M Foundation | --- | --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

Investment Rating - The semiconductor production equipment industry in Japan is rated as Attractive [2]. Core Insights - The adoption of advanced etching technologies, such as cryo etching, is expected to significantly enhance processing capacity for 3D-NAND, with companies like Lam Research and Tokyo Electron leading the charge [2][4]. - The recent ADMETA conference highlighted the growing business opportunities in metal wiring and semiconductor technologies, particularly with the introduction of CoWoW structures and PUC in 3D-NAND production [2][5][6]. - New etching equipment has demonstrated a reduction in greenhouse gas emissions by 84% and electricity consumption by 43% compared to conventional solutions, indicating a shift towards more eco-friendly manufacturing processes [3]. Summary by Sections Industry Overview - The semiconductor production equipment industry is experiencing rapid advancements, particularly in etching technologies, which are crucial for the production of 3D-NAND [2][3]. Key Players - Tokyo Electron is making strides in cryo etching equipment, while Lam Research is launching competing solutions, indicating a competitive landscape [2][4]. - Kioxia is mass-producing BiCS8 with 218 layers and has adopted the PUC structure, which may create further business opportunities for companies like DISCO and Tokyo Seimitsu [5]. Technological Developments - The introduction of faster etching rates allows for more efficient processing of 3D-NAND stacks, reducing the number of steps required in the etching process [3]. - Sony's announcement of a CoWoW-based CMOS Image Sensor is expected to drive demand for advanced dicing technologies, presenting additional opportunities for DISCO [6]. Market Trends - The industry is witnessing a trend towards eco-friendly solutions, with new technologies significantly lowering emissions and energy consumption [3]. - The need for more dicing processes in CoWoW structures compared to traditional methods may lead to increased demand for specialized equipment [6]. Stock Ratings - Key companies in the semiconductor production equipment sector have varying ratings, with Advantest, DISCO, and Tokyo Electron rated as Overweight, while Nikon is rated Underweight [20].

Investment Rating - The industry investment rating is In-Line [6]. Core Insights - The overall ship orders for 2024 are projected to annualize at approximately 2,300 ships, representing a 4% increase year-over-year. However, the contracting momentum is expected to weaken heading into 2025 [3][5]. - Tanker contracting has significantly declined, with a 70% decrease quarter-over-quarter and a 20% decrease year-over-year in 3Q24. This trend is attributed to both technical factors and fundamental issues such as lower tanker rates and oil price uncertainty [7][8]. - Despite the softer contracting data, consensus estimates for Alfa Laval's Marine orders have increased by 13% and 8% for 3Q24 and 4Q24, respectively, indicating potential order momentum [4][8]. Summary by Sections Ship Orders - In September 2024, a total of 90 vessels were ordered, with 380 vessels ordered in 3Q24, which is 50% lower than the 770 ships ordered in 2Q24 and 20% lower year-over-year [5]. - The contracting strength in 2024 has been primarily driven by containerships, gas carriers, and tankers, with containership contracting remaining robust [5][7]. Company-Specific Insights - For Alfa Laval, the Marine division faces challenges with tanker contracting rolling off, but the increase in high-margin Pumping Systems orders may support margins [4]. - Wartsila's order runway appears well covered by existing shipbuilding order books, particularly in the cruise and gas carrier segments, with CEO Håkan Agnevall indicating that Marine OE orders may not peak until 2027 [4][8]. Market Dynamics - The report highlights that the drivers for incremental order growth in gas carriers are not immediately apparent, and the overall vessel orders are unlikely to see growth in 2025 [7]. - The report notes that the average monthly contracting for gas carriers has slowed to approximately 6 ships, which is about 40% of the levels seen earlier in the year [7].

Investment Rating - The report indicates a preference for maturities inside 15 years, suggesting a cautious approach to the current market conditions [3][4]. Core Insights - The report forecasts a supply of $28 billion over the next three weeks, with net odd lot demand rising to over $300 million per day, which is expected to support tighter spreads [3][4]. - Money fund demand remains healthy, and there is an expectation that SIFMA may tighten this week [3]. - Credit quality appears stable, with positive early indicators for college enrollments, which should support mid-tier education credit [4][29]. - Life care facilities have outperformed high-yield indices by nearly 400 basis points this year, indicating strong demand in the senior living sector [33][35]. Summary by Sections Supply and Demand - A forecast of $28 billion in supply over the next three weeks is noted, with a range of $24-32 billion [3]. - Net odd lot demand has increased to over $300 million per day, which is anticipated to support tighter spreads [3]. - Money fund demand is healthy, and SIFMA is expected to tighten this week [3]. Market Conditions - The report suggests that October is looking positive, with expectations of positive excess returns compared to September, which posted zero excess returns [3]. - The report emphasizes a cautious approach to chasing tighter spreads, indicating a belief that spreads may remain in a narrow range [5]. Credit Quality - Credit quality remains stable, with early enrollment data for K-12 and higher education showing positive trends, which should support mid-tier education credit [4][29]. - The report highlights that life care facilities have significantly outperformed high-yield indices, suggesting strong demand in the senior living sector [33][35]. Dealer Positioning - Dealer balance sheets have decreased across most rating and sector buckets, indicating a cautious stance in the market [3][21]. - The report notes that most active mutual funds remain quiet compared to previous years, which contributes to a cautious outlook on lower-quality names [5].

Investment Rating - The report provides an "In-Line" investment rating for the AI semiconductor industry, indicating a balanced outlook on the sector's performance. Core Insights - NVIDIA's Blackwell production revenue in 1Q25 is expected to surpass that of Hopper, driven by strong demand for its next-generation AI chip, with production volume projected to reach 750k-800k units, nearly tripling from 4Q24 [1][2] - The AI semiconductor supply chain is experiencing significant growth, with NVIDIA's revenue from Blackwell chips anticipated to contribute between US$5-10 billion in 4Q24 [1][2] - The introduction of new GPU dies and server racks, such as the B112 and GB300A, is set to enhance performance and meet increasing demand in the AI sector [3][4] Summary by Sections AI Supply Chain - The GPU testing supply chain is expected to see capacity utilization below 50% in October and November, increasing to over 60% in December [2] - NVIDIA's upcoming GPU die, B112, will enter production in 1H25, offering improved performance while utilizing TSMC's 4nm technology [3] AI Downstream Supply Chain - NVIDIA is likely to adopt sockets for its data center GPUs starting with Blackwell, which may positively impact suppliers like Lotes in the mid to long term [6] - Hon Hai reported a 34% month-over-month increase in September sales, driven by AI-related server shipments [6] AI Semiconductor Demand - The report forecasts nearly US$380 billion in cloud capex across 2024-2025, indicating strong investment capabilities among major cloud service providers [20] - Hyperscalers are expected to increase their AI server procurement, with a notable shift in capex allocation among key players like Microsoft and Amazon [21][23] AI Chip Vendor Insights - NVIDIA's AI chip consumption is projected to generate significant revenue, with the company expected to be the largest customer for HBM in 2024 [24][26] - The report highlights the competitive landscape among AI chip vendors, with NVIDIA's H100 and H200 chips leading in market share and performance metrics [35][36]

Investment Rating - The report does not explicitly state an investment rating for the natural gas industry or specific companies within it. Core Insights - The average pre-dividend free cash flow (FCF) break-even for the group in 2025 is approximately $2.37 per Mcf, with CTRA leading at $1.24 per Mcf, followed by EQT at $2.35 per Mcf and AR at $2.42 per Mcf [2] - In 2026, the pre-dividend FCF break-even remains at $2.37 per Mcf, with CTRA again leading at $1.36 per Mcf, followed by EQT at $2.20 per Mcf and AR at $2.31 per Mcf [2] - The post-dividend FCF break-even for the group in 2025 is around $2.65 per Mcf, with CTRA at $2.12 per Mcf, EQT at $2.53 per Mcf, and RRC at $2.76 per Mcf [2] - The post-dividend FCF break-even in 2026 increases to approximately $2.70 per Mcf, with CTRA at $2.14 per Mcf, EQT at $2.39 per Mcf, and RRC at $2.68 per Mcf [2] Natural Gas Production - Lower 48 gas production increased by 0.5% week-over-week to 100.9 Bcf/d, with notable growth from the Gulf of Mexico, Permian, and Oklahoma regions [3] - Overall, Lower 48 gas production averaged 101.0 Bcf/d in October to date, which is 0.4 Bcf/d above the September average [3] - Natural gas production in the Appalachia region was reported at 33.91 Bcf/d for October 2024 [29] Natural Gas Consumption - U.S. natural gas consumption increased by 4% year-over-year, driven by higher industrial and residential/commercial demand [3] - Total natural gas demand for the week was reported at 78.11 Bcf/d, a decrease from the previous week [51] - Residential/commercial demand was 9.56 Bcf/d, reflecting a 4% increase week-over-week [51] Natural Gas Prices - Henry Hub prices rose by 4% week-over-week to $2.75 per MMBtu [4] - Asian LNG prices decreased by 1% week-over-week to $13.10 per Mcf, while European gas prices increased by 2% to $12.91 per Mcf [4] - 2024 Henry Hub futures increased by 12% week-over-week to $3.18 per MMBtu [4] Natural Gas Storage - Natural gas storage levels are currently 6% above the five-year average, with a reported storage build of 55 Bcf [4] - Total gas storage stands at 3.55 Tcf, which is 3% above prior-year levels [4] Rig Count - The total U.S. gas rig count increased by 3 week-over-week to 102 rigs, with increases in both the Appalachia and Haynesville basins [4]

Investment Rating - The overall industry investment rating is "Attractive" [6]. Core Insights - The construction machinery sector is experiencing a recovery, particularly in excavator sales, with expectations for positive sales growth in 3Q24 driven by overseas growth and a narrowing of domestic declines [3][4]. - Individual company performance varies significantly, with Hengli and Dingli expected to outperform their peers in terms of revenue and net profit growth [3][5]. Summary by Company Jiangsu Hengli Hydraulic Co., Ltd. (601100.SS) - Expected to achieve revenue growth of 18% YoY and net profit growth of 30% in 3Q24, supported by strong domestic excavator recovery and market share gains in non-excavator machinery [3][10]. - Price target raised from Rmb63.00 to Rmb69.00, reflecting improved fundamentals and strong competitiveness [22]. Zhejiang Dingli Machinery Co., Ltd. (603338.SS) - Anticipated revenue growth of 34% YoY and net profit growth of 45% in 3Q24, driven by strong overseas sales [3][10]. - Price target increased from Rmb58.00 to Rmb69.00, aligning with its historical P/B average [25]. Sany Heavy Industry Co., Ltd. (600031.SZ) - Expected revenue growth of 10% YoY and net profit growth of 33% in 3Q24, benefiting from domestic excavator recovery and overseas demand [3][10]. - Price target raised from Rmb14.00 to Rmb20.00, reflecting stronger market share gains [14]. Zoomlion Heavy Industry (000157.SZ; 1157.HK) - Projected revenue growth of 2% YoY and a net profit decline of 8% in 3Q24, facing challenges from a significant domestic sales decline [3][10]. - Price target increased from HK$3.90 to HK$5.00 for H-shares and from Rmb6.00 to Rmb7.70 for A-shares, based on historical P/B metrics [17].

Investment Rating - The report maintains an "Overweight" (OW) rating for India and Australia, while reducing the "Underweight" (UW) position for China to -50 basis points [2][4]. Core Insights - Geopolitical risks, the US election, and policy uncertainty for 2025 are significant concerns for the upcoming months [2]. - The report indicates a preference for defensive investments over cyclical ones due to concerns about oil prices and global growth risks [2]. - Japan's OW position is reduced to +50 basis points, reflecting sensitivity to global growth and oil price risks [2]. - The report increases UW positions on Korea and Taiwan to -150 basis points each, while adding to OW positions on Brazil and South Africa [2]. Summary by Sections Market Allocations - Current active allocations show Japan at +50 bps, China at -50 bps, India at +150 bps, Taiwan at -150 bps, and Australia at +50 bps [4]. - Brazil and South Africa have been added to OW positions, while Korea and Taiwan have been increased to UW positions [2][4]. Earnings and Valuations - The report provides earnings forecasts and valuations for various indices, with the MSCI EM index target price set at 1,410, reflecting a 20% increase [7][9]. - The report highlights that the consensus EPS growth for MSCI EM is projected at 13% for the upcoming year [9]. Economic Indicators - The report notes that China has re-rated significantly, now valued similarly to Germany and Singapore [21][22]. - It emphasizes the importance of the working-age population trends in India and China, with India showing favorable demographic trends [46][47].

Investment Rating - The investment rating for Guangzhou Automobile Group is Overweight [3][15]. Core Viewpoints - The stock GAC-H rose 19% on October 7, 2024, outperforming the market and H-share peers, driven by potential short position coverage and an expanded A/H share premium of 220% from a previous low of approximately 50% in 2018 [2]. - Key points to monitor include southbound flow due to elevated A/H premium, deepening SOE reform, potential accelerated spin-off of GAC's EV subsidiary Aion, and fundamental vehicle demand supported by capital market rally [2]. Financial Metrics - Price target is set at HK$3.70 with a downside of 3% from the current price of HK$3.81 [3]. - Market capitalization is approximately RMB 72,565 million with an average daily trading value of HK$53 million [3]. - For the fiscal year ending December 2023, net revenue is projected at RMB 129,706 million, with EPS at RMB 0.42 [3]. - The P/E ratio is 7.7, and the dividend yield is 7.4% [3]. Future Projections - Revenue projections for the next few years are as follows: RMB 116,202 million for 2024, RMB 125,991 million for 2025, and RMB 134,303 million for 2026 [3]. - Expected EPS for 2024 and 2025 is RMB 0.31, with a slight increase to RMB 0.35 in 2026 [3]. - The return on equity (ROE) is expected to be 3.9% in 2023, declining to 2.8% in 2024 and 2025, before recovering to 3.1% in 2026 [3].

Investment Rating - The report indicates a long positioning in USD (DXY) and NOK against EUR, while showing increased short positions in NZD and EUR [2][11][19]. Core Insights - Tactical investors are predominantly long on NOK (versus EUR) and USD (DXY), while maintaining short positions in EUR and JPY. In the futures market, there is a long positioning in EUR and GBP, with short positions in CAD and CHF [2][11][19]. - The speculative USD (DXY) futures positioning increased to -13.9% of open interest, up from -12.7% the previous week, indicating a shift in market sentiment towards USD [19]. Summary by Sections - **Market Positioning**: In the week ending October 4, investors added long positions in USD and NOK, while increasing short positions in NZD and EUR. In the futures market, short AUD positions were reduced, and long NZD positions were increased [2][11]. - **Options Data**: Options data suggest that tactical investors are most long on NOK and USD, while being short on EUR and JPY. The positioning in the futures market shows long positions in EUR and GBP, and short positions in CAD and CHF [11][19]. - **Sentiment Analysis**: The Daily Sentiment Index showed the largest improvement for USD, while sentiment for EUR, NZD, and CHF deteriorated the most among G10 currencies [19].