Investment Rating - The report does not explicitly provide an investment rating for the global industry sector Core Insights - Global manufacturing has faced challenges over the past two years, with a modest growth rate of 0.9% contributing to the overall GDP increase of 6.3% since mid-2022, primarily driven by the services sector [4][6] - Despite a brief recovery in 2Q24, global industry growth remains sluggish, with a forecasted annualized growth rate of just above 1% [4][6] - Business surveys indicate a concerning trend, with deteriorating signals for both production and final demand, suggesting potential stagnation or contraction in global manufacturing [4][14] Summary by Sections Global Economic Overview - The global economy has seen an imbalanced expansion, with services contributing significantly to GDP growth while the industrial sector has struggled [4][6] - The services sector has added 5.6 percentage points to global GDP growth, while the industrial sector has only contributed 0.7 percentage points [4] Manufacturing Performance - Global factory output has shown a lackluster growth of approximately 1% annualized rate, with a slight acceleration to 1.6% in 2Q24 after a contraction in 1Q24 [6][10] - Consumer demand remains resilient, particularly outside of China, supporting some growth in manufacturing [4][6] Demand and Supply Imbalances - There are significant imbalances between supply and demand, with the US experiencing higher consumer demand compared to its production capabilities, while China has been a weak link in demand despite being a major supplier [12][14] - Political tensions and trade imbalances may exacerbate these issues, potentially leading to further economic challenges [12][14] Business Sentiment and Surveys - Business surveys have shown a marked deterioration, with the J.P. Morgan global manufacturing output PMI dropping below 50 for the first time since December of the previous year, indicating a slight contraction in output [14][17] - The decline in the output PMI is concerning, as it reflects broader weaknesses in demand signals, with new orders PMI also showing significant drops [19][21] Inventory Dynamics - Inventory levels have fluctuated significantly, with recent signals indicating a potential oversupply that may need to be corrected in the coming months [23][26] - The relationship between inventory growth and final demand has shifted, suggesting that manufacturers may need to adjust production levels accordingly [23][26]

Investment Rating - The investment rating for Advanced Micro Devices (AMD) is Equal-weight [8][18][41] Core Insights - AMD has launched the new Zen 5 server architecture, which is expected to enhance its leadership position in the server market, particularly with the MI350 product [2][10] - The MI300 has performed well in its first year, contributing to a projected $4.5 billion in AI processor revenue, but the overall market for AI is anticipated to exceed $100 billion [6][12] - AMD's server opportunity is viewed positively, with expectations for share gains in 2025, although the pace of these gains will depend on the broader server refresh cycle [10][12] Summary by Sections Product Developments - AMD introduced the MI325X and previewed the MI350X, with the latter expected to support higher memory content and improved performance metrics [10][12] - The MI350X is projected to offer a significant uplift in inference performance, with AMD targeting a total addressable market (TAM) growth to $500 billion by 2028 [12][13] Market Position - AMD is seen as a strong competitor in the server market, with the potential for share gains against Intel, particularly as the server market recovers from previous lows [10][12] - The company has established partnerships with major cloud providers, which is expected to bolster its market presence [10][12] Financial Projections - The price target for AMD is set at $178, reflecting a P/E ratio of approximately 41x based on FY2025 estimates [15][20] - Revenue projections indicate growth from $22.68 billion in 2023 to $40.83 billion by 2026, with non-GAAP EPS expected to rise from $2.66 to $6.59 over the same period [21][22]

M Update Podcast | Metals & Mining Tracker | Europe October 11, 2024 09:44 AM GMT HRC tug-of-war China's HRC prices have rallied since the recent policy pivot, causing the EU-China HRC spread to fall significantly, disincentivising imports. While we note the impact of EU demand weakness, we argue that a positive dynamic in the seaborne market will have a far greater impact on EU prices/ margins. Play Audio Related Research: European Metals & Mining Tracker: HRC tug-of-war (October 10, 2024) | --- | --- | |- ...

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - Emerging Market Debt Dedicated (EMDD) funds experienced significant inflows of US$1.2 billion this week, a notable increase from US$52 million in the previous week [2] - Hard currency fund inflows increased to US$335 million from US$219 million, while local currency fund flows turned positive with inflows of US$689 million compared to outflows of US$52 million last week [2][3] - Year-to-date returns for hard currency and local currency stand at 7.5% and 2.3%, respectively [2] Summary by Sections EM Flows - EMDD funds saw inflows of US$1.2 billion this week, a significant increase from US$52 million the previous week [2] - Hard currency funds had inflows of US$335 million, up from US$219 million, while sovereign funds shifted to outflows of US$304 million from inflows of US$235 million [2] - Local currency funds saw inflows of US$689 million, a rebound from outflows of US$52 million [2] EM Credit Issuance - Total issuance for the week was US$15.1 billion, compared to US$9.7 billion the previous week [3] - Year-to-date sovereign issuance reached US$163.8 billion, which is US$52.2 billion higher than the same point in 2023 [3] ESG Issuance - There was US$3.5 billion in ESG-labelled bond issuance this week, bringing the year-to-date total to US$114.9 billion [6] - Hard currency ESG funds saw inflows of US$172 million, while local currency ESG funds experienced outflows of US$6 million [6] Cumulative Flows - Cumulative flows for EM debt dedicated funds show a significant divergence between hard currency and local currency flows, with hard currency flows remaining positive while local currency flows have fluctuated [13][16]

Investment Rating - The industry investment rating is classified as Attractive [1]. Core Insights - The report highlights that the domestic bauxite market in China is tight, with year-to-date production down 16%. Alumina supply is also constrained, despite 1 million tons of new capacity starting this month. High-profit alumina plants are operating at high utilization rates without proper maintenance, leading to increased maintenance activities. The inventory of alumina at aluminum plants is only 12 days, down 22% year-over-year. Near-term bauxite and alumina prices in China are expected to receive support from supply tightness [1]. - Major beneficiaries identified in the report are Chalco and Hongqiao, both of which are net long in alumina and possess their own bauxite supply [1]. Summary by Sections Supply Issues - A large bauxite mine in Guinea is experiencing shipment issues due to a dispute with the government over increased logistics-related fees. This mine currently ships 7 million tons to China annually. A resolution is expected, but at a higher cost. Chinese alumina plants have an average bauxite inventory of approximately 1-2 weeks, indicating that prolonged shipment disruptions could impact alumina supply [1]. Market Conditions - The report notes that the alumina supply in China remains tight, with the inventory at aluminum plants only covering 12 days. This situation is exacerbated by the high utilization of alumina plants and ongoing maintenance activities [1]. Company Ratings - The report provides specific ratings for companies within the industry, including: - Aluminum Corp. of China Ltd. (601600.SS) - Overweight - China Hongqiao Group (1378.HK) - Overweight - Chalco and Hongqiao are highlighted as major beneficiaries due to their positions in the alumina market [1][16][17].

M Idea Gaming, Lodging and Real Estate | Asia Pacific October 11, 2024 05:11 PM GMT TWA#41: Is Shanghai Shining? Luxury mall visit in Shanghai revealed oversupply but resiliency. Golden Week in Macau was strong, but 3Q margin could disappoint, and EBITDA revision for 2024/25 is negative. Could MoF press conference (Oct 12) change that? Prefer Sands, Godrej and Phoenix. But, Macau 3Q EBITDA will drop by 8% QoQ, resulting in negative revisions for 2024/25 estimates. HK Property residential sentiment is improv ...

Investment Rating - The report indicates a positive outlook for the Chinese market, suggesting a potential technical rebound in the stock market with an estimated 10% upside [1][4]. Core Insights - The report highlights a significant policy shift in response to deflationary pressures, with expectations of a supplementary budget of 1-2 trillion RMB to support consumption and a potential interest rate cut of 10-20 basis points by the end of the year [1][4][10]. - It emphasizes that while the government is beginning to address deflation, the path to sustained re-inflation will be challenging and may require substantial fiscal stimulus exceeding 1 trillion USD over the next two years [8][13]. Summary by Sections Policy Changes - The report notes that the government is expected to implement a supplementary budget aimed at boosting consumption, providing financial support to low-income groups, and assisting local governments in maintaining their operational expenditures [4][10]. - It anticipates that the central bank will adopt a more aggressive stance on interest rate cuts, with a potential reduction of 20 basis points by year-end [4][10]. Economic Outlook - The report forecasts a gradual improvement in GDP growth rates, projecting a rise from 3% in Q2-Q3 to approximately 5% in the coming quarters due to the anticipated policy measures [1][11]. - It also indicates that the deflationary cycle is becoming more entrenched, necessitating stronger policy interventions to break the cycle [10][11]. Market Strategy - The report suggests that investors should focus on stocks with dividend yields significantly above the borrowing cost of 2.25%, as well as A+H shares that may benefit from policy support [1][15]. - It provides specific stock screening criteria for potential beneficiaries of the anticipated monetary and fiscal policies [16]. Long-term Considerations - The report warns that achieving sustainable re-inflation will require addressing structural issues in the economy, particularly in the real estate sector and consumer spending [13][14]. - It draws parallels with Japan's historical challenges in combating deflation, emphasizing the need for comprehensive and coordinated policy measures [13][14].

Investment Rating - The report does not explicitly provide an investment rating for the industry. Core Insights - The report suggests that corporate M&A may recover quicker in the current rate-cutting cycle compared to previous cycles, particularly in the US and Europe [7][35][87]. - The US economy is expected to remain resilient without a significant recession, which typically accompanies rate cuts [3][87]. - Corporates have accumulated significant cash reserves during the pandemic, with approximately $4.5 trillion in private capital available for deployment [5][178]. - The report highlights a growing number of stressed M&A targets, indicating potential opportunities for acquisitions [6][86]. Summary by Sections Executive Summary and Macro Backdrop - The report anticipates no recession or material economic slowdown, which is often associated with rate-cutting cycles [3]. - Corporates have deleveraged during the market downturn in 2022, benefiting from tight credit spreads that allow for potential borrowing [4]. - The report notes that deal-making tends to rise with equity markets, which are expected to remain strong in the absence of a recession [7][96]. What Happens When Rate Cuts Start? - In the US, corporate M&A typically slows as interest rates fall due to recession fears, while European corporates are less affected by rate changes due to a bank-dominated debt environment [7][35][59]. - The report indicates that M&A activity in Europe may benefit from falling rates, as the market is less tech-heavy and more diversified [40][41]. Corporate Capital Allocation in an Election Year - Corporates are beginning to invest more, with a focus on M&A deals that promise strong immediate cash flow [134]. - The report highlights that large cash balances are prevalent across various sectors, not just in technology [111][117]. Dealmaking Trends - The report notes a rebound in buyout deals and private credit activity, indicating a strong momentum in deal-making [47][48]. - It emphasizes that US corporate deal-making is negatively affected by market volatility, which has been decreasing, leading to more certainty post-election [93][96]. - The report also mentions that valuations remain resilient during rate cuts, with the exception of the Global Financial Crisis [101][104]. Market Forecasts - The S&P 500 is projected to reach 5750 by Q4 2024, with expectations for stable credit spreads and oil prices [32][96]. - The report anticipates that the overall theme will support risk assets, albeit with some volatility [32]. Private Capital and Fundraising - Private capital fundraising has slowed, but the total AUM stands at approximately $14 trillion, with around $4.5 trillion in dry powder available for investment [178]. - The report indicates that large deals are recovering first, supported by a risk appetite in private credit [181]. Sector Performance - The report highlights sector-specific performance, noting significant year-over-year changes in deal values across various sectors, with technology and media showing notable activity [167][168]. Conclusion - The report concludes that the current environment presents unique opportunities for M&A, particularly in light of the available capital and the expected resilience of the economy [87][96].

Investment Rating - The report assigns an "Overweight" rating to Asia Vital Components Co. Ltd. (AVC) with a price target of NT$875.00, indicating a potential upside of 45% from the current price of NT$605.00 [6][18]. Core Insights - AVC is expected to increase its AI infrastructure exposure to 25% of total revenue and 35% of total profit by 2026, driven by a full range of cooling solutions including server chassis and liquid cooling systems [2][3]. - The company has a strong position in the market for 3D vapor chambers and is expected to maintain its dominance in upcoming server platforms, which will enhance its supply relationships with major cloud service providers [3][20]. - Significant revenue growth is anticipated from liquid cooling systems, with a projected increase in AI-related revenue by 42% in 2025 and 47% in 2026 due to higher cold plate module supply share [4][30]. Summary by Sections Revenue and Profit Projections - AVC's revenue is projected to grow from NT$59,194 million in FY23 to NT$104,101 million by FY26, with a corresponding increase in EPS from NT$14.11 to NT$35.03 [6][30]. - AI server-related revenue is expected to rise significantly, reaching NT$26,186 million by 2026, contributing 34.7% to total gross profit [23][30]. Product Offerings and Market Position - AVC provides a comprehensive range of thermal solutions, including passive and active cooling components, which are essential for consumer electronics and industrial applications [19][21]. - The company is a major supplier of cold plates for NVIDIA's GB200 server rack liquid cooling systems, with expectations to capture over 50% of the total cold plate market share by 2025 [24][48]. Capacity and Production - AVC's production capacity for cold plates is currently at 50,000 units per month in China and is expected to expand to 100,000 units in Vietnam by the end of 2024 [26][30]. - The company has initiated production of 3D vapor chambers in Vietnam, with daily production expected to reach 5,000 to 8,000 units [25][30]. Market Trends and Future Outlook - The total addressable market (TAM) for liquid cooling related to the GB200 server rack system is projected to grow significantly, reaching US$2.6 billion in 2025 and continuing to expand in subsequent years [45][46]. - AVC's ongoing operating margin is expected to improve to 18% by 2026, up from 12.5% in 2023, supported by strong demand for AI-related products [30][30].

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