Summary of Semiconductor Production Equipment Conference Call Industry Overview - **Industry**: Semiconductor Production Equipment - **Market View**: Attractive [2] Company Focus: Disco (6146) Sales and Shipments - **Q1 FY25**: Shipments of ¥101.1 billion, Sales of ¥82.7 billion - **Q2 FY25 Estimate**: Shipments of ¥100.9 billion, Sales of ¥85.6 billion - **Q2 FY25 Actual**: Shipments of ¥97.6 billion, Sales of ¥96.2 billion - **Q3 FY25 Estimate**: Shipments of ¥99.2 billion, Sales of ¥83.9 billion - **Sales Breakdown**: - Q1 FY25: Memory 32%, OSAT 28%, Power Si 5%, Power SiC 15%, Other 20% [3] - Q2 FY25: Memory 37%, OSAT 25%, Power 25%, Other 13% [3] Gross Profit Margin Trends - **GP Margin**: Trends show fluctuations from 55% to 75% across various quarters from FY19 to FY25 [25] Market Share - **Grinder Market**: Disco holds 82% of the global market share, with Tokyo Seimitsu at 12% and Okamoto at 6% [20] - **Dicer Market**: Disco has a 75% share, while Tokyo Seimitsu holds 14% [23] Technology and Production Insights HBM Production Capacity - **HBM Roadmap**: Details on die density, capacity, and bandwidth per stack for various HBM generations [7] - **Current Trends**: Focus on increasing memory bandwidth and production efficiency [10] Semiconductor Stacking Techniques - **Techniques**: CoC, CoW, and WoW methods discussed, highlighting their bonding accuracy, throughput, and yield [13] Business Opportunities - **Future Growth**: Anticipated growth in HBM and 3D-NAND markets, with Disco positioned favorably in grinder and wafer bonding markets [14][15] Valuation and Risks Valuation Methodology - **Target P/E Ratio**: 25.1x based on historical performance [27] Risks - **Upside Risks**: Growth in SiC equipment, recovery in smartphone and semiconductor markets [28] - **Downside Risks**: Sluggish global demand for electronics, longer replacement cycles for smartphones, and potential commoditization of SPEs [29] Conclusion - **Investment Recommendation**: Disco is rated as Overweight with a target price reflecting strong future earnings potential [49]

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J P M O R G A N Asia Pacific Economic Research 18 October 2024 China housing Lingering time inconsistency issues need a timely comprehensive package, recent efforts still marginal House price correction widened further, along with broad-based sluggishness in major housing activity indicators. The NBS 70 cities' new home prices were down 6.1%oya or 0.7%m/m nsa in September (-5.7%oya or 0.7%m/m nsa in August), and secondary home prices were down 9.0%oya or 0.9%m/m nsa (vs. -8.6%oya or 0.9%m/m nsa in August). ...

Tencent (0700) Overweight 0700.HK, 700 HK Identifying Tencent's alpha amidst the beta trade▲ Price (10 Oct 24): HK$438.80 Price Target (Dec-25): HK$520.00 Prior (Dec-24): HK$480.00 Tencent's share price underperformed ecommerce names in the recent round of the market rally (Tencent flat vs. Alibaba +2%, PDD +5% and JD +8% in the past two weeks) as investors added exposure to a potential macro recovery theme, in our view. Admittedly, Tencent's earnings are driven more by non-cyclical operations (i.e. digital ...

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October 13, 2024 11:07 PM GMT M Foundation Investor Presentation | Asia Pacific China's Fiscal Package: Part 1 Morgan Stanley Asia Limited Robin Xing Chief China Economist Robin.Xing@morganstanley.com +852 2848-6511 Zhipeng Cai Economist Zhipeng.Cai@morganstanley.com +852 2239-7820 Trillion-dollar Fiscal Pivot: Part 1 - Debt Restructuring Begins (13 October 2024) Launching the "Sentiment Tracker" (7 October 2024) For important disclosures, refer to the Disclosure Section, located at the end of this report. ...

October 13, 2024 03:10 AM GMT M Update HK/China Transportation & Infrastructure | Asia Pacific Week in Review (Issue 41-24) Week in review: 3Q24 prelims from CSH and OOIL; J&T 3Q24 operation update; 2024 National Holiday express and pax volume; investor presentation on China Express Tech Diffusion 3Q24 Prelims from CSH and OOIL: CSH's 3Q24 recurring net profit was Rmb21.2bn, +288.57% YoY, largely in line with our expectations. Implied 3Q24 minority interest was Rmb2.8bn, +250% YoY, vs. Rmb1.5bn in 2Q24, tha ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **European Metals, Mining & Steel** industry, particularly analyzing trends in **China's metal inventories** including steel, iron ore, copper, aluminum, and zinc [1][2]. Core Insights and Arguments - **Steel Production and Demand**: - China experienced the largest increase in weekly steel output of 2024, with steel rebar demand surging by **33%** in the last week [1][2]. - Domestic steel consumption increased by **11%** week-over-week (WoW), although total steel demand remains **-4%** year-over-year (YoY) [2][8]. - Preliminary data indicates a **1%** increase in steel production WoW, but a **6%** decrease YoY [2]. - **Steel Prices and Profitability**: - Steel prices in China have rallied by **15-20%** over the past four weeks, leading to the highest margins for steel mills in approximately two years [2][8]. - Blast furnace utilization increased by **2 percentage points** to **87.5%**, the highest since early August, which is atypical for Q4 [2]. - **Iron Ore Arrivals**: - Landed iron ore arrivals in China decreased significantly by **29%** WoW, amounting to an **8 million ton** drop [2][4]. - Global iron ore shipments also fell by **12%** WoW [2]. - **Copper and Aluminum Trends**: - Copper inventories saw a **15,000 ton** increase after a prolonged de-stocking period, with visible copper inventories dropping to approximately **215,000 tons**, the lowest since January 2024 [9]. - Aluminum prices bounced back by **7%** following strong de-stocking trends, although the pace of de-stocking slowed recently [10]. - **Overall Metal Inventory Trends**: - Total steel inventories in China fell by **3%** WoW and are down **17%** since the beginning of August, reaching their lowest level year-to-date at **10.1 million tons** [8]. - The report indicates that physical stocks could rise quickly if positive sentiment and improved margins lead to a surge in steel output [2]. Additional Important Insights - **Seasonal Trends**: - The report notes that seasonal patterns typically see high levels of metal inventory mid-year, followed by significant de-stocking in Q3/Q4 [9]. - **Future Price Forecasts**: - J.P. Morgan Commodities Research forecasts copper prices to reach **$11,000 per ton** in Q2 2025 and **$11,500 per ton** in Q3 2025, approximately **15%** above current spot prices [9]. - Aluminum is projected to be around **$2,750 per ton** in 2025 [10]. - **Market Sentiment**: - The report emphasizes the importance of market sentiment and economic stimuli in influencing inventory levels and production rates in the metals sector [2][10]. This summary encapsulates the key findings and insights from the conference call, providing a comprehensive overview of the current state and future outlook of the metals industry in China.

Summary of Conference Call Notes Industry Overview - The discussion primarily revolves around the **China Financials** sector, focusing on the impact of recent policy changes on credit and risk cycles in the context of the ongoing property deflation cycle and economic growth challenges in China [1][4][17]. Key Points and Arguments 1. **Policy Changes and Market Sentiment** - Recent policy efforts are viewed as a modest shift rather than a complete reversal, aimed at improving market confidence and reducing downside risks [1][4]. - Improved communication from policymakers is expected to lower equity risk premiums for financial stocks, helping investors look beyond current economic cycles [1][17]. 2. **Monetary and Fiscal Policies** - Since 2021, loan yields have decreased by approximately **200 basis points** to around **3.6%**, with government bond issuance increasing from **Rmb4 trillion** to **Rmb9.4 trillion** annually [1][4]. - The focus remains on financial risk controls, with expectations of continued supportive policies, albeit with a cautious approach to avoid exacerbating existing risks [1][4]. 3. **Economic Growth and Credit Demand** - The industrial investment expansion has faced cyclical downturns, with growth needing to slow below **5%** to mitigate PPI pressure and new credit risks [1][21]. - A rebound in credit demand is anticipated post-**2H25**, supported by ongoing industrial upgrades and a stabilization of the property market [1][22][24]. 4. **Investment Recommendations** - Insurance companies like **AIA (1288.HK)** and **Ping An Insurance (2318.HK)** are recommended as attractive investments due to reduced economic downside risks [1]. - Banks with high dividends, such as **PSBC (1658.HK)** and **Ningbo (002142.SS)**, are also favored, while brokers and HKEx are seen as overvalued [1]. 5. **Fiscal Measures and Government Revenue** - The Ministry of Finance (MoF) has announced plans to raise government bond limits to address local government debt and has allocated **Rmb2.2 trillion** and **Rmb1.2 trillion** in local bond quotas for 2023 and 2024, respectively [11][12]. - Government revenue has significantly declined, with a **21.1%** year-over-year drop in government fund revenue from January to August 2024 [12][13]. 6. **Long-term Outlook** - The property market is expected to find a bottom by **2H25**, with ongoing government efforts to manage inventory levels and support credit demand [26][29]. - The financial system is projected to digest significant credit risks associated with the property sector, with estimates of **Rmb3 trillion** in credit costs already recognized [30]. Additional Important Content - The discussion highlights the importance of legislative changes aimed at protecting private businesses, which may take time to positively impact market sentiment [17][18]. - The ongoing industrial upgrades in China are expected to drive reasonable mid- to long-term growth and credit demand, despite current economic pressures [23][25]. This summary encapsulates the critical insights from the conference call, providing a comprehensive overview of the current state and future outlook of the China Financials sector.

Summary of Key Points from the Conference Call Industry Overview - The focus of the conference call is on the **Chinese economy** and the **local government debt restructuring** initiative led by the central government to alleviate fiscal austerity and restore confidence in the economy [2][3][4]. Core Insights and Arguments 1. **Debt Restructuring Initiative**: - The Chinese government is initiating a significant local government debt restructuring program estimated at **Rmb6 trillion** or more over multiple years, aimed at alleviating the burden of **Rmb70-80 trillion** in informal local debt [3][4]. - This restructuring is seen as a critical step to break the cycle of fiscal austerity and restore private sector confidence, which has been undermined by local governments' financial struggles [5][6]. 2. **Policy Focus Areas**: - **Local Debt Resolution**: A significant one-time debt swap to resolve implicit local debt, marking the largest move of its kind in recent years [3]. - **Housing Inventory Purchase**: The government will use bonds to buy back housing inventory, which is expected to stabilize the housing market [3]. - **SOE Bank Recapitalization**: Special Treasury Bonds will be issued to recapitalize major banks, facilitating risk management [3]. - **Social Benefits**: Additional allowances for students and support for financially struggling elderly individuals are planned [3]. 3. **Fiscal Expectations**: - A supplementary fiscal package of **Rmb2 trillion** is expected in the near term for local debt resolution and bank recapitalization [7]. - For 2025, a fiscal package of **Rmb2-3 trillion** is anticipated to support debt swaps and housing inventory clearance, potentially leading to a **1-2 percentage point** expansion in the fiscal deficit [7]. 4. **Consumption Support**: - A large-scale consumption-focused package (e.g., **Rmb10 trillion** over two years) is deemed unlikely, with expectations for gradual and modest consumption stimulus [8]. 5. **Investor Reactions**: - Onshore investors view the restructuring of local government and housing debt as a significant move, with expectations that it will rekindle government-related business spending, particularly in lower-tier cities [9]. Other Important Insights - The central government's balance sheet is expected to play a larger role in debt restructuring and housing market stabilization, although the pace of consumption support and social welfare spending is anticipated to remain gradual [4][6]. - The conference highlighted the importance of restoring stability in the regulatory environment to improve business expectations and stimulate future demand [6]. This summary encapsulates the key points discussed in the conference call, focusing on the implications of the local government debt restructuring initiative and its expected impact on the Chinese economy.