August 24, 2025 11:37 AM GMT JCET Group Co Ltd | Asia Pacific M Update Risk Reward Update What's Changed Updated Components EPS Investment Thesis Bull Base Bear Scenarios Risk Reward for JCET Group Co Ltd (600584.SS) has been updated. Reason for change Morgan Stanley Asia Limited+ Daisy Dai, CFA Equity Analyst Daisy.Dai@morganstanley.com +852 2848-7310 JCET Group Co Ltd (600584.SS, 600584 CG) Greater China Technology Semiconductors | China | Stock Rating | | Underweight | | --- | --- | --- | | Industry View ...

Market Overview & Risk Reward - Stated index is at multi-decade lows, while many companies need additional capital [2] - Dispersion is key to risk reward in the current market [2] - Private credit market default rates are low, but rise to 3-4% when including liability management exercises and out-of-court restructurings [4] - Traditional high yield credit has a 3% average default rate and $0.40 recovery rate, but recovery rates have decreased due to out-of-court restructurings [5] Private Credit Market - Private credit market is a multi-trillion dollar market with numerous opportunities [4][6] - Private credit often has stronger covenants compared to the broader syndicated loan market [8] - Overall corporate leverage and specific sectors are important considerations [8] AI & Technology - AI is in early stages, with only 5% of companies generating revenue [10] - There will be winners and losers in the AI space [12] - Software companies face challenges regarding moats and unique protectable aspects [15] - Enterprise customers are taking their time with cloud adoption, impacting software [15][16]

Investment Rating - The investment rating for Zijin Mining Group is Overweight [4][78]. Core Views - The report highlights that Zijin Mining Group generates over 50% of its gross profit from copper, with a forecasted compound annual growth rate (CAGR) of approximately 7% in copper production volume from 2025 to 2027, driven by projects such as Kamoa, Timok, Julong, and Ashele [13][14]. - The price target for Zijin Mining Group has been raised to HK$25.10, reflecting an implied 2025 estimated price-to-earnings (P/E) ratio of 15x [3][4]. - The report indicates a positive risk-reward scenario, with a bull case price target of HK$31.80 and a bear case price target of HK$9.60 [10][11]. Summary by Sections Price Target and Scenarios - The price target has been updated from HK$23.40 to HK$25.10, with the bull case increasing from HK$31.00 to HK$31.80 and the bear case from HK$9.40 to HK$9.60 [2][3]. - The updated earnings per share (EPS) estimates for 2025, 2026, and 2027 are Rmb1.56, Rmb1.70, and Rmb1.65, respectively, reflecting increases of 1%, 4%, and 5% [3][4]. Production and Pricing - The report adjusts the Kamoa production volume to 400kt for 2025-26 and raises the realized average selling price (ASP) to gold price ratio based on first-quarter 2025 actual numbers [3]. - In the bull case scenario, gold and copper prices are projected at US$3,945/oz and US$5.03/lb, respectively, with gold production of 84.9 tons and copper production of 938.9kt in 2025 [11]. - The base case scenario estimates gold and copper prices at US$3,289/oz and US$4.19/lb, with gold production of 78.6 tons and copper production of 853.5kt [12]. Investment Drivers - Recent mergers and acquisitions, including four gold, three lithium, and one molybdenum project, are expected to enhance gold output growth and diversify into new products [14]. - The report emphasizes the strong demand for copper in China, which is a significant driver for Zijin's growth [13].

Investment Rating - The investment rating for Arclands (9842.T) is Equal-weight [4][10]. Price Target - The price target has been revised from ¥1,500 to ¥1,700 [4][7]. Core Investment Thesis - The report indicates a focus on recovery in retail business earnings after a prolonged slump, alongside synergies with the wholly-consolidated Arcland Service HD [18]. - The investment thesis is supported by expectations of improved sales and margins, particularly in the DIY/gardening and seasonal goods segments, driven by stronger private-brand lineups and cost reductions from synergies [11][18]. Financial Estimates - The estimated EPS for fiscal year ending February 2026 is ¥194.2, with a projected P/E ratio of 8.5x [4][13]. - The bull case estimates an EPS of ¥233.0, which is 20% above the base case estimate [11]. - The retail business sales are projected to reach ¥255,270 million in 2025, with operating profit (OP) of ¥5,559 million [17]. Scenarios - The report outlines three scenarios: - Bull Case: Price target of ¥4,400 - Base Case: Price target of ¥1,700 - Bear Case: Price target of ¥600 [13][14]. Market Context - The report notes that the current stock price is ¥1,688, with a 52-week range of ¥1,986 to ¥1,501 [4]. - The industry view is classified as In-Line, indicating expectations of performance in line with the broader market [4].

Investment Rating - The investment rating for Gree Electric Appliances Inc of Zhuhai is Overweight [2][12][13]. Core Views - The report indicates a price target of Rmb54.00, with the stock currently trading at Rmb45.56, suggesting an upside potential of approximately 18.53% [2][9]. - The earnings per share (EPS) estimates for fiscal years 2025, 2026, and 2027 are projected to be Rmb6.31, Rmb6.69, and Rmb7.22 respectively, reflecting an increase from prior estimates [2][20]. - The report highlights a solid balance sheet and a sustainable high dividend payout ratio, which supports long-term returns [16]. Revenue and Earnings Estimates - Revenue for 2025 is slightly reduced by 2-3% due to a fading trade-in effect amid macro uncertainties, while earnings estimates are lifted by 5-6% due to better margin trends observed in Q1 2025 [1][2]. - The projected domestic air conditioner volume growth for 2025 is 8%, with an average selling price (ASP) growth of 2% [17]. Valuation Metrics - The price-to-earnings (P/E) multiple is adjusted from 9x to 8.5x, reflecting a market derating amid high global macro uncertainties [1][6]. - The stock is currently trading at an attractive valuation of approximately 7x 2025e P/E, which is about 1 standard deviation below its average of 10x since 2017 [16]. Risk Reward Scenarios - The bull case scenario assumes an 11x target P/E with EPS growth of 17% and 6% for 2025 and 2026 respectively, while the bear case assumes a 5x target P/E with lower EPS growth of 3% and 6% [10][15]. - The report identifies positive themes in pricing power and special situations for Gree Electric Appliances [14].

Investment Rating - The investment rating for Zijin Mining Group is "Overweight" [4][16][77]. Core Views - The report indicates that Zijin Mining Group has a price target of Rmb24.00, down from Rmb25.47, reflecting adjustments based on recent metal price changes and production volume guidance [2][3][4]. - The report highlights that Zijin generates over 50% of its gross profit from copper, with a forecasted compound annual growth rate (CAGR) of approximately 3% in copper production volume from 2024 to 2026 [13][22]. - Recent mergers and acquisitions, including four gold projects and three lithium projects, are expected to enhance Zijin's gold output and diversify into new sectors [14]. Summary by Sections Price Target and Scenarios - The updated price target for Zijin Mining Group is Rmb24.00, with a bull case of Rmb36.90 and a bear case of Rmb9.40 [2][4][12]. - The report estimates 2025 EPS at Rmb1.53, a decrease of 3% from previous estimates, and introduces a 2027 EPS estimate of Rmb1.57 [3][4]. Production and Financial Estimates - The report provides production estimates for gold and copper, with gold production expected to be 78.6 tons and copper production at 853.5kt in the base case scenario for 2025 [12][19]. - The report also outlines revenue and EBITDA estimates for 2025, projecting sales of Rmb374.71 billion and EBITDA of Rmb60.52 billion [21]. Market Dynamics - The report notes that Zijin's performance is sensitive to supply disruptions and strong demand for copper in China, which is a significant driver for the company's growth [13][22]. - The anticipated start of the Kamoa Phase 2 expansion by the end of 2024 is expected to contribute positively to production volumes [22].