Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Greater China Materials** sector, focusing on various aspects of the steel, cement, and construction industries in China [1][1]. Core Insights and Arguments 1. **Strong Demand in Auto Sales**: The automotive sector showed robust performance with November AC sales increasing by **44.2% YoY** to **15.38 million units**, with domestic sales up **28.7% YoY** and exports up **59.1% YoY** [1][1]. 2. **Production Cuts in Steel and Paper**: Nine Dragons Paper plans to reduce packaging paper production by **175,000 tons** at its Dongguan base and **145,000 tons** at Taicang and Chongqing bases. Additionally, Shandong coke producers are expected to cut production by **10.5 thousand tons/day** [1][1]. 3. **Steel Output Decline**: Daily crude steel output from major producers was reported at **2.024 million tons**, down **3.2%** compared to late November [1][1]. 4. **Government Policies**: India is planning a **25% temporary safeguard tax** on Chinese steel imports, while Canada intends to impose tariffs on Chinese solar products and other materials in **2025-26** [1][1]. 5. **Infrastructure Stimulus**: The Ministry of Housing and Urban-Rural Development (MoHURD) reported that policy-supported housing delivery reached **3.24 million units** nationwide in the first eleven months of 2024. However, land sales revenue dropped **22.4% YoY** to **RMB 3.2 trillion** [1][1]. 6. **Cement Shipments**: Cement shipments in eastern China remained high due to year-end construction activities, with apparent consumption of long and flat products showing a decline of **3.1%** and **0.9%** YoY, respectively [1][1]. Additional Important Information 1. **Local Government Bonds**: Local government special bond issuance totaled **RMB 21 billion** in December, bringing the year-to-date total to **RMB 4.0 trillion**, which is **102.6%** of the 2024 quota [1][1]. 2. **Construction Contracts**: Major construction state-owned enterprises signed new domestic contracts worth **RMB 600 billion** in November, reflecting a **4% YoY** increase. The total for the first eleven months reached **RMB 5.76 trillion**, up **2% YoY** [1][1]. 3. **Market Dynamics**: Weekly primary unit sales in 50 cities increased by **28% YoY**, while secondary unit sales in 10 cities were up **70% YoY** but down **14.9% WoW** [1][1]. 4. **Investment in Grid Infrastructure**: China completed **RMB 529 billion** in grid investment in the first eleven months of 2024, marking an **18.7% YoY** increase [1][1]. This summary encapsulates the key points discussed in the conference call, highlighting the current state and future outlook of the Greater China Materials sector, along with relevant statistics and government policies impacting the industry.

Company and Industry Overview * **Company**: Zhejiang Huahai Pharmaceutical Co. Ltd. (600521.SS) * **Industry**: China Healthcare * **Research Firm**: Morgan Stanley Research * **Analyst**: Laurence Tam Key Points Investment Drivers * **API Pricing**: Monthly API pricing data released by China Customs. * **Drug Launches**: Drug launches in China and the US, particularly in the formulation segment. * **Margin Expansion**: Expansion of margins through pricing, capacity utilization, and operating leverage. Risks to PT/Rating * **Upside Risks**: * New multinational API manufacturing contracts. * Rise in API pricing in multiple drug categories. * Approval of formulations in China and the US. * Renewal of management incentive scheme. * **Downside Risks**: * Dipping export demand due to geopolitical factors. * Export bans by overseas regulators. * Price cuts on generic drugs. Financial Projections * **Sales/Revenue**: 9,707.4 million RMB (Note: Insufficient consensus data available) * **EBIT**: 2,018 million RMB (Note: Insufficient consensus data available) * **Ownership Positioning**: 94.1% institutional owners * **MS Alpha Models**: 3/5 for 3-month horizon Risk/Reward Update * **Price Target**: Rmb23.00 (Up from Rmb22.00) * **Bull Case**: Rmb27.00 - Rmb28.00 * **Base Case**: Rmb22.00 - Rmb23.00 * **Bear Case**: Rmb12.00 - Rmb13.00 * **52-Week Range**: Rmb21.55 - Rmb10.71 * **Fiscal Year Ending**: 12/23 - 12/26e Investment Thesis * **Top Five Chinese Formulations by Sales**: Drug Master Files (2023) * **Top Ten Most Supplier - Formulations with more stable margins** * **Return of API export supply chains**: Resumption of API export supply chains, lifted by global and export bans. * **Acceleration of formulation sales growth**: Expected acceleration of formulation sales growth, launches per year, mainly in 2023-2026. * **Forward PE multiple**: Projected forward PE multiple of multiple for A-share listed API stocks with high level of forward integration. Risk/Reward Themes * **Pricing Power**: Secular Growth: View descriptions of Risk Rewards Themes here Key Earnings Inputs * **Net Sales**: 8,308,720,000 RMB (2023) * **Gross Margin**: 60.4% (2023) * **Operating Margin**: 14.9% (2023) * **Net Margin**: 10.0% (2023) * **Net Income**: 830,466,000 RMB (2023) Additional Information * **Morgan Stanley and its affiliates do business that relates to companies/instruments covered in Morgan Stanley Research**. * **Morgan Stanley uses a relative rating system using terms such as Overweight, Equal-weight, Not-Rated, or Underweight**. * **Analyst certification and other important disclosures are available in the Disclosure Section**.

23 Dec 2024 08:58:42 ET │ 13 pages US Economics November core PCE inflation at 0.11%MoM was notably softer than the 0.18% we had been penciling in. There has been some more difficulty than usual over the last year pinpointing the seasonal adjustment for airfares in PCE data. This again helped to explain the divergence between final core PCE and our forecast, with airfares falling more than we expected. We continue to expect weaker airfares in PCE than in CPI over the coming months. Some other components wer ...

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Hong Kong and Mainland China property markets** and their performance indicators, including sales trends, price indices, and market outlooks. Core Insights and Arguments - **Secondary Sales Trends**: The 7-day moving average of secondary sales in Shanghai shows fluctuations, indicating varying market activity levels throughout 2023 and into 2024 [1] - **Web Traffic Index**: The J.P. Morgan Property Agency Web Traffic Index indicates a correlation between web traffic and sales performance across 12 major cities, suggesting that increased online interest may lead to higher sales [2] - **Asking Price Index**: The Tier-1 cities' asking price index reflects that approximately 20% of projects have raised prices, indicating a slight recovery in pricing power among developers [3] - **Market Sentiment**: The sales manager confidence index shows a positive trend, suggesting that managers are becoming more optimistic about future sales, which could lead to increased activity in the property market [45] - **Valuation Summary**: A detailed valuation summary of various property companies indicates a mix of "Overweight" (OW) and "Underweight" (UW) ratings, with price targets reflecting expected market performance [27] Important but Overlooked Content - **Upcoming Project Launches**: Several new projects are set to launch, including developments by Wheelock/MTRC and Henderson Land, which could impact market dynamics and sales figures in the near term [31] - **Share Price Performance**: The weekly share price performance of property developers and managers shows a general downward trend, with specific companies experiencing significant declines, indicating potential investment risks [38] - **Long-term Price Trends**: Historical data shows that property prices in Hong Kong have experienced significant declines in past cycles, suggesting that current market conditions may lead to similar outcomes if economic conditions worsen [35] Conclusion - The conference call highlights a cautiously optimistic outlook for the Hong Kong and Mainland China property markets, with signs of recovery in sales and pricing, but also warns of potential risks associated with market volatility and economic conditions.

Industry Coverage: China Healthcare * **Coverage Universe**: The report covers a range of companies in the China healthcare sector, including biotech, pharmaceuticals, and medical devices. * **Key Companies**: The report specifically mentions several companies, such as Everest Medicines Ltd, Livzon Pharma, Luye Pharma Group, Ocumension Therapeutics, RemeGen Co., Ltd., Shenzhen Salubris Pharmaceuticals, Sichuan Kelun Pharmaceutical Co Ltd, Simcere Pharmaceutical Group, Sino Biopharmaceutical, The United Laboratories, WuXi AppTec Co Ltd, WuXi Biologics Cayman Inc, WuXi XDC Cayman Inc., Beijing Tiantan Biological Products Corp, China Resources Boya Bio-pharmaceutical, Hualan Biological Engineering Inc., Pacific Shuanglin Bio-pharmacy, Shanghai RAAS Blood Products Co. Ltd. * **Industry Focus**: The report focuses on the growth potential and investment opportunities in the China healthcare sector, particularly in areas such as biotechnology, pharmaceuticals, and medical devices. Risk Reward - Innovent Biologics Inc (1801.HK) * **Stock Rating**: Overweight * **Price Target**: HK$67.00 * **Base Case DCF**: The report uses a discounted cash flow (DCF) model to arrive at a price target of HK$67.00 for Innovent Biologics Inc. * **Key Drivers**: The report identifies several key drivers for Innovent Biologics Inc, including: * **Strong biologics platform and pipeline**: Innovent has a strong biologics platform and a robust pipeline with 10 products currently marketed under BLA/NDA and three more in Phase 3/pivotal stages. * **Domestic and international growth**: Innovent's products are commercialized in China and have the potential for significant growth in the domestic market. The company also has a pipeline of innovative products that could drive future growth. * **Collaborations with large pharmaceutical companies**: Innovent has entered into collaborations with large pharmaceutical companies, which could provide additional revenue streams and support its pipeline development. * **Risks**: The report also identifies several risks associated with Innovent Biologics Inc, including: * **Failure of clinical trials**: The success of Innovent's pipeline is dependent on the success of its clinical trials. * **Intensifying competition**: The biopharmaceutical industry is highly competitive, and Innovent may face increased competition from both domestic and international companies. * **Regulatory challenges**: Innovent may face regulatory challenges in obtaining approval for its products in China and other markets. Other Key Points * **Market Dynamics**: The report provides insights into the market dynamics of the China healthcare sector, including trends in biotechnology, pharmaceuticals, and medical devices. * **Regulatory Environment**: The report discusses the regulatory environment in China and its impact on the healthcare sector. * **Investment Opportunities**: The report identifies several investment opportunities in the China healthcare sector, including companies with strong pipelines, innovative products, and potential for growth.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Chinese economy**, particularly the real estate and automotive sectors, as well as government bond yields and monetary policy expectations. Core Insights and Arguments 1. **Property Sales Growth**: - In December, property sales growth in 30 cities moderated to **15% YoY** in the first 21 days, down from **20% YoY** in November. Tier-1 cities showed stronger growth compared to lower-tier cities [2][13][27]. - The growth rate further decelerated to **5% YoY** in the third week of December, influenced by a high base from the previous year [2][13]. 2. **Automotive Sector Performance**: - Auto retail sales surged to **34% YoY** and wholesales increased by **39% YoY** in the first 15 days of December, driven by consumption trade-in subsidies [2][7]. 3. **Crude Steel Production**: - Crude steel production improved to **3.4% YoY** in the first 10 days of December, compared to **2.2% YoY** in November [2][31]. 4. **Government Bond Issuance**: - Weekly net issuance of Central Government Bonds (CGB) dropped to **RMB -84 billion** during the week of December 16-22, while gross issuance of new special Local Government Bonds (LGB) remained low at **RMB 6 billion** [2][5]. - Notably, gross issuance of special refinancing LGB surged to **RMB 983 billion** in the first 19 days of December, following a strong issuance of **RMB 1.2 trillion** in November [2]. 5. **Monetary Policy Outlook**: - The 10-year CGB yield decreased by **32 basis points** month-to-date in December to **1.7%**, reflecting market expectations for further monetary policy easing [24]. - The People's Bank of China (PBC) is expected to cut the policy rate by **30-40 basis points** in 2025 and another **20-30 basis points** in 2026, with a forecasted 10-year CGB yield of **1.5%** by the end of 2025 and 2026 [24]. 6. **Mixed Economic Growth**: - November showed a mixed growth picture, with property sales rebounding to **3% YoY** but new property starts declining by **27% YoY**, impacting property investment and construction activities [10][11]. Additional Important Insights - **Subway Passenger Turnover**: The subway passenger turnover remained elevated, with growth increasing to **6% YoY** in the first 17 days of December from **4% YoY** in November [2]. - **High Frequency Data**: The Full-Truck-Load traffic index rose to **9% YoY** in the first 19 days of December, compared to **1% YoY** in November, indicating improved logistics activity [2]. This summary encapsulates the key points from the conference call, highlighting the current state and outlook of the Chinese economy, particularly in the real estate and automotive sectors, as well as the implications for monetary policy and government bond markets.

Summary of Conference Call Notes on Shanghai Anlogic Infotech Co Ltd Company Overview - **Company**: Shanghai Anlogic Infotech Co Ltd (688107.SS) - **Industry**: Field Programmable Gate Arrays (FPGA) within the semiconductor sector Key Points and Arguments Industry Dynamics - The FPGA market is expected to return to growth in 2025 after experiencing a trough in mid-2024, with a projected YoY growth of 27% for Anlogic in 2025 due to localization trends in China [1][2] - The FPGA segment accounted for only 1.6% of total semiconductor revenue in 2023, indicating its niche status [6] - Communication demand remains weak, with a significant decline in newly built 5G base stations in Q3 2024, down 36% QoQ and 32% YoY [12][39] Financial Performance - Anlogic's revenue showed three consecutive quarters of growth in 2024, but overall demand remains weak due to ongoing inventory digestion [12] - The company's gross margin dropped from 50% in Q4 2023 to 27% in Q3 2024, primarily due to product mix and pricing declines [13] - Despite revenue growth forecasts, Anlogic is expected to remain loss-making in 2025, with EPS estimates swinging to a loss [10][13] Price Target and Valuation - The price target for Anlogic has been raised to Rmb34.40, reflecting a higher target P/S ratio of 15.7x, despite earnings cuts for 2024-2026 [3][23] - The valuation model is based on a P/S ratio due to the company's history of losses and the need for heavy R&D investment [47] - Anlogic's P/S ratio is in line with global peer Lattice, but profitability remains significantly lower [24][25] Risks and Challenges - High R&D expenses are expected to continue, remaining above 40% of sales for 2024 and 2025, which may hinder profitability [10][13] - The company faces challenges in achieving higher revenue scale and maintaining a double-digit P/S valuation, requiring a CAGR of 20-30% over the next five years [25][47] - Limited visibility on communication demand recovery poses a risk to future revenue growth [12][39] Other Important Insights - The localization trend in China is driving a shift towards local vendors, which may benefit Anlogic in the civilian FPGA market, although urgency is less compared to specialty FPGAs [2] - Inventory levels in the FPGA market are currently high, with Lattice's inventory days at 218 days, indicating a need for normalization [17] - The overall sentiment in the A-share market has improved, contributing to the revised price target [23] Conclusion - Anlogic is positioned to benefit from the localization trend in China, but faces significant challenges in terms of profitability and demand recovery in the communication sector. The company's future growth will depend on its ability to navigate these challenges while maintaining a focus on R&D and product competitiveness.

-20.0 -15.0 -10.0 -5.0 0.0 5.0 10.0 -40 -30 -20 -10 0 10 20 30 40 50 60 2008 2010 2012 2014 2016 2018 2020 2022 2024 ($bn) ($bn) Non-Dealer Positioning (4Wk Moving Average) All itraxx Main Series All iTraxx XO (RS) Net Sellers of Protection Net Buyers of Protection Global Credit: What We're Watching Asia Credit Demand December 23, 2024 Global Credit: What We're Watching | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |---------------------|------------ ...

December 23, 2024 12:52 PM GMT Weekly primary unit sales in 50 cities were +5.0% YoY (vs. +31% YoY last week) and +5.9% WoW for the week ended December 22: Tier 1 city sales were +3.3% YoY (vs. +71% YoY last week) but -34% WoW. Tier 2 city sales were +4.5% YoY (vs. +21% YoY last week) and +25% WoW. Tier 3 city sales were +10.3% YoY (vs. +29% YoY last week) but -10.1% WoW. M Update China Property | Asia Pacific Weekly primary unit sales were +5.0% YoY and +5.9% WoW. Weekly secondary unit sales were +58% YoY ...

22 Dec 2024 21:29:36 ET │ 29 pages | --- | --- | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------- ...