Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Industrials - **Key Insights**: Strong export growth observed, but concerns are rising due to material price hikes and soft infrastructure investment [2][3] Core Points and Arguments 1. **Export Growth**: December 2025 and January 2026 saw resilient sales in construction machinery and heavy-duty trucks (HDT), with a notable increase in shipbuilding orders aligning with 2026 full-year guidance [2][3] 2. **Infrastructure Investment**: Infrastructure fixed asset investment (FAI) excluding utilities fell by 12.2% YoY in December, leading to a total YoY decline of 2.2% for 2025 [3] 3. **Excavator Sales**: January excavator sales are projected at around 9,000 units, reflecting a YoY increase of approximately 70%, influenced by base effects and Chinese New Year distortions [3][12] 4. **Automation Sector**: A moderate recovery in automation demand is expected in 2026, with companies cautious about downstream capital expenditures in the automotive sector [4] 5. **Lithium Battery Equipment**: Companies in the lithium battery sector anticipate a continued CAPEX upcycle in 2026, with indices for PV and battery equipment up 12% and 23% YTD, respectively [4] 6. **Shipbuilding Orders**: New shipbuilding orders showed a 79% YoY growth in December, despite a 24% YoY decline in 2025 [3] Additional Important Insights 1. **HDT Sector Performance**: The HDT sector's shipments rose 27% YoY to 1.14 million units in 2025, with domestic sales up 31% and exports up 17% [11] 2. **Risks**: Investment downsizing at the macroeconomic level poses a significant risk to the industrial sector, potentially leading to reduced demand for industrial goods [14] 3. **Valuation and Price Targets**: Various companies in the industrial sector have been assigned buy ratings, with price targets set for Hongfa at Rmb 45.00, Sinotruk at HK$ 45.00, and Sungrow at Rmb 225.00 [8][31] 4. **Emerging Technologies**: Chinese OEMs are expected to dominate global humanoid robot shipments, with significant growth anticipated in 2026 [5] 5. **Market Size Projections**: The global market for solid-state batteries is projected to grow from approximately US$100 million in 2030 to over US$30 billion by 2050, although earnings impact visibility remains low [5] Conclusion The China industrial sector is experiencing a mix of strong export performance and rising concerns over material costs and infrastructure investment. Key sectors such as construction machinery, automation, and lithium battery equipment are poised for growth, while risks related to macroeconomic conditions and competition remain significant.

J P M O R G A N Asia Pacific Equity Research 22 January 2026 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. Sungrow - A 10 key investor questions and takes from our recent site visit Sungrow is one of our top picks in our Asia Utilities & Renewables 2026 ou ...

Summary of China Renewable Energy Conference Call Industry Overview - The conference call focused on the **China Renewable Energy** sector, specifically the solar module and inverter markets. Key Points on Solar Modules - **Export Value Decline**: China's solar module export value decreased by **15.3% year-over-year (yoy)** to **US$23,698 million** in 2025, despite a **13.7% yoy** increase in export volume to **268.3 GW** [1][2] - **December Performance**: In December 2025, the export value was **US$1,825 million**, reflecting a **6.5% yoy** increase but a **1.7% month-over-month (mom)** decline [2] - **Regional Demand**: The increase in export volume in December was primarily driven by: - **Europe**: **45.2% yoy** increase to **7.9 GW**, with significant contributions from Italy, the Netherlands, and Poland - **Asia (excluding China)**: **20.8% yoy** increase to **7.6 GW**, mainly from the UAE, South Korea, and the Philippines - **Africa**: **47.5% yoy** increase to **2.0 GW** [2] Key Points on Inverters - **Export Value Growth**: China's inverter export value rose by **9.3% yoy** to **US$9,042 million** in 2025, with a notable **26.1% yoy** increase to **US$839 million** in December [1][4] - **Regional Demand**: The demand for inverters in December was significantly boosted by: - **Europe**: **36.5% yoy** increase to **US$306 million**, driven by demand from Ukraine and Eastern European countries supporting residential energy storage systems (ESS) - **Africa**: **97.8% yoy** increase to **US$100 million**, with Egypt, South Africa, and Nigeria being key contributors - **Oceania**: **149.3% yoy** increase to **US$62 million**, supported by subsidy policies for residential ESS projects in Australia [4][6] Production and Installation Trends - **Module Production Decline**: China's module production volume decreased by **1.2% yoy** to **563.2 GW** in the first 20 months of 2025, with a projected further decline of **14.8% yoy** to **32.5 GW** in January 2026 due to seasonal factors [3] - **Solar Installation Growth**: Solar installations in China increased by **33.2% yoy** to **274.9 GW** in the first 11 months of 2025, although November saw a **11.9% yoy** decline to **22.0 GW** [3] Investment Preferences - The report suggests a preference for inverter companies such as **Sungrow** and **Deye**, which are expected to benefit from the growth in ESS demand [1] Risks - Potential risks affecting the inverter market include: - Lower-than-expected demand for residential and commercial energy storage in emerging markets - Increased price competition among inverter manufacturers - Higher trade tariffs on Chinese inverter products in international markets [15][17] Valuation Insights - **Deye Technology**: Target price set at **Rmb102.0/share**, based on a DCF model, anticipating sustainable growth in energy storage demand [14] - **Sungrow Power Supply**: Target price set at **Rmb240.00/share**, also based on a DCF valuation, reflecting long-term growth potential [16] This summary encapsulates the essential insights from the conference call regarding the current state and future outlook of the China Renewable Energy sector, particularly focusing on solar modules and inverters.

Summary of China Solar Power Conference Call Industry Overview - The conference call focused on the **China Solar Power** industry, specifically discussing solar product prices, installation forecasts, and market dynamics. Key Points Solar Product Prices - Weekly solar product prices have seen a **1-2% increase** week-over-week (wow) for upstream polysilicon materials and downstream solar modules, while solar cell prices declined by **1%** [1] - Average market prices for n-type grade rod-type polysilicon rose to **Rmb53.4/kg**, and granular silicon to **Rmb50.5/kg** [2] - N-type wafer prices remained unchanged at **Rmb1.38/W** for 182mm products and **Rmb1.68/W** for 210mm products [3] - Average prices for TOPCon modules increased by **1.5%** to **Rmb0.68/W** for utility-scale projects and **4.2%** to **Rmb0.70/W** for distributed projects [4] - Solar glass prices remained stable at **Rmb11.0/m2** for 2.0mm and **Rmb18.3/m2** for 3.2mm products [5] Installation Forecasts - The annual module output in China for 2025 was reported at **563.2GW**, a **1.2% decrease** year-over-year (yoy) [4] - Solar installation demand is expected to remain muted in January until new project construction begins after the Chinese New Year [1] - Citi forecasts a **24% decrease** in PRC solar installations to **220GW** in 2026 due to reduced returns from larger-than-expected renewable market-based tariff cuts [1] Inventory and Production Dynamics - Polysilicon inventory at producer plants increased by **1%** to **306k tonnes** as of December 31 [2] - Downstream wafer plant inventory rose by **5.3%** month-over-month (mom) to **219k tonnes** [2] - Wafer inventory climbed **6.9%** wow to **23.2GW** as of December 31 [3] - The average inventory period for solar glass increased by **2.8%** to **39.1 days** as of December 31 [6] Company Preferences and Risks - In the PRC solar sector, the preference is for inverter companies like **Sungrow** and **Deye**, which are expected to benefit from high demand growth in energy storage systems [1] - Caution is advised regarding solar glass makers due to low average selling prices (ASP) and high inventory levels [1] - Key risks for **Deye** include lower-than-expected energy storage demand and increased price competition among inverter peers [19] - For **Sungrow**, risks include slower-than-expected solar installations and intensified trade tensions affecting exports [21] Valuation Insights - **Deye's** target price is set at **Rmb102.0/share**, based on a discounted cash flow (DCF) model, reflecting sustainable growth in energy storage demand [18] - **Sungrow's** target price is **Rmb240.00**, also based on a DCF valuation, indicating long-term potential returns [20] Additional Important Information - The conference call highlighted the importance of monitoring market dynamics and potential risks in the solar sector, particularly in light of changing tariff structures and inventory levels [1][19][21]

Summary of Conference Call Notes Industry Overview - The conference call discusses the **China Industrial Automation** industry, highlighting recent price hikes by major players such as **Siemens**, **Schneider Electric**, and **Inovance**. Price increases range from **2% to 50%** depending on the product, primarily driven by raw material inflation, particularly in **copper**, **aluminum**, and **semiconductor memory** [1][6][10]. Key Points Price Hikes - **Siemens** announced price hikes of **2%-50%** effective January 1, 2026, with specific increases for drive-related spare parts (5-15%) and servo products (2-5%) [6]. - **Schneider Electric** implemented price increases of **1%-40%** for both industrial automation and electric products, effective January 1, 2026, with notable hikes in specific products like HMI PSA6/P6 (20%) [6]. - **Inovance** plans to raise prices by **5%-20%** starting January 10, 2026, with increases across various product lines, including servo systems (6%) and industrial motors (12%) [6]. Market Forecast - The price hikes could lead to upside risks in the forecast for the **China Industrial Automation market**, which is expected to remain flat in dollar terms until **2026E**. The forecast anticipates low single-digit volume increases offsetting modest price declines [2]. - The actual implementation of price increases will likely vary by customer, and successful pass-through may be limited to selective customers due to the current demand environment [2]. Competitive Landscape - The profitability outlook is expected to diverge among industry leaders and smaller players, with a preference for companies like **Inovance** that possess stronger pricing power and can drive market consolidation [2]. - Inovance is recognized as a domestic leader in industrial automation, with significant growth potential in overseas markets and opportunities in digitalization and IoT solutions [15]. Investment Thesis - Inovance's competitive advantages include: - Leading R&D effectiveness with high success rates for new products - A comprehensive product portfolio that enhances customer retention [15]. - The investment rating for Inovance is maintained as **Buy**, with a 12-month price target of **Rmb82.1**, based on a **35x** P/E ratio for **2026E** [16]. Risks - Potential risks to the investment thesis include: - Slower-than-expected market share gains in industrial automation - Weaker margin trends - Delays in the ramp-up of the EV component segment - General slowdown in manufacturing capex and automation demand [16]. Additional Insights - The conference call emphasizes the importance of monitoring the actual pass-through of price increases and the varying impacts on different customer segments [2]. - The overall market growth forecast for the **China Industrial Automation** sector is projected at **0%/-1%/0%** year-over-year for **2025E/26E/27E** [12]. This summary encapsulates the critical insights from the conference call, focusing on the implications of price hikes, market forecasts, competitive dynamics, and investment considerations within the China Industrial Automation industry.

Summary of China Renewable Energy Conference Call Industry Overview - The conference call focused on the **China Renewable Energy** sector, specifically the solar energy market in China. Key Points Solar Capacity Forecasts - The forecast for **PRC solar installation** in 2025 has been slightly raised to **290GW** from **280GW** based on ongoing projects, while the forecast for **2026** has been lowered to **220GW**, representing a **24% year-over-year decline** from **250GW** [1][2] - Major Independent Power Producers (IPPs) like **China Huaneng Group** and **National Energy Investment Group** are cautious about solar capacity additions during the **15th 5-year period (2026-2030)** due to profitability issues from recent projects [1] Profitability Concerns - Recent solar projects have been less profitable due to **tariff cuts** and high **depreciation expenses** from installations made in **2022-2023** when module prices were elevated [1][2] - The average on-grid tariff has decreased significantly, impacting the financial viability of new installations [2] Market Dynamics - The solar sector is noted for its **cooperative attitude** among enterprises, which is seen as a positive aspect amidst market challenges [1] - There is a potential negative impact on **Energy Storage System (ESS)** demand due to the anticipated reduction in solar installations in **2026** [2] Module Pricing and Production - **China's solar module export value** decreased by **16.8% year-over-year** to **US$21,873 million** in the first 11 months of 2025, with a slight recovery in November showing an **18% year-over-year increase** [3] - The **module production volume** is expected to decline further, with a projected drop of **10.9% year-over-year** in December due to a lack of domestic installation rush [6] Inverter Market - **China's inverter export value** increased by **26% year-over-year** in November, with significant demand from regions like **Oceania** and **Europe** [7] Company-Specific Insights Preferred Companies - The report expresses a preference for companies involved in **Energy Storage Systems (ESS)** and **polysilicon production**, specifically naming **Sungrow**, **Deye**, **Tongwei**, and **GCL** as favorable investment opportunities [1] Valuation and Risks - **Ginlong Technologies** has a target price of **Rmb55.00** per share based on a DCF valuation, with a WACC of **10.1%** [19] - **Ningbo Deye Technology** has a target price of **Rmb102.0** per share, with a WACC of **8.4%** [21] - **Sungrow Power Supply** has a target price of **Rmb240.00**, with a WACC of **7.0%** [23] - **Tongwei** has a target price of **Rmb30.00** per share, with a WACC of **9.2%** [25] Risks - Key risks for these companies include lower-than-expected solar installations, increased competition, and potential trade tariffs against Chinese products [20][22][24][26] Conclusion - The solar energy market in China is facing challenges with profitability and installation forecasts, but there are still opportunities in specific segments like ESS and polysilicon production. The cautious outlook from major IPPs indicates a need for strategic investment in the sector.

Summary of China Renewable Energy Conference Call Industry Overview - The conference call focused on the **China Renewable Energy** sector, particularly the solar energy market, including polysilicon, wafers, solar cells, modules, and solar glass products [1][2][3][4][5][6]. Key Points and Arguments Price Trends - **Polysilicon Prices**: Average market prices for n-type grade rod-type polysilicon decreased by -0.1% week-over-week (wow) to Rmb51.9/kg, while granular silicon prices remained unchanged at Rmb50.5/kg [2]. - **Wafer Prices**: Prices for n-type wafers fell by -2.3% wow to Rmb1.26/W for 182mm products and -1.8% wow to Rmb1.68/W for 210mm products due to inventory pressure [3]. - **Solar Cell Prices**: Average prices for TOPCon solar cells decreased by -2.6% wow to Rmb0.30/W [3]. - **Module Prices**: Average market prices for TOPCon modules increased slightly by 0.2% wow to Rmb0.67/W for utility-scale projects, but remained stable for distributed projects [4][5]. - **Solar Glass Prices**: Prices for solar glass products decreased by -1.5% wow to Rmb12.8/m2 for 2.0mm and -1.3% wow to Rmb19.8/m2 for 3.2mm products [6]. Inventory and Demand - **Inventory Levels**: Polysilicon inventory at producer plants rose by +3.1% wow to 267k tonnes, while wafer inventory increased by 5.3% wow to 18.4GW [2][3]. - **Demand Decline**: Domestic solar installation demand in China dropped by -50.9% year-over-year (yoy) to 28.7GW in 3Q25, while module export volume grew by +43.6% yoy to 78.8GW in the same period [1][5]. - **Future Projections**: Monthly polysilicon output is expected to decline by 14% month-over-month (mom) to 120k tonnes in November, with an annual output forecasted to drop by 27.8% yoy to 1,330k tonnes in 2025 [2]. Market Dynamics - **Anti-Involution Policies**: The anticipated increase in module prices is driven by anti-involution policies in China's solar industry and the potential removal of VAT rebates for module exports by the end of 2025 [1][5]. - **Production Adjustments**: Certain polysilicon plants in Southwest China, including Tongwei's facilities, suspended production due to weakened demand and increased electricity prices [2]. Investment Preferences - **Preferred Companies**: The report favors inverter manufacturers such as **Sungrow** and **Deye**, which are expected to benefit from the growth in energy storage systems. Polysilicon producers are also favored due to higher average selling prices (ASP) and potential capacity consolidation [1]. Additional Important Information - **Risks**: Key risks for companies like Deye and Sungrow include lower-than-expected demand for energy storage, increased price competition, and potential trade tariffs against Chinese products in overseas markets [20][22]. - **Valuation Models**: Target prices for companies are based on discounted cash flow (DCF) models, with specific assumptions regarding growth rates and weighted average cost of capital (WACC) [19][21][23]. This summary encapsulates the essential insights from the conference call, highlighting the current state and future outlook of the China Renewable Energy sector, particularly in solar energy.

Group 1 - The core viewpoint emphasizes the importance of selecting valuable research reports and understanding market trends to avoid missing investment opportunities [1] - The advanced packaging market is projected to exceed $79 billion by 2030, transitioning from "post-manufacturing" to "system front-end," indicating a significant growth phase for domestic packaging platforms [1] - Companies positioned in the 2.5D/3D packaging sector are expected to benefit from this market shift, marking a golden validation period for these firms [1] Group 2 - The market share of variable frequency drives and servo systems has been consistently increasing over the past five years, indicating a stable industrial control foundation [1] - The robotics sector is on the verge of breakthroughs, with a price-to-earnings (PE) ratio approximately 20% lower than the industry average, suggesting potential for valuation recovery [1]

Core Insights - The report highlights a mixed performance in the photovoltaic (PV) industry, with significant growth in component exports but a decline in new installations in August 2025 [1][2][3] Group 1: Domestic PV Installations - In August 2025, domestic PV installations reached 7.4GW, showing a year-on-year decrease of 55.3% and a month-on-month decrease of 33.3% [2] - Cumulatively, from January to August 2025, new PV installations totaled 230.61GW, reflecting a year-on-year increase of 64.7% [2] Group 2: Component Exports - In August 2025, the export value of PV components was 20.95 billion yuan, marking a year-on-year increase of 20.4% and a month-on-month increase of 31.9% [1][2] - The cumulative export value from January to August 2025 was 132.21 billion yuan, which is a year-on-year decrease of 18.0% [1][2] - In July 2025, the domestic PV component export volume was 21.25GW, showing a year-on-year increase of 8% but a month-on-month decrease of 2% [1][2] Group 3: Inverter Exports - The export value of inverters in August 2025 was 6.29 billion yuan, with a year-on-year increase of 2.2% but a month-on-month decrease of 3.4% [3] - Cumulatively, from January to August 2025, the total export value of inverters was 43.4 billion yuan, reflecting a year-on-year increase of 8.0% [3] - Exports to different regions showed varied performance, with significant growth in Oceania (year-on-year increase of 245.9%) but declines in North America (year-on-year decrease of 24.1%) [3] Group 4: Solar Power Generation - In August 2025, solar power generation reached 53.82 billion kWh, representing a year-on-year growth of 15.9% [3] - Solar power accounted for 5.75% of the total industrial power generation in the country, with a slight month-on-month decrease of 0.29 percentage points [3] - The total power generation in August 2025 was 936.3 billion kWh, with various energy sources showing different growth rates [3] Group 5: Recommended Companies - Companies recommended for investment include Aiko Solar, Longi Green Energy, Daqo New Energy, and others focusing on various segments of the PV industry [4]

Summary of the Conference Call on the Autos/Auto Parts/Tire Sector Industry Overview - The conference call focused on the **Autos, Auto Parts, and Tire sectors** in Japan, highlighting the current market conditions and future outlooks for these industries [1][4]. Core Insights and Arguments Autos Sector - A **bullish stance** has been adopted due to the easing of tariffs and environmental regulations, which is expected to significantly improve the external environment for the sector [4][6]. - The **gross tariff impact** on seven major automakers is estimated at **¥1.6 trillion**, with a net impact of **¥890 billion** after recovery measures, based on a **15% tariff rate** assumption under USMCA [11]. - Relaxation of regulations such as **ACC-II, GHG, and CAFE** is projected to reduce compliance costs by **¥1.2 trillion**, surpassing the net tariff impact [11]. Auto Parts Sector - The ability to pass tariff costs onto OEMs is a key factor, with potential profit erosion of **20-30%** for companies like **Denso** and **Aisin** [11]. - The sector is encouraged to explore value addition in **vehicle intelligence** and **Software-Defined Vehicles (SDV)** [11]. - The impact of tariffs is expected to be manageable for Toyota, but negotiations with overseas OEMs will be crucial [11]. Tire Sector - The impact of tariffs on the tire sector is considered relatively minor, but the competitive environment remains challenging [4][7]. - Localized production benefits are expected to be evaluated in the medium term, as tariffs increase the cost of cheaper imports, providing advantages to local manufacturers [7]. Stock Recommendations - The order of preference for subsectors is: **1) Autos → 2) Tires → 3) Auto Parts** [5]. - Specific stock recommendations include: - **Overweight**: Toyota Motor, Suzuki Motor, Yamaha Motor, Denso, Aisin, Bridgestone - **Neutral**: Nissan Motor, Honda Motor, Mazda Motor, Subaru - **Underweight**: Subaru, Koito Manufacturing, TS Tech [10][12]. Additional Important Insights - The complexity of the **Toyota Group structure** is increasing, which may impact strategic decisions and operational efficiency [14]. - The **global auto demand** is expected to normalize post-COVID-19, with a projected growth of around **2% CAGR from 2024** [29]. - The **US localization ratio** for major automakers shows that Honda has a high ratio of about **70%**, while Toyota, Subaru, and Nissan are slightly below **60%** [69]. - The **tariff exemption impact** on operating profit over two years is significant, with Toyota's operating profit expected to be impacted by **¥744 billion** due to tariffs [74]. This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current state and future outlook of the Japanese automotive industry.