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

10 October 2024 | 10:38PM HKT _ China Consumer Connections: Online Brand Tracker: White goods/beer continue to lead; Sports lag; cosmetics improve | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------- ...

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 - Mindray is rated as "Buy" with a 12-month price target of Rmb430, indicating a potential upside of 44.9% [34][39] - United Imaging is rated as "Neutral" with a 12-month price target of Rmb141, indicating an upside of 11.7% [35][38] Core Insights - The procurement value of major medical devices in China has shown signs of recovery, with a month-on-month growth of 33% in September 2024, and year-on-year growth of 0.3% for the first time since June 2023 [3][8] - The leading devices such as PET-CT, CT scanners, and MRI are closely related to the trade-in policy, which has positively influenced their procurement values [3][8] - Mindray is expected to benefit from strong healthcare infrastructure construction and domestic substitution, with a significant portion of its revenue coming from China [34][39] - United Imaging is positioned to capture a growing market share in the medical imaging equipment sector, with an estimated revenue CAGR of 18.6% over the next 11 years [35][39] Summary by Sections Procurement Trends - In September 2024, all seven tracked medical devices recorded positive month-on-month growth for the first time since June 2023, with notable increases in procurement values: PET-CT (+196%), CT scanner (+4%), and MRI (-9%) [3][27][23] - The total bidding value for these devices has turned positive year-on-year, reflecting a recovery in the market [3][8] Company-Specific Insights - Mindray's revenue is expected to grow significantly due to its market leadership and multiple growth drivers, including procurement recovery and new product launches [34][39] - United Imaging's market share in CT and MRI is projected to increase significantly by 2032, driven by government incentives and competitive product performance [35][39] Market Outlook - The overall medical imaging equipment market in China is expected to grow to Rmb101 billion (US$14.4 billion) by 2032, supported by government infrastructure incentives [35][39] - The report anticipates that procurement activities will continue to recover, providing a favorable environment for both Mindray and United Imaging [34][35]

Investment Rating - The report indicates a positive outlook for the NEV sector, with major brands experiencing significant order increases during the National Holiday Golden Week [6][13][14]. Core Insights - Major NEV brands saw a 53% increase in orders during the National Holiday Golden Week compared to the daily average in September [6][16]. - Consumer price sensitivity remains high across all pricing ranges, impacting order intakes for brands like Nio, which experienced a decline in orders due to reduced discounts [5][16]. - The penetration of Battery Electric Vehicles (BEVs) is expected to increase significantly for vehicles priced under RMB 200,000, driven by strong demand in lower-tier cities [5][6]. Industry Trends - Strong store traffic and orders were observed during the National Holiday Golden Week, with both NEVs and Internal Combustion Engine (ICE) vehicles showing positive year-over-year and month-over-month growth [2][6]. - Replacement demand for vehicles is a significant driver, accounting for over 50% of total orders for popular new models, supported by government trade-in subsidy programs [6][13]. - Traditional premium foreign brands and mass-market joint venture brands also reported strong order intakes, with notable exceptions like Porsche [6][13]. Brand Performance - BYD reported a 52% increase in orders during the Golden Week, with estimated orders reaching 200,000 units [13]. - HIMA experienced a remarkable 111% increase in orders, with new orders estimated at 25,000 to 26,000 units [13][14]. - Li Auto's orders increased by 58%, with significant contributions from its L6 and L7 models [14]. - Nio faced a decline of 33% in orders, attributed to reduced discount offerings during the holiday period [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 report indicates a positive outlook on the industry, driven by expectations of significant fiscal policy easing and its potential impact on economic growth [5][8]. Core Insights - The report highlights the anticipation of a RMB 2-3 trillion fiscal package, which is expected to stimulate the economy and address investor concerns regarding the property market and consumption [2][5]. - It emphasizes the importance of monitoring upcoming meetings and data releases from key government bodies, as these will provide early signals of policy implementation and its effects [3][4]. - The report notes that confirmed easing measures from the People's Bank of China (PBOC) could boost real GDP growth by approximately 40 basis points, contingent on the scale and targeted areas of fiscal spending [6][8]. Summary by Sections Fiscal Policy and Economic Outlook - The report discusses unprecedented forward guidance on reserve requirement ratio (RRR) cuts and liquidity support, indicating a greater openness to easing from policymakers [6]. - It mentions that long-term bond yields have increased due to optimism surrounding fiscal policy easing, particularly following the Politburo meeting [8]. Foreign Exchange and Currency Dynamics - The report observes that the USD/CNY exchange rate has moved lower, reflecting improved market expectations for the Chinese economy amid signals of policy easing [6]. - It highlights the asymmetric risks associated with the CNY, noting that while significant fiscal policy easing could lead to a stronger CNY, potential depreciation risks remain if US tariffs increase [6]. Bond Market and Interest Rates - The report indicates that long-term cash bond yields rose sharply after the Politburo meeting, driven by expectations of a sizeable fiscal easing package [8]. - It anticipates further monetary policy easing in the coming year, which is expected to keep interbank liquidity ample and drive front-end rates lower [8]. Trade Balance and Economic Indicators - The report notes that China's trade balance improved significantly in August, with a higher goods trade surplus contributing to positive economic indicators [30][32]. - It also mentions that travel exports have rebounded to 116% of 2019 levels, while travel imports have slightly decreased [30][32].

6 October 2024 | 11:31PM EDT Machinery Supply Tracker Continued signs of stabilization in Ag machinery inventories Machinery Supply Tracker Explore> September used inventory levels for Ag were in line vs. normal seasonality, including a year-over-year decline in under 100 HP used inventories. Construction Machinery trends deteriorated slightly on a seasonally adjusted basis, while the Truck Machinery data points were mixed. n Construction Machinery: Used construction equipment inventories were flat sequenti ...

7 October 2024 | 7:21AM HKT The 720: Asia Strategy, China Resilience - Moutai & CATL, China Macro, China Healthcare, US Strategy In Focus | Asia Strategy Asia Strategy - China changes the game. We raise China to overweight tactically and increase our MXAPJ 12m index target to 690 on higher earnings and valuations. The current rally has brought the MSCI China forward P/E to 11.3x (-0.4 s.d.). Valuation could expand to 12x on policy support. We raise our 12m MXCN/CSI300 targets to 84/4600 implying 15-18% upsi ...

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