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].

Investment Rating - The report assigns a "Buy" rating to Xiaomi Corp. with a 12-month target price of HK$59, representing a 43% upside potential from the current price of HK$41.25 [1][17][49]. Core Insights - Xiaomi's EV factory Phase II is ready for production, with trial production expected to commence soon, indicating strong execution in EV manufacturing capacity [1]. - The company has shown robust sales momentum in China, particularly in smartphones, with a 40% year-over-year growth in Q1 2025, leading to a market share increase to 18.6% [2][50]. - Despite macroeconomic uncertainties, Xiaomi's revenue from China is expected to offset some overseas revenue challenges, particularly from US tariff impacts [16][50]. Summary by Sections EV Manufacturing - Phase II of the Xiaomi EV factory in Beijing has received approval and is expected to start trial production soon, aligning with management's timeline for the YU7 launch in June-July 2025 [1][19]. - The SU7 order volume has normalized post the SU7 Ultra release, and the additional capacity from Phase II is anticipated to meet rising consumer demand [1][29]. Smartphone Performance - Global smartphone shipments grew by 1% year-over-year in Q1 2025, with Xiaomi maintaining a stable market share of 14% and achieving 41.8 million shipments [2][40]. - In China, Xiaomi's smartphone shipments surged by 40% year-over-year, significantly outperforming the industry average of 3% growth [2][41]. Financial Projections - Revenue forecasts for Xiaomi have been adjusted, with expected revenues of RMB 365.9 billion for 2024 and projected growth to RMB 714.8 billion by 2027 [4][14]. - The report anticipates a 17% year-over-year growth in smartphone revenue for Q1 2025, driven by higher average selling prices [2][12]. Market Position and Strategy - Xiaomi is positioned as the world's third-largest smartphone brand and is expanding its ecosystem through a "Human x Car x Home" strategy, which is expected to drive significant revenue and EPS growth in the coming years [50]. - The company is leveraging its strong balance sheet and operational capabilities to enhance competitiveness in the EV market [50].

17 April 2025 | 4:13PM HKT Navigating China Internet: Top 400 app tracker: stable March engagement trends; solid AI & video momentum China's top 400 mobile apps maintained the prior month's momentum with total time spent up +7% yoy in March 2025 (vs. +5% in Feb 2025), with solid Weixin time spent growth (+8% yoy) and strong Douyin app engagement performance (main app +23% yoy/Lite +19% yoy), softer eCommerce time spent +1% yoy, while games' time spent increased by +3% yoy in Mar, according to QuestMobile da ...

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies Core Insights - Investor concerns regarding ADR de-listing risks have resurfaced due to escalating US-China trade tensions and regulatory risks highlighted by the America First Investment Policy [1][9] - The US-China trade tensions have reached unprecedented levels, with effective US tariffs on Chinese imports reaching 107% and Chinese tariffs on US goods at 144% as of April 2023 [9] - The US-China Relations Barometer indicates that bilateral frictions are at two-year highs, contributing to increased volatility in global capital markets [8][9] - The potential for US investors to liquidate approximately US$800 billion worth of holdings in Chinese stocks if banned from investing in Chinese securities has been highlighted [9] Summary by Sections ADR De-listing Risks - ADR de-listing risks have returned to the forefront due to regulatory gaps on audit inspections between the US and China, particularly under the Holding Foreign Companies Accountable Act (HFCAA) [11] - The SEC identified five Chinese stocks as Commission-Identified Issuers (CII) under the HFCAA in March 2022, leading to a significant drawdown in the ADR index [11] - The PCAOB and CSRC signed an agreement in August 2022 to allow PCAOB access to audit papers of Chinese ADRs, which has eased some concerns [11] Mechanisms for De-listing - De-listing can be voluntary or involuntary, with involuntary de-listing typically occurring faster and putting pressure on share prices [17] - Forced de-listing can be triggered by accounting fraud, non-compliance with HFCAA, US sanctions, or violations of Chinese regulations [17] - A simplified process for de-listing includes investors selling before the last trading day and potentially trading on the OTC market [17][20] Share Fungibility Mechanism - The share fungibility mechanism allows for the conversion between ADS and HK shares, which is effective for companies with dual primary listings or ADR/HK secondary listings [25] - The conversion process generally takes two business days, and no new shares are created during this process [25][24] Impact on Investors - US institutional investors currently hold around US$830 billion in Chinese stocks, with significant potential selling pressure if forced to liquidate [32][34] - Retail ownership in Chinese ADRs is estimated to be over US$370 billion, with companies having high retail ownership facing stronger selling pressures [32][34] - Passive investment vehicles like ETFs may be significantly impacted by ADR de-listing, particularly those with high exposure to ADRs without HK listings [43]

Investment Rating - The report indicates a positive outlook for China's economy, with Q1 GDP growth of 5.4% year-on-year, surpassing market expectations [2][10][20] Core Insights - China's Q1 GDP and March activity data exceeded expectations, driven by export frontloading in anticipation of higher US tariffs, with industrial production growth accelerating significantly [10][20] - Retail sales growth improved notably in March, supported by a surge in automobile and home appliance sales due to a consumer goods trade-in program [10][20] - The services industry output index also showed improvement, indicating a recovery in the services sector [15][20] - Fixed asset investment growth edged up, primarily due to increased infrastructure and manufacturing investments, although property investment remained weak [13][20] Summary by Sections GDP and Economic Activity - China's real GDP grew by 1.2% quarter-on-quarter in Q1, with year-on-year growth stable at 5.4%, above the market consensus of 5.2% [10][20] - The report anticipates a significant drop in sequential GDP growth in Q2 and low growth in H2 due to external shocks from increased US tariffs [20] Industrial Production - Industrial production growth accelerated to 7.7% year-on-year in March, driven by stronger-than-expected exports and increased output in the computer industry [12][20] - Sequentially, industrial production gained 0.8% month-on-month non-annualized in March [12][20] Fixed Asset Investment - Fixed asset investment growth rose to 4.3% year-on-year in March, led by infrastructure investment growth of 10.9% [13][20] - Manufacturing investment growth remained strong at 9.2%, while property investment continued to decline at -10.0% [13][20] Retail Sales - Retail sales growth increased to 5.9% year-on-year in March, significantly above market consensus, with notable improvements in online and offline sales [14][20] - Home appliance sales surged to 35.1% year-on-year growth in March, driven by the trade-in program [14][20] Services Sector - The services industry output index grew by 6.3% year-on-year in March, reflecting a recovery in the services sector [15][20] Property Market - Property-related activity remained subdued, with property sales volume growth improving slightly to -1.0% year-on-year in March [16][20] - New home starts and completions continued to decline significantly, indicating ongoing challenges in the property market [16][20] Labor Market - The nationwide unemployment rate edged down to 5.2% in March, with the youth unemployment rate showing structural pressures [19][20]

14 April 2025 | 7:31AM HKT China Strategy Self-help is the best defense The Tariff Pandora's box has been opened US-China trade tensions have soared to unprecedented levels, prompting concerns about global recession, and decoupling risks between the two largest economies globally in other strategic cohorts, notably capital markets, technology, and geopolitics. Our US-China Relations Barometer, a gauge of multi-faceted bilateral frictions per market pricing, is at 2-year highs. Lower fair values, but higher ...

13 April 2025 | 7:32PM EDT Goldman Sachs Oil Analyst 18.7 19.2 18.3 18.3 20.0 19.5 19.0 18.5 18.0 17.5 17.0 16.5 20.0 19.5 19.0 18.5 18.0 17.5 17.0 16.5 18.0 16.0 16.0 New Balance Mar 16 Balance Baseline Growth, Global Slowdown, OPEC 2.2mb/d Unwind OPEC Baseline Global Slowdown, OPEC 2.2mb/d Unwind US Shale (L48 Crude and Total NGL) Production in Q4 2026 mb/d mb/d US Shale Production in 2026Q4 Would Undershoot Our Mid March Forecast by 1.2mb/d in a Scenario With a Global Slowdown and Where OPEC Unwinds All ...

13 April 2025 | 6:39PM HKT China: Three things in China Three quick highlights from China: n Cutting GDP forecasts on higher tariffs: With the US effective tariff rates on Chinese goods shooting up to more than 100%, Chinese exports to the US are likely to decline dramatically. We expect policymakers to step up easing efforts significantly and have raised our estimate of the "augmented fiscal deficit" to 14.5% of GDP from 13.8%. That said, we think achieving the government's "around 5%" GDP growth target th ...