Core Insights - Shengjing Micro is driving industrial upgrades through its innovative capabilities in the field of industrial electronic detonators and specialized chips [1] Group 1: Technological Advancements - The first fully wireless blasting system for open-pit mines in China, developed with the participation of Shengjing Micro, was successfully applied in September 2025 [1] - This system achieves full-domain wireless detonation from the surface to the borehole, overcoming the core technical barriers of wireless signal penetration through complex media [1] - The technology eliminates reliance on traditional cables, filling a domestic technological gap [1] Group 2: Market Position and Applications - Shengjing Micro leverages its high-performance, low-power specialized chip advantages and platforms such as provincial engineering technology research centers and CNAS-certified laboratories to transform technological strength into a wide range of products [1] - The core module of its electronic detonators has already captured a leading position in the domestic market [1]

Group 1: Federal Reserve Actions - The Federal Reserve announced a 25 basis point rate cut in September, aligning with market expectations, and indicated two more potential cuts by year-end [1] - The dot plot suggests only one rate cut in the following year, with further cuts not expected until 2027, but Chairman Powell emphasized that the dot plot reflects individual forecasts rather than a set plan [1] - Market analysis indicates a high probability (87.7%) of a 25 basis point cut in October, while the likelihood of maintaining rates in December is only 1.1% [1] Group 2: Japanese Stock Market Performance - The Nikkei 225 index reached a historical high, driven by gains in the real estate and technology sectors, with Resonac Holdings leading with an 11% increase [3] - Economists expect the Bank of Japan to maintain stable policy rates during its meeting, but a potential rate hike of 25 basis points is anticipated in October [3] - The resignation of Prime Minister Shinto Abe may create opportunities for the Japanese stock market if a new leader adopts more expansionary fiscal and monetary policies [3] Group 3: South Korean Stock Market Trends - The KOSPI index rose by 0.84%, nearing its historical peak, with significant contributions from major companies like SK Hynix and Hanwha Aerospace [4] - The South Korean government stated that the impact of the Federal Reserve's rate cut on Korea is limited, while monitoring trade negotiations and household debt [4] - Ongoing corporate governance and capital market reforms are contributing to the upward trend in the South Korean stock market [4] Group 4: Asian Market Overview - The MSCI Asia-Pacific index reached a four-year high, with a year-to-date increase of over 20%, outperforming the S&P 500 index [6] - Analysts from T. Rowe Price and Franklin Templeton warn that the market may be underestimating the impact of tariffs on corporate profits, which could suppress exports in the coming months [6][7] - Concerns are raised regarding the potential risks to the Asian technology sector, particularly in semiconductor industries, due to reliance on exports [7]

Investment Rating - The report maintains a "Buy" rating for Mitsubishi Electric (Melco) [1][5][22]. Core Insights - Mitsubishi Electric is undergoing a significant transformation, shifting from a product sales-based business model to one that leverages data extracted from components, focusing on miniaturization and discontinuing non-strategic businesses [2][5]. - The company plans to invest in data center optical devices instead of power components due to a slowdown in xEV applications, and aims to localize its FA operations [2]. - Melco is targeting a shareholder return rate of 50% or higher and aims to maintain a debt-to-equity ratio of 0.3x [4][10]. Summary by Relevant Sections Business Strategy - Melco expects sales to grow from ¥2.1 trillion and an operating profit margin of 6.6% in FY3/22 to ¥2.5 trillion and 9.3% in FY3/26, despite lower-than-expected trends in fixed asset control systems [8]. - The company plans to terminate businesses generating ¥0.5 trillion in sales as part of its portfolio review [8]. Cost Reduction - The company is focused on rapid cost reductions, particularly in China, to address challenges faced by its operations [3]. Capital Allocation - Melco is considering mergers and acquisitions (M&A) in growth sectors such as industrial, HVAC, and AI/digital technologies, with a new M&A budget set at ¥1 trillion through FY3/28 [4][10]. - The company aims to enhance profitability by improving operational efficiency and reallocating resources [10]. Financial Performance - Melco forecasts sales of approximately ¥680 billion for FY3/26, with a target of achieving at least 10% growth in operating profit margin [11][9]. - The company plans to increase production capacity in response to strong orders in its defense business and aims to restore operating profit margins to over 10% through restructuring and cost reductions [5][12]. Semiconductor and Device Business - Melco intends to limit investments in power devices while shifting focus to high-performing optical devices, with plans to accelerate the expansion of its HVDC power module business [20][21]. - The company aims to increase its optical device sales by over 20% annually [21].