Industry Overview - The report highlights a downward trend in costs for soy sauce, dairy, and beer, while meat prices have seen sequential inflation [1][2] - Raw material costs account for 45%-80%+ of COGS across different sub-sectors, with significant declines in bean pulp, chicken, beef, molasses, soybean, raw milk, corn, and sunflower seeds by 10-20% compared to the 2023 average [2] - Pepper, palm oil, fish, chicken, and pork experienced sequential inflation, with pepper costs increasing by approximately 12% MoM [2] Cost Trends - Dairy, soy sauce, beverages, and frozen bakery indices saw a decline in July due to falling prices in milk powder, raw milk, soybean, and butter [3] - Beer indices eased due to falling aluminum costs, though aluminum prices remain 6% higher than the 2023 average [3] - Compound condiments, hot pot ingredients, and frozen flour and rice saw price increases due to rising costs of fish, chicken, and pork [3] Inflation and Economic Indicators - China's headline CPI inflation increased to +0.5% YoY in July from +0.2% YoY in June, while headline PPI inflation remained flat at -0.8% YoY [3] - Food price inflation rose across the board in July due to decreased supply from adverse weather conditions [3] Sector-Specific Cost Analysis - Soy sauce, compound condiments, F&B, pet food, beer, and frozen food are ranked based on pure cost benefits and GPM expansion potential [14] - Soy sauce leads in cost benefits, while pet food leads in GPM expansion potential [14] Raw Material Contributions - Raw materials contribute significantly to COGS, with soybean, white granulated sugar, glass, PET, and MSG being key components for soy sauce [16] - Compound condiments see significant contributions from soybean oil, Sichuan pepper, and PET, with 2024E raw materials contribution to unit COGS estimated at -3.7% [17] Price Actions and Trends - Price hikes and cuts have been observed across various sectors, including spirits, beer, soft drinks, and prepared food [32] - Notable price hikes include Moutai's 20% ex-factory price hike for Feitian and Coca-Cola's price hike to Rmb3.5 from 3.0 for 500ml Coke in certain regions [32] Historical Cost and GPM Correlation - Historical patterns show a high correlation between cost index and GPM for condiments, with significant cost benefits observed in 3Q24 [29] - Dairy sector continues to experience cost tailwinds, with sunflower seeds cost normalizing [29] Raw Material Price Trends - Barley, rice, bean pulp, soybean, and SPI have seen significant price changes compared to historical averages, with barley prices down 30% vs. 2022 average [24] - Cocoa prices have surged by 224% compared to the 2022 average, while palm oil prices are down 28% [24]

12 August 2024 | 12:16PM CST 2131d4eaf4cb4d50b1d51c8af07b64b4 China Healthcare: July 2024 China hospital equipment bidding: Gradual improvement rather than an inflection We continue to track the procurement value of main medical devices in China, including patient monitors, ultrasound, endoscope, CT scanners, MRI, PET-CT, and digital radiography (DR). We note that July's month-on-month numbers were positive for 5 out of the 7 devices we track at 50%/17%/13%/9%/5% m/m growth for PET-CT/DR/ultrasound/endoscop ...

12 August 2024 | 1:01AM EDT 2131d4eaf4cb4d50b1d51c8af07b64b4 Bancolombia (CIB): Key takeaways from 2Q24 conference call - More constructive on macro scenario, but pressure from lower rates remains ROE relatively stable in 2025 Bancolombia hosted its conference call post 2Q24 results, giving more color on the outlook for net interest margin and profitability through 2025. Even though management is more constructive regarding economic activity, it still expects NIM to contract 30bps in 2025, following the exp ...

12 August 2024 | 12:01AM EDT 2131d4eaf4cb4d50b1d51c8af07b64b4 Americas Retail: Specialty Hardlines: Takeaways from IR/Management; DG vs. Family Dollar pricing; Home furnishings In this note, we discuss key takeaways from meetings with the IR/management team of COST, DRVN, EYE, MODG, TCS, and VVV. We also detail findings from our visit to DG and Family Dollar on 8/2/24 to compare prices. Additionally, we provide read-throughs to our coverage from home furnishings earnings (ARHS, ETD, and W). Takeaways from I ...

Investment Rating - The report maintains a Buy rating for JBS with a target price of R$38.7, indicating a positive outlook for the company [14][18]. - BRF is rated Neutral with a target price of R$19.5 for local shares and US$3.60 for ADRs [16][18]. Core Insights - JBS is expected to report solid earnings driven by strong global chicken market demand, with a forecasted EBITDA of R$9.0 billion, which is 10% above Bloomberg's consensus [3][8]. - BRF is also anticipated to have a solid quarter, but expectations may be overly optimistic, with a significant year-to-date revision to consensus EBITDA [4][10]. - The report highlights a positive asymmetry for JBS shares, noting that while other competitors have seen significant stock price increases, JBS has lagged, suggesting an attractive entry point [3][8]. Summary by Sections JBS Overview - JBS's earnings preview indicates a net revenue of R$104.1 billion, with a gross profit of R$14.8 billion and an EBITDA margin of 8.6% [8]. - The company is expected to benefit from a diversified business mix, with chicken accounting for 54% of its revenue [3][8]. BRF Overview - BRF's consolidated net revenue is projected at R$14.5 billion, with an adjusted EBITDA of R$2.4 billion and an EBITDA margin of 16.4% [10][17]. - The report notes that BRF's operational momentum is strong, but the market may have already priced in much of the expected growth [4][10]. Market Dynamics - The report discusses key market dynamics, including resilient demand in the US and a positive beef cycle in Brazil, which supports volume growth for companies like Minerva and Frigol [4][5]. - It also mentions potential challenges such as increased chicken supply in the domestic market and the impacts of Newcastle disease on earnings [5]. Valuation Metrics - JBS is valued at a forward EV/EBITDA of 6.0x, which is considered undemanding compared to its peers [3][12]. - BRF's valuation reflects a target EV/EBITDA of 5.7x, indicating a more cautious outlook given the recent performance [16][17].

11 August 2024 | 10:15PM EDT 2131d4eaf4cb4d50b1d51c8af07b64b4 B3 (B3SA3.SA): Key takeaways from 2Q24 call — diversification paying off Mitigating a challenging outlook in cash equities with other revenue streams Management discussed the main drivers of revenue growth in 2Q24. The good print in listed derivatives was supported by market volatility and price adjustments in prior periods, which can still benefit this line in coming quarters. Furthermore, BDRs, REITs and ETFs continue to gain traction (13% of t ...

12 August 2024 | 12:01AM EDT 2131d4eaf4cb4d50b1d51c8af07b64b4 Americas Retail: Specialty Hardlines: Updating our Beauty Trackers for 2Q24; Beauty read throughs In this note, we update our beauty trackers with the latest industry data and present analysis on the beauty/personal care category with additional third party data sources, including HundredX. Additionally, we discuss read throughs from earnings in the Beauty space (ELF, L'Oreal, LVMH, OLPX, and SBH), along with recent commentary from COST, CVS, and ...

Investment Rating - The report rates SMIC as a BUY with a target price of HK$23.00, up from a prior target price of HK$22.00, based on a price-to-book (P/B) ratio of 1.1x [2][6][10]. Core Insights - SMIC's 2Q24 revenue and gross profit margin (GPM) exceeded guidance, driven by strong demand from smartphone and consumer electronics, with a revenue increase of 22% year-over-year and 9% quarter-over-quarter to US$1.9 billion [6][12]. - The company anticipates a robust 3Q24, projecting revenue growth of 13-15% quarter-over-quarter and an improved GPM of 18-20% [6][13]. - The recovery is attributed to restocking demand, easing price competition, and improvements in average selling price (ASP) and yield, particularly in advanced nodes, which are expected to continue into 2025 [6][10]. Financial Forecasts - Revenue projections for the years ending December are as follows: - 2024E: US$7.975 billion - 2025E: US$9.662 billion - 2026E: US$10.991 billion [8][18]. - Core EPS estimates have been revised significantly, with increases of 106% for 2024E, 40% for 2025E, and 35% for 2026E [10][16]. Key Financial Metrics - 2Q24 financial highlights include: - Revenue: US$1.901 billion - GPM: 13.9% - Net income: US$165 million, reflecting a 129% increase quarter-over-quarter [12][19]. - The company’s monthly capacity for 8" equivalent wafers increased to 837k in 2Q24, with a utilization rate of 85.2% [12][17]. Management Outlook - Management expects 2024 revenue growth to align with or exceed industry averages, with a significant increase in 12" capacity planned for the second half of 2024 [14][10]. - The anticipated end of restocking demand in 4Q24 is noted, as channel inventory reaches desired levels, but long-term demand from domestic customers is expected to support ASP increases [14][10].

Investment Rating - The report maintains a forecast that the annual average growth of CPI is likely to be around 0.5% in 2024 and 1.5% in 2025 [2] Core Insights - The Consumer Price Index (CPI) increased from 0.2% in June to 0.5% in July, surpassing market expectations, while core CPI growth decreased from 0.6% to 0.4% [2] - The CPI growth was supported by a low base effect from the previous year, particularly in food prices, which saw a recovery due to rising pork prices [2] - The report anticipates a gradual recovery in CPI growth, projecting it to reach around 1.1% in 4Q24, driven by food price recovery and policies aimed at boosting durable goods consumption [2] Summary by Sections CPI Analysis - In the first seven months of 2024, the CPI index rose by 0.2%, and core CPI increased by 0.6% [2] - The food price index in July remained unchanged year-on-year, marking an end to a 12-month deflationary period [2] - Month-on-month, the CPI index grew by 0.5% in July, compared to an average of 0.2% from 2010 to 2019 [2] Factors Influencing CPI - The rainy season affected the supply of fresh vegetables and fruits, leading to a 9.3% month-on-month increase in fresh vegetable prices [2] - Travel prices surged by 9.4% month-on-month in July, indicating a recovery in travel consumption [2] - The downward pressure on CPI was attributed to declining auto prices and weak rent CPI, which fell by 0.3% in July [2] Producer Price Index (PPI) Insights - The Producer Price Index (PPI) growth declined by 0.8% year-on-year and 0.2% month-on-month in July [4] - The report notes that the recovery of PPI growth was milder than expected, with challenges stemming from weak property investment and industrial competition [4] - The PPI growth may face further declines in the coming months due to base effects [4]

Investment Rating - The report maintains an "Outperform" rating for the computer industry and a "Buy" rating for HUARUI PRECISION [12][24]. Core Insights - The domestic AI product traffic has surged, particularly in AI search products, while ChatGPT's monthly traffic has declined year-over-year. The market for AI products is still in an exploratory phase [11][13]. - The new procurement rules from the State-owned Assets Supervision and Administration Commission (SASAC) are expected to boost technological localization and innovation within central state-owned enterprises [11][13]. - In the real estate sector, Shenzhen Public Housing Group's initiative to purchase unsold homes for affordable housing is seen as a model that may influence other major cities like Beijing and Shanghai [18][20]. - The machine tool industry, represented by HUARUI PRECISION, has shown significant earnings recovery, with a projected net profit growth of 23.99% to 33.32% from 2024 to 2026 [33]. Computer Industry Summary - In July, domestic AI product traffic surged, with significant growth in AI search products, while the overall market remains exploratory [11][13]. - The SASAC's new procurement rules are expected to promote technological innovation and localization among central SOEs [11][13]. - Recommended stocks in the AI sector include DAMENG, NINESTAR, and KINGSOFT OFFICE, focusing on technology security and policy-driven sectors [13][15]. Real Estate Industry Summary - Shenzhen's city-wide purchase of unsold market-rate housing is a significant development, with potential replication in other major cities [18][20]. - The recent land auction in Shanghai set a new record for land prices, indicating strong demand from high-quality real estate companies [18][20]. - The CITIC Real Estate Index rose 2.65%, outperforming the broader market, suggesting a stabilization in the real estate sector [20]. Machine Tool Industry Summary - HUARUI PRECISION reported a revenue increase of 14.93% year-over-year, with significant improvements in profitability due to better margins and reduced costs [26][29]. - The company is expanding its mid-to-high-end product offerings and overseas distribution channels, which are expected to drive future growth [30][33]. - The projected net profit for HUARUI PRECISION is expected to reach RMB196 million, RMB250 million, and RMB334 million from 2024 to 2026, indicating strong growth potential [33].