Investment Rating - The report assigns an "Overweight" rating to Zhejiang Huahai Pharmaceutical Co. Ltd. with a price target of Rmb22.00, indicating a potential upside of 15% from the current price of Rmb19.20 [5]. Core Insights - The strong performance of Huahai is attributed to market share gains, gross margin expansion due to a change in product mix, and successful product launches [3]. - The China formulation segment has shown the best performance, followed by API exports and US formulations [3]. - The report highlights a significant growth inflection in China's pharmaceutical export sector since May 2024, following a prolonged de-stocking cycle post-COVID-19 [3]. - The investment thesis is based on three observations: the beginning of an up-cycle in China's API industry, successful forward integration by Huahai leading to margin stabilization and expansion, and a low profit base in 2023 [3]. Financial Summary - Huahai reported a net profit range of Rmb239 million to Rmb297 million for 3Q2024, reflecting a year-over-year increase of 57% to 95% [2]. - Revenue projections for the fiscal years ending December 2023 to December 2026 are Rmb8,309 million, Rmb9,820 million, Rmb11,055 million, and Rmb12,341 million respectively [6]. - The expected EPS for the same period is projected to grow from Rmb0.57 in 2023 to Rmb1.23 in 2026 [6]. - The report indicates a P/E ratio decreasing from 25.7 in 2023 to 15.6 in 2026, suggesting improving valuation metrics over time [6].

Investment Rating - The investment rating for Bank of China Limited is Equal-weight [1][2][11]. Core Views - The report indicates that while there is good progress in the business transition of Bank of China, its valuation is less attractive compared to its Hong Kong counterpart [2][3]. - The earnings forecasts for Bank of China have been revised downwards due to the impact of mortgage rate cuts and LPR cuts, leading to a projected net interest margin (NIM) contraction [1][4]. - The report maintains a long-term view on the bank's performance, with a price target derived from a dividend discount model (DDM) remaining unchanged [1][4]. Summary by Sections Earnings Forecasts - EPS forecasts for Bank of China are adjusted to 0.74, 0.75, and 0.76 RMB for fiscal years 2024, 2025, and 2026 respectively [1]. - NIM forecasts have been revised to 1.42%, 1.36%, and 1.39% for 2024, 2025, and 2026 [4]. - The net profit growth forecasts are lowered to 0.5%, 0.4%, and 1.6% for 2024, 2025, and 2026 [1]. Key Drivers - The report highlights the drivers of growth for Bank of China, including the transition towards wealth management and asset management amid business reforms [5]. - Total asset growth is projected at 12.2% for 2023, decreasing to 6.4% in 2024 and stabilizing at 6.1% for 2025 and 2026 [4]. Risk and Reward Analysis - The risk-reward analysis indicates a positive outlook for Bank of China, despite the challenges posed by external economic factors [3][5]. - The consensus price target distribution shows a mean target of 4.20 RMB, with Morgan Stanley's price target at 4.50 RMB [3].

Investment Rating - The investment rating for Agricultural Bank of China Limited is Overweight [1][3]. Core Views - The report highlights a play on the government's economic rebalancing, with continuously improving asset quality and the highest NPL coverage ratio among the Big 5 banks [5]. - The bank has a strong deposit franchise, particularly in rural areas, leading to a stable funding structure, with deposits accounting for 78% of total liabilities in FY2023 [5]. - The valuation is attractive, with a projected 2024E dividend yield of 7.7%, compared to 5.3% for ABC-A [5]. Earnings Forecasts - Earnings forecasts for Agricultural Bank of China Limited have been revised following 2Q24 results, with net interest margin (NIM) forecasts adjusted to 1.43%/1.39%/1.42% for 2024/25/26 [1]. - Loan growth estimates have been raised to 9.2%/7.7%/6.3% for the same periods, leading to higher net interest income growth forecasts of 2.3%/5.1%/9.6% in 2024/25/26 [1]. - Net profit forecasts have been slightly revised up to 2.2%/2.7%/2.5% for 2024/25/26, with EPS estimates increased by 1.1%/1.1%/0.7% for the same years [1]. Price Target and Valuation - The price target for Agricultural Bank of China Limited is set at HK$4.40, with a bull case price target of HK$6.59 and a bear case of HK$1.55 [3][4]. - The report employs a three-stage dividend discount model with a probability-weighted approach, assigning 60% to the base case, 20% to the bull case, and 20% to the bear case [6]. Risk Reward Themes - The risk-reward chart indicates a 94% Overweight rating, with 0% Equal-weight and 6% Underweight [6]. - Key themes include pricing power being negative, with various scenarios outlined for bull, base, and bear cases reflecting different economic conditions [6][7].

Investment Rating - The report maintains an Equal-weight rating for ASML Holding NV with a price target of €800 [7]. Core Insights - The company is expected to signal FY25 sales at the mid-point of the guidance range of €30-40 billion, with a forecast of €34.8 billion and EPS of €29.36 [3][11]. - The order intake for Q3 is anticipated to be around €4.5-5.0 billion, with expectations for Q4 to include early 2026 ordering [3][4]. - There is a focus on TSMC's ongoing spending and the sustainability of China DUV sales, which accounted for 49% of ASML's sales in 1H24 [4][13]. - The report highlights potential growth in HBM demand, despite weakness in DRAM commodity pricing [3][21]. Financial Projections - FY24 revenue is projected at €27.187 billion, with an EPS of €18.51, while FY25 is expected to see revenue growth to €34.805 billion and EPS of €29.36 [8][25]. - The gross margin is expected to improve from 51.5% in FY24 to 55% in FY25, with EBIT margin increasing from 31.1% to 37.9% [8][25]. - The valuation is projected at 25x 2026 estimated EPS of €32, leading to a price target of €800 [5]. Market Dynamics - The report notes that slowing capex at other foundries like Samsung and Intel will emphasize growth at TSMC into 2025-26 [3][4]. - There are concerns regarding potential normalization in China spending, which could impact ASML's sales growth in FY26 [13][21]. - The upcoming earnings report is expected to address management's guidance for 2025 and discuss long-term trends, including gross margin improvements and product roadmaps [17][18].

Investment Rating - The investment rating for PDD Holdings Inc is Overweight, with a price target of US$150.00, indicating a potential upside of 6% from the current price of US$141.47 [6]. Core Insights - Temu has expanded its market presence by entering four countries with a fully-entrusted model and one with a semi-entrusted model as of September 2024 [2][3]. - Temu's global accumulated downloads reached 747 million, with significant contributions from the US (26%), EU (28%), and LatAM (23%) [3]. - Monthly downloads for Temu in September were 56 million, slightly down from 59 million in August, with Colombia leading at 7.1 million downloads [3]. - Monthly Active Users (MAU) for Temu increased to 311 million in September, up from 290 million in August, representing 92% of Amazon's global MAU [3]. - Daily Active Users (DAU) for Temu reached 32.2 million in September, compared to 30.8 million in August, with Amazon's DAU at 98 million [3]. Summary by Sections Company Overview - PDD Holdings Inc operates in the China Internet and Other Services sector, with a market capitalization of US$182.68 billion and an enterprise value of US$145.98 billion [6]. Financial Metrics - For the fiscal year ending December 2023, PDD Holdings is projected to have a revenue of RMB 247.64 billion, with an EPS of RMB 41.12 [6]. - The company is expected to see revenue growth to RMB 513.22 billion by December 2026, with EPS projected to reach RMB 89.10 [6]. Valuation Metrics - The P/E ratio for PDD Holdings is currently 25.3, expected to drop to 11.2 by December 2026, indicating improving valuation over time [6]. - The Return on Equity (ROE) is projected to decrease from 51.0% in 2023 to 30.2% by 2026, reflecting potential challenges in maintaining high profitability [6].

Investment Rating - The report does not explicitly provide an investment rating for the industry or specific companies. Core Insights - The report highlights significant developments in ESG regulations in North America, particularly focusing on the implications of new laws and guidelines for companies operating in the region [1][2][6]. Summary by Sections ESG Regulatory Developments - The US Supreme Court has allowed President Biden's fossil fuel rule, which includes new federal air pollution regulations targeting methane emissions in the Oil & Gas sector [1]. - California has passed SB-219, amending climate disclosure rules to require companies generating over $1 billion in annual revenues to disclose their GHG emissions starting in 2026 [2]. - The SEC has dissolved its Climate and ESG Enforcement Task Force, which previously focused on enforcing ESG disclosure compliance [2]. Key Legislative Actions - The HR-9801 bill aims to reform the interconnection queue process for US grid operators, facilitating a more efficient review process for clean energy projects [1]. - The Manchin-Barrasso Energy Permitting Reform Act of 2024 seeks to accelerate the permitting process for energy projects, including oil, gas, and renewable energy [1][6]. - The Commodity Futures Trading Commission (CFTC) has approved guidance for trading voluntary carbon credit derivatives, enhancing market transparency [1]. Future Tracking Items - Key items to monitor include the SEC's ESG Disclosures for Asset Managers rule and the EPA's GHG emissions guidelines for existing natural gas power plants, both pending finalization [6]. - Legislative progress on the Manchin-Barrasso Energy Permitting Reform Act and the anti-ESG state regulation landscape is also crucial, as over 75% of states have pending or enacted legislation on ESG [6][12]. International Developments - In Canada, proposed updates to the Environmental Protection Act and new sustainability disclosure standards are under consideration [15]. - Latin American countries like Argentina, Brazil, and Chile are developing sustainable finance taxonomies to enhance transparency and align with international standards [16].

Investment Rating - The report maintains an "Overweight" rating for Anta Sports, indicating an expectation of outperforming the average total return of the stocks in the coverage universe [10]. Core Insights - The China sportswear industry showed encouraging performance during the Golden Week Holiday, with notable retail sales growth for leading brands such as Anta and Li Ning, exceeding previous expectations [1]. - Anta's outdoor category has seen a sales contribution of approximately 15%, driven by enhanced product development and competitive pricing [2]. - Kolon is experiencing strong momentum with improved operational metrics and aims to exceed its 2024 sales target of Rmb15 million [2]. - Bosideng's self-operated business reported over 30% retail sales growth in eastern China, driven by winter apparel [1]. - Li Ning's operational metrics improved despite flat retail sales, indicating better conversion rates and average selling prices [5]. Summary by Company Anta - Retail sales increased in the high-teens, outperforming expectations, with a strong contribution from the outdoor category [1][2]. - The brand has successfully elevated its equity through new store formats in high-end shopping malls [2]. Kolon - The company is confident in beating its 2024 sales target, supported by a strong product mix and improved operating metrics [2]. Bosideng - The company maintains guidance for mid-teens sales growth, with self-operated sales growth exceeding 20% [5]. Li Ning - Despite a decline in traffic, operational metrics improved, and the company is focusing on enhancing its product offerings [5].

North America Equity Research 10 October 2024 J P M O R G A N Healthcare Technology & Distribution Top 10 Discussion Topics in Our Space Into Year End | --- | --- | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------- ...

Investment Rating - The report maintains an "Overweight" (buy) rating for Will Semiconductor [1][5][11]. Core Insights - Will Semiconductor is expected to experience a rapid margin recovery, with preliminary results indicating a significant increase in sales and net profit for 3Q24, driven by strong design wins and market share gains in the high-end smartphone segment [1][2]. - The company is projected to achieve a sales and earnings compound annual growth rate (CAGR) of 24% and 128% respectively from 2024 to 2026, supported by a robust product pipeline and an optimized cost structure [2][5]. - The stock is currently trading at a trough valuation of 28x forward PE, which is considered attractive given the faster-than-expected recovery in profitability [2][5]. Summary by Sections Financial Performance - Will Semiconductor reported preliminary 9M24 results with sales growth of 24-26% and net profit growth of 515-567% year-over-year [1]. - For 3Q24, the company likely achieved sales of Rmb6.8 billion, reflecting a 5% quarter-over-quarter and 9% year-over-year increase, and a net profit of Rmb1.0 billion, representing a 24% quarter-over-quarter and 364% year-over-year increase [1][2]. Market Position and Strategy - As the third-largest CMOS Image Sensor (CIS) supplier globally, Will Semiconductor is positioned to reaccelerate its growth due to solid market share gains and a diversified product offering [5]. - The company is expected to continue gaining market share in higher-end smartphone models, despite limited seasonal volume growth in the broader Android smartphone market [2][5]. Valuation and Price Target - The price target for Will Semiconductor is set at Rmb162.00, based on a 30x one-year forward PE, which aligns with the average for A-share peers [5][2].

Investment Rating - The report does not explicitly provide an investment rating for the industry [19]. Core Insights - Singapore's clean product inventories decreased by approximately 1.3 million barrels week-over-week, with middle distillates at 10,587 kbbls and light distillates at 14,189 kbbls, while fuel oil inventories increased to 17,585 kbbls [1][3]. - In the ARA region, gasoil inventories fell to 2,310 ktonnes, gasoline inventories rose to 1,092 ktonnes, and fuel oil inventories decreased to 1,235 ktonnes [1][4]. - Overall, total clean product inventories in both Singapore and ARA are within the middle of their seasonal ranges, indicating stable supply dynamics [1][4]. Summary by Sections Singapore Inventory Data - Middle distillates: This week at 10,587 kbbls, down from 10,742 kbbls last week, with a year-over-year increase of 1,032 kbbls [3]. - Light distillates: This week at 14,189 kbbls, down from 15,314 kbbls last week, with a year-over-year increase of 1,931 kbbls [3]. - Fuel oil: This week at 17,585 kbbls, up from 16,758 kbbls last week, but down from 17,974 kbbls a year ago [3]. ARA Inventory Data - Gasoil: This week at 2,310 ktonnes, down from 2,428 ktonnes last week, with a year-over-year increase of 483 ktonnes [4]. - Gasoline: This week at 1,092 ktonnes, up from 970 ktonnes last week, but down from 1,363 ktonnes a year ago [4]. - Fuel oil: This week at 1,235 ktonnes, down from 1,372 ktonnes last week, with a year-over-year increase of 158 ktonnes [4]. Crack Spreads - Singapore 321 crack spreads decreased week-over-week and are in the bottom half of the seasonal range, while European 321 crack spreads also decreased and are similarly positioned [1]. - Gasoline cracks fell week-over-week in both regions, while diesel cracks decreased in Singapore and remained flat in Europe [1].