Core Insights - Japan's manufacturing confidence has risen to its highest level in nearly four years, driven by a weaker yen and robust orders, with the manufacturing confidence index increasing from 8 in October to 17 in November, the highest since January 2022 [1] - The electronics sector's sub-index surged to 25, marking the highest level since December 2021, indicating strong performance in this industry [1] - The automotive and transportation machinery sectors also saw significant increases, with their confidence index rising from 9 to 27 [1] Industry Analysis - The depreciation of the yen has provided a boost to exports, as noted by an electronics company manager, with the yen falling over 5% against the US dollar during the survey period from October 28 to November 7 [1] - The semiconductor market, particularly in the memory sector, is performing well, contributing to the overall positive sentiment in the electronics industry [1] - Despite the current optimism, there are concerns regarding a potential decline in the overall manufacturing index, which is expected to drop to 15 in February, with some managers expressing worries about sluggish automotive production and sales [1]

Core Viewpoint - Morgan Stanley expresses optimism regarding ASML's upcoming Q3 2025 earnings report, suggesting that opportunities post-earnings will outweigh risks, with market focus likely shifting to FY27 after the report [1][2] Earnings Risks - ASML's stock has declined by 43% since the last earnings call, where the company indicated uncertainty regarding growth for 2026 [2] - Two main risks for the upcoming earnings include lower-than-expected order volume for Q3 2025 and guidance for FY26 falling below market expectations [2] - The firm has a conservative outlook on Q3 2025 orders due to ASML's cautious tone, although strong orders from TSMC in the latter half of the quarter could exceed expectations, contingent on Samsung's actions [2] Market Sentiment and Recommendations - Despite potential short-term risks, the firm maintains a positive outlook on ASML's stock, suggesting that if guidance for FY26 is weak, it could be a buying opportunity [3] - Conversely, strong order volume and positive guidance for FY26 would likely boost the stock price [3] - The firm reiterates its "overweight" rating and "preferred stock" status for ASML, indicating confidence in the company's long-term prospects [3] Q3 2025 Earnings Expectations - ASML is expected to report revenues of €7.568 billion for Q3 2025, reflecting a 1.6% quarter-over-quarter decline but a 1.3% year-over-year increase, slightly below market consensus [4] - Order volume is anticipated to reach €3.92 billion, which is 21.1% lower than Bloomberg consensus, reflecting a conservative stance [4] - Projected gross margin is 51.1%, aligning with market expectations, while EBIT is expected to be €2.331 billion, 3.4% below consensus [4] - The company is expected to provide guidance for FY26, which is anticipated to be more positive than previous statements due to improvements in the storage market [4]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's special integrated circuit business continues to show strong growth, with revenue reaching 1.469 billion yuan, a year-on-year increase of 18.09%, accounting for 48.21% of total revenue, becoming the core growth engine [8] - The smart security chip business faces intensified market competition, resulting in a revenue decline of 5.85% to 1.395 billion yuan [8] - The quartz crystal frequency device business benefits from the demand release in 5G and IoT, with revenue increasing by 35.78% to 151 million yuan [8] - The overall gross margin is approximately 55.56%, with the special integrated circuit gross margin at 71.12%, while the smart security chip gross margin slightly decreased to 44.16% [8] - The company is enhancing its core competitiveness through technological upgrades and product structure adjustments in strategic areas [8] Financial Summary - For the first half of 2025, the company achieved total revenue of 3.047 billion yuan, a year-on-year increase of 6.07%, and a net profit attributable to shareholders of 690 million yuan, a year-on-year decrease of 6.18% [1][8] - The earnings forecast for 2025-2026 has been adjusted, with net profits expected to be 1.675 billion yuan and 1.926 billion yuan respectively, down from previous estimates [8] - The projected net profit for 2027 is 2.613 billion yuan, with corresponding P/E ratios of 42, 36, and 27 times for 2025, 2026, and 2027 respectively [8] - The company maintains a strong position in the domestic special integrated circuit market, justifying the "Buy" rating despite the downward adjustment in profit expectations [8]

Group 1 - The core viewpoint of the article highlights that 盛美上海 is focusing on expanding its overseas market presence and has confidence in increasing its sales share internationally [1] - 盛美上海 has raised its addressable market in China to $7 billion, based on the assumption of a $40 billion semiconductor equipment market size in China by 2030 [1] - The company reported nearly 40% revenue growth in Q2, driven by strong equipment sales and demand [1] - 盛美上海 maintains its full-year performance guidance unchanged, with contract liabilities reflecting prepayments after product debugging acceptance [1] - The discrepancy in financial reports is attributed to different accounting standards, and the existing capacity at the 临港 plant supports the annual performance guidance, with plans for additional capacity next year [1] Group 2 - 益和源资产, established in January 2014 and officially operational since June 2015, is a professional asset management company primarily focused on secondary stock market investments [2] - The future business scope of 益和源资产 will also include primary market private equity investments and comprehensive asset management services [2] - The company's vision is to become a world-class investment firm that benefits society, with a mission centered on natural principles and societal enrichment [2]