Core Insights - Garrett Motion Inc. has announced the first commercial application of its largest MEG turbocharger platform in collaboration with Weichai, aimed at marine propulsion and high-output power generation [1][3] Company Overview - Garrett Motion is a leader in turbocharging and electrification technologies, with a 70-year history of innovation across automotive and industrial sectors [9] - The company has a global presence with six R&D centers, 13 manufacturing facilities, and over 9,000 employees in more than 20 countries [9] Product Launch - The MEG turbocharger platform is designed for large-bore engines, specifically for marine propulsion, high-output power generation, and backup genset systems [2][4] - This platform supports multiple fuel types, including diesel, natural gas, and alternative fuels, enabling customers to meet efficiency and emissions targets [2] Strategic Collaboration - The partnership with Weichai Power is a significant milestone, enhancing Garrett's presence in large-engine segments for marine and industrial applications [3] - Both companies aim to deliver competitive and sustainable marine power systems globally by combining their respective strengths in turbocharging and engine development [3][8] Technological Advancements - The MEG turbo is engineered to provide higher efficiency, long-term reliability, and lower fuel consumption, addressing the growing demand for improved fuel efficiency and compliance with emissions standards [4][6] - The design incorporates optimized aerodynamics, high-temperature materials, and modular architecture for superior performance [4]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the diverging power solutions for AI data centers (AIDC) in the US and China, highlighting the growing demand for energy due to the rise of AI technologies [1][11][16]. Core Insights - **AIDC Power Consumption**: The International Energy Agency (IEA) forecasts that global electricity consumption of data centers will more than double from 416 TWh in 2024 to 946 TWh in 2030, with a compound annual growth rate (CAGR) of 15% [3][24]. - **Market Share**: By 2030, the US and China are expected to account for approximately 45% and 30% of the global data center market, respectively [3][25]. - **Primary Power Solutions in the US**: Due to grid connection shortfalls, onsite power generation, particularly gas turbines, is becoming the primary solution for data centers in the US. Gas turbines are favored for their shorter lead times (1-2 years) compared to grid connections (5-7 years) [4][33]. - **Backup Power Solutions in China**: China has sufficient grid power for primary needs, but there is a tight supply for backup power, especially for 2MW diesel engines, which are critical for generator sets [5][34]. Key Suppliers and Market Dynamics - A list of 16 key suppliers for AIDC power solutions is provided, which collectively account for about 10% of total AIDC capital expenditures [2][11]. - **US Market**: Gas turbine producers are experiencing strong demand, with significant order backlogs and ongoing capacity expansions [4][37]. - **China Market**: Foreign brands dominate the diesel engine market in China, but local manufacturers like Weichai and Yuchai are expected to increase their market share significantly by 2025 due to shorter lead times and quicker capacity ramp-up [5][34]. Investment Recommendations - The report covers nine stocks providing power equipment to AIDCs, with eight rated as "Buy" due to the booming AIDC capital expenditures and strong demand outlook. GEV is rated "Hold" due to higher costs associated with its offshore wind backlog [6][12]. Additional Insights - **AI Training Power Needs**: AI-focused hyperscalers can have capacities of 100MW, consuming energy equivalent to that of 100,000 households, compared to traditional data centers with capacities of 10-25MW [16]. - **Future Projections**: AIDC is projected to account for 80% of newly added data center IT power from 2024 to 2028, indicating a significant shift in energy requirements driven by AI advancements [22][23]. Conclusion - The report highlights the critical need for efficient power solutions in the rapidly growing AIDC sector, with distinct strategies emerging in the US and China. The investment landscape is favorable for companies involved in power generation technologies, particularly gas turbines and diesel engines, as demand continues to rise in response to AI developments [1][11][16].

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Chinese economy** and its macroeconomic indicators, particularly focusing on the **manufacturing sector** and **capital markets** in China. Core Insights and Arguments - **Trade Relations**: Following the meeting between President Xi and President Trump on October 30, the US announced a **10% reduction in fentanyl-related tariffs** on China and a partial loosening of export controls. In return, China agreed to postpone its rare earth controls for one year and resume soybean purchases [1][1][1]. - **GDP Growth Forecasts**: Economists have revised the **2025 real GDP growth forecast** for China to **5.0%** (up from **4.9%**), with **2026/27 forecasts** also increased to **4.8%** and **4.7%** respectively, driven by stronger export growth and government spending [1][1][1]. - **Market Performance**: The MXCN and CSI300 indices experienced losses of **1.5%** and **0.4%** respectively. However, there were **US$3.5 billion inflows** into the Southbound Connect this week, indicating continued interest in Chinese equities [1][1][1]. - **Industrial Profit and Revenue**: In September, industrial profit increased by **23.0%** year-over-year, while revenue rose by **3.3%** year-over-year [1][1][1]. - **PMI Indicators**: The NBS manufacturing PMI decreased to **49.0**, indicating contraction, while the non-manufacturing PMI slightly improved to **50.1** in October [1][1][1]. Additional Important Insights - **Capital Market Focus**: The CSRC Chair highlighted six key areas for capital markets under the **15th Five-Year Plan**, emphasizing the government's commitment to enhancing market conditions [1][1][1]. - **Loan Demand and Business Conditions**: The People's Bank of China (PBoC) Q3 surveys suggest marginally better loan demand and improved business conditions, indicating a potential recovery in the financial sector [4][4][4]. - **Sector Performance**: The **Materials** sector outperformed with a **3.1%** increase, while the **Real Estate** sector lagged with a **-1.5%** decline [3][3][3]. - **Earnings Growth Projections**: The consensus for **2025/26 EPS growth** is projected at **1%/16%** for MXCN and **15%/13%** for CSI300, with the **Materials** sector seeing the most significant upward revision [10][10][10]. Conclusion The conference call provided a comprehensive overview of the current state of the Chinese economy, highlighting the impact of trade relations, GDP growth forecasts, and sector performance. The insights suggest a cautiously optimistic outlook for the Chinese market, driven by government policies and improving economic indicators.

Investment Rating - The report maintains a "Buy" rating for Volvo CE, indicating confidence in its growth potential within the machinery sector [27]. Core Insights - Domestic demand for trucks is accelerating, while construction machinery demand is moderating due to factors such as replacement policies and seasonal effects [2][3]. - The growth for construction machinery may have peaked in Q1 2025, with a notable slowdown observed in recent months [3][6]. - Sany expects a 20% year-on-year growth in domestic demand for excavators for the full year, despite a challenging competitive landscape [10][12]. - The electrification of machinery is gaining traction, with significant implications for exports, particularly to Europe [14][16]. Summary by Sections Domestic Demand - There is a divergence in domestic demand, with trucks experiencing growth while construction machinery sales are moderating due to replacement policies and seasonal factors [2][3]. - Sany reported a moderation in machine fleet operating rates and utilization hours, indicating a slowdown in demand [6]. Exports - Demand for exports is stronger in Southeast Asia and Africa, while the CIS region shows weakness [9]. - Sany's excavator export volume increased by 16% year-on-year in the first five months of 2025, with a focus on Asia and Africa [12][13]. Technology and Electrification - The focus on electrification is rising, with Chinese OEMs aiming to penetrate European markets, which are more challenging under traditional internal combustion engine (ICE) standards [14][16]. - Weichai and Sinotruk anticipate a ceiling for electrification penetration in heavy-duty trucks at 25-30% due to infrastructure constraints [16]. Competitive Landscape - Pricing pressure has resurfaced in the industry, particularly for large-sized machines and electrified heavy-duty trucks (eHDTs) [17][18]. - The emergence of a "shared excavators" business model is noted, contributing to monthly sales volume but not considered real demand [20].

Investment Ratings - The report includes a "Buy" rating for MediaTek, CR Land, Weichai Power, and Krafton, while removing Advantest, Delta Electronics, Keppel Ltd, and Zijin Mining from the APAC Conviction List [1]. Core Insights - MediaTek is transitioning from a traditional smartphone application processor provider to an AI-focused company, with expected revenue and earnings growth of 16% and 17% CAGR from 2024 to 2027, respectively [2][24]. - CR Land is positioned for recovery in business growth and profitability, with forecasts indicating a re-acceleration in contract sales growth and market share gains [3][41]. - Weichai Power is expected to benefit from an improving outlook for heavy-duty trucks and a more profitable engine portfolio, with a forecasted 18% EPS CAGR over two years [4]. - Krafton's PUBG franchise is anticipated to drive earnings, with a focus on strong performance in upcoming results [5][9]. Summary by Company MediaTek - Positioned to transition to AI applications, with a forecasted revenue growth of 16% CAGR from 2024 to 2027, driven by market share gains and new total addressable markets (TAMs) [2][24][25]. - Expected operating margin (OpM) improvement from 19% in 2025 to 22% in 2027 [25]. - Current trading at 16x/13x FY26/27E P/E, at the mid/low-end of its historical range [26]. CR Land - Forecasts indicate contract sales growth re-acceleration and market share gains, with a projected gross profit margin recovery to 18% by 2027 [3][41]. - Expected average free cash flow (FCF) yield of 11% during 2025-2027 [3]. - Current share price implies a compelling valuation at 0.4x P/B on its development property business [3]. Weichai Power - Anticipated re-rating due to improved cyclical outlook for heavy-duty trucks and a more profitable engine portfolio [4]. - Forecasted gradual increase in dividend payout supported by strong net cash position and FCF generation [4]. - Currently trades at 10x 2025E P/E with a 6% dividend yield [4]. Krafton - Focus on the strong momentum of the PUBG franchise as a key earnings driver [5][9]. - Expected to outperform consensus estimates in upcoming earnings release [9]. - Currently trading at near-historical trough level at 12x 2025E P/E [9].