Report Industry Investment Rating - No information provided on the report industry investment rating Core Viewpoints - Initiate a buy recommendation on SJMHOL 6 ½ 01/15/31 due to its attractive risk - return profile in the Macau gaming sector, and maintain hold on SJMHOL 4.85 01/27/28 [7][9] - The 2026 China NPC meeting policy stance is investment - led stabilization with targeted demand support and emphasis on price normalization, with a GDP growth target of 4.5 - 5% [16][17] Summary by Directory Trading Desk Comments - Recent financial new issues NORBK/OCBCSP/DAESEC/SUMIBK tightened 4 - 10bps; TW lifers and HK credits LINREI/HKE traded 4 - 6bps tighter; Chinese TMT names BABA/TENCNT/LENOVO closed 2 - 3bps tighter, MEITUAs remained unchanged; ZHOSHK/FRESHK traded 5 - 10bps wider [2] - In greater China higher - yielding space, NWDEVL/VDNWDL complex was 0.1 - 0.9pt higher, SJMHOL 28 - 31 edged 0.1 - 0.2pt higher, rest of Macau gaming space was unchanged to 0.1pt higher; WESCHI 28 - 29 lost 0.6 - 0.9pt [2] - In Chinese properties, VNKRLE 27' and 29' rose 1.9 - 2.1pts, FUTLAN 28/FTLNHD 26 - 29 were unchanged to 0.1pt higher, LNGFOR 27 - 32 leaked 0.1 - 0.4pt [2] - In KR space, POHANG/LGENSO tightened 1 - 3bps, long - end HYNMTR traded 2 - 4bps wider; in JP space, SOFTBKs recovered 0.1 - 1.0pt, Japanese and Yankee AT1s surged up to 0.8pt then retraced, closing 0.3pt higher except SOCGEN 7.125 Perp which was 0.7pt lower, insurance subs edged 0.1 - 0.2pt higher [2] - In SE Asian space, GARUDA 31 gained 0.9pt, MEDCIJ 26 - 30/VEDLN 28 - 33 were unchanged to 0.4pt higher, PCORPM Perps were unchanged to 0.1pt higher, PTTGC/TOPTB Perps leaked 0.3 - 0.7pt; in the Middle East, bonds initially rose 0.3 - 0.8pt then gains were halved, LGFVs remained stable [2] - New INDUBK Float 03/12/29 tightened 3bps from RO at SOFR+41, new HSBC Float 03/10/32 tightened 10bps from RO at SOFR+121, rest of fixed - rate HSBC 30 - 37 tightened 5bps from ROs; LINREI/HKE/OCBCSP/DAESEC tightened 1 - 2bps [3] Macro News Recap - S&P (-0.56%), Dow (-1.61%) and Nasdaq (-0.26%) were lower on Thursday; US Initial Jobless Claims was +213k, lower than the market expectation of +215k; UST yield was higher on Thursday, with 2/5/10/30 year yield at 3.57%/3.72%/4.13%/4.74% [6] Desk Analyst Comments - Initiate buy on SJMHOL 6 ½ 01/15/31 despite weaker FY25 and 4Q25 results due to satellite closures [7] - Provide details of Macau gaming USD bond picks including ISIN, amount outstanding, ask price, YTM, and mod dur [7] China Policy - The 2026 Government Work Report signals a downshift in growth ambition and a marginally softer fiscal impulse, with policy emphasis on investment in emerging sectors like AI, digital, and green industries, and incremental support for consumption and housing [16] - GDP growth target is revised to 4.5 - 5%, fiscal deficit is slightly weaker at 7.9% of GDP; ultra - long special bonds and local special bonds have specific allocations and mandates [18] - Ultra - long special bonds allocate RMB1.0tn to "Two Major" projects and equipment upgrades, central government budgetary investment is up RMB20bn, PBoC will establish RMB800bn of policy - based financial instruments [19] - Support for consumption has limited incremental measures, a new RMB100bn "special fund to boost domestic demand" is introduced; housing policy maintains the existing framework [20] - The report reiterates reflation as a policy objective, with a CPI target of 2%, and expects CPI, PPI, and GDP deflator to rebound in 2026 [21] - Key changes in support for "new quality productive forces" and tech sectors include designating new emerging pillar industries, introducing future industries, and upgrading the AI focus [22] Offshore Asia New Issues - Priced issues include HSBC with different tenors and coupons, and Industrial Bank Co., Ltd. HK Branch [24] - Pipeline issue is Jiangsu Fuxuan Industrial with a 3 - year tenor and 4.2% pricing [25] News and Market Color - 120 credit bonds were issued onshore yesterday with an amount of RMB93bn; month - to - date, 339 credit bonds were issued with a total amount of RMB279bn, a 20.1% yoy increase [26] - China sets 4.5% - 5% 2026 GDP growth target and will work to stabilize the real estate market; more than 82% of Chinese LGFVs phased out as government debt cleanup progresses [26] Company News - ACEN plans to build a USD266mn battery energy storage system in the Philippines [33] - HD Hyundai Heavy won an USD1bn deal to build four LNG carriers [33] - JD.com EBITDA was down 65% yoy in 2025 to RMB18.34bn (cUSD2.66bn) [33] - NIO plans to overhaul its European business, switching from direct sales to a dealership - led model [33] - Nissan might close UK plant amid EU subsidy dispute [33]

Core Viewpoint - The passage of the U.S. budget reconciliation legislation, known as the "One Big Beautiful Bill," provides potential support for Plug Power and the hydrogen industry, raising questions about the company's future prospects and investor outlook [1]. Company Overview - Plug Power's original business focused on manufacturing hydrogen fuel cells for forklifts and material-handling equipment, serving major retailers like Amazon, Home Depot, and Walmart [2]. - The company also supplies hydrogen fuel to its customers, but has historically sold it at a loss, leading to negative gross margins and cash flow issues [3]. Production and Capacity - To improve its margin profile, Plug Power is building its own hydrogen plants, currently operating three with a total capacity of 40 tons per day, and plans to construct a fourth plant in Texas with a capacity of 45 tons per day by year-end [4]. - Despite the increased production efforts, customer demand still exceeds production capacity, resulting in continued negative gross margins, although there was an improvement from negative 92% to negative 31% year-over-year [5]. Financial Performance - In the second quarter, Plug Power reported a revenue increase of 21% to $174 million, with equipment revenue rising 29% to $99.2 million and electrolyzer revenue tripling to $45 million [7]. - The company experienced significant cash outflows, with operating cash flow outflows of $191.8 million in the second quarter and a negative free cash flow of $230.4 million for the quarter [8]. Future Outlook - Plug Power maintains its revenue forecast of around $700 million for the year, citing legislative support from the One Big Beautiful Bill as a positive factor for building hydrogen capacity [9]. - The company aims to achieve gross margin neutrality in the fourth quarter and targets EBITDA profitability by the fourth quarter of 2026 [6]. Strategic Initiatives - The company is implementing a restructuring plan, Project Quantum Leap, to reduce operating costs and has secured a long-term hydrogen supply agreement expected to yield substantial cost savings [7][11]. - The recent legislative clarity regarding production and investment tax credits is seen as a tailwind for the company, potentially aiding in finding partners for future projects [11].