V i e w p o i n t | 25 Jun 2025 16:16:30 ET │ 19 pages Thematic Equity Strategy A Global Perspective on Artificial Intelligence CITI'S TAKE AI remains one of our top Growth themes in the US given its premium growth expectations at justifiable valuations. In this report we take a broader look at AI across the globe and our Enablers versus Adopters value chain delineation. We reiterate the need for value chain diversification within the theme while also stressing geographic reach. Investors solely focused on ...

Investment Rating - The report suggests an "Overweight" rating for sectors benefiting from the influx of educated youth into the workforce, particularly in services, healthcare, financial services, high-tech industries, and hospitality & entertainment [66][69]. Core Insights - Youth unemployment in China has increased significantly, from approximately 10% in 2018 to around 21% in the summer of 2023, but this is viewed as an opportunity rather than a threat due to the unprecedented level of education among the youth entering the workforce [2][5][6]. - China is transitioning from an industrial policy-driven economy to a services-oriented economy, with a notable increase in the contribution of services to GDP, which has risen from 32% in 1990 to 55% in 2023 [4][53]. - The report highlights that the most educated cohort in China's history is entering the labor market, with tertiary education enrollment rates soaring from 3% in 1990 to 75% in 2023, indicating a well-prepared workforce [4][14][10]. Summary by Sections Youth Unemployment - Youth unemployment is currently misinterpreted as a threat, while it actually presents an opportunity for economic growth as the most educated population enters the workforce [6][13]. - The report emphasizes that the rise in youth unemployment should be viewed through the lens of potential service consumption growth [6][20]. Human Capital Development - China has rapidly upskilled its population, with 15,467 per 100,000 now holding a degree, a fourfold increase over the past 20 years [4][10]. - Investment in education has increased from 2.4% of GDP in 2005 to 4.0% in 2022, leading to a significant rise in STEM graduates [4][39]. Service Sector Growth - The services sector in China is expected to grow significantly, with the potential to reach levels comparable to the US, where services contribute 76% to GDP [53][55]. - Key sectors identified for growth include healthcare, financial services, high-tech industries, and hospitality & entertainment, which currently employ a lower percentage of the labor force compared to the US [62][66]. Investment Opportunities - The report lists specific companies that are well-positioned to benefit from the growth in service consumption, including Trip.com, MGM China, NetEase, and Ping An Group, among others [66][69][88]. - The financial intermediation sector is highlighted as having substantial growth potential, particularly in health and protection products, with a noted lack of active CPAs in China compared to the US [70][69]. Healthcare Sector - The healthcare sector is poised for growth, with China now holding a 20% share of global PCT patent publications in biotechnology, second only to the US [76][81]. - The report identifies companies like Innovent and Akeso as potential beneficiaries of the expanding healthcare services market [76][81].

Asia Memory Equities Memory prices continue to hover higher Korea Soaring memory prices: We reiterate our positive view on the memory sector. Previously, we highlighted a faster memory turnaround from April (see: Asia Memory report, 10 March). We now see that memory prices are hovering higher throughout 2Q, with a higher level of blended ASPs of +3-8% q-o-q due to 1) earlier phase-out of DDR4 products leading to aggressive purchases on the fear of shortages while solid demand for DDR4 is supported by the le ...

Summary of Baidu, Inc. Conference Call Company Overview - **Company**: Baidu, Inc. - **Industry**: Internet Services - **Market Cap**: US$28.7 billion as of 28 May 2025 - **Current Price**: US$83.19 - **12-Month Rating**: Buy with a price target of US$107.00 [7][26] Key Points AI Search Transformation - Baidu is focusing on an AI-driven transformation of its search capabilities, aiming for AI search penetration to reach 70-80% by year-end, up from 35% in April [2] - The shift from traditional link-based results to multimodal content formats (videos, rich text, AI agents) is expected to enhance user engagement and advertiser ROI, with AI agents currently contributing 9% of core ad revenue [2] Cloud Business Performance - Baidu Cloud reported a strong revenue growth of 42% year-over-year in Q1 2025, driven by increased demand for AI training and inference, as well as improved availability of compute chips [3] - Subscription-based revenue constitutes the majority of cloud revenue, indicating sustainable growth potential [3] Robotaxi Expansion - The company plans to scale its robotaxi fleet to 3,000 vehicles by year-end, expanding its services to international markets like Dubai and Abu Dhabi [4] - Baidu's autonomous vehicle cost advantage and fully driverless operation are expected to enhance monetization potential in these markets [4] Financial Projections - Revenue projections for Baidu show a slight decline in 2024, with expected revenues of Rmb 133,125 million, followed by a recovery to Rmb 133,352 million in 2025 [6] - EBIT margin is projected to decrease to 10.4% in 2025, with a gradual recovery in subsequent years [6] Valuation and Risks - The price target reflects a valuation of 4x 2025E PE for search and feed ads, and 2x 2025E PS for cloud [5] - Key risks include competitive landscape changes, execution of new business strategies, and regulatory challenges [12] Market Outlook - Forecast stock return is estimated at 28.6%, with no expected dividend yield [9] - The company is rated neutral regarding the improvement of industry structure and regulatory environment over the next six months [14] Additional Insights - Baidu's management emphasizes that user experience remains a top priority amid ongoing revenue pressures from the AI search transition [2] - The company is exploring innovative ad formats to mitigate revenue pressures expected in Q2 and Q3 [2] This summary encapsulates the critical insights from Baidu's recent conference call, highlighting the company's strategic focus on AI, cloud growth, and expansion into autonomous driving, alongside financial projections and market outlook.

Investment Rating - The report does not explicitly state an investment rating for the industry or companies discussed Core Insights - China's economy appears stable with a focus on boosting demand and improving consumer sentiment, despite challenges in the property market [1][4] - The property market remains fragile but stable, with government policies aimed at stimulating demand rather than supply [5][10] - Exporters are shifting production to Southeast Asia and Mexico due to high costs in the US, leading to potential price increases for Chinese products [1][5] - Industrial technology is advancing, with Chinese companies catching up to Western suppliers in automation and AI [1][28] - Datacenter construction is expected to significantly increase in 2025 due to AI adoption, with a potential doubling in compute buildout [1][6] Summary by Sections Economic Overview - The macroeconomic environment in China is stable, with minimal panic regarding tariffs and a notable focus on demand-side stimulus [4][8] - Consumer sentiment is increasingly important, with government efforts to boost consumption following trade negotiations [4][10] Property Market - The property market is stabilized by demand-side policies, but improvement is fading, and the government is focused on fixing this part of the economy [5][11] - Transaction volumes in the secondary housing market are performing better than new housing, with a notable divergence between luxury and ordinary homes [7][10] Export and Production Shifts - Exporters are moving production to existing hubs in Southeast Asia and Mexico, avoiding the US due to high costs [5][18] - Chinese appliance companies are successfully penetrating overseas markets, particularly in the EU and North America [13][19] Industrial Technology - The discrete automation market is showing signs of recovery, with Chinese companies developing competitive technologies in software and AI [28][39] - Shenzhen Inovance is gaining market share in industrial automation, focusing on customized solutions and responsiveness to customer demands [30][32] Datacenter and AI Adoption - AI adoption is accelerating, with significant investments expected in datacenter infrastructure by 2025 [6][39] - Companies are taking a pragmatic approach to AI integration, looking for validated use cases before large-scale implementation [6][39] Company-Specific Insights - Midea's domestic sales are expected to see single-digit growth, driven by a replacement cycle rather than new demand [13][21] - Haier is experiencing growth in overseas markets, particularly in Southeast Asia, while maintaining a focus on the US and EU [19][24] - Hisense is benefiting from subsidy policies, leading to revenue growth in both domestic and international markets [24][25]

Core Insights - Hesai Group reported strong financial results for Q1 2025, with net revenues of RMB525.3 million (US$72.4 million), a 46.3% increase year-over-year [17][31] - The company shipped 195,818 lidar units in Q1 2025, representing a 231.3% increase from the same period in 2024 [16][15] - Hesai was ranked as the world's No.1 automotive lidar company by revenue market share for the fourth consecutive year in 2024 [3] Financial Performance - Net revenues for Q1 2025 were RMB525.3 million, up from RMB359.1 million in Q1 2024, driven by increased sales of ADAS lidar products [17][31] - Gross margin improved to 41.7% in Q1 2025 from 38.8% in Q1 2024, attributed to effective cost and scale optimization [17][31] - The net loss narrowed significantly by 83.6% year-over-year to RMB17.5 million (US$2.4 million) [22][31] Operational Highlights - ADAS lidar shipments reached 146,087 units in Q1 2025, a 178.5% increase from 52,462 units in Q1 2024 [16][15] - The company secured new design wins with 23 OEMs globally across over 120 vehicle models, including partnerships with Chery, Great Wall Motor, Zeekr, and Geely [5][15] - Hesai is the main lidar supplier for next-generation Robotaxi fleets from Baidu Apollo Go, DiDi, Pony.ai, and WeRide [14][15] Product Development - New products include the AT1440 lidar, which delivers ultra-high-definition point clouds, and the FTX solid-state lidar for blind spot detection [14] - The company announced the successful resolution of all IP-related litigation against it, reinforcing its commitment to innovation and R&D [8][10] Business Outlook - For Q2 2025, Hesai expects net revenues to be between RMB680 million (US$93.7 million) and RMB720 million (US$99.2 million), indicating a year-over-year increase of approximately 48% to 57% [19]

Investment Rating - The report maintains an Overweight rating on ASM International, indicating a positive outlook for FY25 with continuing share gains [15]. Core Insights - The European semiconductor market is showing signs of recovery, although the recovery is not as significant as typically expected due to macroeconomic uncertainties and higher than normal inventory levels [15][17]. - Infineon Technologies reported positive current trading with no signs of tariff impact, and the auto market is showing early signs of an up-cycle [15][17]. - Nokia is expected to see steady improvement, particularly in its Network Infrastructure business, with low potential tariff impact due to flexible manufacturing [15][17]. - Future's management emphasized a focus on audience growth, diversification, and monetization, with a compelling valuation narrative for a turnaround [15][17]. Summary by Sections European TMT Conference Highlights - The conference featured discussions with 11 telco management teams, highlighting key takeaways from companies such as Cellnex, Inwit, and Vodafone [15][17]. - BT Group's FY results showed a revenue of £5,049 million, slightly below consensus, with a mixed KPI performance [15][17]. Semiconductor Insights - Companies at the conference indicated that the inventory correction in the semiconductor market is nearing its end, but visibility for FY25 remains constrained [15][17]. - ASM International is optimistic about mid-term trends and has not seen changes in customer behavior due to the macro environment [15][17]. Company-Specific Feedback - Infineon Technologies expressed confidence in current trading, with no deterioration in orders despite tariffs [15][17]. - Nokia's growth in the hyperscaler market is expected to continue, aided by the integration of the Infinera sales team [15][17]. - Future's management is committed to P&L efficiency and capital allocation, setting the stage for potential value creation [15][17].

在企业、资本和政府的大力支持下，人形机器人行业正在迅 速发展。我们预计到2050年全球市场规模将达到5万亿美元， 在本报告中，我们探讨了产业链上的最佳商业模式和投资机 会。 要点 全球人形机器人潜在市场规模 – 到2050年将达到5 万亿美元：我们的美国研究团队建立了摩根士丹利 的全球人形机器人TAM模型，该模型预测全球人形 机器人市场将超过全球汽车行业。我们预计到2050 年全球人形机器人销售额将达到 4.7 万亿美元，大 概是全球 20 家最大汽车厂商 2024 年总收入的两 倍，而这一数字在未来25年内很可能会大幅减少。 April 30, 2025 06:46 AM GMT 人形机器人 价值5万亿美元的全球市场 This translated report is made available for convenience only and is excerpted from the original research report published in English. In the event of any discrepancy between the translation and the ...

Core Insights - Baidu's Apollo Go has formed a strategic partnership with UAE-based Autogo to deploy the largest fully driverless fleet in Abu Dhabi [1][8] - Initial trials will involve dozens of autonomous vehicles, with plans for phased expansion leading to full commercial operations by 2026 [2][8] - The partnership aims to integrate Apollo Go's technology with Autogo's local expertise to enhance transportation efficiency and sustainability in Abu Dhabi [3][5] Company Overview - Apollo Go is recognized as China's largest robotaxi service, having commenced fully driverless operations in over 10 cities since February 2025 [4] - The service has a strong track record, with 150 million kilometers of safe autonomous driving and over 10 million cumulative rides [5] - Apollo Go promotes an all-electric, on-demand service model, contributing to reduced emissions and urban congestion [5] Future Plans - The collaboration between Apollo Go and Autogo will focus on scaling commercial operations to serve more users and support Abu Dhabi's smart city vision [6][8]

Core Insights - Baidu's autonomous ride-hailing platform, Apollo Go, has signed a strategic cooperation agreement with Dubai's Roads and Transport Authority (RTA) to launch autonomous driving testing and services in the city, marking its first international fleet deployment outside of China and Hong Kong [1][8] Deployment Plans - Apollo Go will deploy 100 fully autonomous vehicles in urban Dubai by the end of 2025, with plans to scale the fleet to at least 1,000 vehicles by 2028 [2][11] Strategic Vision - The partnership aims to support Dubai's goal of making 25% of the city's transportation autonomous by 2030, aligning with Dubai's ambitious vision for autonomous transportation [3][4] Technical Expertise - Apollo Go will share its technical, operational, and regulatory expertise gained from deployments in major Chinese cities, including a large-scale deployment in Wuhan, to ensure seamless localized operation in Dubai [3][5] Market Position - Apollo Go has achieved over 150 million kilometers of safe driving and provided more than 10 million rides, positioning itself as one of the world's largest autonomous ride-hailing platforms [5][11] Vehicle Specifications - The RT6 model, designed for driverless mobility, features enhanced reliability and comfort, aiming to provide an optimized autonomous vehicle experience for users in Dubai [6] Global Expansion - This partnership represents a significant milestone in Apollo Go's global expansion strategy, following its first autonomous driving test licenses granted in Hong Kong in November 2024 [8][11] Future Goals - Apollo Go is committed to delivering safe, green, and intelligent mobility services in collaboration with global partners, contributing to smarter and more connected urban environments [9]