January 6, 2026 03:32 PM GMT Investor Presentation | Japan M Foundation Electronic Components: Watching End-Product Demand Change/Gap Between Actual Demand and Electronic Component Shipments in 2026 The expanding range of devices leveraging AI computing is driving demand for high-performance electronic components. However, we also expect valuations and the sustainability of EPS growth to come under scrutiny, and thus maintain our industry view at In-Line. Key Takeaways Morgan Stanley MUFG Securities Co., Lt ...

Summary of BYD Management Update Call Company Overview - **Company**: BYD (1211.HK) - **Industry**: New Energy Vehicles (NEV) and Battery Manufacturing - **Market Position**: Largest NEV passenger vehicle manufacturer in China and second-largest battery maker globally [19][20] Key Takeaways Financial Performance - **4Q25E Profitability**: Expected to improve QoQ despite a decline in total sales volume and blended ASP due to lower overseas sales mix. The 3Q25 gross margin improved QoQ due to cost reductions and fewer one-off negative impacts compared to 2Q25 [1][2] - **Operating Cash Flow**: Remained healthy at Rmb9 billion in 3Q25, despite a QoQ decline in accounts payable by approximately Rmb30 billion and an inventory increase of about Rmb10 billion [2] - **Total Cash Resources**: Strong at Rmb180 billion at the end of 3Q25 [2] Capital Expenditure - **4Q25E Capex**: Anticipated to decline QoQ, with a significant YoY decline expected in 2026E as production capacity meets demand [2] - **Production Capacity**: Annual production capacity planned for various factories includes Thailand (150k units), Brazil (150k), and Hungary (150k) [10] Sales and Market Expansion - **2026E Overseas Sales Target**: Management targets 1.5-1.6 million units, up from over 900k units in 2025E. 10M25 overseas sales reached 781k units, reflecting a 130% YoY growth [3] - **Regional Sales Insights**: - **Europe**: Expected to account for ~30% of total overseas sales, with sales doubling YoY. Plans to launch more PHEV models in Europe next year [3] - **Latin America and Asia Pacific**: Anticipated robust sales growth, with NEV penetration currently below 10% [3] New Product Development - **2026E New Technology**: Expected to be a disruptive innovation, addressing user pain points more effectively than previous technologies [4] - **Product Pricing Strategy**: More flexible pricing based on customer demand, with recent launches of large-battery PHEV products maintaining previous pricing [16] Risks and Challenges - **Potential Risks**: Include weaker-than-expected NEV sales, slower ramp-up of the Skyrail business, prolonged capex cycles, and unexpected cash flow issues [22][24] - **Impact of Subsidy Phase-Out**: Management believes BYD can leverage its strong balance sheet and cash flow to navigate the phase-out of NEV purchase tax subsidies [12] Inventory and Production Efficiency - **Current Domestic Inventory**: Slightly more than one month, with expectations for a decline in absolute inventory amounts in Dec-2025E and Jan-2026E [17] - **D&A Expense**: Expected to remain stable YoY in 2025E, with a potential decline per car in 2026E [13] Market Valuation - **Target Price**: HK$174.00, implying an expected share price return of 82.4% and a total return of 83.8% [5][21] - **Market Capitalization**: Approximately HK$869.78 billion (US$111.87 billion) [5] Conclusion - BYD is positioned for growth with strong financials, expanding overseas sales, and innovative product development. However, it faces risks related to market dynamics and regulatory changes. The management's proactive strategies and robust cash flow are expected to mitigate these challenges.

Summary of the Conference Call on Electronic Components Industry Industry Overview - The conference focused on the **Electronic Components** industry in **Japan** with a specific emphasis on demand shifts and earnings forecasts for key players in the sector [1][4][8]. Key Points Demand and Earnings Outlook - Results for **April to June 2025** exceeded forecasts, with strong demand anticipated for **July to September 2025**. A solid foundation is necessary for earnings expansion in **2026** [1][6]. - The outlook for demand beyond **October to December 2025** remains uncertain, indicating potential volatility in the market [7]. Company Ratings and Forecasts - **Ibiden**: Rated **Overweight** with expectations to maintain a dominant share of **NVIDIA's ABF package substrates**. Current price is **6,732 JPY** with a target price of **8,300 JPY**, indicating a **23% upside** [6][10]. - **TDK**: Also rated **Overweight**, with earnings expected to expand due to high-value-added rechargeable batteries. Current price is **1,928 JPY** with a target price of **2,100 JPY**, suggesting a **9% upside** [6][10]. - **Hirose Electric**: Rated **Overweight**, benefiting from the expansion of automotive connectors. Current price is **18,700 JPY** with a target price of **20,900 JPY**, indicating a **12% upside** [6][10]. - **Niterra**: Expected to see continued earnings growth for replacement plugs and SPE electrostatic chucks. Current price is **5,326 JPY** with a target price of **5,700 JPY**, suggesting a **7% upside** [6][10]. - **Meiko Electronics**: Rated **Overweight** with continued earnings growth anticipated from expanding capacity for high-layer-count/high-density build-up PCBs. Current price is **8,380 JPY** with a target price of **8,400 JPY**, indicating a **0% upside** [6][10]. Risk-Reward Snapshot - The report includes a risk-reward snapshot ranking companies by preference, with **Ibiden** and **TDK** at the top, followed by **Hirose Electric** and **Niterra**. Companies like **Murata Manufacturing** and **Hamamatsu Photonics** are rated **Equal-Weight**, indicating a more cautious outlook [7][10]. Market Trends - The **MLCC** (Multi-Layer Ceramic Capacitor) market is highlighted, with expectations for **Murata's** market share to continue rising at a mild rate in the mid to long term [9]. - Capex by hyperscalers has significantly increased, indicating a positive trend for electronic components [9]. Financial Metrics - The report provides detailed financial metrics for various companies, including P/E ratios, EV/EBITDA, and ROE, which are essential for evaluating investment opportunities [10]. Additional Insights - The conference emphasized the importance of monitoring demand shifts and the potential impact of macroeconomic factors on the electronic components market [1][9]. - Analysts noted the need for investors to consider potential conflicts of interest when interpreting research from firms like **Morgan Stanley** [4][5]. This summary encapsulates the key insights and financial forecasts from the conference call, providing a comprehensive overview of the electronic components industry in Japan.

Summary of the Conference Call on Electronic Components Industry Industry Overview - The conference focused on the **Electronic Components** industry in **Japan** with a specific emphasis on demand shifts and earnings forecasts for key players in the sector [1][4][8]. Key Companies Discussed 1. **Ibiden** - Rated as **Overweight** with expectations to maintain a dominant share of **NVIDIA's ABF package substrates** [6][10]. - Forecasted to maintain nearly **100% market share** in FC packages for NVIDIA [9]. 2. **TDK** - Rated as **Overweight** with anticipated earnings expansion from high-value-added rechargeable batteries and improved earnings from sensors and magnetic application products [6][10]. 3. **Hirose Electric** - Rated as **Overweight** with expected expansion in automotive connectors and recovery in the general industrial machinery business [6][10]. 4. **Niterra** - Rated as **Overweight** with continued earnings growth expected from replacement plugs and SPE electrostatic chucks [6][10]. 5. **Meiko Electronics** - Rated as **Overweight** with ongoing earnings growth anticipated from expanding capacity for high-layer-count/high-density build-up PCBs [6][10]. Market Outlook - Strong demand is expected to continue through **July to September**, but the outlook beyond **October to December** remains uncertain [7]. - The earnings forecast for **2026** emphasizes the need for a solid foundation to be laid from year-end through New Year [1]. Risk-Reward Snapshot - The report provided a risk-reward snapshot ranking companies based on preference: - **Ibiden**: Target price of **8,300 JPY**, current price **6,732 JPY**, with a **23%** upside potential [7]. - **TDK**: Target price of **2,100 JPY**, current price **1,928 JPY**, with a **9%** upside potential [7]. - **Hirose Electric**: Target price of **20,900 JPY**, current price **18,700 JPY**, with a **12%** upside potential [7]. - **Niterra**: Target price of **5,700 JPY**, current price **5,326 JPY**, with a **7%** upside potential [7]. - **Meiko Electronics**: Target price of **8,400 JPY**, current price **8,380 JPY**, with a **0%** upside potential [7]. Financial Metrics - The report included detailed financial metrics for each company, including market capitalization, net financial assets, P/E ratios, and ROE forecasts for fiscal years 2024, 2025, and 2026 [10]. Additional Insights - The conference highlighted the significant increase in **Capex** by hyperscalers, indicating a robust demand environment for electronic components [9]. - The report also discussed the **supply chains** of **MLCC** and aluminum capacitors, emphasizing the importance of these components in the broader electronic components market [9]. Conclusion - The electronic components industry in Japan is poised for growth, with several companies showing strong potential for earnings expansion. However, the uncertainty in the latter part of the year necessitates careful monitoring of market conditions and demand shifts.