Investment Rating - The report maintains a "Buy" rating for TSMC (2330.TW) with a 12-month price target of NT$1,190.00, indicating a potential upside of 40.5% from the current price of NT$847.00 [1] Core Insights - TSMC's 2025 outlook is better than previously feared, with the company maintaining its full-year revenue and capex guidance despite concerns over potential end demand slowdown due to tariffs [2][19] - The company has not engaged in discussions regarding joint ventures or technology transfers, alleviating investor concerns that have affected valuations [2] - There are incremental negatives regarding gross margin (GM) guidance, with expectations of GM dilution widening to 3-4 percentage points due to overseas expansion and inflationary pressures [3][21] Revenue and Earnings Forecast - Revenue projections for TSMC are as follows: NT$2,894.31 million for 2024, NT$3,655.51 million for 2025, NT$4,192.55 million for 2026, and NT$5,035.09 million for 2027, reflecting a growth rate of 33.9% in 2024 and 26.3% in 2025 [6][18] - EPS estimates are NT$45.25 for 2024, NT$59.07 for 2025, NT$66.09 for 2026, and NT$78.06 for 2027, with a projected EPS growth of 39.9% in 2024 and 30.5% in 2025 [6][18] Margin and Profitability - The report indicates a slight decrease in GM forecast for 2027, revised down to 57.1% from 57.8%, due to higher operational costs and inflation [3][21] - EBITDA margins are projected to be 68.6% in 2024, 67.9% in 2025, and 68.8% in 2026, with net income margins expected to be 40.5% in 2024 and 41.9% in 2025 [13][18] Market Position and Competitive Landscape - TSMC's market capitalization is NT$22.0 trillion (approximately $675.7 billion), with an enterprise value of NT$20.1 trillion (approximately $618.7 billion) [5] - The company is ranked third in M&A within the semiconductor industry, indicating a strong competitive position [5] Capital Expenditure and Investment Strategy - TSMC's capex guidance for 2025 is set between US$38-42 billion, reflecting ongoing investments to meet robust demand, particularly in AI-related sectors [19][36] - The company is accelerating its expansion in the US, with plans to build multiple wafer fabs and advanced packaging facilities to cater to US-based customers [37]

Investment Rating - The report maintains a positive outlook on the semiconductor industry, particularly in advanced packaging, driven by increasing demand from AI and high power chips [2]. Core Insights - There is a growing demand for advanced packaging tools, with management indicating that both non-China and China clients are expanding their capacities, benefiting the business growth of Capcon [9][10]. - Capcon's competitive edge lies in its ability to provide tools with higher throughput, enhancing manufacturing efficiency and profitability for clients [10]. - The adoption of Fan-out Panel-level Packaging (FOPLP) technology is expected to increase, particularly with glass substrates, which are cost-effective and perform well in heat dissipation [11]. Company Profile - Capcon Semi is an equipment manufacturer specializing in semiconductor advanced assembly and packaging, offering products such as Flip-Chip Bonder and Multi-Chip Die Bonder. Key clients include ASE, TSMC, and JCET [3].

Investment Rating - The report maintains a generally positive outlook on the Chinese healthcare sector, indicating that the tariff impact is manageable for covered companies [2][3]. Core Views - The report highlights that while US tariffs on pharmaceuticals are currently exempt, there is an expectation of future tariffs that could affect generic drug and API exporters [2][12]. - The analysis suggests that domestic players in the MedTech sector are better positioned due to their limited exposure to US markets and ongoing local manufacturing efforts [2][17]. - The report emphasizes the potential for domestic innovative players to benefit from the tariff environment, as multinational corporations may face margin erosion in China [15][18]. Summary by Segment Pharmaceuticals - Pharmaceuticals are currently exempt from US tariffs, but risks remain as future tariffs could be imposed [12][15]. - Companies like Hepalink and Luye are expected to face revenue impacts due to their exposure to US tariffs, with estimated changes in 12-month target prices ranging from -5% to -13% [3][15]. - The report notes that most Chinese pharma companies have limited exposure to the US market, with only a few API companies significantly affected [12][13]. Biotech - The biotech segment is expected to experience limited impact from US tariffs, with a focus on license-in and license-out strategies [14][15]. - Companies like BeiGene and Legend Biotech have developed local-to-local supply strategies to mitigate tariff risks [29][30]. - Sensitivity analysis indicates that the average change in 12-month target prices for biotech companies could range from -1% to -7% due to tariff impacts [32]. MedTech - The MedTech sector is primarily focused on emerging markets, which limits the impact of US tariffs [17][24]. - Companies such as United Imaging and AngelAlign are building local manufacturing capabilities in the US to navigate tariff challenges [17][24]. - The report anticipates manageable cost increases for high-end medical equipment due to tariffs, but overall impact on MedTech companies is expected to be limited [19][24]. CDMO - The report indicates that CDMO players can generally pass through increased costs to their pharmaceutical and biotech clients, mitigating the impact of tariffs [20][26]. - Sensitivity analysis suggests that COGS could be affected by 0.1% to 6.8% depending on the ability to pass through costs [20][26]. - The overall impact on CDMO companies is expected to be manageable, with upstream suppliers having multiple manufacturing sites to mitigate tariff risks [20][26]. Healthcare Services - Healthcare service providers are expected to experience very limited impact from US tariffs, as many can switch to alternative suppliers [21][24]. - Companies like Jinxin and Aier have noted that a low proportion of their consumables are sourced from the US, allowing for flexibility in procurement [21][24]. - The report concludes that the overall demand for healthcare services remains relatively inelastic, minimizing the impact of cost changes [26].

Investment Rating - The report maintains a "Buy" rating for HG Tech with a 12-month target price of Rmb54, indicating an upside potential of 43.9% from the current price of Rmb37.53 [11]. Core Insights - The significance of the 1Q25 earnings report is to alleviate concerns regarding the profitability of optical transceivers for domestic customers in China, with a pre-announced net profit range of Rmb390 million to Rmb440 million, translating to a 43% year-over-year increase [1][2]. - The strong profit forecast is attributed to the ramp-up of 400G optical transceivers driven by demand from China's cloud companies and equipment OEMs, suggesting a positive outlook for the company's performance in subsequent quarters [2]. - HG Tech is positioned as a key beneficiary of China's AI infrastructure investment, with limited exposure to tariff risks due to minimal sales to the US [3]. Revenue Mix and Market Segments - In 2024, the revenue mix for HG Tech is projected as follows: 30% from laser tools, 34% from networking (including optical transceivers), 31% from sensors, and 5% from other segments [8]. - The automotive market accounts for 60% of the revenue from sensors, with significant growth in orders for EVs (33% YoY) and shipbuilding tools (134% YoY) [8]. Future Outlook - The report anticipates ongoing product mix improvement in transceiver sales, particularly with the introduction of more 400G and 800G products, which is expected to drive margin expansion [2][9]. - Key questions for the upcoming earnings conference include the drivers behind the rebound in optical transceiver sales, progress on new products in the laser segment, and the outlook for 800G adoption in the China market [4].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The Trump Administration's tariff policies have led to significant uncertainty in the US economic outlook, raising fears of a potential recession [3][28] - Economists express differing views on the likelihood of a recession, with some predicting a 45% probability of recession within the next 12 months due to the impact of tariffs on growth [9][56] - The effective US tariff rate is expected to rise by approximately 16 percentage points this year, contributing to a forecasted real GDP growth of only 0.5% for 2025 [9][56] Summary by Sections Interviews with Economists - Paul Krugman emphasizes that the uncertainty surrounding tariff policies, rather than the tariffs themselves, poses a significant risk for recession [29][40] - Jan Hatzius notes that while the hard data remains solid, soft data indicates a concerning outlook, with a potential 2 percentage point hit to growth from tariffs [56][60] - Oren Cass argues that the trade policies could lead to better long-term economic outcomes despite short-term costs [93][94] Market Vulnerability - The report assesses that markets are quite vulnerable to recession risks, particularly due to the uncertainty surrounding tariff policies [4][33] - Concerns about a financial crisis arising from tariff-induced economic conditions are acknowledged, but the current banking system is viewed as healthier compared to previous crises [32][66] Economic Forecasts - The report revises the US growth forecast down to 0.5% for 2025, with a 45% chance of recession within the next year due to the impact of tariffs [9][56] - The report highlights that the uncertainty from tariff policies is affecting business investment decisions, leading to a potential slowdown in economic activity [30][61] Recommendations for Investors - Investors are advised to consider traditional safe havens such as the Yen, Swiss Franc, and gold, as well as regional and style diversification to hedge against recession risks [34][68] - The report suggests that monetary policy adjustments, including potential rate cuts, could help stabilize the economy if recessionary conditions emerge [68][69]

Investment Rating - The report maintains a "Buy" rating for Zai Lab (ZLAB) with a 12-month price target of $53.91, indicating an upside potential of 82.5% from the current price of $29.54 [10][11]. Core Insights - The competitive landscape for generalized Myasthenia Gravis (gMG) treatment is evolving, particularly with the positive Phase 3 results of telitacicept, which has implications for Zai Lab's efgartigimod [1]. - Efgar's competitive profile is highlighted by its quick treatment onset and durable symptom improvement, making it a favorable option for refractory gMG patients [1][4]. - Zai Lab is transitioning from a licensing-in model focused on China to a dual engine model that includes in-house development and global opportunities, which is expected to enhance its R&D progress [9]. Summary by Sections Competitive Landscape - The report discusses the competitive dynamics in gMG treatment, noting that while telitacicept shows deep patient response, efgar demonstrates quicker symptom relief, which is crucial for patient adoption [4][8]. - The treatment duration is a significant differentiator, with efgar accumulating clinical evidence for long-term usage, while RC18 is positioned as a long-term maintenance therapy [4][5]. Clinical Data Comparison - Efgar shows a mean change of -5.13 in MG-ADL score at week 21, compared to RC18's -5.74 at week 24, indicating efgar's quicker onset of symptom improvement [9]. - The report emphasizes the variability in placebo profiles across clinical trials, suggesting caution in cross-trial comparisons [8]. Market Position and Future Outlook - Zai Lab's efgar is positioned favorably due to its two-year lead in NRDL coverage and endorsements from clinical guidelines in both China and the US [8]. - The report anticipates that Zai Lab's global pipeline will attract more market interest starting in 2025, as the company becomes more selective in its licensing deals [9].

Investment Ratings - The report initiates coverage on Huaqin and Lingyi with a Buy rating, and Inspur is rated Neutral [1][54]. Core Insights - The China AI servers supply chain is expected to be driven by increasing demand from the domestic market, with China Cloud capital expenditures projected to grow at 26% year-over-year in 2025 and maintain a similar high level in 2026 [1][27]. - Huaqin's net income is anticipated to grow at a CAGR of 22% from 2025 to 2027, while Inspur and Lingyi are expected to see net income growth of 17% and 31% CAGR, respectively, during the same period [2][54]. - The report highlights the competitive landscape, noting that Huaqin's strengths include extensive experience in smartphone ODM, strong R&D capabilities, and a highly automated production process [27][51]. Summary by Sections Huaqin - Huaqin is positioned as an ODM company with a diverse product range, including smartphones, PCs, and AI servers. The company is expected to benefit from increased Capex spending on AI servers and market share gains in legacy businesses [23][51]. - The 12-month price target for Huaqin is set at Rmb79.8, reflecting a target P/E multiple of 20x based on 2025E EPS estimates [26][52]. - Revenue is projected to grow significantly, with contributions from servers and wearables expected to rise to 29% and 7% by 2028, respectively [23][40]. Inspur - Inspur is recognized as a leading supplier of AI servers, with a focus on serving Chinese clients. The company is expected to experience net income growth at a CAGR of 17% from 2025 to 2027 [54]. - The 12-month price target for Inspur is set at Rmb53, with a current trading P/E of 21x for 2025 [54]. - Inspur's strong R&D capabilities and experience in the server market are highlighted as key advantages in capitalizing on the growing demand for AI servers [54]. Lingyi - Lingyi is expected to benefit from the rising demand for AI devices and changes in smartphone form factors, with a projected net income growth of 31% CAGR from 2025 to 2027 [2][54]. - The report initiates coverage on Lingyi with a Buy rating and a price target of Rmb9.4, indicating a 30% upside [1][54]. Market Dynamics - The report discusses the competitive dynamics within the AI server supply chain, emphasizing the importance of local foundation models and the potential for market share gains as local peers exit the market [27][51]. - The valuation of Huaqin, Inspur, and Lingyi is compared to the Taiwan AI servers supply chain, with Huaqin and Lingyi trading at higher multiples due to their growth prospects [3][19].

14 April 2025 | 5:45AM JST Asia Technology: Buy recommendations in the wake of smartphone/PC/other exclusions from reciprocal tariffs On April 11 (US time), the Trump administration announced that it would exclude certain electronic devices & components, including smartphones and PCs, from its reciprocal tariffs. Specifically, US Customs and Border Protection (CBP) announced that it would exclude smartphones, PCs, monitors, tablet PCs, the Apple Watch, and other electronic devices, as well as components suc ...

13 April 2025 | 10:18PM EDT Americas Technology: Hardware Tariff exclusions announced for several products incl. PCs, smartphones, servers BOTTOM LINE US Customs and Border Protection published guidance on Friday night (April 11) that provided exclusions to the reciprocal tariffs for 20 product categories including computers, servers, smartphones, switches and routers, solid-state drives, monitors, and flat panel TVs, and several semi & semi equipment products. This move appears to exempt these products fro ...

Investment Rating - The report maintains a generally positive outlook on the Chinese healthcare sector, indicating that the tariff impact is manageable for covered companies [2][3]. Core Views - The report highlights that while US tariffs on pharmaceuticals have been broadly exempt, there is potential exposure for generic drug and API exporters if tariffs are imposed [2][3]. - The analysis suggests that domestic players in the MedTech sector have limited exposure to US tariffs, with many focusing on emerging markets [2][3]. - The report emphasizes that the tariff situation is evolving, with significant implications for companies with US exposure, particularly in the pharmaceutical and biotech segments [2][3]. Summary by Segment Pharmaceuticals - Pharmaceuticals are currently exempt from US tariffs, but risks remain as tariffs may be imposed in the future [14][16]. - Companies like Hepalink and Luye are expected to face revenue impacts due to their exposure to US tariffs, with estimated changes in 12-month target prices ranging from -5% to -13% [16][24]. - The report notes that the majority of upstream supply materials for pharma companies are sourced domestically, limiting exposure to the 125% China tariff on US imports [16][24]. Biotech - Biotech companies generally have limited exposure to US tariffs, with significant license-in assets primarily sourced from the EU [16][30]. - The report indicates that BeiGene and Legend Biotech have some exposure to US tariffs, but their local-to-local supply strategies mitigate risks [16][30]. - Sensitivity analysis shows potential earnings impacts for companies like Zai Lab and Everest Medicines, with expected COGS increases of 3% to 11% due to tariffs [30][35]. MedTech - The MedTech sector is noted to have limited impact from US tariffs, as many companies are focused on developing markets [18][26]. - Companies like United Imaging and AngelAlign are building local manufacturing capacities in the US to mitigate tariff risks [18][26]. - The report highlights that high-end medical equipment may face cost increases due to China's anti-dumping investigations, but overall exposure remains low [18][26]. CDMO - The report indicates that CDMO players are primarily affected by commercial API projects, with costs likely passed on to pharmaceutical and biotech clients [20][21]. - Sensitivity analysis suggests that COGS could be affected by 0.1% to 6.8% if CDMOs can only pass through a portion of the increased costs due to tariffs [21][28]. - The overall impact on CDMO companies is manageable, with many having diversified supply chains to mitigate tariff risks [20][21]. Healthcare Services - Healthcare service providers report very limited impact from US tariffs, as many can switch to alternative suppliers [22][26]. - Companies like Jinxin and Aier noted that a low proportion of their consumables are sourced from the US, allowing for flexibility in procurement [22][26]. - The report emphasizes that the demand for healthcare services remains relatively inelastic, reducing the impact of potential cost increases [22][28].