10 October 2024 | 4:09PM EDT _ | --- | --- | --- | |-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------| | | | | | US AI | Equity Views and US Equities: Growing into AI Phase 2 ...

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]

8 October 2024 | 6:08PM CST revenue recognition will likely accelerate per mgmt as ocean freight congestion eases) and we forecast +28% yoy revenue into 2H24E. Shenzhen Inovance Technology Co. (300124.SZ): Sept IA orders slightly down yoy/up mom | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---- ...

_ 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 ...

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 indicates a rotation in growth across the CEEMEA region, with Turkey and Russia weakening while CEE and South Africa show signs of gradual improvement [2][3]. Core Insights - The CEEMEA Current Activity Indicator (CAI) has fallen below the estimated potential growth of +3.0-3.5% for the region, reflecting a moderation in overall activity [1][3]. - Inflation trends in CEEMEA have been mixed, with disinflation stalling in low-yielders and core inflation continuing to decline in most economies [3][4]. - The geopolitical risks from the Middle East conflict pose significant threats to the economic outlook of CEEMEA economies, particularly oil importers [5][6]. Summary by Sections Growth Dynamics - Turkey and Russia are experiencing significant slowdowns in growth due to tightened policies aimed at combating high inflation, with forecasts for weak growth in both economies for 2025 [2][3]. - The CEE-4 region, particularly Poland, is showing signs of improvement, although growth expectations have been delayed until 2025 due to ongoing weakness in the Euro area [7]. Inflation Trends - Recent inflation data in CEEMEA has shown a stall in the decline of headline inflation rates, particularly in high-yielders like Turkey and Egypt, while core inflation remains on a downward trend [3][4]. - The report has raised inflation forecasts for several CEEMEA economies, although they remain generally below consensus for 2024 and 2025 [3]. Geopolitical Risks - The intensification of the Middle East conflict presents risks to the CEEMEA economic outlook, especially for countries reliant on oil imports [5][6]. - The outcome of the upcoming US presidential election is highlighted as a potential binary event for emerging markets, with implications for global trade and EM growth [6]. Regional Insights - South Africa is expected to see growth improve from 1.1% in 2024 to 2.0% in 2025, supported by structural and cyclical factors [12][13]. - In Russia, inflation is projected to decline gradually, with a forecast of 7.8% year-on-year by Q4 2024, while the economy is expected to slow further [9][10]. - Turkey's disinflation process has been slower than anticipated, leading to a delay in monetary easing, with the first rate cut now expected in January 2025 [11]. External Challenges - Egypt faces rising external challenges, including a widening current account deficit, but strong prospects for capital inflows are expected to mitigate these risks [15]. - Kazakhstan's fiscal policy is expected to be looser than previously anticipated, which may lead to higher inflation and delays in monetary easing [20].

Investment Rating - The report assigns a "Buy" rating to CATL and includes it in the APAC Conviction List with a 12-month target price of RMB 307 [21][30]. Core Insights - CATL is positioned as a key enabler and pioneer in global electrification, maintaining a strong competitive edge through manufacturing strengths, R&D effectiveness, and ecosystem advantages [3][12][14]. - The company captures approximately 50% of EBITDA in the global battery industry, indicating its dominant market position [18]. Manufacturing Strengths - CATL has the lowest warranty compensation ratio among peers, reflecting solid quality performance [3]. - The company faces challenges in balancing volume, quality, and flexibility in manufacturing, particularly in customizing battery products [5]. R&D Effectiveness - CATL is expected to contribute around 40% of R&D spending in the global battery industry, showcasing its commitment to innovation [12]. - The company has developed a robust R&D pipeline, which is crucial for maintaining its competitive advantage [12]. Ecosystem Strengths - CATL benefits from high-quality, high-frequency feedback mechanisms that facilitate continuous product iteration [14]. Financial Performance and Projections - In various scenarios, CATL's revenue CAGR is projected at 18.6% in the base case, with a potential upside of 44% in a blue-sky scenario [20]. - The report outlines a significant expected growth in net profit CAGR at 25.2% under the base case [20]. Valuation Methodology - The target price of RMB 307 is derived from a combination of near-term and long-term valuations, using a 3M average P/E of 15.6x for 2024-25E and a long-term P/E of 15x for 2030E [21].

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].

9 October 2024 | 4:14PM EDT _ USA: FOMC Minutes Show Range of Views Over Size of September Cut | --- | --- | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------ ...

Investment Rating - The investment rating for Sunny Optical is maintained at Neutral with a 12-month target price of HK$63.50, based on a P/E multiple of 23.3x for 2025E [6][9]. Core Insights - Sunny Optical's September shipments showed a year-on-year increase of 6% for handset lenses, while camera module shipments decreased by 30% year-on-year. Vehicle lens shipments increased by 13% year-on-year [1][2]. - The company is expected to improve its gross margin (GM) to 17.5% in the second half of 2024, up from 14.1% in the second half of 2023 and 17.2% in the first half of 2024, driven by product mix upgrades towards mid and high-end smartphone projects [1][4]. - The overall shipment performance for the first nine months of 2024 is largely in line with estimates, with handset lens shipments tracking 77% of the 2024 estimates, vehicle lens at 78%, and camera modules at 74% [2][4]. Shipment Performance Summary - Handset lens shipments in September were 119 million units, a decrease of 4% month-on-month but an increase of 6% year-on-year, leading to a total of 993 million units for the first nine months of 2024, representing a 20% year-on-year growth [2][4]. - Camera module shipments were 37 million units in September, down 30% year-on-year, with a total of 409 million units for the first nine months of 2024, reflecting a 3% year-on-year increase [4]. - Vehicle lens shipments reached 9 million units in September, up 13% year-on-year, contributing to a total of 80 million units for the first nine months of 2024 [2][4]. Financial Projections - Revenue projections for Sunny Optical are estimated to reach RMB 37.63 billion in 2024, with an expected increase to RMB 45.36 billion in 2025 and RMB 53.74 billion in 2026 [9]. - The earnings per share (EPS) is projected to be RMB 2.08 in 2024, increasing to RMB 2.56 in 2025 and RMB 3.24 in 2026 [9].