It's 9 am in Shanghai, Shenzhen, and here in Hong Kong, you're watching the China show. I'm Annabelle Droulers with David Ingles. Good morning.We are counting down to the open of markets in greater China. Our top stories today, Asian stocks rising, treasuries sliding as traders trimming bets for a Fed rate cuts following a stronger than expected US jobs report. So the so-called scare trade spreads to this region with real estate services, biotech stocks, tracking declines among peers on Wall Street.Meanwhil ...

Lenovo reported better-than-expected sales, helped by consumers buying PCs ahead of anticipated memory chip price hikes as well as strong momentum for its AI servers https://t.co/qZBZxLxFeJ ...

Core Insights - Dell Technologies' shares are currently trading at an attractive valuation with a Value Score of A, reflecting a 12-month price/sales (P/S) ratio of 0.67X, significantly lower than the industry average of 7.91X and the broader sector's 6.54X [1] - The company's valuation remains discounted compared to ecosystem partners like NVIDIA, AMD, and Meta Platforms, which have forward 12-month P/S ratios of 14.58X, 7.43X, and 6.74X respectively [2] Valuation and Market Position - Dell's low valuation may indicate an attractive entry point, but it does not guarantee upside due to potential underlying operational and demand-related risks [5] - The consumer PC segment is experiencing persistent weakness, with revenues declining year over year, contrasting with stable growth in the commercial segment [6][7] - The overall Client Solutions Group revenues showed modest growth, but consumer sales contraction negatively impacted segment performance and operating margins [7] Competitive Landscape - Dell's AI server business is expanding, yet profitability is constrained by intense competition, with operating margins projected to remain in the mid-single-digit range [8] - The company faces competition from rivals like Hewlett-Packard, Lenovo, and Super Micro Computer, which are advancing GPU-dense AI server platforms, intensifying price competition [10] Earnings and Performance Trends - The Zacks Consensus Estimate for Dell's fourth-quarter fiscal 2026 earnings is $3.54 per share, indicating a year-over-year growth of 32.09% [11] - Dell's stock has underperformed, delivering an 11.6% return over the trailing 12 months, lagging behind the Zacks sector's 23.7% growth and the industry's 15.3% rise [12][13] - The underperformance is attributed to elevated memory component pricing, weakness in core PC operations, and mounting cost pressures [13] Outlook and Recommendations - Dell's low valuation masks operational pressures that cloud its near-term outlook, with weak consumer demand and competitive pricing dynamics restricting earnings leverage [16] - Until the company demonstrates stronger margin resilience and balanced demand trends, the stock's risk-reward profile remains unattractive, reinforcing its Zacks Rank 4 (Sell) status [16]

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Global I/O Hardware** industry, particularly the **memory market** and its implications for **hyperscale capital expenditures (capex)** and **hardware margins** due to rising demand from AI applications and server requirements [2][8]. Core Insights and Arguments 1. **Memory Pricing Forecasts**: - UBS forecasts a **289% increase** in DRAM pricing per Gb from 2025 to 2027, surpassing the previous cycle's 89% rise [2][13]. - NAND pricing is expected to rise **144%**, exceeding the 92% rebound seen in 2024 [2][13]. 2. **Hyperscale Capex Growth**: - Hyperscale capex is projected to reach **US$827 billion** in 2026 and **US$915 billion** in 2027, reflecting increases of **43%** and **28%** respectively [3][27]. - Memory costs are estimated to add approximately **US$100 billion** annually to hyperscale capex, increasing from **US$53 billion** in 2025 to **US$155 billion** in 2026 and **US$252 billion** in 2027 [3][25]. 3. **Impact on PC and Smartphone Markets**: - PC unit forecasts for 2026 have been revised down from **267 million** to **255 million**, indicating a **4% decline** year-over-year [4]. - Smartphone unit sell-in estimates have also been reduced from **1.28 billion** to **1.20 billion**, reflecting a **5% decline** in 2026 [4]. 4. **Brand and ODM Margin Pressures**: - The rising memory costs are squeezing margins for brands and ODMs, with DRAM now accounting for **18%** of PC BOM costs and potentially **24%** for high-end smartphones by H226 [4][9]. - ODMs are forced to pass through memory costs, which boosts sales but does not enhance gross or operating profits, leading to lower margins [4][9]. 5. **Investment Preferences**: - Analysts recommend favoring AI hardware and components over traditional PC and branded companies due to the higher memory costs impacting margins [5]. Additional Important Insights 1. **Server Demand and Memory Costs**: - The demand for AI and traditional servers is strong, with server unit forecasts for 2025-26 revised up from **+6%** to **+13%** year-over-year [2][14]. - A typical data center server's memory cost is expected to rise from **46%** to **67%** of total server costs due to increased memory pricing [15]. 2. **Long-term Memory Cycle**: - The memory pricing cycle is described as the strongest in decades, with expectations of sustained under-supply into 2027 [10][13]. 3. **Capex and Cash Flow Dynamics**: - The capital intensity for internet companies is projected to rise from **10%** of capex/sales pre-AI to approximately **35%** in 2026, with a significant portion of capex financed through operating cash flow [28]. 4. **Future Outlook**: - The aggressive push for compute resources to meet growing cloud workloads and AI demands is expected to continue, although future growth rates may slow as spending becomes increasingly financed by debt and equity [28]. This summary encapsulates the critical insights and projections discussed during the conference call, highlighting the significant impact of memory pricing on the hardware industry and the strategic shifts in investment focus towards AI-related technologies.

Summary of BYDE (0285.HK) Conference Call Company Overview - **Company**: BYDE (0285.HK) - **Market Cap**: HK$76.1 billion / $9.7 billion - **Enterprise Value**: HK$67.1 billion / $8.6 billion - **Industry**: Greater China Technology Key Points Industry and Market Dynamics - The global smartphone Total Addressable Market (TAM) for 2026E/27E has been reduced due to rising memory prices, impacting growth expectations for smartphone manufacturers [1][4] - Global leaders like Apple are expected to outperform due to their scale and consumer purchasing power, while Chinese brands face challenges due to price sensitivity [1][17] - Smartphone shipments are projected to decline by 6% YoY in 2026E, with a recovery of +2% YoY in 2027E [17] Company Performance and Financials - BYDE's revenue estimates have been revised down by 9%/11%/18% for 2025E/26E/27E, primarily due to lower revenues from Android smartphone assembly and casing [19] - Revenue projections for 2025E, 2026E, and 2027E are now Rmb 185,660 million, Rmb 201,492 million, and Rmb 217,307 million respectively [21] - Gross margin is expected to improve from 7.4% in 2025E to 8.9% in 2028E, driven by a shift towards higher-margin components [18][22] Business Segments - **Automotive Electronics**: Expected to grow at a CAGR of 23% from 2026E to 2028E, despite a projected 8% YoY decline in automotive shipments in 2H25 [18] - **Apple Assembly and Casing**: Revenue from Apple is expected to increase, reflecting market share gains despite the overall smartphone market challenges [19] - **Android Smartphone Assembly**: Revenue is expected to decline due to fierce competition and lower demand [19][22] Valuation and Rating Changes - Target price has been reduced to HK$40 from HK$53.08, reflecting slower growth and less relative upside compared to peers [1][26] - BYDE has been downgraded to a Neutral rating from Buy due to underperformance in the competitive smartphone market [1][26] Risks and Opportunities - **Upside Risks**: Better-than-expected smartphone demand, faster expansion into Apple and automotive electronics, and quicker contributions from new AI server businesses [1][26] - **Downside Risks**: Weaker smartphone market demand, increased competition in automotive electronics, and slower-than-expected growth in AI server components [31][32] Financial Metrics - **EPS**: Expected to grow from Rmb 1.89 in 2024 to Rmb 3.01 in 2027 [15] - **P/E Ratio**: Projected to be 15.6 in 2024, decreasing to 10.0 by 2027 [12] - **Dividend Yield**: Expected to increase from 1.9% in 2024 to 3.0% in 2027 [12] Conclusion - BYDE is navigating a challenging smartphone market with a strategic focus on expanding into higher-margin segments like automotive electronics and AI server components. The company faces significant risks from market dynamics but has opportunities for growth through its partnerships with leading brands like Apple. The revised target price and neutral rating reflect a cautious outlook amid these challenges.

कुछ खास होता भी नहीं था। सिर्फ यही पता था आईटी का मतलब इनकम टैक्स होता है। अ स्टार्ट किया कि कुछ नया करना है। स्टार्टेड विद असेंबलिंग ऑफ डेस्कटॉप्स एंड देन लैपटॉप्स और सर्वर्स और उससे हम स्टार्ट हुए। मगर जब मैं पाकिस्तान में नहीं था 95 से पहले। तो जिस वक्त स्टार्ट किया तो एक चीज का पता चला पाकिस्तान में अपना ब्रांड कुछ भी नहीं है। हम किसी के मल्टीनेशनल के ब्रांड्स के ऊपर बैठ के ड्राइव करते हैं यहां पे। नॉट इवन इन आईटी मेरा ख्याल है किसी चीज का भी हमारे पास कोई ब्रांड नहीं है। उस वक्त हमने सोचा कि एक पाकिस्त ...

Financial Data and Key Metrics Changes - The company reported record revenues of $12.3 billion and non-GAAP earnings per share (EPS) of $3.50 for fiscal Q1 2026, with non-GAAP EPS at the high end of guidance [5][17] - QCT revenues reached a record $10.6 billion, with strong year-over-year growth across automotive and IoT segments [17] - Licensing business revenues were $1.6 billion, with an EBT margin of 77%, driven by higher units and favorable mix [17] Business Line Data and Key Metrics Changes - QCT handset revenues reached a record $7.8 billion, benefiting from recently launched flagship smartphones [17] - QCT IoT revenues grew 9% year-over-year to $1.7 billion, driven by demand across consumer and networking products [17] - QCT Automotive revenues grew to $1.1 billion, up 15% year-over-year, reflecting increased demand for Snapdragon Digital Chassis platforms [17] Market Data and Key Metrics Changes - Global consumer demand for handsets, particularly in the premium and high-tier segments, exceeded expectations, with healthy sell-through observed [5] - The handset industry is expected to face constraints due to memory availability and pricing, particularly DRAM, as suppliers redirect capacity to meet AI data center demand [5][6] Company Strategy and Development Direction - The company is focused on expanding its presence in the premium and high-tier smartphone segments, with a dual flagship product strategy that has seen broad OEM adoption [6][7] - The company is also investing in AI-native smartphones and intelligent wearables, positioning Snapdragon platforms as the choice for the industry [7][8] - In automotive, the company aims to reinforce its technology leadership with multiple design wins and collaborations with major automakers [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the fundamentals of the handset business despite near-term challenges related to memory supply and pricing [19] - The company anticipates returning to prior growth trajectories for QCT handset revenues once memory supply normalizes [19] - Management remains optimistic about the long-term growth potential in automotive and IoT, with expectations for continued revenue acceleration [21] Other Important Information - The company completed the acquisition of Alphawave Semi, enhancing its high-speed wire connectivity technologies [15] - The company is actively engaging with leading hyperscalers and cloud service providers to develop data center solutions [14] Q&A Session Summary Question: What factors are driving the weakness in handset outlook beyond memory pricing? - Management indicated that the weakness is entirely related to memory availability, with strong microeconomic indicators and handset demand observed [26][27] Question: Is the automotive revenue growth driven by ADAS wins? - Management confirmed that the automotive pipeline continues to translate into revenue, with new car launches contributing to record revenues [29][30] Question: How is the company managing the memory supply situation? - Management clarified that they do not purchase memory directly but work closely with customers who do, ensuring flexibility with various memory providers [69][70] Question: What is the outlook for the data center business? - Management stated that progress is on track, with positive feedback from engagements with hyperscalers and cloud service providers [35][36] Question: How does the company view the impact of memory shortages on the overall handset market? - Management emphasized that the size of the handset market will be determined by memory availability, with expectations for premium and high-tier segments to remain resilient [40][76]

Group 1: Diverging Trends in China's Corporate Landscape - Major Chinese consumer brands, such as Anta Sports and TCL, are resuming foreign acquisitions to secure growth amid a sluggish domestic economy [1][2] - The trend of acquiring foreign brands is reminiscent of early 21st-century strategies, like Lenovo's acquisition of IBM's PC business, which had diminished over the past decade [3] - The acquisitions are driven by strategic necessity, as companies face increased competition and underperformance in their domestic markets [4] Group 2: Banking Sector Challenges - China Merchants Bank, a leading commercial bank, reported a significant slowdown in profit growth, with a mere 1.2% increase last year and operating income rising only 0.01% [5][6] - The bank's net interest income grew by just 2%, which is below the 5.4% increase in its loan book, indicating squeezed interest margins due to a low-interest-rate environment [6] - The bank is prioritizing loan quality over aggressive expansion, reflecting prudent management in uncertain economic conditions [7]

Disney Succession Plan - Disney has officially named Josh Dearo as its next CEO, succeeding Bob Iger later this year [1][10] - Josh Dearo's experience in overseeing the parks and cruises business, which accounts for nearly 60% of Disney's profits, is seen as a critical factor for his selection [4][10] - The transition is expected to be smoother than previous succession attempts due to a more deliberate process and the retention of key executives like Dana Walden [14][15] Business Performance and Strategy - Disney's reliance on its experiences segment is crucial for growth, especially as the entertainment sector faces challenges [4][8] - The company has established a strong base of intellectual property (IP) that supports its content strategy, although there are concerns about the need for more content [6][9] - The stock performance has been rangebound over the past decade, with a need for continued growth in experiences and streaming to improve profitability [15][20] Market Outlook - Despite short-term headwinds, such as a dip in tourism to domestic parks, the long-term outlook for Disney is considered optimistic due to the growth potential in its core businesses [21][22] - The company is viewed as undervalued, with expectations for a recovery as it navigates the transition in leadership and focuses on its growth-oriented segments [20][22]

Summary of Greater China Technology Hardware Conference Call Industry Overview - The conference focused on the Greater China Technology Hardware sector, specifically addressing the impact of input cost hikes on profit outlook for 2026 [4][8]. Core Insights - **Opportunities in AI and Server Upgrades**: There are significant opportunities in AI GPU and ASIC server/rack design upgrades, particularly with the upcoming Vera Rubin platform and Kyber architecture [8][8]. - **AI ASIC Server Expansion**: The magnitude of AI ASIC server upgrades and volume expansion is primarily centered around TPU and Trainium platforms [8][8]. - **Share Price Upside Potential**: Analysts see potential for share price upside in the near term due to various factors including AI server power solutions and capacity expansion across the tech hardware supply chain [8][8]. - **Risks Identified**: - Consumer electronics demand, particularly for smartphones and PCs, is being negatively impacted by rising memory costs [8][8]. - Anticipated lower business momentum in the second half of 2026 due to pull-forward builds in the first half [8][8]. - Raw material price hikes (copper, nickel) and supply tightness are expected to create margin headwinds [8][8]. - Supply shortages may delay shipment pace, affecting overall market performance [8][8]. Key Stock Ideas - **AI Server Hardware**: Recommended stocks include Wistron, FII/Hon Hai, Wiwynn, Delta Electronics, AVC, BizLink, King Slide, Accton, Chenbro, Gold Circuit, Innolight, FIT, and Fositek [8][8]. - **Edge AI Companies**: Notable mentions include Xiaomi, Luxshare, and Lenovo [8][8]. Valuation Comparison - A detailed valuation comparison of various companies within the Greater China Technology Hardware sector was provided, including metrics such as market cap, EPS estimates, P/E ratios, and target prices [10][10]. - Companies highlighted include Lite-On Tech, Delta, Hon Hai, Foxconn Tech, and others, with specific price targets and ratings [10][10]. Additional Considerations - The report emphasizes the importance of considering Morgan Stanley Research as one of several factors in investment decision-making, acknowledging potential conflicts of interest [4][5]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the Greater China Technology Hardware industry.