Report Industry Investment Rating - No information provided Core View of the Report - Maintain buy on VEDLN 9.475 07/24/30 due to its all-time high first half recurring EBITDA [3][7] Summary by Relevant Sections Trading Desk Comments - Yesterday, recent USD MEITUA 31 - 35s widened 2 - 4bps with RM selling; TW lifers SHIKON/FUBON/NSINTWs widened 2 - 5bps; BBLTB sub curve was 1 - 4bps wider; JP bank FRNs held up well, JP AT1s dropped by 0.3pt; JP insurance hybrids were marked lower; Yankee AT1s were down by 0.4pt then stabilized; NWDEVL Perps lowered 0.7 - 2.0pts, NWDEVL 27 - 31s were down by 0.6 - 1.3pts; LASUDE 26 was 1.4pts lower; MTRC perps lost up to 0.2pt; VNKRLE 27 - 29 recovered 2.7 - 2.9pts; GRNCH 28 fell by up to 0.5pt; Macau gaming stocks had mixed performance; HYNMTRs/HYUELEs traded 1 - 3bps wider; NTT curve was 1 - 3bps wider; PETMK curve was 2 - 4bps wider on the long end; SMCGL Perps/GARUDA 31 were down by 0.1 - 0.2pt; VEDLN 28 - 33s were 0.3 - 1.1pts lower; onshore AAA - guaranteed LGFV papers were sought after [2] - This morning, new CDBFLC 35 widened 2bps, new QBEAU 37 tightened 3bps, new STANLN PerpNC10 was 0.2pt higher; JP insurance bonds and MTRC Perps were down by 0.1 - 0.3pt; NUFAU 30 rose 0.9pt, SOFTBK 61/65s and NWDEVL 30 were 0.6 - 0.7pt lower; TW lifers widened 2 - 4bps [3] Top Performers and Underperformers - Top performers include VNKRLE 3.975 11/09/27 (price 60.3, change 2.9), VNKRLE 3 1/2 11/12/29 (price 52.0, change 2.7), etc. - Top underperformers include NWDEVL 6 1/4 PERP (price 42.3, change - 2.0), NWDEVL 5 1/4 PERP (price 44.0, change - 1.9), etc. [4] Macro News Recap - On Tuesday, S&P (-1.17%), Dow (-0.53%) and Nasdaq (-2.04%) were lower; UST yield was lower, with 2/5/10/30 year yield at 3.58%/3.69%/4.10%/4.67% [6] Desk Analyst Comments on VEDLN - VEDLN's 2QFY26 recurring EBITDA reached INR116.1bn, up 12% yoy; 1HFY26 EBITDA rose to INR223.6bn, 42% of full - year target of USD6bn; prefer VEDLN 9.475 07/24/30 with YTW of 9.0% and 106bps yield pickup over NICAU 9 09/30/30 [7] - VEDLN's average borrowing cost declined to c9.0% in 1HFY26 from c9.7% in 1QFY26, expected to fall below 8% near - term; PAT dropped 26% yoy to INR79.4bn due to one - off losses [10] - 1HFY26 operating cash flow decreased 12% yoy to INR162.3bn; spent INR102.6bn in capex, 61 - 68% of FY26 target; estimated 1HFY26 FCF was INR59.7bn [11] - As of Sep'25, cash and equivalents increased to INR218.6bn; total debt/LTM EBITDA and net debt/LTM EBITDA rose slightly to 1.9x and 1.4x; aims to bring net leverage down to 1.0x near - term [12] - Deleveraging may face headwinds from JPA acquisition; demerger hearing postponed to 12 Nov'25, seen as moderately credit positive [13] Offshore Asia New Issues - Priced issues include Alinma Sukuk Limited (USD500mn, 10NC5, 5.792%, T + 210), China Development Bank Financial Leasing (USD500mn, 10NC5, 4.6%, T + 93), etc. - Pipeline issues include Gaoxin International Investment (unrated, 3yr, 5.0%), Korea Electric Power Corporation (Aa2/AA/-, 3yr/SOFR + 95, 5yr/T + 80), etc. [17][18] News and Market Color - 99 credit bonds issued yesterday onshore with RMB106bn; MTD, 206 credit bonds issued with RMB190bn, 19.2% yoy increase [20] - Adani Enterprises 1HFY26 EBITDA fell 11% yoy to INR76.9bn, plans to raise INR250bn via rights issue [20] - Adani Ports 1HFY26 EBITDA rose 20% yoy to INR110.5bn, Fitch changed outlook to stable and affirmed BBB - rating [20] - China to boost subsidies for Alibaba, Tencent to cut data center energy bills [20] - Moody's upgraded Bharti Airtel to Baa2 from Baa3, outlook to stable [20] - GLP China repurchased USD205mn of GLPCHI 2.95 03/29/26, USD495mn outstanding [20] - Nickel Industries to hold non - deal roadshow on 19 Nov'25 [20] - Petron 9M25 revenue fell 10% yoy to PHP594.9bn [20] - Pertamina Geothermal targets 6.1% revenue increase for FY26 [20] - SK Telecom plans full - scale AI infrastructure expansion [20]

AI Model Development - Tencent's flagship AI model development overseer has raised $50 million for a startup [1] - The startup plans to release a rival to OpenAI's Sora [1]

Summary of Global Cloud Capex Tracker Conference Call Industry Overview - The conference call focuses on the **US Technology** sector, specifically the **cloud computing industry** and the **capital expenditure (capex)** of global hyperscalers [1][4]. Key Points Capital Expenditure Trends - **2025 Capex**: The cash capex for the top 11 global cloud service providers (CSPs) is projected to be approximately **$470 billion**, reflecting a **68% year-over-year (Y/Y)** increase [2][10]. - **2026 Capex**: The forecast for 2026 cash capex has been revised to **$620 billion**, indicating a **33% Y/Y growth**, which is **$60 billion** higher than previous estimates [2][12]. - The upward revisions in capex are primarily driven by **Amazon**, **Meta**, and **Alphabet**, while **Microsoft** has slightly reduced its estimates due to a higher mix of capital leases [2][9]. Capex Intensity - The capex intensity for 2025 is expected to reach **19.1% of revenue**, marking an increase of approximately **6 percentage points Y/Y**, which is a new all-time high [2][16]. Hyperscaler Management Commentary - Management teams from the **Big 4 US hyperscalers** (Amazon, Microsoft, Meta, Alphabet) have indicated a need to accelerate infrastructure deployment due to **capacity constraints** in compute and power [9][10]. - All four companies have raised their current year capex targets, with expectations of significant increases in spending into 2026 [9][10]. AI Infrastructure Spending - There is a growing demand for AI infrastructure, with expectations that global AI infrastructure spending could reach **$3-4 trillion per year** as indicated by NVIDIA's CEO [3][9]. - Monthly tokens processed by major CSPs are growing exponentially, suggesting an increase in demand for AI inference [3][18]. Revenue Growth Projections - Aggregate cloud revenue for major providers is expected to accelerate, with the top 4 US hyperscalers projected to see revenue growth in the coming quarters [21][22]. Non-AI Cloud Capex - Non-AI cloud capex growth is anticipated to accelerate to **+78% Y/Y in 2025**, followed by **+24% Y/Y in 2026** [23][24]. Additional Insights - The consensus for 2026 capex estimates has been raised by more than **70%** from a year ago, indicating strong confidence in continued growth in cloud spending [20]. - A detailed list of technology companies with revenue exposure to cloud capex is provided, highlighting the interconnectedness of the industry [7]. Conclusion - The overall sentiment from the conference call indicates a robust growth trajectory for cloud capex driven by increasing demand for AI infrastructure and the strategic responses of major hyperscalers to capacity constraints and market opportunities [1][3][9].

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Summary of Conference Call on China Internet Equities Industry Overview - **Industry**: China Internet Equities - **Key Focus**: AI applications and quick commerce (QC) trends Key Trends in Consumer AI Applications 1. **Concentration of Top Players**: - Chatbot applications are primarily dominated by ByteDance and DeepSeek, with Tencent having a smaller share [1][7] 2. **Impact on Traditional Search**: - Baidu (BIDU) has seen a decline in young user engagement, attributed to a shift towards AI-native and social apps. However, user engagement for those aged over 40 remains stable due to increased traffic to AI search [1][7] - Daily time spent on AI-native apps is approximately 10 minutes, indicating limited impact on traditional search and productivity apps [1][7] 3. **Emerging AI Applications**: - ByteDance's Jimeng leads in video generation app users, while Ant's healthcare AI assistant AQ has entered the top 10 AI-native apps. Education AI apps are also gaining traction among Chinese users [1][7] 4. **Integration of AI into Existing Apps**: - Alibaba's (BABA) Quark app saw over 50% of users engaging with its AI features post-integration, while Tencent's QQ Browser, with a larger user base, is experiencing slower AI plugin development [1][7] Quick Commerce (QC) Competition 1. **Market Resilience**: - Meituan (MT) has shown resilience in QC, with a slight improvement in weekly session share from August to early October, while Eleme and JD have seen declines [2] 2. **User Growth and Engagement**: - Taobao added 47 million year-over-year daily active users (DAU) in September, surpassing JD's 34 million and MT's 8 million. Despite seasonal tapering, 23% of Taobao's monthly active users (MAU) and 18% of JD's are utilizing QC [2] 3. **Expansion in Lower-Tier Cities**: - Taobao's merchant percentage compared to MT increased from 58% in January to 72% in October, driven by growth in lower-tier cities. Approximately 64% of Eleme's new merchants are from tier 3 and below cities [2] 4. **Rider Capacity Trends**: - Taobao experienced significant year-over-year growth in daily active crowdsourcing (+80%) and priority riders (+30%) in Q3 2025, while MT's priority riders decreased by 6% [2] In-Store Competition - **Douyin's Competitive Edge**: - Douyin Laike's MAU surpassed MT's in the second half of 2024, particularly excelling in lower-tier cities, while MT remains strong in top-tier cities. Competition intensified since March 2025 due to Douyin's increased investment in top-tier cities [3] Investment Recommendations - **Preferred Stocks**: - Tencent and Alibaba are recommended for their AI potential, both rated as "Buy" [7] Additional Insights - **User Engagement Metrics**: - MAU of AI-generated content applications reached 287 million in September [8] - **Market Dynamics**: - The competitive landscape is evolving with significant shifts in user engagement and merchant coverage, particularly in the context of lower-tier city expansion and AI integration [2][3] This summary encapsulates the key points discussed during the conference call, highlighting the competitive landscape and emerging trends within the China Internet Equities sector.

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Sector Report Summary: Technology Industry Overview - The report focuses on the technology sector, specifically the demand for optical modules in AI and cloud computing, driven by major players like Nvidia, Google, and AWS [1][8]. Key Points and Arguments 1. **Demand Forecast for Optical Modules**: - Total demand for 800G and 1.6T optical modules is projected to reach 43 million and 30 million units in 2026, respectively, an increase from previous estimates of 37 million and 15 million [1][8]. - This growth is attributed to: - Increased demand from Nvidia, Google, and AWS for accelerators [1][8]. - Rising GPU/ASIC scale-out bandwidth, which enhances the GPU/ASIC-to-optical module ratio [1][8]. - Google's transition to large-scale clusters in 2026, which will likely adopt optical interconnects [1][8]. 2. **Nvidia's Impact**: - Nvidia's new Rubin GPU is expected to significantly increase the scale-out bandwidth, with each GPU equipped with two CX9 NIC chips, doubling the bandwidth compared to the previous Blackwell architecture [3]. - The ratio of 1.6T optical modules to GPUs has improved from 1:2.5 to 1:5 [3]. 3. **Google's Transition**: - Google is anticipated to fully transition to large-scale clusters in 2026, with a projected TPU-to-optical module ratio of approximately 1:4 [3]. - Expected TPU shipments for Google are 4 million, leading to a demand for 6 million to 10 million units of 800G/1.6T optical modules in 2026 [3]. 4. **Beneficiaries of Increased Demand**: - Companies like Tower Semiconductor (TSEM), Broadcom (AVGO), and LITE are expected to benefit from the upward revision in demand for 1.6T optical modules [4]. - LITE is well-positioned to capitalize on the transition towards scale-up architectures in optical communications [4]. 5. **Market Dynamics**: - The report highlights the expected total shipment of Optical Communication Systems (OCS) to be 15,000 and 30,000 units in 2025 and 2026, with LITE projected to capture a 30% market share in 2026 [4]. Additional Important Insights - **CPO/OIO Updates**: - Nvidia's CPO switch is expected to see shipments of 2,000, 20,000, and 35,000 units in 2025, 2026, and 2027, respectively [5]. - Starting from 2027, both Nvidia and ASIC players are expected to introduce OIO-related solutions, which will drive demand for CW lasers and optical engines [5]. - **Risks**: - Potential risks include AI demand deceleration, geopolitical uncertainties, and increased competition within the sector [6][12]. Conclusion - The technology sector, particularly in optical modules for AI and cloud computing, is poised for significant growth driven by major players like Nvidia and Google. The upward revisions in demand forecasts indicate a robust market opportunity, although risks remain that could impact future performance.

Core Insights - Tencent has announced the top 50 finalists for its CarbonX Program 2.0, aimed at accelerating climate technologies for a net-zero world by 2050 [1][10] - The program received over 660 applications from 54 countries, with a total funding pool of RMB200 million (approximately US$28 million) for the selected innovators [2][10] - The initiative addresses the "Valley of Death" in climate innovation, which is the gap between early-stage innovation and large-scale deployment [3][4] Funding and Support - Winners of the CarbonX Program will receive not only funding but also technical resources, expert mentorship, and opportunities to pilot their solutions in climate-vulnerable regions such as Kenya, the Maldives, and Serbia [2][6] - The program aims to create a global ecosystem involving scientists, engineers, entrepreneurs, investors, and industry leaders to support the scaling of climate solutions [4][5] Focus Areas of Innovation - The finalists are working on four key areas: 1. Carbon Dioxide Removal (CDR) with pilots in Kenya to develop cost-effective solutions for removing CO2 [8] 2. Industrial Decarbonization (CCUS for Steel) focusing on reducing lifecycle emissions in steel production with pilots in Serbia [8] 3. Carbon Capture and Utilization (CarbonXmade) transforming captured carbon into consumer products [8] 4. Long-Duration Energy Storage (LDES) validating emerging technologies in the Maldives to support renewable energy expansion [8] Event and Collaboration - The announcement was made at the CarbonX Summit 2025 in Shenzhen, which gathered leaders from business, academia, and policy to discuss how innovation ecosystems can accelerate climate action [7] - The summit emphasized the importance of catalytic finance, inclusive deployment, and multilateral collaboration in achieving the Paris Agreement targets [7]

Core Viewpoint - Kaixin Holdings has signed a term sheet to acquire a 51% stake in Honglu Technology, aiming to enhance collaboration in the "AI + Animation" ecosystem and promote AI innovation in animation production [1] Company Overview - Kaixin Holdings is transitioning into an AI-driven technology business in China, focusing on expanding its AI capabilities and exploring new growth opportunities [6] - Honglu Technology specializes in animation technology innovation, including the shift from traditional animation to computer-generated graphics, and utilizes emerging technologies such as rendering and AI research [2] Strategic Advantages of Honglu Technology - **Technical Advantage**: Comprehensive coverage of the 3D animation production process, utilizing UE5 Unreal Engine and AI technology R&D capabilities [3] - **Team Advantage**: The core team has over 10 years of industry experience and has produced nearly 5,000 hours of S-rated anime series [3] - **Content Sources Advantage**: Strategic partnerships with Youku Entertainment and suppliers of high-quality S-rated anime series [4] - **IP Advantage**: Ownership of original and novel copyright IP, a large fan base, and the ability to generate diverse derivative products [4] - **Qualifications Advantage**: Registered 19 software patents, showcasing strong technical capabilities in animation and design [4] - **Network Advantage**: Deep partnerships with Xuanji Technology and major video platforms like Youku, Tencent, and iQiyi, creating a robust ecosystem [4] Recent Developments - The previously intended acquisition of Xingcan was terminated as it did not meet mutual expectations, allowing Kaixin to focus on optimizing AI application scenarios [5]

Well, big tech earnings on deck. Investors bracing for Friday's CPI report as well. It's a combination that could set the tone for the Fed's next move at the end of October with valuation stretch and the market still leaning heavily, we know, on a handful of mega cap names.The question now is whether the rally can broaden out. For more, we're bringing in Andrew Cry, co-chief investment officer at Crescent Grove Advisors. Andrew, it's great to see you on set. Let's talk earnings here first because it continu ...