Summary of Conference Call Transcript Industry Overview - **Industry Focus**: Greater China Technology Hardware, specifically in the automation sector - **Key Indicator**: China's manufacturing PMI (Purchasing Managers' Index) for December 2025 Key Points 1. **Manufacturing PMI Increase**: China's manufacturing PMI rose to 50.1 in December from 49.2 in November, exceeding market expectations of 49.4 and consensus at 49.2 [2][7] 2. **Production and Orders Improvement**: The production index improved by 1.7 percentage points month-over-month to 51.7, while the new orders index increased by 1.6 percentage points to 50.8 [7] 3. **Macro Team Insights**: The increase in PMI is attributed to a quarter-end production push, robust exports, and the impact of government policies on infrastructure [7] 4. **Overall Manufacturing Recovery**: The report maintains a view of moderate recovery in overall manufacturing activities in China, supported by government policies [7] 5. **Capex Sentiment**: Some industry players are experiencing improved capital expenditure sentiment as they head into 2026 [7] 6. **Company Preferences**: Among Taiwanese automation companies, Airtac (1590.TW) is preferred over Hiwin (2049.TW) due to broader product offerings and more attractive valuation metrics [7] - **Airtac Valuation**: Currently valued at 21x 2026 estimated P/E, compared to a mid-cycle average of 25x [7] - **Hiwin Valuation**: Valued at 30x 2026 P/E, which is considered unattractive given lukewarm fundamentals [7] Company-Specific Insights 1. **Airtac International (1590.TW)**: - Expected to continue gaining market share due to its diverse product offerings [7] - Valuation methodology suggests a base case of 25x 2026 estimated P/E, reflecting earnings growth momentum [10] 2. **Hiwin Technologies Corp. (2049.TW)**: - Target multiple of 24x for 2026 EPS estimate, justified by a projected operating profit CAGR of 20% from 2024 to 2027 [11] Risks - **Upside Risks**: - Stronger macroeconomic conditions in China - Higher-than-expected demand for industrial automation - Earlier-than-expected revenue contributions from humanoid technologies [13][14] - **Downside Risks**: - Economic downturn in China - Delays in developing miniature linear guideway business - Weaker-than-expected demand despite increased investment in new products [13][14] Conclusion - The report indicates a cautiously optimistic outlook for the Greater China technology hardware sector, particularly in automation, driven by improving manufacturing metrics and government support. Airtac is positioned favorably compared to Hiwin, suggesting potential investment opportunities in the sector.