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.

Summary of ZTO Express 4Q25 Preview Conference Call Company Overview - **Company**: ZTO Express (ZTO.N) - **Industry**: Transportation & Infrastructure - **Market**: Hong Kong/China Key Points Earnings Outlook - The earnings outlook for 4Q25 remains largely unchanged compared to the management discussion post-3Q25 [1] - ZTO is expected to achieve a net profit of approximately Rmb2.7 billion, which is flat year-over-year [3] Market Share Dynamics - ZTO is projected to gain 1 percentage point in market share in 4Q25, recovering from a loss of 0.6 percentage points in 3Q25 and 0.3 percentage points in 1H25 [2] - Industry volume growth is anticipated to slow from 13% in 3Q25 to 5% year-over-year in 4Q25, attributed to decreased low-value parcels and a high base from the previous year [2] - ZTO's market share gains resumed in October 2025, leading to a 1 percentage point year-over-year gain in 4Q25 [2] Profitability Metrics - Unit operating profit is expected to improve by Rmb0.05 quarter-over-quarter to Rmb0.30 in 4Q25, despite a slight increase in unit costs during the peak season [3] - The unit profit is projected to remain stable at Rmb0.26, with higher operating profit offset by lower tax credits [3] 2026 Outlook - The outlook for 2026 indicates continued market share gains for ZTO, with manageable downside risks to unit profit [4] Investment Recommendation - The recommendation for ZTO remains "Overweight" (OW), with sustained market share gains being a key focus for investors [5] - The stock is currently trading at a price-to-earnings (P/E) ratio of 12x for 2026 estimates, with a forward free cash flow yield of 6-8%, which is attractive compared to the peer average of 1% [5] - A reduction in capital expenditures is expected to enhance shareholder returns [5] Valuation and Risks - The valuation methodology includes a discounted cash flow approach with a probability-weighted scenario analysis: 15% bull case, 75% base case, and 10% bear case [12] - Key assumptions include a weighted average cost of capital (WACC) of 13.2% and a terminal growth rate of 3% [13] - Upside risks include faster-than-expected market share gains and better cost control, while downside risks involve intensified competition and potential market share losses [15] Financial Metrics - Current market capitalization is Rmb119.7 billion, with an enterprise value of Rmb108.1 billion [7] - Earnings per share (EPS) estimates for the next fiscal years are Rmb11.76 for 2025 and Rmb12.93 for 2026 [7] Additional Insights - The company is positioned to achieve approximately 10% year-over-year profit growth in 2026 under the base case scenario [10] - The bear case scenario suggests potential challenges in achieving both earnings growth and market share gains [10] This summary encapsulates the critical insights from the ZTO Express conference call, highlighting the company's performance, market dynamics, and investment outlook.

Summary of ZTO Express Conference Call Company Overview - **Company**: ZTO Express (ZTO.N) - **Industry**: Transportation & Infrastructure in Hong Kong/China Key Points and Arguments Market Share and Competition - ZTO has gained market share in Q4 2025, achieving low-teens year-over-year volume growth quarter-to-date, outperforming the industry due to a decrease in low-value parcels in the market [4][12] - Management believes that market competition has improved, with leading players resuming share gains, which was a positive surprise compared to expectations of stable market shares due to customer lock-up [2][4] - ZTO is not participating in aggressive pricing competition, which is deemed irrational for smaller players with thin margins and weak balance sheets [5][12] Financial Performance - 3Q25 net profit exceeded expectations due to tax credits, while gross profit and operating profit missed estimates [3] - Adjusted EBITDA was in line with expectations, and excluding tax benefits, unit profit increased quarter-over-quarter [3] - The 2025 volume outlook was slightly lowered due to a slowdown in market volume growth [3] Earnings Forecasts and Price Target - EPS forecasts for 2025-2027 have been raised by 3%, 6%, and 4% respectively, reflecting the 3Q25 results and healthier average selling price dynamics [6][15] - The weighted average cost of capital (WACC) assumption was slightly lowered to 13.2% from 13.3% due to a decrease in the cost of debt [6][16] - The price target has been increased by 5% to US$25.00, implying a 13x 2026 estimated P/E, which is below the domestic peer average of 16x [6][16] Shareholder Returns and Capital Expenditure - ZTO expects higher absolute shareholder returns year-over-year, assuming no irrational competition [14] - Capital expenditure guidance for 2025 is approximately Rmb5.5-6 billion, expected to decline to Rmb5 billion in 2026 [14] Risks and Opportunities - Risks still exist, but the company is optimistic about achieving both market share gain and profit growth in 2026 [5][29] - The retail business handles over 9 million daily parcels, representing 8-9% of total volume, with management targeting a higher retail parcel mix in 2026 [13] - Potential mergers and acquisitions are being considered as a growth option [14] Valuation and Investment Thesis - ZTO is viewed as a long-term winner in the industry, with attractive risk-reward dynamics, trading at 11x 2026 estimated P/E and a forward free cash flow yield of 7-8% compared to a peer average of 1% [7][29] - The company’s market leadership in volume and unit profitability supports a positive outlook, with a moderate probability of achieving both market share gain and profit growth [24][29] Additional Important Information - The effective tax rate is expected to be 18%, with a significant reduction in tax expenses noted [17] - The company’s market cap is currently Rmb107,605 million, with an average daily trading value of US$10 million [9] - The stock price closed at US$18.97 on November 19, 2025, indicating a 32% upside to the new price target [9] This summary encapsulates the key insights from the ZTO Express conference call, highlighting the company's performance, market dynamics, and future outlook.

Summary of the China Logistics Sector Conference Call Industry Overview - **Industry**: China Logistics Sector - **Focus**: Impact of autonomous driving (AD) technologies on logistics, particularly through the use of robovans and robotrucks [1][3] Key Insights - **Market Potential**: The logistics industry in China is expected to see a significant transformation due to the adoption of autonomous driving technologies, with estimates suggesting a potential 200 basis points (bp) increase in net profit margin (NPM) [1] - **Fleet Expansion**: The total fleet size of robovans and robotrucks is projected to grow from approximately 5,000 units to around 40,000 units by the end of 2025, indicating a three to six-fold increase [3][4] - **Cost Reduction**: The integration of robovans and robotrucks is anticipated to lower parcel logistics costs by about 10% from 2024 to 2030, which could enhance NPM by 2% and return on equity (ROE) by 5% [3][5][7] Technological Advancements - **Robovan Deployment**: Robovans are currently being tested in over 100 cities in China, with a focus on short-haul transport. They have achieved a 45% cost saving compared to traditional minivans [4][5] - **Robotruck Capabilities**: Robotrucks are equipped with commercialized Level 2+ AD functions, which are expected to reduce costs by 10% compared to traditional trucks [4][5] Financial Metrics - **Profitability Outlook**: The combination of robovans and robotrucks could lead to profit increases of 17% to 130% for parcel firms compared to 2024 levels [5][7] - **Current Valuation**: Parcel companies are trading at a price-to-earnings (PE) ratio of 14x for 2026 estimates, reflecting a recovery in pricing since the recent price war [5][7] Market Dynamics - **Cost Structure**: Transportation accounts for over 54% of logistics costs in China, with short-haul and last-mile deliveries comprising 60% of total costs [10][12] - **Labor Challenges**: The logistics sector faces labor shortages, with couriers working long hours for low wages, complicating efforts to reduce delivery fees [19][24] Regulatory Environment - **Policy Support**: The Chinese government is promoting the integration of AI and autonomous driving in logistics, with several policies aimed at facilitating the deployment of unmanned vehicles [61][62][63] Competitive Landscape - **Preferred Companies**: J&T Global Express and STO Express are highlighted as preferred investments due to their potential for larger profit increases from AD solutions [3][5][7] - **Market Share**: Major parcel firms like ZTO and SF are rapidly expanding their fleets of robovans, with ZTO planning to introduce an additional 10,000 units [58][59] Challenges and Risks - **Technological Bottlenecks**: Despite advancements, robovans still face challenges such as the need for manual loading and unloading, and the requirement for detailed route mapping [60] - **Compliance Risks**: The operation of robovans is currently limited by road access rights, which are still being developed across various cities [61] Conclusion The China logistics sector is on the brink of a significant transformation driven by autonomous driving technologies, with substantial cost-saving potential and profitability improvements expected. However, challenges related to technology, labor, and regulatory compliance remain critical factors to monitor.

Summary of ZTO Express Conference Call Company Overview - **Company**: ZTO Express - **Industry**: Transportation & Infrastructure - **Market**: Asia Pacific, primarily Mainland China Key Points and Arguments Market Dynamics and Volume Growth - ZTO's volume is expected to grow by approximately 10% year-over-year (YoY) in 3Q25, while industry volume growth is projected to slow from 17% in 2Q25 to 13% YoY in 3Q25 due to soft consumption and competition from instant shopping [2][4] - The anti-involution initiatives are impacting the market, leading to decreased low-value parcels and limiting upside for ZTO's market share gains in 3Q25 [2][5] Earnings Outlook - Adjusted net profit (NP) growth for 3Q25 is likely to remain negative at -8% YoY, an improvement from previous expectations of a drop greater than 15% YoY [3][4] - Unit operating profit is expected to improve by Rmb0.03 quarter-over-quarter (QoQ) to Rmb0.28 in 3Q25, influenced by various factors including anti-involution initiatives and market pricing [3][4] - There is mild potential for earnings growth to turn positive in 4Q25, with EPS forecasts for 2025-2027 raised by 9.1%, 5.8%, and 5.7% respectively [4][14] Price Target and Valuation - The price target remains unchanged at US$23.80, implying a 15x 2025 estimated price-to-earnings (P/E) ratio, which is below the domestic peer average of 20x [4][15] - The stock is currently trading at 12x 2025 estimated P/E, with a forward free cash flow (FCF) yield of 6-7%, which is attractive compared to the peer average of 1% [6][28] Competitive Landscape - More provinces are announcing price hikes amid anti-involution, but the competition outlook for 2026 remains uncertain [5][28] - ZTO aims to prioritize market share gains in the long run, despite potential disruptions from anti-involution initiatives [5][28] Financial Metrics - Current market capitalization is Rmb109,666 million, with a share price of US$19.24 as of September 25, 2025 [8] - The company has a projected non-GAAP net profit of Rmb9.3 billion for 2025, exceeding consensus estimates of Rmb8.9 billion [13][42] Risks and Considerations - Risks include potential pricing competition resuming after peak season, which could lead to near-term earnings cuts and market share gains for ZTO [5][43] - The company faces challenges from intensified industry competition and potential market consolidation stagnation [43] Additional Important Information - ZTO's strategic initiatives include cash dividends with a 40% payout and share repurchases to enhance shareholder returns [28] - The company is focused on maintaining its market leadership position and improving unit profitability despite the competitive pressures [6][23]

Summary of the Conference Call on the China Logistics Sector Industry Overview - The conference call focused on the **China Logistics Sector**, particularly the **parcel delivery** and **freight forwarding** industries, highlighting the earnings outlook and potential risks for key players in the market [2][4]. Key Points and Arguments Earnings Outlook - **Parcel Sector Recovery**: The earnings outlook for the parcel sector is improving, with industry prices recovering since late July due to regulatory measures against price competition. This recovery has exceeded previous expectations [2][3]. - **Earnings Revisions**: - EPS estimates for Tongda companies (ZTO, YTO, STO, Yunda) have been raised by approximately **0-65%** for 2025-27, reflecting a more positive average selling price (ASP) outlook [2][3]. - SF Holding's recurring net profit (NP) in Q2 was disappointing, leading to a **13%** reduction in EPS estimates for 2025-27 and a downgrade to a Neutral rating [2][5]. Pricing Impact - **Price Hikes**: Price increases began in key regions like Yiwu and Guangdong, affecting **80%** of industry volumes. An average sequential price hike of **Rmb0.3** per parcel is expected by year-end, with **1/3** of this benefiting Tongda companies [3]. - **Profit Boost**: Assuming stabilized pricing beyond 2025, profit boosts for Tongda companies could average **Rmb0.03** per parcel for the full year 2025 [3]. Risks - **Volume Slowdown**: A potential slowdown in industry volumes, which grew by **12%** in August, poses a significant downside risk. This could disrupt the current favorable pricing environment and impact higher-tier firms more severely due to their larger capacities [3]. Freight Forwarding Sector - **Resilience Amid Challenges**: Despite macroeconomic headwinds and US-China trade tensions, freight forwarding companies are expected to maintain bottom-line resilience by capturing business opportunities in the global logistics value chain [4]. - **Kerry Logistics Network (KLN)**: KLN has seen **15%** of its total revenue from ASEAN, with **40%** of its freight volume being air-related, which is higher margin compared to sea freight [4]. Company-Specific Insights - **J&T as Top Pick**: J&T is highlighted as a top pick due to its significant growth potential overseas and higher margin sensitivity to improving pricing in China [5]. - **SF Holding Downgrade**: SF Holding's earnings growth is expected to be only **12%** CAGR over 2024-27, down from **17%**, leading to lower price targets and a downgrade in ratings [5]. Additional Important Information - **Market Share and Performance**: The express delivery market share and performance metrics for major players like Yunda, YTO, STO, and SF were discussed, showing varying growth rates and revenue figures [7][21]. - **Valuation Comparisons**: Valuation metrics for parcel and freight forwarding companies were provided, indicating the market cap, P/E ratios, and expected growth rates for 2025-27 [17][18]. This summary encapsulates the key insights and data points from the conference call, providing a comprehensive overview of the current state and outlook of the China logistics sector.

Investment Rating - The report maintains an "Overweight" (OW) rating for several key stocks within the "anti-involution" theme, indicating a positive outlook for these investments [10]. Core Insights - The "anti-involution" theme is projected as a significant trade over the next 18-24 months, focusing on rationalizing local government-backed investments and enhancing returns on investments (ROIs) in the Chinese equity market [2][5]. - The report identifies three primary ecosystems for investment: "renewables proxies," "property + macro proxies," and "ecommerce proxies," with a strong preference for renewables due to better topline profiles and execution capabilities [2][5]. - The report highlights that the "anti-involution" policy is crucial for the expansion of the Chinese equity market, as it aims to improve ROIs, which are essential for attracting institutional investments [2][5]. Summary by Sections Anti-Involution Theme - The "anti-involution" policy is compared to previous initiatives aimed at controlling capital expansion, with a focus on reducing over-capacity and improving fiscal discipline [2][5]. - The report anticipates a "Decade of Consolidation" in various sectors, driven by increased M&A activity as local corporatism is curtailed [5]. Stock Performance - Price returns from July 1 to September 5, 2025, show that renewable proxies, particularly battery, lithium, and solar shares, have outperformed with returns of 39%, 37%, and 33% respectively [5][35]. - In contrast, sectors like autos and ecommerce have lagged, with returns flat to -4%, reflecting ongoing competitive pressures and uncertainties regarding subsidies [5][35]. Top Picks - The report lists top stock picks to express the "anti-involution" theme, including Baosteel, CATL, Daqo, and PetroChina, among others, indicating a focus on sectors with strong growth potential [10][5]. - Updated stock screens categorize stocks into renewable proxies, property + macro proxies, and consumption proxies, providing a structured approach to investment selection [5][10]. Market Context - The report notes that households in China held approximately US$24 trillion in cash and deposits as of June 2025, raising questions about the ability of equities to generate sufficient earnings and dividends to absorb this liquidity [18]. - The report emphasizes that the current market environment, characterized by declining fixed income returns and rising volatility, is pushing investors towards equities as a more attractive investment avenue [12][18].

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the **China Internet and eCommerce industry**, focusing on online retail performance and key players in the market. Core Insights and Arguments 1. **Online Retail Growth**: - National online retail goods GMV accelerated to **+8% year-over-year (yoy)** in July, improving from **+6%** in May and June, which included the 618 shopping festival [2] - Online services GMV accelerated to **+35% yoy** in July, up from **29%** in May and June, driven by a shift towards services and subsidies in food delivery and local services [2] 2. **Retail Sales Performance**: - Overall retail sales growth was **3.7% yoy** in July, below expectations (Goldman Sachs estimate: **+5.0% yoy**) [2] - Notable slowdown in automobile sales, which declined by **-1.5% yoy** in July due to reduced discount rates amid "anti-involution" policies [2] 3. **Parcel Volume Growth**: - Industry parcel volume growth moderated to approximately **+15%** in July, with a steady growth rate in early August at low-teens yoy [2][21] - Average daily parcel volume was around **507 million** in the first 10 days of August [21] 4. **Company-Specific Insights**: - **Alibaba**: Expected to report **+11% yoy** growth in Customer Management Revenue and **23%** growth in cloud revenue, with a focus on AI initiatives [8] - **Pinduoduo (PDD)**: Anticipated **14%** growth in online marketing revenue and **7%** in transaction commission revenue, with discussions around its evolving business model [8] - **JD**: Reported strong **20%+ revenue growth** but faced wider-than-expected losses in new businesses, particularly in food delivery [9] - **Meituan**: Expected to see a decline in core local commerce EBIT due to increased competition and user subsidies [8] 5. **Market Dynamics**: - E-commerce engagement increased by **14% yoy** in July, with JD and Taobao showing strong growth in time spent by users [7] - The competitive landscape is intensifying, particularly in food delivery, impacting profitability across platforms [7] 6. **Future Outlook**: - The industry is projected to maintain a **6% growth** in online GMV by 2025, with parcel volume growth expected at **17%** [2] - The potential peak in food delivery investment/losses is anticipated in the **September 2025** quarter, which may lead to a positive inflection in eCommerce share prices in the second half of 2025 [7] Additional Important Content - **Temu's Performance**: - Temu's U.S. GMV decreased by **20% yoy** in July, but its monthly active users (MAU) rebounded by **41% month-over-month (mom)** after three months of decline [3] - The number of Temu merchants remained flat, indicating stability in merchant engagement [3] - **Regulatory Concerns**: - Temu has been notified of potential violations of the Digital Services Act for not adequately assessing risks related to illegal products sold on its platform [7] - **Consumer Behavior Trends**: - Consumer durables such as home appliances grew by **+28.7% yoy**, while discretionary categories like apparel showed modest growth of **+1.8% yoy** [23] - **Investment Recommendations**: - A defensive sub-sector exposure is recommended due to weaker profit setups for transaction platforms, with preferences for games, mobility, and internet verticals [7] This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the China eCommerce industry and its major players.

Investment Rating - The report maintains an Overweight (OW) rating on Defensives versus Cyclicals, particularly favoring Gold miners, Aerospace and Defense, and Consumer Staples [2] Core Insights - The report indicates a cautious outlook due to the ascendance of Multipolar World trends, with significant slowing in growth anticipated and further adjustments needed in valuations and earnings estimates [1][2] - Preferred markets include domestic Japan (unhedged), India, Singapore, and UAE, while being Equal-weight (EW) on China and Underweight (UW) on Korea and Taiwan [1] - Financials are favored over Semiconductors and Tech Hardware [1] Market Allocation - The report highlights a preference for Japan (30.6% allocation), India (12.9%), Singapore (3.3%), and UAE (1.4%), while being neutral on China (18.0%) and Taiwan (8.9%) [24] - The allocation reflects a strategic positioning in markets expected to perform better in the current economic climate [24] Earnings and Valuations - The report provides base-case earnings forecasts for major indices, with the TOPIX expected to reach 2,600 by December 2025, reflecting a 3% decrease from current levels [10] - The MSCI EM index is projected to decline to 1,050, a 6% drop, while the MSCI APxJ is expected to reach 550, also a 5% decrease [10] - The report outlines a Bull Case scenario for the MSCI APxJ reaching 3,100, indicating a potential upside of 12% [11] Global Economic Forecasts - Real GDP growth forecasts for major economies show a decline, with the US projected at 1.4% for 2025 and China at 4.2% [13] - The report anticipates a general slowdown in growth across Asia, with specific countries like India maintaining relatively higher growth rates [13] Inflation Projections - The report forecasts headline CPI for the US at 3.0% for 2025, while China is expected to remain low at 0.1% [15] - Inflation rates across Asia are projected to vary, with India expected to see a CPI of 4.9% [15] Focus List of Companies - The report includes a focus list of companies with Overweight ratings, such as Bajaj Finance Limited and ICICI Bank, indicating strong performance potential [29] - The focus list reflects a diverse range of sectors, including Financials, Consumer Staples, and Communication Services, with significant upside potential noted for several companies [29]

Core Insights - The article highlights the author's extensive experience in investment banking, focusing on U.S. and Asia markets, with a strong educational background in accounting and finance [1] - The author emphasizes a flexible investment approach influenced by renowned investors, covering various investment styles including growth, GARP, deep value, turnaround, cyclical, and special situations [1] Group 1: Professional Background - The author is a co-founder and portfolio manager of a multi-family office, specializing in U.S. and Asia markets [1] - Holds both bachelor's and master's degrees in accounting and finance from a top U.S. program and is a CFA Charterholder [1] - Previous experience includes working as an analyst at a multi-billion dollar value fund, covering U.S. and Asia equities without market capitalization restrictions [1] Group 2: Investment Approach - The investment strategy is influenced by notable investors such as Warren Buffett, Peter Lynch, and Charlie Munger [1] - The author employs a comprehensive research methodology, utilizing public filings, industry periodicals, conferences, company visits, analyst calls, and management meetings [1] - The investment universe includes a diverse range of strategies, indicating a broad search for value across global markets [1]