20 March 2026 | 10:35PM HKT Equity Research First Tractor (0038.HK): 2M26 tractor production data reaffirms cyclical inflection; reiterate Buy What's happened? NBS released Jan-Feb combined production data for agricultural tractors recently. Production volume of high‑horsepower (HHP) tractors rose by +c.10% yoy in 2M26, with medium‑to‑high HP tractors combined increasing by +2% yoy. We highlight HHP tractor production has managed to maintain +DD% yoy growth since November 2025 (see our note), while medium‑t ...

Core Thesis - Deere & Company is positioned for potential recovery as agricultural conditions stabilize, entering FY2025 at a cyclical trough [1][4] Company Overview - Deere & Company manufactures and distributes various equipment globally, operating through two main divisions: Equipment Operations and Financial Services [1] - Equipment Operations includes Production & Precision Agriculture, Small Agriculture & Turf, and Construction & Forestry [1] Industry Dynamics - Deere's results are cyclical, closely tracking farm income and crop prices, with recent declines in net sales expected from FY2023 through FY2025 due to normalized commodity prices [2] - The rate of sales contraction is slowing, indicating a potential bottom of the cycle [2] Competitive Positioning - Deere is significantly larger than key competitors like CNH Industrial and Kubota, with approximately double their scale in Equipment Operations [3] - In agriculture, Deere experienced a 14% sales decline in FY2025, consistent with peers, while competitors like CLAAS showed greater resilience [3] Market Performance - Deere's stock has risen approximately 75% since the end of 2020, outperforming most agricultural peers, reflecting market confidence in its structural advantages [4] - The current environment is seen as an attractive long-term entry point for investors as sales declines moderate and competitive scale remains strong [4] Previous Coverage - Previous bullish analyses highlighted Deere's margin resilience, consistent earnings beats, aggressive buybacks, and expanding ag-tech initiatives despite cyclical pressures, with a stock price appreciation of approximately 26.88% since May 2025 [5]

Group 1 - Masco (MAS) is positioned for cyclical recovery as the interest rate cycle reverses, supported by effective execution, pricing increases, and long-term structural demand drivers [1] - Revenue growth is expected to be bolstered by operating leverage and cost savings from restructuring initiatives [1] - Margins are anticipated to improve due to these factors, indicating a positive outlook for the company's financial performance [1]

Core Insights - Dalal Street LLC, led by Mohnish Pabrai, reported an equity portfolio valued at approximately $402 million, emphasizing a high-conviction, concentrated value investing strategy focused on cyclical commodity and energy services companies [1][10] Portfolio Overview - Total Portfolio Value: ~$402 million - Top 10 Holdings Weight: ~100%, indicating an extremely concentrated portfolio - Turnover Rate: Low to Moderate, with selective additions and one exit [3][8] Top Holdings - Warrior Met Coal (HCC): ~$158.7 million, ~39.5% of the portfolio - Transocean (RIG): ~$111.7 million, ~27.8% of the portfolio - Alpha Metallurgical Resources (AMR): ~$108.5 million, ~27.0% of the portfolio - Valaris (VAL): ~$23.1 million, ~5.8% of the portfolio [3] Recent Activity - Notable Additions: - Transocean (RIG): Increased shares by ~2.6 million (~+10.6%), indicating confidence in offshore drilling recovery [4] - Alpha Metallurgical Resources (AMR): Small increase (~+2%), reflecting ongoing commitment to metallurgical coal [4] - Major Trim: - Valaris (VAL): Reduced shares by ~607,000 (~-57%), likely for profit-taking or rebalancing [5] - Full Exit: - Noble Corp (NE): Previous value ~$6.8 million, fully exited to consolidate offshore drilling exposure [7] Investment Strategy - The portfolio reflects a deep value and concentrated cyclical betting style, typically holding positions for multiple years with low turnover [8] - Focus remains on sectors with significant cyclical leverage, particularly metallurgical coal and offshore drilling, which are characterized by supply constraints and volatile pricing [10][11]

Joining us right now to talk about it is Stephen Parker. He is the co-head of global investment strategy at JP Morgan Private Bank. And Stephen, we're sitting right at market highs for the major averages.And yet, every time uh there's a a little bit of a concern about what might be happening with technology, you do see the pullbacks kind of quickly. Um again, we we are not talking about being far from all-time highs for any of these major averages, but what did you think of the action yesterday in the softw ...

Joining us right now to talk about it is Stephen Parker. He is the co-head of global investment strategy at JP Morgan Private Bank. And Stephen, we're sitting right at market highs for the major averages.And yet, every time uh there's a a little bit of a concern about what might be happening with technology, you do see the pullbacks kind of quickly. Um again, we we are not talking about being far from all-time highs for any of these major averages, but what did you think of the action yesterday in the softw ...

Group 1: Company Overview - Eastman Chemical Company operates as a specialty materials company in the United States, China, and internationally, currently positioned at the trough of a cyclical downturn while exhibiting strong turnaround characteristics [2] - The company's share was trading at $68.67 as of January 16th, with trailing and forward P/E ratios of 11.46 and 11.26 respectively [1] Group 2: Financial and Operational Strategies - Management is aggressively reshaping profitability through self-help initiatives, including $175 million in structural cost reductions over 2025–2026 and a 7% global workforce reduction [2] - Anticipated earnings rebound in 2026 is supported by a swing from 2025 inventory losses to positive contributions and realization of an additional $100 million in cost savings [6] Group 3: Growth Drivers - The core growth engine lies in its Molecular Recycling Technology (Methanolysis), which produces virgin-quality recycled polyester (rPET) without color or performance degradation, addressing high-end brand requirements [3] - The Kingsport plant is performing above expectations, with identified debottlenecking opportunities that could expand capacity to 130% with minimal capital expenditure [4] Group 4: Market Conditions and Demand Indicators - The investment thesis is closely tied to macroeconomic indicators, with New Home Sales serving as a leading signal for demand recovery in housing-related sectors [5] - Interest rate declines are likely to improve consumer affordability in EMN's highly rate-sensitive end markets, supporting broader demand recovery [5] Group 5: Long-term Outlook - Strategic repositioning and operational leverage position EMN to benefit from the cyclical recovery while capturing durable long-term growth, making the stock an attractive opportunity for investors seeking both turnaround potential and exposure to innovative, high-margin technologies [7]

Core Viewpoint - Carvana has received a price target increase to $600 from Deutsche Bank, indicating strong confidence in the company's future performance and market positioning [1] Group 1: Company Analysis - Carvana is well positioned to benefit from a potential cyclical recovery in 2026, supported by policy measures and an aging vehicle fleet in the U.S. [1] - The company is highlighted as a major beneficiary of increased consumer spending and digital adoption in the used vehicle market [1] - Carvana could strengthen its market leadership through physical infrastructure advantages in a digitally underpenetrated industry, allowing for unit growth that exceeds expectations [2] Group 2: Industry Trends - The analysis discusses broader e-commerce and AI-driven trends, with Amazon positioned to influence agentic commerce [2] - AWS revenue growth is expected to accelerate in 2026 as new capacity from Trainium and NVIDIA becomes available [2] - Margin expansion opportunities are anticipated for select companies in 2026, with Chewy and DoorDash identified as having paths to improved margins and returns on investments [3]

分组1 - Greg Branch, Founder and Managing Partner at Branch Global Capital Advisors, emphasizes the importance of focusing on long-term economic tailwinds rather than short-term market fluctuations, predicting a strong year for investors in 2026 with double-digit earnings growth and healthy GDP growth [1][2] - Branch highlights a rotation into cyclical and high-beta stocks, suggesting that sectors like financials and minerals will benefit from earnings growth during a cyclical recovery, driven by supply-demand tightness [2] - Michael Farr from Farr Miller & Washington believes the long-term market trend remains upward despite potential pullbacks, indicating that the economy continues to grow and the Fed may be easing more than necessary [3] 分组2 - Coty Inc. (NYSE:COTY) is identified as a cheap stock with a forward P/E ratio of 7.25 and an expected EPS growth rate of 34.18% over the next 3-5 years, although recent downgrades from analysts raise concerns about its leadership transition [8][9][10] - Fox Factory Holding Corp. (NASDAQ:FOXF) has a forward P/E ratio of 13.19 and an expected EPS growth rate of 34.93% over the next 3-5 years, but it faces challenges with declines in certain segments and a recent net loss of $0.6 million, contrasting with previous net income [11][12][13]

Core Thesis - Americold Realty Trust, Inc. (COLD) is trading at a historic discount despite its strategic position in the cold storage REIT sector, which controls nearly half of the U.S. market [2][4] Market Position and Valuation - COLD's shares were trading at $10.99 as of December 1st, with a forward P/E of 119.05, indicating a significant valuation multiple collapse compared to historical levels [1][3] - Both Americold and its peer Lineage are trading at implied cap rates above 10%, contrasting sharply with historical transaction levels of 5-6% [3] Industry Dynamics - The cold storage sector is experiencing cyclical weakness due to lower storage volumes and soft consumer demand, but month-over-month inventory increases suggest potential stabilization [2] - The potential resumption of agricultural trade between the U.S. and China could provide a near-term tailwind for the sector, particularly with renewed soybean purchases [3] Future Outlook - Occupancy rates are expected to rise as inventories build in the second half of the year, with forward guidance for 2026 likely to be a key catalyst for sentiment recovery [2][4] - Americold is positioned for a recovery in both occupancy and pricing power as supply tightens and macro conditions improve, offering a compelling investment opportunity for those with a 12-24 month horizon [4]