Investment Rating - The report maintains a "Buy" rating for companies like Giant and Proya in the cosmetics industry [4][16]. Core Insights - The cosmetics industry in China is expected to see a GMV growth of approximately 10% year-over-year during the Double 11 Shopping Festival, with local brands outperforming global counterparts [1][5]. - The competition is stabilizing with tapering price competition and increased platform support for brands [2][9]. - Local brands are gaining more traffic compared to private labels and multinational corporations (MNCs) [10][17]. Summary by Sections GMV Growth Expectations - Overall cosmetics GMV is projected to grow around 10% year-over-year during this year's Double 11, with local brands leading the growth [1][5]. - By platform, Taobao/Tmall targets a GMV of RMB 65-70 billion with a growth of 7-8%, while Douyin aims for RMB 38-39 billion with over 40% growth [5][8]. - Top local brands like Proya, Comfy, and Winona are expected to achieve growth rates of 40-50%, HDD-100%+, and 20-30% respectively, while most MNC brands are likely to see muted growth of 5-10% [7][8]. Industry Trends and Platform Policies - The Double 11 event this year will last 26-34 days, longer than previous years, with platforms starting promotions earlier [9][11]. - Price competition remains stable compared to last year, with platforms providing stronger support to merchants, including covering return costs and offering significant subsidies [10][9]. - The return rate is expected to be higher at 22-23%, but brands will face less cost pressure due to new platform policies [4][10]. Company-Specific Insights - Proya's short-term performance is viewed positively due to its well-structured management, though long-term challenges exist in expanding into new categories [16][17]. - Giant is expected to perform well during Double 11, benefiting from a strong brand presence in the collagen market [17]. - Botanee's turnaround potential is viewed conservatively, with success hinging on the performance of its whitening product during the event [17][16].

Investment Rating - The report assigns a "Buy" rating for Naura (002371.SZ) with a 12-month target price raised to Rmb502, reflecting a 14.6% increase from the previous target of Rmb438 [1][11]. Core Insights - Naura is positioned to benefit from the strong growth in China's semiconductor industry, with expected capital expenditures (capex) rising to US$36 billion in 2024, US$40 billion in 2025, and US$42 billion in 2026, up from US$30 billion in 2023 [1][10]. - The company is expected to achieve a revenue growth of 31% year-over-year (YoY) in Q3 2024, reaching Rmb8.1 billion, driven by increasing demand from domestic foundries and integrated device manufacturers (IDMs) [2][10]. - Naura's competitive advantage lies in its comprehensive product offerings across various semiconductor manufacturing processes, including etching, deposition, and cleaning tools, which positions it well to capture market opportunities [2][10]. Summary by Sections Revenue and Earnings Forecast - The report anticipates Naura's revenues for 2024E to be Rmb30,554 million, with subsequent years showing growth to Rmb41,064 million in 2025E, Rmb50,543 million in 2026E, and Rmb59,447 million in 2027E, reflecting increases of 4%, 11%, and 16% respectively [5][10]. - Net income is projected to grow to Rmb5,991 million in 2024E, Rmb8,581 million in 2025E, Rmb10,727 million in 2026E, and Rmb12,030 million in 2027E, with growth rates of 0%, 11%, 18%, and 19% respectively [5][10]. Margin Analysis - The gross margin is expected to sustain at 43% in Q3 2024, compared to 41% in 2023 and 45% in the first half of 2024 [2][10]. - Operating expenses are projected to decrease, with the operating expense ratio expected to be 22% in Q3 2024, down from 25% in 2023 [2][10]. Market Position and Competitive Landscape - Naura is recognized as a leader in the domestic semiconductor equipment market, benefiting from its technology leadership and strong relationships with first-tier customers [2][10]. - The company is expanding its product line to include high-end tools, which will enhance its market share and competitive positioning within the semiconductor value chain [2][10].

Investment Rating - The investment rating for Angel Yeast is "Sell" with a 12-month target price of Rmb30.3, reflecting a downside of 16.8% from the current price of Rmb36.42 [1][2][15]. Core Insights - The company is expected to achieve 23% year-on-year sales growth in Q3 2024, driven by a rebound in domestic bakery yeast volume and strong overseas demand, which is projected to grow over 20% year-on-year [1][3]. - Despite the sales growth, the company anticipates a contraction in gross profit margin (GPM) and net profit margin (NPM) due to rising logistics costs, with expected GPM/NPM contractions of 1.5 percentage points and 0.7 percentage points year-on-year, respectively [1][2]. - The management has raised the full-year sales growth estimate for 2024 from approximately 10% to 12.5%, with net profit growth now expected to reach 9% year-on-year [1][2][12]. Summary by Sections Sales and Growth - The company reported a year-to-date sales growth of approximately 12% and aims for over 20% sales growth in October [3][4]. - Domestic sales in the baking segment grew 7%-8% year-on-year in September, while overseas sales surged by 40% year-on-year [3][4]. Profitability and Costs - Logistics costs have increased significantly, impacting overseas profitability, although these costs are stabilizing [5][6]. - Raw material prices, particularly for molasses, have shown a downward trend, which may influence pricing strategies moving forward [7][8]. Capacity and Future Outlook - The utilization rate remains high at around 90%, with new production capacity expected from the Egyptian and Russian factories in Q4 2024 [9]. - The company is exploring mergers and acquisitions to enhance growth, although suitable targets are limited [9]. Financial Estimates - Revised financial estimates indicate a 2% increase in net profit estimates for 2024-2026, with expected sales growth of 12.5% and net profit growth of 9% for 2024 [12][14].

Investment Rating - The investment rating for Anta Sports Products is "Buy" with a target price of HK$95.00 [17] Core Insights - The sportswear industry in China is experiencing a deceleration in consumption growth as the economy transitions, with a sustainable shift towards value-focus and an increasing global presence [1] - Holiday sales showed healthy performance with double-digit growth across brands, slightly accelerating from September [1][2] - The distributor anticipates an expansion of discounts in Q4 due to slower-than-expected sales in the previous months and inventory control [1][6] Sales Performance - In Q3 2024, sales were under pressure with growth rates averaging in the mid-single to high-single digits, but September saw a pickup to high-single to low-double digits [1] - National Day holiday sales were healthy, reflecting low-double-digit growth across brands, indicating a marginal acceleration compared to September [1][2] - The distributor's full-year 2024 sales target has been revised to 11-13%, with specific brand performance varying [5][6] Inventory Management - Nike's inventory levels have shown a sequential upward trend due to lower-than-expected new product sales, while adidas and Anta have seen improvements in inventory levels [1][7] - Li Ning maintains a healthy inventory level with effective sell-in control, while Xtep's inventory is slightly higher due to increased competition in lower-tier cities [7][8] Market Trends - There is a clear trend of brands enhancing penetration into lower-tier cities, with expectations of escalating competition in these markets next year [1][8] - The distributor notes that lower-tier city consumers are increasingly focused on high-quality and unique products, presenting share gain opportunities for leading brands [8] Future Outlook - For 2025, the distributor expects growth targets for large brands to be in the mid-single to mid-teens percentage year-over-year, while niche brands may achieve 20-30% growth on a low base [6] - The competition is anticipated to intensify across all aspects, with disciplined channel expansion remaining a priority [6]

Investment Rating - The report reiterates a "Buy" rating on both SK Hynix and Samsung Electronics, with Hynix being on the APAC Conviction List [2][4][5]. Core Insights - The report highlights that Korean memory suppliers, SK Hynix and Samsung Electronics, are expected to experience stronger growth in 3Q24 in terms of average selling price (ASP) and bit shipment compared to Nanya Technology, primarily due to a higher mix of high-end products like HBM and DDR5 [2][3]. - Nanya Technology reported a mid-single-digit percentage increase in ASP for 3Q24, while its bit shipment decreased by low-twenties percent. In contrast, Hynix and SEC are expected to see DRAM ASP growth of 12% and 9%, respectively, with bit shipment growth of +2% and -2% [2][3]. - The pricing outlook for 4Q24 is challenging for Nanya, as it anticipates minimal contribution from DDR5, while Hynix and SEC are expected to see blended DRAM ASP growth of 9% and 6%, respectively, due to continued improvement in product mix towards HBM and DDR5 [2][3]. - Nanya has lowered its capital expenditure guidance for the year from NT$26 billion to NT$20 billion, representing a ~3% decline from peak levels in 2022. In contrast, DRAM capex for Hynix and SEC is expected to grow year-over-year, primarily focused on HBM capacity and fab construction [2][3]. Summary by Sections Nanya Technology Performance - Nanya's 3Q24 ASP increased by mid-single-digit percentage quarter-over-quarter, while bit shipment decreased by low-twenties percent [2]. - The company faces challenges in 4Q24 due to minimal DDR5 output and elevated inventory levels in the DDR3&4 market [2][3]. SK Hynix and Samsung Electronics Outlook - Hynix and SEC are positioned to benefit from stronger demand for high-end products, with expected ASP growth of 12% and 9% for Hynix and SEC, respectively, in 3Q24 [2][3]. - Both companies are expected to see solid pricing growth in 4Q24, driven by a favorable product mix towards HBM and DDR5 [2][3]. Capital Expenditure Trends - Nanya has significantly reduced its capex guidance for the year, while Hynix and SEC are expected to increase their DRAM capex, focusing on HBM and fab construction [2][3].

Investment Rating - The report maintains a positive outlook on the China real estate sector, emphasizing the importance of fiscal stimulus in the near term [1][3]. Core Insights - The National Development and Reform Commission (NDRC) has committed to accelerating urban renewal investments, with a focus on infrastructure projects, including a significant Rmb4 trillion budget for underground pipeline construction over the next five years [1][3]. - The NDRC aims to stabilize the property market through a combination of supply-side and demand-side measures, including inventory management and adjustments to housing policy regulations [1][3]. - The report highlights the necessity of fiscal stimulus as a key factor influencing the housing market's recovery in the coming weeks [1][3]. Summary by Sections Urban Renewal Investment - The NDRC plans to front-load Rmb200 billion in investment projects by the end of October 2024, with a total of Rmb4 trillion earmarked for urban renewal infrastructure over the next five years [3][4]. - The focus will be on critical construction projects that align with national strategies, particularly the development of an urban underground pipeline network [3][4]. Housing Market Stabilization - On the supply side, the NDRC will implement strict controls on new housing supply and optimize existing inventory, with an estimated Rmb30 trillion of unsold residential inventory by the end of 2023 [1][3]. - Demand-side measures include further adjustments to housing policy regulations to stimulate both rigid and upgrade demand for housing, alongside interest rate cuts for existing mortgages [1][3]. New-Type Urbanization - The report discusses the goal of achieving 70% urbanization by 2029, with specific measures to facilitate the urbanization of over 170 million migrant workers and their families [4][5]. - The NDRC is committed to enhancing urban facility capacity and industrial foundations in counties, which account for a significant portion of China's GDP and population [4][5].

Investment Ratings - Daqo ADR: Buy rated, Daqo A: Neutral rated [3] - GCL Tech: Neutral rated [5] - TZE: Sell rated [7] - Tongwei: Sell rated [9] - LONGi: Neutral rated [11] - Hangzhou First: Buy rated [13] Core Insights - The report reflects minor adjustments to solar coverage estimates, with an average fine-tuning of 2% for book values and a -1% tweak for EBITDA of Hangzhou First [1] - The investment thesis for Daqo highlights its leading position in poly production and strong balance sheet, suggesting it can navigate downturns effectively [3] - GCL Tech is positioned to increase market share significantly by 2030, but faces liquidity pressures [5] - TZE is expected to encounter significant challenges due to a shrinking addressable market and high inventory risks [7] - Tongwei's unfavorable supply/demand dynamics for poly lead to a sell rating, despite its rapid rise in the solar industry [9] - LONGi's strong balance sheet is offset by operational challenges, leading to a neutral rating [11] - Hangzhou First is expected to achieve high net income growth due to its market position and capacity expansion [13] Summary by Company Daqo - Leading poly producer with 14% global market share by end-2023, rated Buy due to undervaluation concerns [3] - Target price of US$21.6 based on 0.4X 2024E P/B [3] GCL Tech - Positioned at the lowest end of the cost curve, aiming for 40% market share by 2030, rated Neutral [5] - Target price of HK$1.2 based on 0.7X 2024E P/B [6] TZE - Largest solar wafer producer facing headwinds, rated Sell due to market contraction [7] - Target price of Rmb6.1 based on 0.7X 2024E P/B [8] Tongwei - Rapid growth but unfavorable dynamics for poly, rated Sell [9] - Target price of Rmb13.7 based on 1.1X 2024E P/B [9] LONGi - World leader in solar PV solutions but facing operational headwinds, rated Neutral [11] - Target price of Rmb16.1 based on 2.0X 2024E P/B [11] Hangzhou First - Largest solar film producer with significant market share, rated Buy due to growth potential [13] - Target price of Rmb23.1 based on 13X 2027E EV/EBITDA [13]

_ 10 October 2024 | 2:40AM HKT China Consumer Staples: Expert call takeaways: Spirits still through the cycle; Beverage improving into Sept On Oct 9, we hosted a virtual conference with a large-scale Spirits and F&B distributor located in Hunan province for the regional update. Key highlights included: 1) Spirits decline in National Day Holiday narrowed vs. MAF: The distributor believes that the policy stimulus will still take time to translate into enhanced sales momentum, despite observing somewhat of an ...

_ 10 October 2024 | 11:43AM EDT USA: Core CPI Above Expectations; Hurricane Helene Boosts Initial Jobless Claims; Estimating 0.24% for September Core PCE | --- | --- | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------- ...

Global Investment Research China Resilience ̶CATL (300750.SZ) Key enabler and pioneer of global electrification October 10, 2024 Eric Shen Qiying Wei Goldman Sachs (Asia) L.L.C. 852-2978-7954 eric.shen@gs.com Goldman Sachs (Asia) L.L.C. 852-2978-6426 qiying.wei@gs.com | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ...