Investment Rating - The investment rating for Innolight is "Buy" with a 12-month price target revised to Rmb105 from Rmb115, indicating an upside potential of 32.7% from the current price of Rmb79.14 [13][20]. Core Insights - Innolight's 1Q25 net profit was Rmb1.58 billion, aligning with pre-announced expectations, while revenue was Rmb6.67 billion, which was 5% below expectations due to supply chain constraints [1]. - The gross margin (GM) improved to 36.7% in 1Q25, reflecting a 3.9 percentage points year-over-year increase and a 1.6 percentage points quarter-over-quarter increase, driven by better yield and product mix [1][2]. - The company anticipates a robust near-term outlook into 2Q25, supported by the commencement of 1.6T batch shipments and the ramp-up of 800G volume [1]. Summary by Sections Financial Performance - 1Q25 revenue was Rmb6.67 billion, indicating a 2% quarter-over-quarter growth, but the growth has slowed for three consecutive quarters [9]. - The company expects gradual improvement in supply constraints into 2Q/3Q25 as new supplier capacity comes online [9]. Margin Outlook - The gross margin has shown a consistent improvement over the past five quarters, with expectations for further upside in 2Q25 and 2H25 due to a favorable product mix and efficiency improvements [2]. - The ongoing increase in silicon photonics transceivers and the ramp-up of 1.6T transceivers, which have higher gross margins compared to the company average, are expected to contribute positively to margins [2]. Tariff Impact - Innolight's production base in Thailand allows it to mitigate tariff impacts, as transceiver shipments from Thailand to the US are exempt from tariffs, contrasting with shipments from China that face a 27.5% tariff [8]. - The company has established sufficient capacity in Thailand to meet US demand, which has significantly contributed to its revenue growth [8]. Future Projections - Revenue estimates for 2024, 2025E, and 2026E have been adjusted to Rmb23.86 billion, Rmb27.98 billion, and Rmb31.22 billion respectively, reflecting a downward revision due to slower shipment growth expectations [15]. - Net profit estimates have been revised upwards by 12% and 4% for 2025 and 2026E respectively, indicating a positive outlook despite revenue adjustments [12][15].

Investment Rating - The investment rating for Jiangsu Nhwa Pharmaceutical Co. is Neutral, with a 12-month price target of Rmb28, indicating an upside potential of 25.2% from the current price of Rmb22.37 [6][2]. Core Insights - Jiangsu Nhwa Pharmaceutical Co. is a leading manufacturer of psychiatric drugs and anesthetics in China, with growth drivers including the ramp-up of its licensed-in asset TRV-130 and newly approved generic drugs [2]. - The company's 1Q25 results showed revenue of Rmb1,511 million, representing an 11% year-over-year increase, and a net profit of Rmb301 million, up 13% year-over-year, which were in line with expectations [1]. - The report indicates that only 0.4% of the company's total revenue in 2024 was from overseas markets, with minimal exposure to the US market, suggesting limited tariff impact [1]. Financial Projections - Revenue projections for Jiangsu Nhwa Pharmaceutical Co. are as follows: Rmb5,697.6 million for 2024, Rmb6,531.9 million for 2025, Rmb7,513.2 million for 2026, and Rmb8,698.0 million for 2027 [6]. - EBITDA estimates are projected to be Rmb1,376.4 million for 2024, Rmb1,583.4 million for 2025, Rmb1,862.9 million for 2026, and Rmb2,206.4 million for 2027 [6]. - Earnings per share (EPS) estimates are Rmb1.13 for 2024, Rmb1.29 for 2025, Rmb1.50 for 2026, and Rmb1.77 for 2027 [6]. Key Catalysts - Important events to monitor include the ramp-up pace of TRV-130 and the potential for volume-based procurement (VBP) in anesthetics, which could impact the company's growth trajectory [2].

Investment Rating - The report indicates a mixed sentiment in the market, with significant foreign selling in EM Asia ex-China, particularly in Taiwan, Korea, and ASEAN, while India saw some buying activity [26][30]. Core Insights - Foreign Institutional Investors (FII) sold US$2.9 billion in EM Asia ex-China markets, with Taiwan leading the outflows at US$2.3 billion, followed by Korea at US$1 billion and ASEAN at US$0.9 billion. In contrast, India experienced inflows of US$1.3 billion [26][30]. - The Chinese National Team has increased its support for the A-share market, with approximately US$100 billion of buying via onshore ETFs in the second quarter to date [7][17]. - Southbound buying has moderated to US$3 billion week-to-date, but year-to-date, it has reached US$78 billion, indicating strong interest from mainland investors in HK-listed stocks [6][19]. Summary by Sections Foreign Selling and Buying Trends - EM Asia ex-China markets experienced FII selling of US$2.9 billion week-over-week, with Taiwan, Korea, and ASEAN seeing significant outflows [26][30]. - India was an exception, attracting US$1.3 billion in FII buying [26]. ADR Delisting Risks - US institutional investors hold around US$250 billion in Chinese ADRs, with an estimated 20% of these holdings potentially unable to trade in Hong Kong, which could lead to increased selling pressure on companies with high retail ownership [7][12]. National Team and Southbound Buying - The Chinese National Team has stepped up its buying efforts in the A-share market, contributing to a total of approximately US$100 billion in support through onshore ETFs [7][17]. - Southbound investors have been active, with cumulative buying reaching US$78 billion year-to-date, reflecting a growing representation in the HK market [19][21].

Investment Rating - The report maintains an "Overweight" (OW) rating for SANY Heavy Industry, indicating a positive outlook for the company's stock performance [3][5][13]. Core Insights - SANY Heavy Industry reported a strong fiscal year 2024, with a 32% year-over-year increase in net profit, reaching Rmb6 billion, and a significant surge in free cash flow (FCF) [2][5]. - The company's overseas revenue constituted 64% of total sales, reflecting a 12% year-over-year growth, with a gross profit margin (GPM) of 30%, significantly higher than the domestic GPM [3][6][12]. - SANY's strategic focus includes overseas expansion, electrification, and enhancing product intelligence, while addressing challenges such as tariff disruptions and domestic market changes [3][7][13]. Financial Performance Summary - In FY24, SANY's total revenue reached Rmb78.383 billion, a 5.9% increase from FY23, with a gross profit margin improvement to 26.7% [9][12]. - Operating cash flow hit an all-time high of Rmb15 billion, attributed to high-quality sales and favorable payment conditions, while capital expenditures were reduced by 36% year-over-year to Rmb3 billion [5][9]. - The net margin improved to 7.6%, up from 6.1% in FY23, driven by effective cost management and a positive product mix [2][5][9]. Strategic Initiatives - SANY is actively pursuing growth opportunities in emerging markets, particularly in Latin America, Asia Pacific, Africa, and the Middle East, with expectations for revenue growth exceeding 20% year-over-year in 2025 [6][7]. - The company launched over 40 electric products in 2024, generating Rmb4 billion in revenue from new energy products, which accounted for 5% of total revenue [7][12]. - SANY plans to enhance its product intelligence through increased R&D investment, focusing on integrating advanced technologies and leveraging AI for improved service offerings [7][12].

22 April 2025 | 12:06AM HKT Private Tech Tour 2025 review: Top 10 takeaways across advanced, new technology/ applications, and market demand check We hosted our China Private Technology Tour 2025 in Shanghai, Shenzhen, Guangzhou, and Hong Kong during April 14-17 with Founders and C-suite level speakers along with factory visits across 19 private companies in 8 segments: Allen Chang +852-2978-2930 | allen.k.chang@gs.com Goldman Sachs (Asia) L.L.C. Verena Jeng +852-2978-1681 | verena.jeng@gs.com Goldman Sachs ...

Larger Cap Refiners: What Are We Focused On Into EPS Results? In this note we update estimates for the US Larger Cap Refiners (MPC, VLO, PSX, DINO) ahead of 1Q25 earnings. Heading into the quarter, we are mindful of the tougher near-term setup where we note (a) softer global oil demand expectations, (b) tighter crude differentials with Brent-WTI tightening to $3/bbl (vs $5/bbl historical average) and WTI-WCS tightening to $9/bbl (vs $15/bbl historical average), and (c) depressed Renewable Diesel earnings. T ...

Investment Rating - The report upgrades Cambricon to a Buy rating with a target price of Rmb1,223, indicating a potential upside of 76% from the current price of Rmb695 [1][2]. Core Insights - Cambricon is experiencing a recovery in revenue growth, driven by a shift from intelligent computing cluster systems to cloud chips, which are expected to dominate its revenue stream. The company anticipates a revenue growth of 111% CAGR from 2025 to 2027, primarily due to the rising demand for cloud chips in the generative AI sector in China [1][2]. - The company is projected to turn profitable in 2025, with an EBIT margin expected to improve to 26% by 2030 [2]. Summary by Sections Revenue and Growth - In 1Q25, Cambricon's revenues increased by 12% QoQ, marking a significant recovery from a -90% QoQ decline in the same quarter over the past five years. Cloud chips contributed 99% of 2024 revenues, a substantial increase from 13% in 2023 [1][2]. - The forecast for total revenue is Rmb1,174.5 million in 2024, Rmb5,531.1 million in 2025, Rmb12,047.9 million in 2026, and Rmb24,703.5 million in 2027 [4][13]. Inventory and Demand - Inventory levels rose to Rmb2.8 billion in 1Q25, up from Rmb99 million in 2023, indicating strong demand for cloud chips. Raw material costs surged by 1,400% YoY in 2024, while finished goods inventory declined by 23% YoY [1][2][27]. - Contract liabilities, reflecting pre-orders, increased to Rmb1.4 million in 1Q25, up from Rmb0.3 million in 2023, signaling positive future growth prospects [1][2]. Research and Development - The number of R&D engineers increased from 727 in 1H24 to 741 in 2024, with revenue per R&D engineer rising to Rmb619, compared to Rmb381k in 2022 [1][2][17]. Financial Projections - The report anticipates a significant increase in net income, with projections of Rmb946.8 million in 2025, Rmb2,369 million in 2026, and Rmb5,014 million in 2027, reflecting a growth of 546% from previous estimates [30]. - EBITDA is expected to grow at an 80% CAGR from 2025 to 2030, with margins improving to 26% by 2030 [34]. Valuation - The target price of Rmb1,223 is based on a revised EV/EBITDA multiple of 49x for 2030E, reflecting a more conservative approach compared to previous estimates [35][37].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Household disposable income grew by 5.5% year-over-year in Q1 2025, slightly down from 5.6% in Q4 2024, while nominal consumption growth increased to 5.2% year-over-year from 4.5% in the previous quarter [3][4] - The labor market remained stable in Q1 2025, with urban unemployment rates increasing slightly, particularly in large cities [18][20] - The household savings rate decreased in Q1 2025, falling below pre-Covid trend levels, with estimated cumulative excess savings at RMB 3.0 trillion [32][39] - Consumer confidence showed a slight uptick but remained muted, reflecting ongoing economic uncertainties [46][48] Summary by Sections Income and Spending - Household disposable income growth decelerated to 5.5% year-over-year in Q1 2025, while nominal consumption growth accelerated to 5.2% [3][4] - Per capita household consumption growth accelerated to +9.3% quarter-over-quarter annualized in Q1, driven by increased spending on food, clothing, education, culture, and entertainment [3][11] Employment - The labor market was stable, with urban unemployment rates slightly increasing after seasonal adjustments [18][20] - The migrant worker population grew marginally in Q1 2025, and several provinces increased minimum monthly wages, providing a boost to household disposable income [24][28] Household Savings - The household savings rate fell below pre-Covid trend levels, with excess savings estimated at RMB 3.0 trillion [32][39] - There are RMB 52 trillion in excess deposits in household bank deposits, with growth remaining stable [35][41] Consumer Confidence - The consumer confidence index increased slightly in early 2025, supported by consumption-boosting measures and improved property sales in top-tier cities [3][46] - Significant divergence in residential population changes was noted across provinces, with Guangdong seeing the most growth and Shandong the largest decline [49][50]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report discusses the negative impact of US tariffs on emerging market (EM) economies, particularly in Asia, leading to downgraded growth forecasts across various EMs [3][44] - It identifies China, Malaysia, Mexico, Hungary, and Vietnam as the most exposed to tariff turmoil, while Russia, Ukraine, Turkey, Argentina, and Poland are likely to be less affected [6][36] - The report anticipates more monetary easing across EMs due to declining inflation and weak growth, with central banks expected to implement front-loaded easing policies [6][47] Summary by Sections EM Macro Navigator Overview - The publication provides an overview of themes, market trends, and events relevant to EM investors, assessing the impact of US tariffs on EM economies [3][9] - It includes country-by-country forecasts, with significant downgrades noted for smaller export-oriented economies in Asia [3][44] Impact of US Tariffs - The US announced significant tariff increases, including a 10% baseline increase and a 125% tariff on Chinese imports, leading to a 15 percentage point increase in the effective US tariff rate [8][9] - The report explores five channels through which tariffs affect EM economies: direct trade effects, trade diversion effects, uncertainty effects, financial conditions/liquidity, and commodity prices [10][22] Country-Specific Forecasts - In China, growth forecasts have been lowered to 4.0% in 2025 and 3.5% in 2026, with expectations of policy easing mitigating some impacts [6][46] - Mexico's growth forecast has been revised down from 0.0% to -0.5% in 2025, while significant cuts are noted for Czechia and Hungary due to their reliance on auto production [6][46] Financial Conditions and Monetary Policy - The report indicates a tightening of financial conditions in developed markets, while some EMs have experienced easing due to exchange rate depreciation [25][28] - EM central banks are expected to implement more aggressive rate cuts, with specific forecasts for countries like India, Mexico, and Chile [51][62] Commodity Price Effects - Oil prices have decreased by 15% to $64 per barrel since the tariff announcement, with further declines expected, impacting both oil-exporting and oil-importing countries differently [31][34] - The report highlights that lower commodity prices will have significant negative consequences for oil-exporting countries while benefiting oil-importers [31][34]

Investment Rating - The report downgrades L&T to Neutral from Buy due to expected capex deferral and maintains a Sell rating on Cummins and Thermax [2][47] - KEI is upgraded to Buy from Neutral as the risk-reward profile appears attractive [2] Core Insights - The report highlights a slowing growth environment for Indian Industrials amid tariff uncertainty, leading to deferrals in new factory capex and lower order inflows [1][7] - Revenue impacts of approximately 4-5% are anticipated for ports and logistics in FY26/27E, with a general expectation of lower earnings across the coverage [1][30] - The report revises earnings estimates downwards by an average of -1%/-4%/-6% for FY25E-FY27E [4] Summary by Relevant Sections Capital Expenditure and Growth - Capital expenditure in the private sector is expected to slow down due to tariff negotiations, leading to deferred projects and reduced order inflow for companies [7][30] - The report notes that while India’s GDP growth has historically been resilient to external shocks, the current tariff uncertainty may still impact container and port volumes [8][10] Sector-Specific Ratings - For ports and logistics, Adani Port is rated Buy, while Container Corp of India is rated Sell due to anticipated declines in container volumes [3][31] - In the cement sector, Ultratech is the only Buy recommendation, with concerns about excess capacity in 1HFY26 but resilience expected due to lower commodity prices [3][38] Electronic Manufacturing Services (EMS) - The report maintains a Sell rating on Dixon and a Neutral rating on Amber, citing that export opportunities will depend on global tariffs and costs [4][42] Cables and Wires - Cables and wire companies are expected to benefit from ongoing power and infrastructure capex in the near term, but growth may moderate in FY27E [2][31] - The report notes that India represents 2-3% of global C&W exports, indicating significant export potential [2] Overall Market Valuation - The report indicates that multiples for several capital goods and building material stocks have been cut to reflect a tougher operating environment [1][10] - The report suggests that while the Indian economy is relatively insulated from a US slowdown, the correlation between Indian equity markets and US markets remains strong [10][12]