Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The IMF has reduced interest rates for its lending under the General Resources Account (GRA), benefiting countries like Argentina, Ukraine, Egypt, Pakistan, and Ecuador with total estimated savings of around US$1 billion in 2025 [1][11] - The basic charge margin has been lowered from 100 basis points (bp) to 60 bp, and the level-based surcharge threshold has been raised from 187.5% of quota to 300% [5][6] - The effective interest rate for countries with surcharges is expected to decrease by 1.2 percentage points (pp), translating to an average saving of 18% of interest charges due to the IMF in 2025 [12][15] Summary by Sections Changes in IMF Lending Rates - The IMF's review of charges and surcharges primarily affects borrowing under the GRA, which is used by larger emerging market borrowers [3] - The basic charge margin is reduced from 100 bp to 60 bp, benefiting all countries with GRA credit outstanding [5][8] - The level-based surcharge threshold is increased to 300% of quota, meaning some countries will no longer incur this surcharge [6][10] - The time-based surcharge is lowered from 100 bp to 75 bp, effective from November 1, 2024 [6] Estimated Savings and Beneficiaries - Total estimated savings from the changes are around US$1 billion for 2025, with US$936 million going to 19 countries that currently face surcharges [11] - Argentina is projected to save US$346 million, followed by Ukraine with US$130 million and Egypt with US$127 million [11][16] - The savings for countries that will no longer pay the level-based surcharge are relatively small, totaling around US$32 million [10] Impact on Effective Interest Rates - The effective interest rate for the 19 countries with current surcharges is expected to fall from a range of 3.9-7.0% to 2.7-5.8% [12][15] - On average, the savings amount to 0.04% of GDP for 2025 [14][15] - The changes, while beneficial, may not meet the expectations of borrowers who sought more substantial reductions [13][15]

Investment Rating - The investment rating for Sunny Optical is Overweight, with a price target of HK$72.00, indicating a potential upside of 30% from the current price of HK$55.25 [7][27]. Core Insights - The report highlights a deceleration in the year-to-date growth rate of handset CCM shipments, which fell from +3% in January-August to -1% in January-September. In contrast, handset lenses showed resilience with a +6% year-over-year growth in September and +20% growth in January-September [3][4]. - Vehicle lens shipments increased by 13% year-over-year to 9.31 million units, aligning with the full-year growth target of 10-15% [3][4]. Summary by Sections Handset CCM and Lenses - Handset CCM shipments declined by 30% year-over-year to 36.77 million units in September, while handset lens shipments increased by 6% year-over-year to 118.7 million units. Both segments experienced a slowdown in year-to-date growth [3][4]. - The report anticipates that if handset lens shipments maintain their levels in Q4 2024, they could exceed the full-year shipment target. Conversely, without significant improvement, handset CCM is likely to miss its full-year target [4]. Vehicle Lenses - The growth rate for vehicle lenses improved slightly from 11.4% in January-August to 11.6% in January-September, with aggregate shipments in the first nine months showing a 11.6% year-over-year increase [3][4]. Financial Metrics - For the fiscal year ending December 2023, Sunny Optical is projected to have a net revenue of RMB 31,681 million, with an estimated EPS of RMB 0.99. The expected revenue for 2024 is RMB 36,300 million, with an EPS of RMB 2.39 [7][11].

Investment Rating - The report maintains an "Overweight" (OW) rating on China Online Travel Agencies (OTAs) due to resilient travel demand and favorable comparisons ahead, with potential upside from consumption recovery [1][5]. Core Insights - Domestic tourism and receipts increased by 5.9% and 6.3% year-over-year, respectively, adjusted for the number of holiday days [2]. - Daily air passenger volume rose by 11% compared to 2023 and 22% compared to 2019, indicating strong growth in domestic air travel [2]. - The report anticipates a solid performance in 3Q24, projecting 13% revenue growth and 21% growth in non-GAAP operating profit for Trip.com Group (TCOM) [4][8]. - The report forecasts a 20% core OTA revenue growth and a 37% growth in non-IFRS adjusted profit for Tongcheng Travel Holdings in 3Q24 [4][8]. Summary by Sections Domestic Travel Performance - Domestic tourists and receipts rose 5.9% and 6.3% YoY, respectively [2]. - Daily air passenger volume increased by 11% YoY and 22% compared to 2019 [2]. Outbound and Inbound Travel - Daily average visitors for outbound and inbound travel grew by 26% YoY, with mainland tourists increasing by 33% YoY [3]. - International flight recovery reached 84% of 2019 levels, with Southeast/East Asia accounting for approximately 77% of total flight volume [3]. 3Q24 Financial Expectations - TCOM is expected to achieve 13% revenue growth and 21% non-GAAP operating profit growth, with a flat non-GAAP profit YoY due to tax normalization [4][8]. - Tongcheng is projected to have a 20% core OTA revenue growth and a 37% non-IFRS adjusted profit growth in 3Q24 [4][8]. Valuation and Price Target Adjustments - Price targets for TCOM and Tongcheng have been raised to US$73 and HK$24, respectively, reflecting a switch to DCF valuation [5]. - TCOM and Tongcheng are trading at 15x and 12x 2025 estimated P/Es, respectively, which is considered attractive compared to the internet average NTM P/E of approximately 16x [5].

Investment Rating - The industry investment rating is classified as Attractive [1]. Core Insights - Demand outlook is improving due to property sales recovery during the holiday period, with increased demand for steel and cement [1]. - Production and sales of industrial goods are showing positive trends, with notable increases in daily crude steel output and passenger vehicle sales [1]. - Local government special bond issuance has reached Rmb3.6 trillion year-to-date, indicating strong infrastructure investment [1]. Summary by Relevant Sections Demand Tracker - Property sales improved during the National Day Holiday, with a 77% year-on-year increase in weekly primary unit sales in 50 cities [1]. - Steel and cement demand is picking up, with apparent cement shipments in eastern China improving post-holiday [1]. Production and Sales - The national operating rate of alumina producers was 86.70%, up 0.8 percentage points week-on-week [1]. - Daily crude steel output at major producers was 2.01 million tons in late September, reflecting a 1.3% increase compared to mid-September [1]. Infrastructure and Investment - In the first nine months of 2024, China railway completed fixed asset investment of Rmb561.2 billion, up 10.3% year-on-year [1]. - Local government special bond issuance totaled Rmb128 billion in October, bringing the year-to-date figure to Rmb3.6 trillion, which is approximately 93% of the total quota [1]. Building Materials Activity - Cement prices in eastern China increased by Rmb30-100 per ton, and apparent consumption of long and flat steel products rose by 25.5% week-on-week [1]. - Glass inventory decreased by 18.3% week-on-week due to restocking at processing plants [1].

Investment Rating - The report maintains an "Overweight" (OW) rating for companies such as China Resources Land and China Resources Mixc Lifestyle Services, while Sunac China and Shimao Group Holdings are rated "Underweight" (UW) [28][30]. Core Insights - The Ministry of Finance (MOF) has announced three key policies aimed at supporting the property sector, including allowing local governments to raise special local government bonds (LGBs) for purchasing idle land and unsold homes, and optimizing tax rates for value-added tax (VAT) and land appreciation tax (LAT) [1][5][6]. - The report anticipates that more policy support will be forthcoming to stabilize the property market, with home prices expected to stabilize around the second quarter of 2025 [1][8]. - Sales during the Golden Week showed significant growth in tier-1 cities, with primary sales increasing by 50% to 275% compared to the previous quarter [7][11]. Summary by Sections Policy Announcements - Local governments are permitted to raise special LGBs to purchase idle land, estimated at approximately 4.9 billion square meters of gross floor area (GFA) that has not started construction [2]. - The purchase of unsold homes is supported through special LGBs, which offer lower funding costs compared to traditional bank loans, enhancing local governments' incentives to buy [5]. - A new policy direction aims to eliminate the distinction between ordinary and non-ordinary housing for tax purposes, potentially lowering transaction costs and encouraging market turnover [6]. Market Outlook - The report projects a sales volume of approximately 900 million square meters GFA for 2024, with a long-term normalized level expected to be between 700 million and 800 million square meters GFA [9][22]. - The expert call indicated that if home price corrections worsen, further demand-side easing measures may be implemented in January 2025 [8][18]. Company Preferences - The report favors state-owned enterprises (SOEs) with undemanding valuations, such as CR Land and Poly PS, while distressed companies like Sunac and Shimao are expected to remain volatile [1][8]. - The report highlights that developers are cautious about raising prices, focusing instead on maintaining sales volume amid a positive market sentiment [17].

Investment Rating - The report assigns an "Overweight" rating to Apple (AAPL) with a current price of $227.55 as of October 11, 2024 [1][12]. Core Insights - The stability of lead times for the iPhone 16 Pro models suggests improving demand momentum compared to the initial weeks post-launch, indicating that previous weakness may have been an aberration [1]. - Delivery lead times for iPhone 16 products are now tracking in line with the iPhone 15 series for base and Pro models, while tracking lower for Plus and Pro Max models [1]. - Aggregate lead times have moderated by 1 day relative to Week 4, contrasting with a 5-day moderation for the iPhone 15 series in the same period last year [1]. Summary by Region North America - In the US, lead times for iPhone 16 and 16 Plus are 4 days each, while Pro and Pro Max remain at 21 and 28 days, respectively [1][2]. - Most variants of the iPhone 16 series were available for in-store pickup on October 11, 2024, with Pro Max models unavailable [1]. China - In China, lead times for iPhone 16 and 16 Plus have moderated to 1 day each, while Pro and Pro Max lead times are 20 and 26 days, respectively [1]. - Some variants of iPhone 16, 16 Plus, and 16 Pro were available for pickup on October 11 or 12, while Pro Max models were not available [1]. Europe - In Germany, lead times for iPhone 16 and 16 Plus are 3 days each, while Pro and Pro Max lead times are 22 and 31 days, respectively [2]. - In the UK, lead times for iPhone 16 and 16 Plus are 5 days and 4 days, respectively, with Pro and Pro Max models unavailable for pickup [2].

Investment Rating - The investment rating for Sunny Optical is Overweight, indicating that the stock's total return is expected to exceed the average total return of the industry coverage universe over the next 12-18 months [4][20]. Core Viewpoints - Sunny Optical is positioned as the largest player in the vehicle lens market, which is anticipated to be a multi-year growth driver due to strong electric vehicle (EV) sales and increasing Advanced Driver Assistance Systems (ADAS) penetration [2][4]. - September vehicle lens shipments reached 9,314 million units, reflecting a year-over-year increase of 12.7% and a month-over-month increase of 10.4%. Aggregate shipments for the first three quarters of 2024 totaled 79,798 million units, up 11.6% year-over-year [1][2]. Summary by Sections Investment Rating - Stock Rating: Overweight [4] - Price Target: HK$72.00, with a 30% upside potential from the current price of HK$55.25 [4]. Financial Metrics - Market Capitalization: RMB 54,964 million [4]. - Revenue (Net): Expected to grow from RMB 31,681 million in FY23 to RMB 44,398 million by FY26 [4]. - EPS (Earnings Per Share): Projected to increase from RMB 0.99 in FY23 to RMB 3.04 in FY26 [4]. Shipment Data - Monthly vehicle lens shipments in September 2024 were 9,314 million units, with a year-over-year growth of 12.7% and a month-over-month growth of 10.4% [1][2]. - Total shipments for the first three quarters of 2024 reached 79,798 million units, marking an 11.6% increase year-over-year [1][2]. Industry Outlook - The vehicle lens segment is expected to benefit from the growing demand for EVs and ADAS, which require more cameras per vehicle [2][4].

Global Research 11 October 2024 J P M O R G A N EM Money Trail Records Smashed as China Optimism Lifts EM Boats EM Equities saw unprecedented inflows this week at +$9.8bn - the highest weekly amount in our tracking history since Oct 2000, from +$7.2bn last week. The subscriptions continue to be entirely driven by ETFs (+$10.1bn, the highest weekly inflow on record) while non-ETFs posted outflows of -$292mn. Among regional funds, the buying was concentrated in Asia ex-Japan at +$9.2bn, also the highest weekl ...

Investment Rating - The report assigns an "Underweight" rating to Tesla Inc with a price target of $130.00 for December 2025 [4][10]. Core Insights - The report highlights a substantial risk of multiple compression for Tesla shares following a significant rally, driven by investor enthusiasm for the recent Robotaxi Day event, which did not meet expectations regarding vehicle sales, earnings, or cash flow [1][2]. - Despite a 68% increase in Tesla's share price since April 22, 2024, the outlook for vehicle sales and earnings has deteriorated, with 2024 vehicle sales estimates down 8% and EBIT down 13% [2][9]. - The report emphasizes that Tesla's valuation appears to be pricing in optimistic growth expectations that may not materialize, particularly in the context of expanding into lower-priced segments [9][12]. Summary by Sections Financial Performance - For FY 2023, Tesla's revenue is projected at $96.77 billion, with an adjusted EBITDA of $13.56 billion and an adjusted net income of $10.88 billion, resulting in a net margin of 11.2% [8]. - The adjusted EPS for FY 2024 is estimated at $2.25, with a decline in free cash flow expected to drop by 49% from $3.9 billion to $1.9 billion [2][5]. Valuation Methodology - The price target of $130.00 is based on a 50/50 blend of discounted cash flow (DCF) analysis and multiples-based analysis for 2026 estimates [10][14]. - The DCF analysis suggests a value per share of $115, while the multiples-based analysis indicates a value of $144 [31][19]. Market Expectations - The report notes that investor expectations were overly optimistic, particularly regarding the rollout of Tesla's robotaxi program, which is now seen as a longer-term prospect rather than an immediate opportunity [1][11]. - The anticipated launch of the Cybercab and Robovan has raised questions about the economic viability of selling these vehicles externally, which may not align with previous expectations of Tesla operating a dedicated robotaxi fleet [11][12].

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]