M Idea Greater China Semiconductors | Asia Pacific December 5, 2024 06:54 AM GMT We expect WFE players to outperform in 2025 We remain optimistic for China's wafer fab equipment (WFE) market, given robust capital investment from local memory and logic players and further share gains due to increased demand for localization. We expect 2025 to be a transition year for global WFE, with local China players to outperform: Following record outperformance by WFE stocks globally in 2024, lead by DRAM and China in p ...

Key Points **Industry Overview** 1. **Export Demand**: Export demand remains strong, particularly in the Belt and Road (B&R) regions, contributing to higher margins. However, tariffs pose a downside risk. 2. **Domestic Market**: The domestic market is expected to see limited downside and some signs of recovery in 2025, driven by mild growth and potential stimulus measures. 3. **Sector Performance**: The construction machinery sector has seen a surge in stock prices YTD, driven by sustained export growth and domestic stimulus measures. **Company Analysis** 1. **Sany**: Sany is preferred due to its higher contribution from export and excavators. The target price for Sany is adjusted to HKD22.00 (RMB22.00) with a Buy rating. 2. **Zoomlion-H**: Zoomlion-H is also preferred due to its higher contribution from export and excavators. The target price for Zoomlion-H is adjusted to HKD6.20 (RMB7.90) with a Buy rating. 3. **Zoomlion-A**: Zoomlion-A is downgraded to Hold due to weaker-than-expected domestic sales and export growth moderation. The target price is adjusted to RMB7.90 (HKD6.20) with a Hold rating. **Market Outlook** 1. **Export Growth**: Export growth is expected to sustain at 10-20% in 2025, normalizing from the high base of 30-50% growth in 2024e. 2. **Domestic Growth**: Domestic sales growth is expected to turn positive in 2025, driven by easy comparisons and potential stimulus measures. 3. **Valuation**: The sector trades at a 2.0x 1-year forward PB, below the historical average of 2.3x since 2012. **Additional Considerations** 1. **Tariffs**: Tariffs remain a downside risk for export businesses. 2. **Domestic Weakness**: Domestic weakness in property-related machinery could impact overall sector performance. 3. **Replacement Demand**: Replacement demand is expected to be the main driver of domestic excavator sales in 2025e.

Summary of EEMEA Oil and Gas Chartbook Equities Industry Overview - **Industry**: Oil and Gas - **Region**: EEMEA (Eastern Europe, Middle East, and Africa) Key Points 1. **OPEC+ Output Decisions**: OPEC+ has agreed to postpone output hikes due to weak oil demand, extending the unwinding of 2.2 million barrels per day (mbpd) of voluntary cuts over 18 months instead of 12 months previously [15][15][15] 2. **Saudi Arabia's Jack-Up Rigs**: The active jack-up rig count in Saudi Arabia is expected to drop to 61 by mid-December 2024 from 88 rigs in February 2024, approaching pre-2020 levels [12][12][12] 3. **China's Oil Imports**: Crude oil imports to China increased by 9% month-on-month (mom) and 4% year-on-year (yoy), primarily driven by stockpiling rather than actual demand [14][14][14] 4. **Global Oil Demand**: Overall global oil demand growth remains weak, with notable declines in diesel and gasoline demand in the US and China [14][14][14] 5. **European Refining Margins**: European refining margins have weakened, averaging USD 6.3 per barrel but dropping to USD 3-4 per barrel in early December 2024, influenced by increased output from Nigeria's Dangote refinery [17][17][17] 6. **Freight Rates**: Clean tanker day rates have seen a modest increase, but remain significantly lower than in the first half of 2024 due to oversupply [18][18][18] Additional Insights - **Market Dynamics**: The third wave of rig suspensions in Saudi Arabia may affect between five and ten rigs, which is an increase from the previously expected five [12][12][12] - **Regional Production Compliance**: Iraqi oil production has declined to comply with OPEC+ quotas, while Kazakhstan's output rebounded significantly in November 2024 [15][15][15] - **Economic Impact**: Weaker refining margins have led to economic cuts in operations, with some refineries, like Gunvor's Rotterdam facility, facing closures [17][17][17] Conclusion The EEMEA oil and gas sector is currently facing challenges due to weak demand, regulatory decisions from OPEC+, and fluctuating refining margins. The situation is compounded by geopolitical factors and market dynamics that continue to evolve.

V i e w p o i n t | 06 Dec 2024 16:00:00 ET │ 29 pages Global Economics Global Indicators November Chartbook: The World in Pictures CITI'S TAKE Our global indicators chartbook highlights ongoing resilience as global growth has continued to run a notch below its 3% trend. The global PMIs at the same time highlight a two-track global economy with strong services sectors and struggling manufacturing activity. While the global manufacturing PMI increased to 50 in November, it had languished in contractionary te ...

Extel Asia Survey 2025 12 Nov – 6 Dec 2024 Equity Research Report | 6 December 2024 China Energy Storage Equities Industrials & Renewables China From boom to bloom ◆ We raise our 2025-26 energy storage system installation forecasts given a better demand outlook ◆ China is liberalizing its ancillary service market, which could lead to better returns for ESS operators ◆ Compared with Sungrow, Eve has more upside potential given bottoming battery prices We raise our 2025/26 global energy storage system (ESS) i ...

Europe Equity Research 02 December 2024 J P M O R G A N Metal Inventories in China China metals channel check: steel production & China steel demand flat week on week & stable across November. JPM latest iron ore market review. We present our high frequency inventory trends for steel, iron ore, copper, aluminium and zinc in China, for the week ended 29 November. The period captures the last 9-week period since China announced coordinated monetary policy loosening on 24 Sept. Last week's high frequency data ...

2 December 2024 | 3:15PM HKT China Smartphones: Foldable phone patents on new form factors and components upgrade; new models pipeline We reviewed foldable phone patents and models pipeline, and are positive on the rising foldable phone penetration rate. More patents have been filed in 2024, reflecting the trend of (1) New form factors: from flip-types and horizontal-folding to Tri-Fold and Quad-Fold phones, which are positive for supply chain dollar content increase; (2) Components upgrade: more durable pa ...

J P M O R G A N | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------| | | Asia Pacific Equity Research 02 December 2024 | | This material is neither intended to be distributed to Mainland China inv ...

Summary of Key Points from the Conference Call Industry Overview - The focus of the conference call is on the **thermal coal industry in China** and its recent developments regarding coal imports and pricing dynamics. Core Insights and Arguments 1. **Surge in Coal Imports**: China's thermal coal imports have increased by **80% over the last two years**, with no signs of peaking yet. This trend is expected to continue due to new contract guidelines set for 2025 that will likely boost import volumes further [1][2][5]. 2. **New Contract Guidelines**: The National Development and Reform Commission (NDRC) has introduced new coal contract guidelines effective from 2025, which include: - Reducing the minimum captive share requirement from **80% to 75%** for domestic coal generators [2][3]. - Lowering the contract fulfillment rate from **100% to 90%** [3]. - Strengthening the link between domestic and international coal prices through the introduction of the **China Power Coal Index** [3]. - Incorporating coal grade premiums/discounts more explicitly into contract pricing [3]. 3. **Impact on Pricing and Supply**: The new guidelines are expected to enhance flexibility for domestic coal generators in sourcing coal, potentially increasing demand for spot coal, including imports. A closer alignment between domestic and imported coal pricing may allow seaborne sources to compete more effectively in the Chinese market [4][5]. 4. **Price Trends**: Thermal coal prices have been stronger than expected in Q4 2024, with prices around **$140-145 per tonne** for 6,000 CV FOB Newcastle, driven by firm Asian demand and tight gas markets. The forecast for Q1 2025 suggests potential upside risks to prices due to peak winter heating demand [9]. Additional Important Insights 1. **Coal Supply Sources**: China is increasingly sourcing coal from various countries, including **Indonesia, Australia, and Russia**, with a notable increase in imports from lower calorific value sources [12]. 2. **Coal Power Capacity Price Mechanism**: The establishment of a Coal Power Capacity Price Mechanism in November 2023 has incentivized coal generators to source higher calorific value coals, including imports, which may have contributed to the recent surge in imports [8]. 3. **Healthy Coal Stocks**: Current coal stocks in China appear to be healthy, which may provide a buffer against potential supply disruptions during peak demand periods [11][12]. This summary encapsulates the key points discussed in the conference call regarding the thermal coal industry in China, highlighting the significant changes in import dynamics, pricing strategies, and regulatory frameworks that are shaping the market landscape.

Summary of GDS Holdings Ltd Conference Call Company Overview - **Company**: GDS Holdings Ltd - **Industry**: Greater China Telecoms - **Market Cap**: Rmb26,936 million - **Current Share Price**: US$19.69 (as of Nov 29, 2024) - **Price Target**: US$30.00, representing a 52% upside Key Points Business Outlook - Positive outlook for both overseas and domestic business [1] - GDS aims for a committed capacity of 1GW by 2027, with a sales pipeline increasingly focused on overseas customers [4] Capacity and Demand - Current committed capacity stands at 430MW, with an additional 100-200MW reserved for hyperscale customers expected to convert to contracts in upcoming quarters [4] - Customer demand in 2024 has exceeded management expectations, particularly from two short video customers and the largest customer [5] - Anticipated solid demand from key customers for 2025, with expectations of rising demand in remote sites driven by inference [5] Financial Projections - Management projects a higher capital expenditure (capex) of Rmb2-2.5 billion for 2025, with a focus on inventory cleanup and a high threshold for new projects (~11% yield on cost) [5] - Management expects a 10% compound annual growth rate (CAGR) in EBITDA from 2025 to 2027, which is faster than the low-to-mid single-digit growth expected in 2024 [5] - Free cash flow (FCF) for 2025 is expected to be a meaningful positive number [5] Pricing and Revenue - Management anticipates a 4% decline in market share revenue (MSR) for 2024, with an additional 2% drop expected in 2025 [5] - Spot prices are stable, but a higher revenue mix is expected from recent year orders [5] REITs and Asset Management - Private REITs are expected to see asset injections materialize sooner than public REITs, with an enterprise value (EV) of Rmb3 billion [7] - Public REITs are targeting regulatory approvals for asset injections by mid-2025, with an EV of approximately Rmb2 billion [7] - GDS aims to reduce debt by Rmb1 billion and recycle capital by over Rmb1 billion if the asset injection materializes [7] Risks - **Upside Risks**: - Progress in asset monetization via REITs at favorable valuations - Volume recovery in China leading to a pricing rebound - Accelerated sales in overseas markets or entry into new markets - Potential interest rate cuts in China or the US [14] - **Downside Risks**: - Reduction in capex by hyperscalers, particularly in AI investments - Increased competition and pricing pressure - Reversal of the downward trend in interest rates in China and the US [14] Additional Insights - The time from contract signing to full utilization is approximately 18 months, including 12 months of construction and 6 months of move-in [6] - The company has a target EV/EBITDA multiple of 11x for GDS China and 20x for GDS International, reflecting a discount due to GDSI's shorter track record [13] This summary encapsulates the key insights from the conference call, highlighting GDS Holdings Ltd's strategic direction, financial outlook, and the associated risks within the Greater China Telecoms industry.