Summary of Key Points from the Conference Call Industry Overview - **China Equity Strategy**: The 2026 JPM China Opportunity Forum highlighted a constructive outlook on China equities, emphasizing thematic trades such as leading exporters, beneficiaries of AI infrastructure capital expenditure, anti-involution strategies, K-shaped consumption recovery, and property market upside optionality [2][7]. Core Insights - **AI Ecosystem**: The memory and ESS (Energy Storage Systems) sectors are benefiting from global AI capital expenditure demand. Notable trends include a memory up-cycle and rising localization. However, consumer electronics and automotive sectors are facing component cost increases and lower trade-in subsidies year-on-year [6][14]. - **Anti-involution Strategies**: Companies like H World and Atour are shifting to rational pricing strategies to enhance market share. Home appliance brands are focusing on innovation rather than price cuts. The solar industry is also expected to see continued anti-involution efforts [6][31]. - **Consumption Trends**: Leading brands are innovating and optimizing to counteract soft domestic demand, with a focus on overseas growth. The "Liberation Day" in April 2025 is noted as a potential trigger for a future recovery in consumer confidence [6][29]. - **Healthcare Sector**: Drug innovation is a key growth driver for pharmaceutical companies, with a focus on launching new drugs and expanding into overseas markets. Healthcare service providers are gradually recovering, aided by technology upgrades [35][38]. - **Humanoid Robots**: China leads in global humanoid robot shipments, driven by government orders. The sector faces challenges in commercialization and scalability, but industrial applications are expected to show strong potential [40][41]. Important Data Points - **Smartphone Market**: Global smartphone shipments are expected to decline by 0.9% in 2026, with iPhones projected to outperform Android devices. JPM forecasts iPhone EMS builds at 251 million units for 2025, a 6% year-on-year increase [14][15]. - **Automotive Sales**: A slow start for passenger vehicle sales in 2026 is anticipated, with a forecasted decline of 24-29% quarter-on-quarter in Q1 2026 [15]. - **Energy Storage Systems**: Global ESS battery shipments are projected to grow over 40% to approximately 900 GWh in 2026, driven by policy momentum in China and strong orders from Europe [19]. - **Semiconductor Market**: The semiconductor industry is expected to see divergent dynamics, with consumer electronics facing softness while memory and foundry segments show strength. Average DRAM pricing is forecasted to increase by approximately 60% year-on-year in 2026 [20][21]. Company-Specific Insights - **Top Picks**: J.P. Morgan's preferred companies include Zhongji Innolight, NAURA, and CATL, among others, with various ratings and market caps provided [8][10][11][13]. - **Healthcare Innovations**: Companies like Hansoh are targeting over 80% of revenue from innovative medicines by FY25, with a robust pipeline in oncology and diabetes [35][37]. Additional Considerations - **Cost Management**: Companies are overcoming upward cost pressures through process optimization and effective cost pass-through strategies in export markets [34]. - **Global Expansion**: Chinese brands are increasingly building capacity and expanding distribution in emerging markets, with notable investments in ASEAN production bases [33]. This summary encapsulates the key insights and data points from the conference call, providing a comprehensive overview of the current landscape and future outlook for various sectors within the Chinese market.

Accessible version China Property (H/A) Investor feedback: "wait-and-see" to skepticism; FY25 earnings preview Price Objective Change From "wait-and-see" to skepticism on policy outlook Investor feedback to our sector outlook report (YA report dated 08 January 2026), in which we expressed our contrarian positive view on the sector, has ranged from a broadly "wait- and-see" stance to skepticism. The strong performance of other sectors (especially tech) has also reduced any perceived urgency to reposition. Ke ...

Summary of Conference Call on China Property Management & Services Industry Industry Overview - The property management and services (PMC) industry in China is expected to experience moderate growth in 2026 due to ongoing headwinds such as pressure on management fees and cash collection [1][2] - The industry is transitioning to a new growth phase, moving away from legacy issues, although cash collection pressures and management fee weaknesses persist [2] Key Insights - **Earnings Growth Forecast**: The forecast for earnings growth from 2025 to 2027 is 3%, 5%, and 7% year-on-year, respectively, with an average topline growth of approximately 5% [3] - **Performance Divergence**: Companies with strong service quality and solid asset bases are expected to outperform, while those relying on lower quality projects may struggle [2] - **Focus on High-Quality Names**: Recommendations include prioritizing companies like CR Mixc and GTS for their asset quality and decent dividends, with CGS identified as a tactical investment opportunity [4] Financial Metrics - **Management Services (PMS)**: PMS is projected to be the main growth driver with a 7% CAGR from 2025 to 2027, supported by diversified third-party expansion [3] - **Valuation Changes**: Price targets and ratings for various companies have been adjusted, with CGS seeing a 16% increase in price target due to improved cash flow and dividend visibility [11] Company-Specific Updates - **A-Living**: Earnings estimates for 2025-2027 have been revised down by 3%, 7%, and 7% due to a slower recovery in city services and the termination of low-quality projects [11] - **CGS**: Earnings estimates have been revised up by 3%, 5%, and 7% for the same period, reflecting lower SG&A and better-than-expected margin pressure [11] - **CR Mixc**: Earnings estimates have been adjusted down by 2%, 4%, and 7%, but the price target has been increased by 5% due to strong shopping mall performance [11] - **Onewo**: Earnings estimates have been revised down by 6%, 15%, and 28% due to rising margin pressure and liquidity risks from Vanke [11] Market Dynamics - **Cash Collection Pressure**: The average cash collection is expected to decline by 2-3 percentage points in 2025, impacting overall growth [2] - **Legacy Issues**: The impact of legacy issues is diminishing, with PMCs now focusing on independent growth engines and third-party projects [13][14] - **Property Sales Decline**: National property sales have dropped significantly, with expectations of further contraction in 2026, albeit at a milder pace [15][16] Investment Recommendations - **Order of Preference**: The preferred companies include Greentown Service, CR Mixc, and Poly Property Services, with A-Living and Sunac Services rated as underweight [12] - **Dividend Yields**: Companies like CGS and CR Mixc offer attractive dividend yields of approximately 8% and 4-5%, respectively [4][12] Conclusion - The China PMC industry is navigating through a challenging environment with moderate growth expectations. Companies that can maintain high service quality and adapt to changing market conditions are likely to emerge as leaders in this evolving landscape.

Summary of Key Points from J.P. Morgan's Conference Call on Mainland China and Hong Kong Property Industry Overview - The conference call focused on the property sectors in Mainland China and Hong Kong, highlighting investor sentiment and stock performance trends [1][2]. Key Insights on Mainland China Property - **Investor Sentiment**: There is a mixed feedback regarding expectations for the upcoming Politburo and CEWC meetings, with hedge funds (HFs) looking for short-term trading opportunities due to deteriorating housing market data [5]. - **Stock Interest**: CR Land and CR Mixc are the most enquired stocks among Mainland China property companies, while SHKP, Link REIT, Henderson, Sino, and Hang Lung are of higher interest among Hong Kong property companies [1]. - **Earnings Expectations**: Investors expect a single-digit percentage decline in FY25 earnings for CR Land, with concerns that earnings may drop to a mid-teens percentage decline due to delays in disposals [6]. - **CR Mixc Performance**: Strong interest in CR Mixc is noted, with a 10-15% same-store tenant sales growth in 10M25. However, investors are cautious about its high P/E ratio (>20x) and are waiting for a better entry point [6]. Key Insights on Hong Kong Property - **Market Recovery**: Most investors agree that the Hong Kong residential market is recovering, but there is uncertainty regarding which stocks to invest in. SHKP is favored, but its 3.8% dividend yield is seen as unattractive by some [8]. - **Sino Land Performance**: Sino Land has performed well (+44% YTD), but concerns exist regarding its future earnings and landbank replenishment. Generalist investors are more focused on its high dividend certainty [8]. - **Henderson Land Concerns**: Investors are worried about potential dividend cuts, although recent management comments have alleviated some concerns [9]. - **Hang Lung's Recovery**: Hang Lung has seen a notable improvement in tenant sales, which has attracted more interest from long-only investors (LOs) [10]. - **Link REIT's Cautious Outlook**: Investors were surprised by Link REIT's cautious tone regarding negative rental reversion, which is expected to worsen. Many are waiting for signs of improvement before investing [10]. Valuation Insights - **Valuation Metrics**: The report includes a valuation summary for both Mainland China and Hong Kong property sectors, indicating various P/E ratios, dividend yields, and share price returns for key companies [11][13]. - **Investor Preferences**: There is a shift in investor focus from dividend yield to P/E and NAV discount as the market sentiment becomes more risk-on, although dividend yield remains a primary valuation yardstick for many [10]. Additional Considerations - **Short-Term Trading**: Some hedge funds are interested in short-term trades ahead of government meetings, particularly if CR Land trades below HK$29 and Longfor below HK$10 [5]. - **Vanke's Bond Extension**: Most property-focused investors are not overly concerned about Vanke's bond extension, viewing it as a non-surprising development [5]. This summary encapsulates the key points discussed during the conference call, providing insights into investor sentiment, stock performance, and valuation metrics within the property sectors of Mainland China and Hong Kong.

Summary of Key Points from the Conference Call Industry Overview - **China Residential Market**: Developers are increasingly negative due to accelerated price declines, leading to margin and earnings pressure in 2025 and 2026. BEKE anticipates a 30% YoY decline in existing home GTV in Q4 2025 and a 13% and 6% decline in existing and new home transaction GTV in 2026 respectively [2][19]. - **Hong Kong Residential Market**: Developers report a strong recovery in transaction volume driven by rate cuts, rising rental demand, and increased investment from mainland Chinese buyers. There is potential for gradual price increases in new project launches [3]. - **Retail Sector**: High-end malls in China and Hong Kong are experiencing better momentum in 2H25, attributed to positive wealth effects from stock markets and rising gold prices. However, mass market retail remains challenging due to consumption downgrades and e-commerce penetration [4]. - **Office Market in Hong Kong**: There are signs of recovery in the Central office market, driven by increased leasing inquiries from the financial sector and IPO-related services [5]. Company-Specific Insights - **CR Land**: Reported a 17% YoY decline in contract sales gross value to Rmb170bn and expects downward pressure on earnings in 2025 due to lack of one-off gains [8]. - **COLI**: Experienced a 21% YoY decline in contract sales gross value to Rmb189bn, with expectations of launching large projects to mitigate sales decline [9]. - **Greentown China**: Reported a 6% YoY decline in contract sales to Rmb120bn, with expectations of slight profit in 2025 but continued pressure from vintage inventory [10]. - **Poly Developments**: Focused on liquidity and destocking, with a significant portion of sales coming from vintage inventory [11]. - **CR Mixc**: Forecasted double-digit core net profit growth for FY2025, supported by strong same-store sales growth [15]. - **Beike (KE Holdings)**: Expects a 30% YoY decline in GTV for existing homes in Q4 2025, but maintains a guidance of Rmb7bn adjusted operating profit for 2026 [19][20]. Market Preferences - **Stock Preferences**: Preference for HK developers like Henderson and Sino due to the bottoming of the HK residential market, and for retail properties like CR Mixc and Swire Properties due to recovery in mainland China retail [6]. Risks and Valuation - **Valuation Methods**: P/BV methods are used for mainland China property developers, while discount to NAV is used for Hong Kong developers and landlords [31]. - **Key Risks**: For Hong Kong, risks include weakening macroeconomic conditions and increased housing supply. For mainland China, risks involve government policies restricting demand and tight financing for developers [32]. Additional Insights - **Market Sentiment**: There is a cautious optimism among developers in Hong Kong regarding sales momentum and potential price increases, while mainland developers face significant challenges due to declining sales and margins [3][4][5][8][9][10][11].

Investment Rating - The overall investment rating for the China property sector is mixed, with several companies rated as "Buy" (1) and others as "Hold" (2) or "Sell" (3) [13]. Core Insights - Sales in November are weak, with an estimated drop of approximately 40% year-over-year for listed companies, leading to a projected 25% decline for FY25, which is about 10% below original targets [1]. - High-end projects in key cities are outperforming, while secondary prices are experiencing accelerated declines, impacting market sentiment [1][2]. - Companies are becoming less proactive in new land investments due to slower sales and higher requirements for sell-through and margin visibility [2]. - Booking margins are expected to stabilize with better new land margins, projecting gross profit margins (GPM) of 15-20% for new land acquisitions [3]. - Profit outlook for FY25 is conservative across most companies, primarily due to pressure on booking margins and the timing of REIT disposal gains [4]. - Luxury retail sales are showing strong same-store sales growth (SSSG), with CR Mixc reporting 10-15% SSSG in 10M25 [5]. - Regulatory changes are being implemented to manage online property information, with little expectation for new monetary stimulus [6]. Summary by Sections Sales Performance - November sales are projected to decline by about 40% year-over-year, with FY25 expected to conclude at a 25% decrease [1]. - High-end projects are performing better than average, while secondary market prices are declining [1]. Land Investment - Companies are setting higher thresholds for new land acquisitions due to slower sales [2]. - COLI has allocated Rmb20 billion for land costs in 10M and is targeting Rmb30 billion for FY [2]. Margins and Profitability - New land margins are expected to improve, with GPM projected at 15-20% for certain companies [3]. - Profit outlook for FY25 remains conservative, with many companies facing margin pressures [4]. Rental and Retail Performance - Luxury retail SSSG is strong, with CR Mixc achieving 10-15% SSSG in 10M25 [5]. - Non-luxury malls are also showing positive growth, albeit at lower rates [5]. Regulatory Environment - New regulations are being introduced to manage online property information, with limited expectations for new stimulus measures [6].

Summary of Key Points from the Conference Call Industry Overview - The global real estate index declined by 1.5% last month, underperforming global equities by 390 basis points [2][11] - The underperformance is attributed to concerns regarding future rate cuts by the Federal Reserve [2] - Year-to-date performance shows Asia as the best-performing region (+25.6%), followed by Europe (+18.2%) and the US (+2.8%) in USD terms [2] Regional Performance - Europe outperformed with a +1.2% return, while the US and Asia saw declines of -1.6% and -1.8%, respectively [2] - Industrial real estate led the performance for the month with a +5.3% return, driven by a rebound in logistics leasing activity [2][3] - Residential real estate lagged with a -5.9% return due to soft operations in the US and rate sensitivity in Europe [2] Company Insights - UBS has initiated coverage on UAE real estate, giving Buy ratings to Aldar and Emaar [2] - The UBS 28th Annual Global Real Estate CEO/CFO Conference is scheduled for December 2-3, 2025, in London, featuring 70 global real estate management teams [2] Valuation Metrics - The global real estate sector is estimated to have an ~11% return as of October 31, 2025, with a 6.9% discount to NAV [4] - The 2025E P/E ratio is projected at 20.3x, with a 2025E DPS yield of 3.7% and 2024-25E EPS growth of 8.8% [4] Top Picks - Notable top picks include Keppel DC REIT, CapitaLand Ascendas, and Emaar Properties among others across various regions [5] Sector-Specific Trends - In Asia, the residential property market in mainland China remains weak, while Hong Kong's office market is improving due to active hiring [37] - Private REITs in China are expected to offer greater flexibility and fewer regulatory constraints compared to public REITs, creating new capital recycling opportunities [38] - Japanese REIT sponsors are noted for facilitating external growth, often offering assets at discounts to enhance accretion [39] Australia/New Zealand Market - Australian real estate was flat over the last month, outperforming global averages by 1.5 percentage points [40] - A-REIT performance was volatile, with expectations for a rate cut affecting market sentiment [41] - Notable performers included CNI (+6.8%) and INA (+3.3%), while ARF (-5.9%) and CLW (-3.4%) underperformed [43] Singapore Market - Singapore REITs raised approximately S$4 billion in 2025 YTD, indicating strong investor confidence [52] - The residential market is seeing buyers moving up price points, suggesting a positive outlook for 2026 [53] Japan Market - Japan's real estate returned +0.4% over the last month, outperforming global averages [58] - The new Prime Minister's policies may impact the housing market, with a focus on foreign investment regulations [59] China Market - The top 100 developers in China saw contract sales decline by 41% YoY in October 2025, indicating ongoing weakness in the property market [71] - CR Mixc has been upgraded to Buy due to its ability to identify emerging brands and signs of luxury retail recovery [72] Conclusion - The global real estate sector is facing challenges due to macroeconomic factors, but certain regions and sectors are showing resilience and potential for growth. The upcoming conference and ongoing evaluations of REITs and property markets will provide further insights into investment opportunities.

Summary of Conference Call Notes on China Property Market Industry Overview - The conference call focuses on the **China Property** market, highlighting ongoing weaknesses in the housing sector as of September 2025 and expectations for further declines in October due to a high base effect [1][4]. Key Points and Arguments 1. **Market Weakness**: - The housing market continues to show weakness, with home prices and real estate investment declining. National sales value fell by **12% year-over-year (Y/Y)** in September, despite a **3% Y/Y increase** in sales from the top 100 developers [1][3]. - The discrepancy between national sales and top developers' sales is noted, likely due to differences in sales registration timing [3]. 2. **Future Expectations**: - A higher likelihood of new policy support from policymakers is anticipated, especially as the market conditions worsen. The phrase "the worse, the better" is used to describe the potential for policy intervention [1]. - The forecast for **4Q25** indicates a **15% Y/Y decline** in national sales value, with top 100 developers potentially facing a **>30% Y/Y decline** [3][4]. 3. **Home Prices**: - The **70-city home price index** showed a month-over-month (M/M) decline of **-0.41%** in September, worsening from **-0.30%** in August. Secondary home prices also declined, with tier-1 cities experiencing a slight improvement [3][4]. 4. **New Starts and Completions**: - New construction starts dropped **14% Y/Y** in September, an improvement from **-20% Y/Y** in August. However, completions rose **1% Y/Y**, primarily driven by strong growth in office and commercial properties [3][4]. 5. **Real Estate Investment (REI)**: - REI saw a significant decline of **21% Y/Y** in September, marking the worst decline in recent years. The full-year forecast for REI has been revised down to **-14% Y/Y** [3][4]. 6. **Sales Forecasts**: - The full-year sales value forecast is a **10% Y/Y drop**, widening from an **8% Y/Y decline** year-to-date. The anticipated decline in October is expected to be exacerbated by a high base effect [1][3]. 7. **Investment Recommendations**: - The fundamental top picks for investment include **CR Land**, **CR Mixc**, and **China Jinmao**. In a potential policy-induced rally, **Longfor** is expected to have more upside among non-state-owned enterprises (non-SOEs), while **COLI** and **COPL** are seen as laggards among state-owned enterprises (SOEs) [1]. Additional Important Insights - The analysis indicates that while the overall market metrics may not yet appear "bad enough" to trigger stronger policy support, specific metrics, particularly in tier-1 cities and REI, are already at concerning levels [4]. - The conference call emphasizes the importance of monitoring upcoming data releases, particularly for October, which is expected to reflect the impact of the high base from the previous year [4]. This summary encapsulates the critical insights and data points discussed during the conference call regarding the current state and future outlook of the China property market.

Summary of Key Points from the Conference Call on China's Inbound Tourism Industry Overview - The focus is on China's tourism industry, particularly the growth potential of inbound tourism, which is currently dominated by domestic and outbound demand but is expected to become a significant earnings driver in the next three years [1][4][63]. Core Insights and Arguments - **Inbound Tourism Growth**: Inbound tourism is projected to increase from 11% of China's tourism revenue to 18% within five years, with hotels expected to see the highest revenue exposure, reaching over 20% on average by 2030 [4][77]. - **Service Exports Performance**: China's service exports grew by 14% in the first eight months of 2025, with tourism service exports surging by 56% year-on-year, recovering to 150% of pre-COVID levels [3][39]. - **Infrastructure and Policy Support**: Investments in infrastructure, clean energy, and cultural experiences are enhancing the attractiveness of China as a leisure travel destination. The introduction of the K1 visa aims to attract young talent, further boosting business travel [2][19]. - **Market Dynamics**: The report highlights that low-tier cities are becoming increasingly attractive for inbound tourists, with cities like Hangzhou showing robust growth in inbound tourist numbers [3][4]. Financial Projections - **Revenue Exposure**: Hotels are expected to have the highest revenue exposure to inbound tourism, while OTAs, airlines, and duty-free sectors are projected to see 5-10% revenue exposure in five years [4][78]. - **Earnings Growth**: The report anticipates a 19% compound annual growth rate (CAGR) in inbound tourism spending in USD terms over the next decade, driven by increased visitation and longer stays [39][84]. Key Beneficiaries - **Top Stock Picks**: The report identifies ten stocks that could benefit from the growth in inbound tourism, with Trip.com (TCOM.O) ranked as the most attractive, followed by Air China (0753.HK), Shanghai Airport (600009.SS), and CTG Duty-Free (1880.HK) [5][11][70]. - **Segment Analysis**: OTAs are seen as key enablers for inbound tourism, with Trip.com positioned to benefit significantly due to its international operations [57][90]. Additional Insights - **Healthcare and Shopping**: The inbound healthcare sector is expanding, with significant demand for premium medical services. The retail sector is also experiencing growth, driven by rising consumer demand for premium goods and duty-free shopping [61][60]. - **Government Initiatives**: Recent government measures aim to support service consumption, with inbound travel identified as a key growth driver for the economy [12][25]. - **Challenges and Opportunities**: Despite trade frictions, China's economic ties with emerging markets are strengthening, presenting growth opportunities for inbound travel [25][30]. Conclusion - The outlook for China's inbound tourism is positive, with significant growth expected in the coming years. Key sectors such as hotels, OTAs, and airlines are poised to benefit from this trend, supported by government initiatives and changing consumer preferences.

Asia Pacific Equity Research 21 September 2025 China Property and Macro The housing market needs more policy support soon There are multiple signs that the housing market is weakening further, and with 4Q being a high base, the data may look even worse soon. Just like how the Fed may only cut interest rates when macro data turns worse, the same logic applies to policy support in China's housing market ("the worse, the better"). Admittedly, in the near term, we may not anticipate an "all-in" type of policy b ...