Industry Investment Rating - The report maintains an Overweight (OW) rating for China, Japan, Indonesia, and the Philippines, while it is Market Weight (MW) for India, Korea, Taiwan, Singapore, and Malaysia, and Underweight (UW) for Australia, Hong Kong, and Thailand [1] - Utilities are upgraded to Overweight (OW), while staples are downgraded to Market Weight (MW) [1] Core Views - The Asia-Pacific region faces headwinds at the start of 2025, including mixed activity data, higher US 10-year yields, a stronger dollar, potential US tariffs, and elevated economic policy uncertainty [1] - Moderate returns are expected in 2025, driven by policy support, resilience, and core fundamentals [1] - The MXAPJ index target is trimmed to 620 from 630, implying a 9% USD return [1] - Earnings delivery and shareholder yield are key screening criteria, alongside structural themes like AI beneficiaries and defense spending [1] China Strategy - Chinese equities are expected to rebound after a three-year bad streak, with policy support providing a floor for the market [1] - Fiscal policy delivery is crucial for driving equity gains in 2025 [1] - Deflation is detrimental to equity returns, and China's equity market has become more investable for domestic investors [1] - ETFs have seen impressive growth, and RMB 3 trillion has been returned to shareholders [1] Asia Macro - US tariffs are a major external uncertainty for 2025, with China and Vietnam at significant risk [5] - Interest rate cuts are expected across most Asian economies, except Japan, where rate hikes are anticipated [5] - China's housing market is not expected to bottom out, and fiscal policy is expected to ease with a tilt towards consumption-oriented policies [5] Company-Specific Insights TSMC - TSMC is expected to see solid revenue growth of 26.8% YoY in 2025, driven by strong demand for leading-edge nodes, particularly AI [6] - A mid-high single-digit price hike for 3nm/5nm nodes and a 10%+ price hike for CoWoS are expected, with gross margins projected to grow to 59.3% in 2025 [6] - The 12-month target price is raised to NT1,320 [6] Yum China - Yum China is expected to report 4.4% YoY sales growth, 4.6% restaurant profits growth, and 20.4% operating profits growth in 4Q24 [6] - SSSG for KFC and Pizza Hut is expected at -1% and -3% YoY, respectively, with 433 net store openings in 4Q24 [6] - The 12-month target price is lowered to US452 [6] Tencent - Tencent's platform leadership and generative AI strategies are highlighted, with a focus on critical resources and multi-strategies for AI opportunities [6] - The 12-month target price is set at HK$542 [6] GCPL - GCPL is expected to recover from cyclical headwinds, with a gradual recovery in home insecticides and soap volumes starting in 4QFY25 [8] - The 12-month target price is set at Rs1,370 [8] Japan Chemicals - Toray and Kuraray are top picks for 2025, with Toray expected to see 23% annual business profit growth and Kuraray expected to see a 21% CAGR in operating profit [8] - The 12-month target price for Toray is raised to ¥1,210, and for Kuraray to ¥2,900 [8] Kotak Mahindra Bank - The bank faces near-term challenges due to the resignation of its CTO, with investor focus on resolving tech-related issues [9] - The 12-month target price is set at Rs2,286 [9] Korea Views - Korea's caretaker government has released economic policy measures for 2025, aiming to stabilize financial markets and limit downside risks [11] - A gradual 25bp rate cut is expected in each of Q1, Q2, and Q3, with a risk of more rapid easing if domestic activity weakens [11] US Strategy - The S&P 500 is expected to rise by 11% to 6500 in 2025, driven by EPS growth [13] - Earnings growth is expected to be 11% in 2025 and 7% in 2026, with the forward P/E multiple remaining at 21.5x [13] Global FX & Rates - The US dollar is expected to remain strong in 2025, driven by tariff risks and divergent growth prospects [13] - The US yield curve is expected to steepen, with risks to higher yields in longer maturities [15]
高盛：亚洲及中国战略、2025 年 10 个宏观问题、台积电、百胜中国、GCPL、日本化学、韩国观点