Summary of SMIC (0981.HK) Conference Call Company Overview - **Company**: SMIC (Semiconductor Manufacturing International Corporation) - **Ticker**: 0981.HK - **Industry**: Semiconductor Foundry Key Points Industry Dynamics - **AI Chip Demand**: There is a significant increase in demand for AI-related semiconductors, driven by ongoing AI innovations and the expansion of cloud infrastructure in China. For instance, China Mobile has made a procurement of over Rmb1.7 billion for AI inferencing servers, indicating a positive outlook for AI chip demand [1][2] - **Domestic Solutions**: Domestic AI chip suppliers, including Huawei and Cambricon, are developing advanced solutions, which is expected to further boost the demand for semiconductors in China [1][2] Company Performance and Outlook - **Revenue Growth**: SMIC's revenue is projected to grow from $8.03 billion in 2024 to $19.88 billion by 2029, reflecting a compound annual growth rate (CAGR) of approximately 19% [9][20] - **Earnings Revision**: The earnings estimates for 2025-2027 remain largely unchanged, while EPS estimates for 2028-2029 have been increased by 1% and 2% respectively due to higher revenues and gross margins [3] - **Gross Margin Improvement**: Gross margins are expected to improve from 26.5% in 2028 to 28.5% in 2029, supported by better utilization rates [3][20] Financial Metrics - **Earnings Estimates**: - 2025E Revenue: $9.24 billion - 2026E Revenue: $11.22 billion - 2027E Revenue: $13.75 billion - 2028E Revenue: $16.67 billion - 2029E Revenue: $19.88 billion [9][20] - **Net Income**: Expected to rise from $768 million in 2025 to $3.13 billion by 2029 [20] - **EPS Growth**: EPS is projected to increase from $0.10 in 2025 to $0.39 in 2029 [9][20] Valuation - **Target Price**: The 12-month target price for SMIC's H-share is raised to HK$83.5, based on a P/E multiple of 45.2x for 2028E [9][23] - **A-Share Valuation**: The target price for SMIC's A-share is set at Rmb182.8, reflecting a 238% premium over the H-share [10][23] Risks - **Demand Fluctuations**: Potential risks include weaker-than-expected demand in smartphones and consumer electronics, which could impact revenue [24] - **Supply Chain Issues**: Access to certain equipment and materials may be restricted due to the company's listing on the US BIS Entity List [25] Investment Thesis - **Long-term Growth**: SMIC is positioned to benefit from the growing demand from local fabless customers and is expected to see a gradual recovery in margins. The shares are considered attractively valued compared to historical averages [26] Conclusion - **Recommendation**: Maintain a Buy rating on SMIC, supported by strong long-term growth prospects in the semiconductor industry, particularly in AI applications [1][26]

Summary of VeriSilicon Conference Call Company Overview - **Company**: VeriSilicon (688521.SS) - **Industry**: Semiconductor, specifically focusing on AI chips and design services Key Points Industry and Market Dynamics - The local AI chipset ecosystem is expanding, which is expected to drive long-term growth for VeriSilicon's design services and IP offerings [1][2] - The company is positioned as a key beneficiary of this trend, providing AI computing design and production management services, along with comprehensive IP solutions [1][2] Financial Performance - As of mid-September 2025, VeriSilicon's orders on hand reached Rmb3.0 billion, representing an 86% year-over-year increase from 3Q24 [1] - AI computing orders accounted for 64% of total orders, indicating a strong demand in this segment [1] - The company revised its 2025 earnings forecast to a net loss of Rmb27 million, down from a previous estimate of Rmb18 million, due to delays in new project deliveries [3] Earnings Revisions and Projections - For 2026-2030, earnings were revised upwards by 1%-2% to reflect higher revenues from design services, driven by the growth of the local AI ecosystem [3] - Gross margin (GM) is expected to decline by 0.2 to 0.6 percentage points in 2026-2030 due to a shift in product mix towards lower-margin design services [3] Valuation and Price Target - The target price (TP) for VeriSilicon is set at Rmb250, up from a previous target of Rmb220, based on a discounted P/E methodology [7][13] - The target P/E multiple is now 53x for 2029E earnings, reflecting a positive outlook on the company's growth potential [7][13] Risks and Challenges - Potential risks include slower-than-expected technology development, higher costs for talent acquisition, and weaker customer spending on IP and new chipset projects [14] Additional Insights - The company is expected to save clients' spending on duplicated works through its third-party turnkey and IP solutions, allowing clients to focus on key specifications [1][2] - The growth in local semiconductor clients in China is anticipated to drive demand for third-party IP and turnkey solutions, enhancing ROI for clients [2] Financial Metrics - Revenue projections for 2025E are Rmb3,001 million, with a gross profit of Rmb1,378 million and a net income loss of Rmb27 million [12][18] - The company is expected to achieve a revenue of Rmb16,500 million by 2030, with a net income of Rmb4,647 million [12][18] This summary encapsulates the essential insights from the conference call, highlighting the company's strategic positioning, financial outlook, and market dynamics.

Summary of Eastroc Beverage Conference Call Company Overview - **Company**: Eastroc Beverage (605499.SH) - **Industry**: Functional Beverage Market in China - **Market Position**: No.1 market share in China's energy beverage market since 2021, with a market share increase from 5.3% in 2015 to 43.7% in 2024 [2][20] Core Insights - **Growth Projections**: Net profit (NP) is expected to grow by 36% in 2025, 25% in 2026, and 20% in 2027, marking the fastest growth in the China consumer staples sector [1][4] - **Sales Performance**: Sales from non-Guangdong markets increased from 61% in 2022 to 76% in 1H25, indicating successful nationwide expansion [2] - **Product Expansion**: The company has expanded into sports energy beverages, with sales growth of 280% YoY in 2024 and 214% YoY in 1H25 [49][50] Financial Highlights - **Earnings Summary**: - 2023 NP: Rmb2,040 million, EPS: Rmb3.923 - 2024 NP: Rmb3,327 million, EPS: Rmb6.397 - 2025E NP: Rmb4,488 million, EPS: Rmb8.630 [5] - **Valuation Metrics**: High return on equity (ROE) projected at 47.5% in 2024 and over 50% in 2025-2027 [4] Market Dynamics - **Functional Beverage Market Growth**: The functional beverage sector is projected to grow at a CAGR of 11% from 2024 to 2029, with energy beverages accounting for 66.9% of this market [16][19] - **Competitive Landscape**: Eastroc's value-for-money positioning has allowed it to gain market share from premium-priced competitors [3] Strategic Initiatives - **Digital Infrastructure**: The company utilizes a highly digitalized operation with "Five-code Integration" for targeted marketing and efficient sales channel management [3][82] - **Consumer Engagement**: Eastroc employs targeted marketing strategies based on detailed consumer profiling, enhancing brand loyalty and sales performance [79][80] Product Portfolio - **Diverse Offerings**: Eastroc's product range includes energy beverages, sports beverages, tea, coffee, and plant-based protein drinks, catering to various consumer preferences [54][63] - **Flagship Product**: Eastroc Super Drink is a leading product in the energy beverage category, recognized for its quality and affordability [33][74] Marketing and Branding - **Brand Recognition**: The company has established strong brand recognition through effective marketing campaigns and sponsorship of major sporting events [93][94] - **Innovative Packaging**: Eastroc pioneered PET packaging for energy drinks, enhancing convenience and consumer appeal [41][44] Conclusion - **Investment Recommendation**: Coverage initiated with a Buy rating and a target price of Rmb350.50, reflecting expected continued growth and market leadership [1][6]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Solar Energy, specifically focusing on polysilicon production in China - **Context**: The call discusses the implications of new energy efficiency benchmarks set by the Standardization Administration of China (SAC) as part of the anti-involution campaign aimed at consolidating the polysilicon supply chain [1][2] Core Insights - **New Energy Efficiency Benchmark**: A new mandatory benchmark for energy consumption in polysilicon production was released, which is stricter than previous estimates. This benchmark is expected to lead to the shutdown of approximately 1/3 of existing polysilicon production capacity in China, equating to about 1.1 million tons [1][6][8] - **Government's Tactical Move**: The new benchmark is seen as a significant step in the anti-involution process, aimed at removing outdated production capacity and accelerating consolidation within the industry. This is expected to facilitate a quicker commitment from lower-tier players to the capacity buyout plan [2][6] - **Impact on Non-Compliant Producers**: Producers failing to meet at least the level 3 standard will be required to upgrade their production technology within one year or face factory closures [6][8] Company-Specific Insights - **GCL Technology (3800 HK)**: Preferred as it meets the level 1 standard for energy usage. The company recently launched an equity placement at a 9% discount, which was positively received by the market. GCL is expected to be the first to recover during the sector downcycle due to its effective cost reduction and lower power usage [3][6][14] - **Daqo New Energy (DQ US)**: Valued at an undemanding level, with a market cap comparable to its net cash. The company has a USD 100 million share buyback plan, which is seen as a positive catalyst for future performance [3][14] - **Xinte Energy (1799 HK)**: Attractive due to its low price-to-book (PB) valuation. The company is positioned between level 2 and 3 standards [3][6][14] Market Dynamics - **Supply and Demand Rebalance**: The new benchmark is expected to lead to a meaningful rebalancing of supply and demand in the polysilicon market. The anticipated reduction in capacity is viewed as a necessary step to stabilize prices and improve market conditions [6][8] - **Polysilicon Price Trends**: Prices have been increasing since July, indicating a potential recovery in the market as the new regulations take effect [12] Risks and Valuation - **Valuation Risks**: Key risks include a significant drop in polysilicon prices, reduced demand from global buyers due to trade disputes, and rising upstream raw material costs. These factors could adversely affect the valuations of GCL Tech, Daqo, and Xinte [14][14] - **Target Prices**: - GCL Tech: Target price of HKD 1.80, implying a 29.5% upside [14] - Daqo New Energy: Target price of USD 31.00, implying a 13.8% upside [14] - Xinte Energy: Target price of HKD 11.00, implying a 33.5% upside [14] Conclusion - The new energy efficiency benchmarks represent a pivotal moment for the polysilicon industry in China, with significant implications for production capacity, market dynamics, and individual company valuations. The focus on compliance and consolidation is expected to reshape the competitive landscape in the coming quarters [2][6][8]

Summary of Horizon Robotics Conference Call Company Overview - Horizon Robotics is a leading supplier of intelligent driving and edge AI SoC and solutions in China, with over 310 model design wins for its intelligent driving solutions by the end of 2024 [doc id='13']. Industry Insights - The Chinese government is actively promoting the commercialization of L3 intelligent connected vehicles, which is expected to enhance the penetration of advanced driving solutions [doc id='3'][doc id='17']. - Major Chinese automotive OEMs are advancing their intelligent driving technologies, indicating a competitive landscape for Horizon Robotics [doc id='20']. Key Points and Arguments 1. **Optimistic Outlook on HSD Deployment**: - The company has raised its revenue forecast for Horizon SuperDrive (HSD) by 32% to 17% for 2026-2028, reflecting positive feedback from production solution trials and entry into the Robotaxi sector [doc id='1'][doc id='21']. - The stock price has increased by 42% over the past month, outperforming the CSI AI Index by 8 percentage points [doc id='1']. 2. **Strategic Partnerships**: - Horizon Robotics signed a strategic cooperation agreement with Robotaxi manufacturer Hello to develop L4-level intelligent driving solutions, showcasing recognition of its J6P chip and HSD solutions by higher-tier autonomous driving clients [doc id='3'][doc id='16']. 3. **Performance Metrics**: - The HSD solution has achieved a latency of 150 milliseconds and an industry-leading takeover rate in complex urban environments, enhancing confidence in its future performance [doc id='2']. 4. **Valuation Adjustments**: - The target price has been raised to HK$13.20 based on DCF analysis, reflecting higher revenue and cash flow assumptions [doc id='4'][doc id='26']. - The current stock price corresponds to a 20x PS for 2026, which is about 30% higher than major competitors, but the company’s revenue CAGR for 2025-2027 is projected to be 80%, significantly above the industry average [doc id='28']. 5. **Financial Projections**: - Revenue is expected to reach RMB 10.8 billion by 2029, accounting for approximately 60% of its automotive solutions revenue [doc id='21']. - The company anticipates a significant increase in non-automotive solutions revenue, with a CAGR of 103% from 2024 to 2028 [doc id='10']. 6. **Profitability Outlook**: - Horizon Robotics is expected to turn positive in EBIT by 2027, with a projected EBIT margin of 4% by 2028 [doc id='11']. Additional Important Insights - The company’s high R&D expenses, which are 132% of revenue, are a concern compared to peers, where the average is 10-25% [doc id='14']. - The government’s push for intelligent connected vehicles is expected to stimulate consumer demand and technological advancements in the automotive sector [doc id='18']. Conclusion - Horizon Robotics is positioned to benefit from structural trends in the automotive and AI sectors, with optimistic revenue growth forecasts and strategic partnerships enhancing its market position. The valuation remains attractive despite a higher PS ratio compared to competitors, supported by strong growth projections.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Clean Energy, specifically focusing on solar products in China and the Asia Pacific region [1][4] Core Insights and Arguments - **Polysilicon Prices**: - Average price for chunk polysilicon reached Rmb51/kg, reflecting a 2.0% increase week-over-week (WoW) [3][7] - Granular polysilicon prices remained stable at Rmb49/kg [7] - **Wafer and Cell Prices**: - Domestic wafer prices increased by 0-3.8% WoW, with prices ranging from Rmb1.35 to Rmb1.70 per piece [7] - Domestic cell prices remained flat WoW, priced between Rmb0.285 and Rmb0.31 per watt [7] - **Module Prices**: - TOPCon module prices for ground-mounted and distributed projects were stable at Rmb0.67/W and Rmb0.70/W, respectively [7] - Prices for TOPCon modules in the US, EU, and India also remained unchanged, with US prices at US$0.30/W [7] - **Solar Film and Resin Prices**: - Prices for solar films increased by 0-8.1% WoW, while EVA resin prices rose by 0.9-3.5% WoW [7] - POE resin prices remained stable [7] Year-over-Year and Month-over-Month Changes - **Year-over-Year (YoY) Changes**: - Polysilicon prices increased by 27.5% YoY, while wafer prices rose by 25.0% YoY [2] - Cell prices saw a 10.7% increase YoY [2] - TOPCon bifacial module prices decreased by 8.0% YoY [2] - **Month-over-Month (MoM) Changes**: - Polysilicon prices increased by 15.9% MoM, while wafer prices rose by 12.5% MoM [2] - Cell prices increased by 6.9% MoM [2] Additional Important Information - **Market Sentiment**: The clean energy sector, particularly solar products, is viewed as attractive for investment [4] - **Analyst Contacts**: Key analysts involved in the report include Eva Hou, Albert Li, and Estelle Wang, providing insights into the clean energy market [3] Conclusion The clean energy sector, particularly solar products in China, is experiencing price increases across various components, indicating a robust market environment. The stability in module prices and the increase in polysilicon and wafer prices suggest a positive outlook for the industry moving forward.

Summary of Hanbell Precise Machinery Conference Call Company Overview - Hanbell Precise Machinery is a leading supplier of refrigeration compressors, holding approximately 50% market share in the domestic third-party screw compressor market and about 15% in centrifugal compressors [2][12]. Key Industry Insights - The global market for IDC (Internet Data Center) refrigeration compressors is estimated to reach approximately 10 billion RMB by 2025 [2][19]. - IDC demand is expected to drive growth in Hanbell's compressor business, with a projected revenue contribution of 1.19 million RMB in 2025, accounting for 4% of total revenue [2][20]. Core Points and Arguments 1. **Rating Upgrade**: The rating for Hanbell has been upgraded from Neutral to Buy, with a target price raised from 17.80 RMB to 34.80 RMB based on SOTP (Sum of the Parts) valuation method [1][4][53]. 2. **Earnings Recovery**: The company is expected to see a recovery in earnings driven by IDC compressor demand starting in 2026, with projected EPS CAGR of 17% from 2025 to 2029 [1][9][10]. 3. **Revenue Structure Shift**: The revenue contribution from IDC compressors is anticipated to increase from 4% in 2025 to 21% by 2029, indicating a structural shift in revenue sources [3][35]. 4. **Solar Business Impact**: The solar business is expected to decline significantly, with revenue projected to stabilize around 16% of total revenue by 2025 [10][35]. 5. **Market Positioning**: Hanbell's market share in the IDC compressor segment is expected to grow from 1% in 2025 to 10% by 2029, driven by tight HVAC industry capacity and potential partnerships with IDC solution providers [2][20][31]. Financial Projections - **Revenue Estimates**: Projected revenues for Hanbell are as follows (in million RMB): - 2025: 3,168 - 2026: 3,462 - 2027: 3,929 - 2028: 4,489 - 2029: 5,243 [5]. - **Profitability Metrics**: Expected net profit margins are projected to improve, with a forecasted net profit of 1,139 million RMB by 2029 [5][55]. Risks and Catalysts - **Catalysts**: Expansion of IDC market clients and acquisition of new orders are seen as key growth drivers [1][4]. - **Downside Risks**: Potential deterioration in the solar business and delays in IDC business progress could pose risks to the company's performance [1][4]. Additional Important Insights - **Strategic Partnerships**: Hanbell is positioned to benefit from strategic collaborations, such as the partnership with Hon Hai and TECO, which aims to capture broader infrastructure opportunities in the data center sector [29][30]. - **Market Dynamics**: The IDC market is expected to grow significantly, with a projected CAGR of 10-15% in installed capacity, further stimulating demand for refrigeration compressors [19][20]. Conclusion Hanbell Precise Machinery is poised for significant growth in the IDC compressor market, with a favorable shift in revenue structure and strategic partnerships enhancing its market position. The company's rating upgrade reflects confidence in its recovery and growth potential, despite risks associated with its solar business.

Summary of Jiangsu Hengli Hydraulic Conference Call Company Overview - **Company**: Jiangsu Hengli Hydraulic - **Industry**: Heavy Machinery - **Market Cap**: Rmb130 billion / US$18.3 billion - **Shares Outstanding**: 1,305 million - **Current Share Price**: Rmb99.87 (as of 18 September 2025) - **12-Month Rating**: Buy - **12-Month Price Target**: Rmb115.00 (previously Rmb84.00) [7][20] Key Points Industry Dynamics - **Demand Recovery**: The domestic construction machinery market in China is expected to enter an upcycle in 2025, with domestic sales of construction machinery rising by 21.5% YoY in the first eight months of 2025 [10][14]. - **Excavator Sales**: Hengli's production scheduling for excavators was strong, driven by improving demand from domestic OEMs and increased overseas market share [3][10]. Financial Performance - **Earnings Growth**: EPS estimates for 2025-2027 have been raised by 8-11% due to stronger growth assumptions in the excavator cylinder and pump & valve segments [2][17]. - **Revenue Projections**: Revenue for 2025 is projected at Rmb10,266 million, with a CAGR of 21% expected from 2025-2027 [6][18]. - **Profitability Metrics**: EBIT margin is expected to improve from 26.9% in 2025 to 30% in 2027, with ROIC projected to rise from 32.6% to 37.7% during the same period [6][21]. Product Segments - **Excavator Business**: Revenue from excavators is expected to grow at a CAGR of 22% from 2025-2027, with significant contributions from the cylinder and pump & valve segments [27]. - **Screw Products**: The ball screw and roller screw segments are anticipated to become significant growth drivers, with the ball screw expected to contribute 11% of total revenue by 2029E [4][15]. Valuation Changes - **Valuation Methodology**: The valuation method has shifted from PE to SOTP (Sum of the Parts) to better reflect the potential of the screw businesses [19]. - **Price Target Adjustment**: The price target has been lifted to Rmb115.00, implying a 42x PE for 2026E, which is higher than the average of peers in the humanoid robot sector [20][21]. Risks and Considerations - **Geopolitical Risks**: There is uncertainty regarding construction machinery exports to the US and EU due to potential trade restrictions [10]. - **Market Competition**: Hengli is ranked as a top competitor in the industry, but there are concerns about the fundamentals of lower-ranked companies like Dingli [10][14]. Additional Insights - **Technological Advancements**: Hengli is focusing on technological strengths to capitalize on the humanoid robotics market, although this segment is still in early development [15][16]. - **Market Share Gains**: Continued share gains in the cylinder and pump & valve markets are expected, with potential breakthroughs in the screw businesses not fully priced into the current valuation [2][14]. Conclusion Jiangsu Hengli Hydraulic is positioned for strong growth in the heavy machinery sector, driven by recovering demand, robust financial performance, and strategic advancements in product offerings. The company's valuation reflects optimism about its future earnings potential, particularly in the excavator and screw product segments.

Summary of Yuyue Medical Conference Call Industry Overview - The respiratory health market in China has significant growth potential, with approximately 110 million COPD patients and 210 million OSA patients. However, the current penetration rate is less than 1%, compared to about 20% in the United States, indicating a vast opportunity for future growth [2][4]. Company Performance - Yuyue Medical's respiratory oxygen products experienced a year-on-year growth of approximately 60%, with overall respiratory product growth exceeding 30%. Sales of nebulization products also grew over 60%, showcasing strong momentum in the respiratory health sector [2][3]. Core Business Segments - Yuyue Medical, established in 1998, primarily offers home medical devices. Its core business segments include respiratory oxygen, blood glucose monitoring, POCT (point-of-care testing), and infection control, with over 600 product types and more than 10,000 specifications [3]. Market Dynamics - The business model for respiratory machines, which includes both equipment and consumables, shows high user stickiness. Equipment has a usage cycle of 5-6 years, while consumables need to be replaced every six months. The key competitive barriers are brand, channel, and supply chain [4]. Product Development - In the oxygen machine sector, Yuyue Medical has a significant brand advantage and is continuously upgrading its technology. In blood glucose monitoring, the CGM product CT5 has been launched and received positive sales feedback, with potential to replicate the success of traditional BGM [5][6]. Strategic Acquisitions - Yuyue Medical entered the AED market through the acquisition of German company Pumacon, benefiting from the gradual increase in the domestic configuration ratio of external defibrillation devices. The company is also actively developing the necessary equipment for optical clinics [7]. Competitive Advantages - Yuyue Medical's core competitive strengths include robust product capabilities, years of brand accumulation, continuous technological iteration, channel empowerment, and proactive overseas market expansion, covering 131 countries and regions. The establishment of a subsidiary in Germany serves as a research and manufacturing center [8].

Summary of the Conference Call for Aoyuan (奥瑞金) Company and Industry Overview - **Company**: Aoyuan (奥瑞金) - **Industry**: Metal packaging, specifically focusing on two-piece cans Key Points and Arguments 1. **Market Share and Competitive Position**: After acquiring COFCO Packaging, Aoyuan has expanded its market share, enhancing its competitive position in the industry. The combined market share with COFCO is close to 40%, leading to a more stable competitive landscape and improved bargaining power with downstream brand owners [2][4][7] 2. **Profitability Challenges**: In the first half of 2025, Aoyuan's operating profit was only 4 billion RMB, which is below expectations. The overall profit for 2025 is projected to be around 8 billion RMB, primarily due to ongoing losses in the domestic two-piece can market [2][6] 3. **Future Profit Projections**: If Aoyuan successfully implements price increases and realizes the benefits of its overseas expansion, net profit could reach approximately 13 billion RMB in 2026, with a potential valuation increase to 17-20 times PE [5][13] 4. **Industry Dynamics**: The domestic two-piece can market is expected to gradually return to a break-even or slightly profitable state. Each increase of one cent in net profit could yield an additional 200 million RMB in net profit, significantly improving the current profit level [7][8] 5. **International Market Potential**: The global metal two-piece can industry has a higher gross profit margin, with net profit margins close to 10%. In contrast, the domestic market faces challenges due to oversupply and intense competition, making it difficult to improve profit margins [9][10] 6. **Strategic Expansion Plans**: Aoyuan is actively pursuing an overseas expansion strategy, planning to establish new production lines in Southeast Asia, Central Asia, and the Middle East. Collaborations with partners like Ball Corporation are aimed at controlling capital expenditures and sharing investment returns [11][12] 7. **Long-term Outlook**: The long-term outlook for Aoyuan and the industry is optimistic. The acquisition of COFCO is expected to lead to price increases and improved profitability in the domestic market, while international expansion will further enhance scale and market share [13][14] 8. **Investment Timing**: Current market conditions present a favorable opportunity for investors to consider Aoyuan and related companies. The potential for significant profit growth and a relatively low valuation make it an attractive investment [14][15] Additional Important Insights - **Historical Context**: The domestic metal two-piece can industry has faced challenges due to overcapacity, leading to weak bargaining power and low profit margins. However, recent mergers and acquisitions are expected to change this dynamic [10] - **Performance Metrics**: The current factory price per can is approximately 0.4 RMB, and any increase in profit per can directly correlates to net profit margins [8]