October 10, 2024 03:47 AM GMT M Update | --- | --- | --- | --- | --- | --- | --- | |----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--- ...

Investment Rating - The investment rating for Bank of Hangzhou Co Ltd is Equal-weight with a price target of Rmb13.20 [1][3]. Core Insights - The report indicates significant local economic advantages for Bank of Hangzhou, but notes that the transition to retail banking may take time [2]. - Earnings forecasts have been revised down due to the impact of mortgage rate cuts and LPR cuts on the bank's net interest margin (NIM), which is projected to be 1.4% for 2024 [1][5]. - Loan growth forecasts have been raised to 15.3% for 2024, reflecting the bank's rapid expansion in the first half of 2024 [1]. - The report anticipates an increase in the non-performing loan (NPL) formation ratio to 0.50% in 2024, with a corresponding NPL ratio forecast of 0.78% [1]. Summary by Sections Earnings Forecasts - The net profit growth forecasts have been revised down to 10.6% for 2024, 6.3% for 2025, and 10.9% for 2026 [1]. - The earnings per share (EPS) estimates have been slightly revised up for 2024 by 0.51%, while estimates for 2025 and 2026 have been revised down by 3.49% and 3.39% respectively [1]. Key Earnings Inputs - The net interest margin is projected to decrease from 1.50% in 2023 to 1.40% in 2024, and further to 1.38% in 2025 and 1.41% in 2026 [5][6]. - Total asset growth is expected to decline from 13.9% in 2023 to 11.8% in 2024 [5]. - Credit costs are anticipated to rise from 0.72% in 2023 to 0.94% in 2024 [5]. Risk Reward Analysis - The report highlights a low-risk strategy focusing on corporate and retail loans with high asset quality [3]. - It notes that the bank faces competition from major national banks, which could impact its funding costs and NIM [3].

M Idea Sound Bites | Asia Pacific October 10, 2024 11:59 AM GMT Dong E E Jiao Co.: Research Tactical Idea DEEJ's preliminary earnings range for 3Q2024 was a strong beat. In our view, these results should dispel fears in the investment community since May that a weak consumption economy and a tight government insurance budget would hamper DEEJ's performance. Key Takeaways We think a 43% to 73% YoY net profit growth range will very likely lead consensus estimates for the full year to rise... …making short-ter ...

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 Will Semiconductor Co Ltd is Overweight (OW) [4][3]. Core Viewpoints - Will Semiconductor reported solid earnings growth for 3Q24, with a preliminary net income range of Rmb0.9-1.1 billion, indicating a 24% quarter-over-quarter increase at the mid-point [2]. - The revenue for 3Q24 is estimated to be between Rmb6.65-6.9 billion, reflecting a 5% quarter-over-quarter growth, attributed to the rising adoption of high-end smartphone camera image sensors (CIS) and increased penetration in automotive CIS [2][3]. - The company is expected to further expand its market share in the smartphone and automotive CIS sectors, with anticipated improvements in margins and earnings due to a better product mix [3]. Financial Metrics Summary - Price Target: Rmb120.00 [4] - Current Share Price (as of October 9, 2024): Rmb115.48 [4] - Market Capitalization: Rmb140.32 billion [4] - Revenue Forecasts: - FY 2023: Rmb21.021 billion - FY 2024e: Rmb26.184 billion - FY 2025e: Rmb31.800 billion - FY 2026e: Rmb35.385 billion [4] - EPS Forecasts: - FY 2023: Rmb0.47 - FY 2024e: Rmb2.65 - FY 2025e: Rmb3.93 - FY 2026e: Rmb4.50 [4] - EBITDA Forecasts: - FY 2023: Rmb2.281 billion - FY 2024e: Rmb4.389 billion - FY 2025e: Rmb6.401 billion - FY 2026e: Rmb7.293 billion [4] - P/E Ratio: - FY 2023: 228.5 - FY 2024e: 43.6 - FY 2025e: 29.4 - FY 2026e: 25.7 [4] - ROE: - FY 2023: 3.1% - FY 2024e: 15.0% - FY 2025e: 19.4% - FY 2026e: 19.0% [4]

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 reiterates a "Buy" rating on both SK Hynix and Samsung Electronics, with Hynix being on the APAC Conviction List [2][4][5]. Core Insights - The report highlights that Korean memory suppliers, SK Hynix and Samsung Electronics, are expected to experience stronger growth in 3Q24 in terms of average selling price (ASP) and bit shipment compared to Nanya Technology, primarily due to a higher mix of high-end products like HBM and DDR5 [2][3]. - Nanya Technology reported a mid-single-digit percentage increase in ASP for 3Q24, while its bit shipment decreased by low-twenties percent. In contrast, Hynix and SEC are expected to see DRAM ASP growth of 12% and 9%, respectively, with bit shipment growth of +2% and -2% [2][3]. - The pricing outlook for 4Q24 is challenging for Nanya, as it anticipates minimal contribution from DDR5, while Hynix and SEC are expected to see blended DRAM ASP growth of 9% and 6%, respectively, due to continued improvement in product mix towards HBM and DDR5 [2][3]. - Nanya has lowered its capital expenditure guidance for the year from NT$26 billion to NT$20 billion, representing a ~3% decline from peak levels in 2022. In contrast, DRAM capex for Hynix and SEC is expected to grow year-over-year, primarily focused on HBM capacity and fab construction [2][3]. Summary by Sections Nanya Technology Performance - Nanya's 3Q24 ASP increased by mid-single-digit percentage quarter-over-quarter, while bit shipment decreased by low-twenties percent [2]. - The company faces challenges in 4Q24 due to minimal DDR5 output and elevated inventory levels in the DDR3&4 market [2][3]. SK Hynix and Samsung Electronics Outlook - Hynix and SEC are positioned to benefit from stronger demand for high-end products, with expected ASP growth of 12% and 9% for Hynix and SEC, respectively, in 3Q24 [2][3]. - Both companies are expected to see solid pricing growth in 4Q24, driven by a favorable product mix towards HBM and DDR5 [2][3]. Capital Expenditure Trends - Nanya has significantly reduced its capex guidance for the year, while Hynix and SEC are expected to increase their DRAM capex, focusing on HBM and fab construction [2][3].

Investment Ratings - Daqo ADR: Buy rated, Daqo A: Neutral rated [3] - GCL Tech: Neutral rated [5] - TZE: Sell rated [7] - Tongwei: Sell rated [9] - LONGi: Neutral rated [11] - Hangzhou First: Buy rated [13] Core Insights - The report reflects minor adjustments to solar coverage estimates, with an average fine-tuning of 2% for book values and a -1% tweak for EBITDA of Hangzhou First [1] - The investment thesis for Daqo highlights its leading position in poly production and strong balance sheet, suggesting it can navigate downturns effectively [3] - GCL Tech is positioned to increase market share significantly by 2030, but faces liquidity pressures [5] - TZE is expected to encounter significant challenges due to a shrinking addressable market and high inventory risks [7] - Tongwei's unfavorable supply/demand dynamics for poly lead to a sell rating, despite its rapid rise in the solar industry [9] - LONGi's strong balance sheet is offset by operational challenges, leading to a neutral rating [11] - Hangzhou First is expected to achieve high net income growth due to its market position and capacity expansion [13] Summary by Company Daqo - Leading poly producer with 14% global market share by end-2023, rated Buy due to undervaluation concerns [3] - Target price of US$21.6 based on 0.4X 2024E P/B [3] GCL Tech - Positioned at the lowest end of the cost curve, aiming for 40% market share by 2030, rated Neutral [5] - Target price of HK$1.2 based on 0.7X 2024E P/B [6] TZE - Largest solar wafer producer facing headwinds, rated Sell due to market contraction [7] - Target price of Rmb6.1 based on 0.7X 2024E P/B [8] Tongwei - Rapid growth but unfavorable dynamics for poly, rated Sell [9] - Target price of Rmb13.7 based on 1.1X 2024E P/B [9] LONGi - World leader in solar PV solutions but facing operational headwinds, rated Neutral [11] - Target price of Rmb16.1 based on 2.0X 2024E P/B [11] Hangzhou First - Largest solar film producer with significant market share, rated Buy due to growth potential [13] - Target price of Rmb23.1 based on 13X 2027E EV/EBITDA [13]

8 October 2024 | 6:08PM CST revenue recognition will likely accelerate per mgmt as ocean freight congestion eases) and we forecast +28% yoy revenue into 2H24E. Shenzhen Inovance Technology Co. (300124.SZ): Sept IA orders slightly down yoy/up mom | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---- ...