Summary of HTSC Conference Call Company Overview - **Company**: HTSC (Haitong Securities Company) - **Ticker**: 6886.HK (H-shares), 601688.SS (A-shares) - **Industry**: Financial Services, specifically Brokerage and Asset Management Key Points Financial Performance and Projections - **Asset Sale Impact**: HTSC closed the sale of its US subsidiary, AssetMark, for US$1.79 billion, generating US$795 million in investment gains expected to be booked in Q3 2024, which will support 2024 earnings despite a year-over-year drop in investment income due to weaker equity market performance and regulatory tightening [2][4][16] - **Revenue Forecasts**: - 2024 earnings forecast raised by 28.5% due to the sale-related gains - 2025 earnings forecast lowered by 5.8% due to expected declines in asset management revenue and investment-related income [4][16] - **Revenue Breakdown**: AssetMark contributed approximately 45-50% of HTSC's asset management net revenue in 2023, generating Rmb3.79 billion in gross revenue and Rmb862.9 million in net profit [2][16] Market Conditions and Regulatory Environment - **Regulatory Normalization**: There are signs of regulatory normalization, but ongoing uncertainties remain regarding the earnings cycle and market conditions, particularly as A-share average daily trading (ADT) has dropped over 20% year-over-year in Q3 2024 [12][13] - **Future Deployment of Proceeds**: The proceeds from the AssetMark sale may be reserved for future capital needs, with potential deployment into cross-border equity and derivatives businesses, contingent on improved market conditions and regulatory environments [3][17] Valuation and Ratings - **Current Valuation**: HTSC's shares are considered fairly valued, with a price target of HK$9.60 for H-shares and Rmb13.10 for A-shares, implying a 14% upside for H-shares and 1% for A-shares [8][9] - **Rating**: Equal-weight (EW) rating for both H- and A-shares, reflecting cautious optimism due to expected ROE trends [15][18] Earnings Estimates and Ratios - **Earnings Estimates**: - 2024: Net profit expected to increase by 28.5% - 2025: Net profit expected to decrease by 5.8% - 2026: Estimates largely unchanged [4][6] - **Key Ratios**: - 2024 ROE projected at 8.2%, declining to 6.2% in 2025 due to the one-off gains from the AssetMark sale [15][24] Risks and Opportunities - **Upside Risks**: - Earlier-than-expected regulatory relaxation could enhance HTSC's capital deployment capabilities and improve profit margins [18] - Potential market share gains from competitors undergoing mergers [18] - **Downside Risks**: - Weaker equity market performance could negatively impact investment income and overall profitability [19] - Further declines in market ADT and margin finance volume could adversely affect brokerage and interest income [19] Conclusion - HTSC is navigating a challenging environment with significant changes due to the recent asset sale. While the immediate outlook for 2024 appears positive due to one-off gains, the company faces headwinds in 2025 and beyond, necessitating careful monitoring of market conditions and regulatory developments. The current valuation reflects a balanced view of these factors, with modest upside potential.

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M Update Global Biopharma | North America September 22, 2024 10:25 PM GMT P/E – Metric of the Week; Biopharma Comp Clearinghouse Our weekly Comp Clearinghouse includes valuation based upon both MS and consensus ests for our global pharma / large biotech coverage universe spanning North America, Europe, Japan, China, India and Australia. Exhibit 1: Top 10 companies with the lowest P/E | --- | --- | --- | --- | --- | |-------|---------------------------------------------|-------|-------------------|-------| | ...

Europe Equity Research 23 September 2024 J P M O R G A N Source: Company reports. Source: J.P. Morgan. European Autos Global Truck / Construction Equipment Monthly (Sep'24): Mixed leading indicators | --- | --- | |---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Greater China IT Services and Software - **Current View**: Cautious outlook on the A-share software and IT sector, influenced by IT localization themes [2][3] Core Insights - **MIIT Policy**: The Ministry of Industry and Information Technology (MIIT) has mandated the replacement of 2 million sets of industrial software licenses and 800,000 industrial operating systems by 2027. This is part of a broader initiative to enhance supply chain resiliency and security [3][5] - **Recent Market Activity**: The China Securities Xinchuang Index (CSI931247) increased by 4% from September 18-20, compared to a 1% rise in the CSI300. This surge is attributed to geopolitical events and speculation regarding local government funding for IT localization [4][5] - **Investment Recommendations**: - Avoid investments in the Xinchuang theme until financial contributions become clearer due to a poor track record [2][5] - Preference for Baosight (EW) over ZWsoft (UW) for industrial software, and Kingsoft Corp (OW) over Kingsoft Office (UW) for localization [5] Financial Performance and Risks - **Bottlenecks**: Key challenges for IT localization include budget constraints for local governments and performance issues with domestic industrial software. Previous MIIT targets, such as those for cybersecurity growth, have been missed [5] - **Market Sentiment**: The current market environment resembles that of September 2022, where the software sector rallied on localization policies without subsequent financial benefits [5] Company-Specific Insights - **Kingsoft Corp Ltd (3888.HK)**: - Valuation based on a sum of parts approach, with online games valued at 10x 2024e P/E and WPS using DCF with a 9.0% WACC [7] - Risks include slower game revenue growth and competition in cloud services [8][9] - **Shanghai Baosight Software Co Ltd (600845.SS)**: - Valuation derived from a 10-year DCF model with a WACC of 10.5% [10] - Upside risks include faster customer utilization and potential M&A activity [11] - **ZWSOFT Guangzhou Co Ltd (688083.SS)**: - Valuation based on a 10-year DCF with a WACC of 10.8% [13] - Upside risks include stronger IP protection and technology evolution [14] - **Beijing Kingsoft Office Software Inc (688111.SS)**: - Valuation methodology aligns with other Chinese SaaS companies, applying a 10.2% WACC [16] - Risks include slower AI penetration and intensified competition [18] Additional Considerations - **Market Dynamics**: The software sector is experiencing high valuations despite being one of the worst-performing segments over the past two years, indicating a potential market correction if demand does not materialize [5] - **Investment Banking Relationships**: Morgan Stanley has disclosed its investment banking relationships with several companies mentioned, which may influence research objectivity [6][19] This summary encapsulates the critical insights and recommendations from the conference call, providing a comprehensive overview of the current state and outlook of the Greater China IT Services and Software industry.

M Update Container Shipping | Asia Pacific September 22, 2024 04:30 PM GMT Data NOW: SITC vs. 4.4k TEU Containership TC Rates SITC's competitors charter in capacity to provide services. Thus, we believe SITC's share price performance is positively correlated with vessel timecharter rates. Key Takeaways 4.4k TEU containership timecharter rate rose 2% WoW to US$51k/day. Click here for access Exhibit 1: SITC share performance vs. 4,400 TEUs timecharter rate SITC share performance vs. 4,400 TEU timecharter rate ...

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M Update China Autos & Shared Mobility | Asia Pacific September 22, 2024 08:11 PM GMT What are investors focused on? Investor interest in the auto sector rose following the recent bounce, but most are struggling to discern between beta-driven and idiosyncratic moves. A seasonal rally may take place but macro groundwork still looks fragile. Sector discussion Rising interest at both the single stock and sector level on both the long and short sides... China's auto sector has been unloved throughout most of th ...

North America Equity Research 22 September 2024 J P M O R G A N Apple Product Availability Tracker: Lead Times Expand Suggesting Healthy Demand, Albeit Softer on Higher End Than Last Year Overweight AAPL, AAPL US Price (20 Sep 24):$228.20 | --- | --- | |------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ ...