% in March [6][10]. - Conversely, Tier-2 and Tier-3 cities experienced declines of 1.4% and 3.5% month-over-month annualized, respectively [6][10]. Market Dynamics - The report notes a 10% year-over-year decrease in new home transaction volume in major cities as of May [10]. - Policymakers have intensified housing easing efforts, including a recent 25 basis point cut on the housing provident fund mortgage rate, to counteract the property downturn [10].

Investment Rating - The report does not explicitly state an overall investment rating for the industry or specific companies covered Core Insights - The recent US-China tariff rollback is expected to benefit covered companies directly through reduced tariff costs and indirectly through lower inflation and potentially higher household cash flows [2][4] - The report anticipates that the 90-day window for tariff negotiations may lead to faster-than-expected export growth in Q2 and Q3 as Chinese OEMs resume production for US orders [4] - The report highlights that different companies will have varying impacts from the tariff changes, with OEMs likely to maintain profitability-focused strategies while brands may adopt divergent pricing strategies [6][10] Summary by Sections Tariff Rollback Impact - The US will reduce its tariff increase on China from 145 basis points to 30 basis points, while China will lower its effective tariff rate on US imports to around 30% [1][2] - The tariff rollback is larger than previously expected, leading to revised GDP forecasts for both the US and China [2] Company-Specific Impacts - Companies like Xinbao are expected to see faster revenue growth due to their leading position in the small appliances sector, while brands like Anker, Roborock, and Ecovacs may experience limited revenue changes in the current quarter but better growth in H2 2025 [6][21] - The report revises EPS forecasts for Anker, Xinbao, Roborock, and Ecovacs upwards by 2%-9% for 2025-2027, reflecting the alleviation of demand and margin pressures [21][23] Capital Expenditure and Production Strategies - Limited changes in CAPEX plans are expected in the near term due to ongoing uncertainty regarding future tariff rates [5] - Companies are likely to continue leveraging ASEAN countries for manufacturing, depending on future US tariff rates on the region [5] Share Price and Valuation - Share prices of covered companies rebounded after initial corrections, with major white goods companies expected to be least impacted due to diversified production bases [10][11] - The report notes divergent performance across sub-sectors, with some companies like Anker facing greater downside risks despite a rebound in share prices [11][20]