Investment Rating - The report maintains a bullish outlook on the KR Defense sector, particularly highlighting Hyundai Rotem and Hanwha Aerospace as key players with strong order momentum and growth potential [1][4][5]. Core Insights - Hyundai Rotem is expected to announce a significant Poland EC2 contract valued at approximately $6 billion, which includes 180 K2 tanks and local production initiatives [4]. - Hanwha Aerospace has secured an L-SAM II project order worth W199 billion, enhancing its capabilities in Korea's air defense systems [5]. - Hitachi's recent investor day revealed a net debt/EBITDA leverage of 1-2x and a return on invested capital (ROIC) of 12-15%, indicating a stable financial position [1]. Detailed Highlights - **KR Defense**: Hyundai Rotem's anticipated Poland EC2 orders are a strong catalyst for growth, with investor confidence reflected in recent share price rallies [4]. Hanwha Aerospace's order win for the L-SAM II project and the approval of the Austal acquisition position it well for future projects [5]. - **Japan Auto**: Hino Motors and Mitsubishi Fuso have finalized a merger agreement with Toyota and Daimler, aiming to create synergies in the commercial vehicle segment [6]. Stanley Electric's guidance for FY25 was weaker than expected, but a large-scale share buyback was announced [6]. - **Mitsubishi Electric**: The company is focusing on digital transformation and has allocated a new M&A budget of ¥1 trillion to support its business model transformation [8]. Sector Key Newsflow - The J.P. Morgan EU Industrial Conference highlighted strong interest in electrification, data centers, and defense sectors, indicating a shift in investor focus [5][7]. - The merger between Hino and Mitsubishi Fuso is expected to yield significant benefits despite potential dilution from new share issuance [6]. - Investors are cautiously optimistic about the Asia FA & Robotics sector, with expectations of limited downside amid potential trade deals between China and the US [10]. Catalyst Calendar - Key upcoming events include the Hitachi Investor Day and the launch of the Xpeng G7 SUV, which are expected to attract significant investor attention [15].

Investment Rating - The report rates Mizuho as Overweight (OW), Mitsubishi UFJ Financial Group (MUFG) as Neutral (N), and Sumitomo Mitsui Financial Group (SMFG) as Neutral (N) [2][3][6]. Core Insights - Mizuho is projected to be the only mega bank with a return on equity (ROE) exceeding 11% [3][6]. - The report indicates a downgrade for Chongqing Rural Commercial Bank (CRCB) to Neutral due to a decline in dividend attractiveness following a 46% year-to-date rally [11]. - A survey of over 500 investors at the Asia Credit Conference suggests a majority expect the US 10-year yield to exceed 4% by the end of 2025 [15]. Detailed Highlights - Mizuho is the only mega bank forecasted to achieve an ROE above 11%, with a CET1 target of 10% and plans for accelerated buybacks [3][6]. - The Japan Consumer Finance sector is experiencing rising revolving credit card interest rates, now reaching the regulatory ceiling of 18%, while demand remains resilient despite inflation [6][7]. - The dividend yield for CRCB is now 4.3%, which is less attractive compared to peers, following its inclusion in the CSI300 Index [11][12]. Sector Key Newsflow - The report highlights that major players in Japan's consumer finance are raising interest rates on revolving credit cards to the regulatory limit, with Credit Saison leading the way [7][8]. - The Bank of Japan (BoJ) is expected to continue its quantitative tightening (QT) at a pace of -Y400 billion per quarter beyond Q2 2026, with potential adjustments based on market conditions [6][7]. - The report notes that the overall dividend play in the banking sector is becoming less attractive, particularly for CRCB, as improvements are already priced in [11].

Investment Rating - KGI Financial (2883 TT) downgraded to Neutral [3][4] Core Insights - Taiwan Insurance sector is expected to receive regulatory support, but it may be insufficient to mitigate the damage already done to earnings and capital positions [3][7] - India Insurance sector shows stronger-than-expected ULIP sales growth of 19% YoY compared to industry APE growth of 14%, indicating positive near-term prospects for HDFC Life [3][8] - SMFG (8316 JP) remains Neutral despite a raised price target, with a forecasted total shareholder return (TSR) of 60% due to ongoing buybacks [3][13] Taiwan Insurance - Regulatory measures are anticipated to support life insurers in restoring FX reserves, but the impact on earnings and capital positions is likely to be detrimental [7] - KGI's FY25e EPS and DPS have been revised down by an average of 24% and 20% respectively, reflecting the challenges posed by currency fluctuations [7][8] - KGI's price target is set at NT$18.8, with a recommendation to buy on weakness if the stock falls below NT$15 [7] India Insurance - HDFC Life's APE growth was 19% YoY, driven by strong individual and group APE growth [8] - The upcoming Insurance Amendment Bill could allow for 100% FDI in the sector, although the open architecture model may face resistance from insurers [8] SMFG - Price target raised to Y4,180, with a forecast of Y300 billion in buybacks for FY25 [13][16] - SMFG's ROE is projected to remain below 10%, while Mizuho is expected to accelerate buybacks and achieve over 11% ROE [3][13]

Investment Ratings - Coforge: Overweight (O/W) with a price target (PT) of Rs2,080 [3][4] - Qualcomm: Overweight (O/W) with a price target (PT) of $185 [3][4] - Apple: Overweight (O/W) with a price target (PT) of $240 [5] - BE Semiconductor: Overweight (O/W) with a price target (PT) of €121 [6] - Celestica: Overweight (O/W) with a price target (PT) of $115 [6] Core Insights - Coforge's management is optimistic about industry-leading growth and margin expansion, expecting a 14% EBIT margin in FY26 [3][4] - Qualcomm's acquisition of Alphawave for $2.4 billion is aimed at enhancing its Data Center portfolio, positioning it competitively in the custom AI ASIC market [6] - Apple's WWDC event revealed limited AI updates, indicating a focus on retaining its existing consumer base rather than attracting new switchers [5][6] - Taiwan's May exports surged by 38.6% year-over-year, driven by strong shipments to the US, indicating robust demand in the tech sector [9] Detailed Highlights - Coforge's proactive sales strategy and large deal execution are expected to drive robust growth in FY26, with a strong pipeline of large deals [3][4] - Qualcomm's strategic acquisition of Alphawave strengthens its position in the Data Center market, with competitors in Asia including Alchip and Mediatek [6] - Apple suppliers such as Murata, Sunny Optical, AAC, and Genius Optical are highlighted as key players in the supply chain [5][6] - BE Semiconductor is preparing for its Capital Markets Day, with expectations for market sizing and customer insights [6] - Celestica's competitive landscape in Switching includes major players like Inventec, Accton, and Arista, with significant growth opportunities identified [6] - OpenAI has reached $10 billion in annual recurring revenue, indicating strong demand for custom AI ASIC projects [6]

Investment Rating - The report maintains a Neutral rating for Tata Motors, indicating cautious optimism regarding its aggressive targets in the passenger vehicle (PV) and commercial vehicle (CV) segments [4][5]. Core Insights - Tata Motors aims for a 40% market share in the CV segment by FY30, with a target of achieving a teens EBITDA percentage and strong free cash flow (FCF) [5]. - In the PV segment, Tata Motors expects to exceed market growth, targeting a 16% market share by FY27 and 18-20% by FY30, with double-digit EBITDA and Rs 10 billion FCF for PV internal combustion engine (ICE) vehicles [5]. - The company plans to diversify its EV strategy, focusing on high-end segments and new launches, while anticipating positive EBITDA margins in the EV segment [5]. - Koito Manufacturing has postponed the expected profitability of its LiDAR business by two years, now targeting FY2030 for profitability, citing a slowdown in automobile demand and shifts in OEM development policies [3][6]. Detailed Highlights - Tata Motors presented a comprehensive outlook during its India Investor Day, emphasizing aggressive targets for market share and margins in both PV and CV segments [4][5]. - Koito's LiDAR business briefing revealed increased R&D efforts and a revised sales guidance through FY2030, with a focus on adapting to changing market conditions [3][6]. - The report notes a shift in the ADAS/AD development landscape, with developed countries focusing on rule-based autonomous driving while Chinese manufacturers adopt end-to-end self-driving technologies [6][9].

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies covered. Core Insights - The impact of China's rare-earth export ban is significant, affecting key Asian automakers like Suzuki and Ford, with production halts reported [1][5] - The sentiment around BYD has improved, with investors noting a bottoming out in sentiment, while concerns remain for Geely and Great Wall Motor [1][12] - The Indian defense sector is poised for growth, with expectations to increase defense spending to 2.5% of GDP by FY30, indicating a potential doubling of defense spending [1][11] - The EU building materials sector is showing signs of improvement, driven by positive factors such as increased defense spending and a potential recovery in residential construction [1][13] Detailed Highlights - **Japan Auto**: Suzuki halted production of its Swift model due to the rare-earth export ban but resumed operations shortly after, indicating that the situation may not be as severe as initially thought [1][5] - **China Auto Feedback**: Pricing competition has moderated, and BYD's sales volume has responded positively without significant price cuts, improving investor sentiment [1][10][12] - **Indian Defense**: The Ministry of Defense's commentary suggests that conditions are aligning for a significant increase in defense spending, attracting investor interest in various defense companies [1][11] - **EU Building Materials**: The sector is experiencing a strong move, with cement shares leading the way, supported by positive results from companies and a firming sentiment for construction recovery [1][13] Sector Key Newsflow - US auto suppliers are urging immediate action to address China's rare earth restrictions [1][13] - Suzuki's production of the Swift is set to return to normal from June 16 [1][13] - Chinese officials have summoned EV executives to discuss self-regulation in the ongoing price war [1][13] - BYD plans to nearly triple its dealer network in South Africa, reflecting its growth strategy [1][13] - China's NEV retail sales increased by 30% year-on-year in May, indicating strong market demand [1][13]

Investment Rating - The report maintains an Underweight (UW) rating on Lynas Rare Earths and a Neutral (N) rating on MP Materials [2][9]. Core Insights - The rare earths industry is facing significant supply chain disruptions due to China's export restrictions on key heavies like Terbium and Dysprosium, which are critical for electric vehicles and advanced technologies [9]. - Despite potential trade negotiations between the US and China, the damage to the supply chain may be lasting, prompting a shift towards developing non-Chinese sources of rare earths [9]. - The oil sector is expected to see strong refining margins, with a projected surplus of 2.6 million barrels per day (mbd) in Q4 2025, leading to a price floor for Brent crude between $55-60 and WTI between $50-55 [3][15]. Rare Earths Sector Summary - China controls approximately 70% of rare earth production, 85% of processing capacity, and 99% of heavies production, which has led to a scramble for alternative sources among automakers [9]. - Lynas Rare Earths and MP Materials are identified as key beneficiaries of the push for ex-China supply, with Lynas having over 85% exposure to NdPr, which is not currently restricted [9]. - The report expresses caution regarding the sustainability of the current rally in rare earth prices and the timing of commercial production volumes from alternative sources [9]. Oil Sector Summary - The report highlights five conditions necessary for crude prices to decline, with only two expected to materialize: a surge in OECD inventories and a flattening crude curve [15]. - Refining margins are anticipated to remain strong due to limited new capacity coming online, influenced by China's export restrictions and closures of US/EU plants [3][15]. - The report suggests that product stocks are expected to build, but low starting levels should support prices and margins [15].

Investment Ratings - Broadcom: Overweight (O/W) with a price target (PT) of $250 [4] - TSMC: Overweight (O/W) with a price target (PT) of $1275 [6] - Hon Hai: Overweight (O/W) with a price target (PT) of $210 [7] - Wistron: Neutral (N) with a price target (PT) of $118 [9] - Ciena: Overweight (O/W) with a price target (PT) of $86 [10] - Lumentum: Overweight (O/W) with a price target (PT) of $87 [11] - TIS: Neutral (N) with a price target (PT) of Y4,700 [12] - SCSK: Neutral (N) with a price target (PT) of Y4,400 [13] Core Insights - Broadcom is expected to see significant AI XPU growth, with AI revenues projected to rise from $12.2 billion in 2024 to $31.2 billion by 2026, surpassing street consensus [5] - TSMC maintains strong gross margins (GMs) and anticipates a revenue compound annual growth rate (CAGR) of approximately 20% through 2029, supported by price increases and a faster ramp of N2 technology [6][8] - Hon Hai's sales in May were impacted by TWD appreciation, but AI demand remains strong, with expectations of reaching 2,000 rack shipments in Q2 [7][9] - Wistron is focusing on GDR issuance to support AI system growth, with expectations of sustained revenue driven by robust demand for Dell's GB200 systems [9][15] - Ciena's revenue and order strength indicate robust growth in the optical market, driven by cloud and service provider investments [10] - Lumentum is updating its revenue expectations due to strong demand in optics, forecasting a quarterly revenue target of $500 million ahead of schedule [11] Detailed Highlights - Broadcom's AI revenue growth is expected to significantly exceed consensus estimates, with a bullish outlook for the AI sector overall [5] - TSMC's pricing strategy includes anticipated price hikes for leading-edge nodes, with a focus on maintaining high gross margins [6][8] - Hon Hai's revenue growth is expected to continue, driven by AI server demand, despite short-term currency impacts [7][9] - Wistron's capital raise is aimed at supporting AI system growth, with expectations of increased shipments in the coming months [9][15] - Ciena's strong sales trends are attributed to increased cloud investments, indicating a positive outlook for the optical market [10] - Lumentum's demand strength is leading to an upward revision in revenue forecasts, reflecting robust drivers in the optics sector [11]

Investment Rating - The report maintains an "Overweight" rating for Anta Sports [1] Core Insights - Anta Sports has continued the stable trend observed in the first quarter of this year, supported by healthy inventory levels and optimistic sales and performance [1] - The target price for Anta Sports has been raised from HKD 140 to HKD 142 [1] - The retail sales guidance for Anta Sports remains unchanged, with expected growth rates of high single digits for Anta, mid single digits for Fila, and over 30% for other brands [1] - The operating profit margin guidance is maintained, with expected margins of 20% to 25% for Anta, approximately 25% for Fila, and 25% to 30% for other brands [1] - Due to increased investment in MaiaActive and the planned acquisition of JackWolfskin to be completed in June, the earnings forecast for Anta Sports for 2025 to 2027 has been raised by 1% to 2% [1]

Investment Rating - The report assigns a "Neutral" rating to Hong Kong Exchanges and Clearing Limited (00388) with a target price of HKD 340 for the next 12 months [1] Core Insights - The report highlights that improvements in the new stock listing channels for Hong Kong Exchanges are a significant long-term benefit for the Greater China stock market, as the Stock Connect programs have fundamentally changed the investment landscape for both Hong Kong and mainland Chinese investors since their launch in 2014 [1] - It mentions that there are 26 Chinese concept stocks, which are constituents of the MSCI China and FTSE China indices, that have not yet been listed in Hong Kong, with a total market capitalization of USD 237 billion and an average daily trading volume of USD 2 billion over the past three months, representing approximately 5% and 6% of Hong Kong Exchanges' current market capitalization and daily trading volume, respectively [1] - According to sensitivity analysis, if all these stocks were to list in Hong Kong, it is anticipated that the earnings per share for Hong Kong Exchanges would increase by 6% by 2026 [1]