Summary of Key Points from the Conference Call Industry and Company Overview - The report focuses on the European SMID (Small and Mid-cap) stocks and their resilience against AI disruption, particularly in the context of generative AI technologies [2][5]. Core Insights and Arguments - A proprietary AI Displacement Risk framework was introduced, rating 184 European SMID stocks from 0 (no/very low AI moat risk) to 4 (very high risk) [5]. - Eight "AI risk-proof" stocks were identified, which are fundamentally attractive and have the potential for performance catch-up against their peers [2][8]. - The selected stocks are characterized by durable competitive advantages that are not easily disrupted by AI technologies [8]. Specific Company Insights 1. **Asmodee**: - AI tools cannot replace the appeal of physical board games, but can enhance development and productivity. The stock was added to the top picks on January 21 [4]. 2. **BAM Groep**: - Operates in a sector where execution and client relationships are key, with AI serving as a tool rather than a competitive threat [4]. 3. **Bunzl**: - Value creation is based on physical logistics, indicating no AI threat to its competitive moat [4]. 4. **EasyJet**: - The core strengths lie in tangible assets like airport slots, with AI enhancing operational efficiency rather than posing a threat [4]. 5. **Enagás**: - Minimal structural impact from AI due to its regulated role as Spain's gas transmission operator [4]. 6. **Flughafen Zürich**: - Largely insulated from AI disruption, with only mild long-term pressure anticipated on business travel [4]. 7. **Merlin Properties**: - Transitioning towards becoming a major data center owner-operator, presenting a compelling opportunity in AI infrastructure [4]. 8. **Princes Group**: - Operates in a capital-intensive food processing environment, where value is driven by scale and relationships rather than digital processes [4]. Additional Important Insights - The "0" risk category stocks have shown solid positive returns, outperforming those with higher AI exposure [6]. - The report emphasizes the importance of distinguishing between companies with durable moats and those that may be vulnerable to AI disruption [8]. - The average year-to-date performance of the selected low-risk stocks was calculated, highlighting the potential for re-rating among underperformers [7][9]. Performance Metrics - The average performance of the selected stocks rated with the lowest risk of AI displacement was noted to be 7.1% year-to-date [10]. Conclusion - The report provides a focused selection of stocks that are expected to perform well despite the rise of AI technologies, emphasizing the importance of fundamental analysis in identifying resilient companies [8].

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Technology – Software & Services in Europe - **Current Sentiment**: Shift from AI-fueled optimism to concerns about disruption, despite resilient long-term fundamentals in the software sector [1][1] Company-Specific Insights RELX - **Current Position**: Trading at 50% off its highs, but well-positioned to navigate market nervousness - **FY25 Results**: Initial piece of valuation multiple recovery; EPS forecasts increased by 1-3% based on updated buyback assumptions - **Valuation**: 12.7x FY27 adjusted P/E; rated as Overweight [2][2] Adyen - **Growth Guidance**: FY26 growth guidance disappointed, raising questions about long-term growth potential - **Investor Confidence**: May take time to restore confidence, but long-term opportunities remain positive; rated as Overweight - **Recent Performance**: Slightly weaker 4Q and 2026 guidance noted [3][3][4] Capgemini - **FY25 Results**: 4Q performance better than expected with approximately 4% organic growth versus 2.2% expected - **FY26 Guidance**: Weaker free cash flow (FCF) guidance at €1.8-1.9 billion compared to market expectations of around €2 billion due to restructuring impacts [5][5] Dassault Systemes - **Performance**: 4Q25 results missed expectations on both top and bottom lines - **FY26 Guidance**: Revenue growth guidance of 3-5% at constant currency, which may lead to consensus cuts of approximately 2 percentage points [6][6] Other Companies - Results were also reported for SoftwareOne, TeamViewer, and Tieto, but specific details were not provided in the summary [7][7] Market Dynamics - **Investor Sentiment**: The software sector is experiencing high volatility, with a notable decline in confidence attributed to concerns over sustainability and terminal value of companies in the sector [1][1][4] - **Valuation Trends**: The software and information services sector is currently de-rated, reflecting broader market concerns [4][4] Forward Guidance - **General Trends**: Companies are providing varied growth forecasts, with some expecting moderate growth while others face challenges in meeting market expectations [14][14][16][16] - **Adyen's Long-Term Ambition**: Aiming for annual net revenue growth of approximately 20% post-2026, with EBITDA margins expected to exceed 55% by 2028 [16][16] Conclusion - The software and services sector in Europe is currently facing a confidence crisis, with mixed results from key players. While some companies like RELX and Adyen show potential for recovery, others like Capgemini and Dassault Systemes are grappling with restructuring impacts and disappointing guidance. The overall sentiment reflects a cautious outlook amidst high volatility and investor concerns about long-term growth sustainability.

Summary of Conference Call Notes Industry Overview - The discussion centers around the **Chinese economy** and its inflation dynamics, particularly focusing on the **Producer Price Index (PPI)** and its implications for various sectors [1][2][11]. Key Points and Arguments PPI and Economic Dynamics - Recent improvements in the **PPI** have sparked discussions about whether China has made significant strides in addressing **anti-involution** and **capacity cuts**, leading to a better supply-demand balance. However, progress is described as modest and concentrated in a few upstream categories [2][6]. - The **upstream PPI** has improved due to global factors, but the pass-through effect to downstream sectors and consumers remains weak, indicating that demand is still lacking [1][11]. Investment Trends - Investment in oversupplied sectors is slowing, but the overall investment discipline is not decisively tightening, as indicated by the upcoming **15th Five-Year Plan (FYP)** [6][7]. - The **real gross capital formation** shows a slowdown but not a slump, suggesting that final demand remains resilient despite the deceleration in aggregate investment growth [7][10]. Capacity Cuts and Sector Analysis - Limited production curbs have been observed in coal and selected metals, which may temporarily lift upstream prices but do not equate to permanent capacity closures [3][6]. - The industrial landscape has changed since 2015, with intense competition in downstream sectors making broad-based capacity retirement difficult. Anticipated capacity consolidation in the polysilicon sector is expected to be smaller and narrower in scope than previously thought [9][12]. Final Demand and Consumption - The third stage of China's reflation journey, which involves boosting final demand, is still missing. Current consumption support is modest, and without a stronger lift to household consumption, firms' pricing power will remain constrained [10][12]. - Downstream margins are under pressure, with profit margins in these sectors falling to record lows due to challenges in absorbing input cost pressures amid weak final demand [12][21]. Economic Outlook - The base case for 2026 suggests a slow march towards lowflation rather than a robust reflation, with underlying issues such as overcapacity and a soft labor market continuing to pose challenges [11][12]. - Recent PPI improvements are primarily driven by upstream sectors, with limited pass-through effects to downstream sectors, indicating that supply-side reforms alone may not suffice for a broad-based economic recovery [12][11]. Additional Important Insights - The **polished industrial policy** continues to support strategic capacity, sustaining investment even as legacy sectors cool, reflecting ongoing geopolitical tensions and supply chain vulnerabilities [12][11]. - The overall economic environment suggests that while there are pockets of pricing improvement, the durability and breadth of these changes require close monitoring [11][12].

Summary of Conference Call Notes Industry Overview - **Industry**: China Financials - **Market Sentiment**: Attractive outlook for the industry [5] Key Points on Payment Growth - **NetsUnion and UnionPay Performance**: - Payment growth for NetsUnion and UnionPay moderated to **9.3%** year-over-year (yoy) and **8.7%** yoy in 4Q25, down from **17.9%** yoy and **15.4%** yoy in 3Q25, respectively [2][8] - This moderation aligns with a slowdown in official retail sales growth, which decreased to **3.7%** yoy from **4.5%** yoy in the previous quarter [8] - **Bank Card Consumption**: - Bank card consumption payments remained weak, showing a decline of **1.5%** yoy in 4Q25, although it was more stable compared to online payment channels [3][8] - Bank card payments account for approximately **50%** of all consumption payments [8] - **Total System Payment Volume**: - Growth in total system payment volume moderated to **5%** yoy in 4Q25, following a rebound to **15%** yoy in 3Q25 [10][8] Factors Affecting Payment Growth - **Consumption Shift**: - There is a notable shift in consumption payments towards online channels, impacting traditional bank card usage [9] - **Banking Sector Caution**: - Banks are being conservative in credit card loan allocations to manage retail risks, which may lead to continued weakness in bank card fees and consumption credit growth in 2026 [3][9] Additional Insights - **Impact of Subsidies and Regulations**: - The decline in consumption trade-in subsidies and VAT tax examinations of online retailers have contributed to the slowdown in payment growth [2] - **Future Outlook**: - Despite the current moderation, the overall sentiment remains that the banking sector's earnings may not be significantly impacted by the weak growth in bank card fees and consumption credit [3] Conclusion - The data from 4Q25 indicates a moderation in payment growth across key platforms, reflecting broader economic trends and shifts in consumer behavior towards online payments. The banking sector is expected to remain cautious in its lending practices, which may influence future growth dynamics in the financial services industry in China.

Summary of Cybersecurity Industry Conference Call Industry Overview - The cybersecurity sector in North America is currently facing mixed performance, with an average decline of 16% year-to-date (YTD), slightly outperforming the broader software market which is down 20% [7][9]. - The industry is experiencing a significant opportunity with AI, estimated at $45 billion, as the threat landscape evolves and attacker capabilities increase [7]. Key Companies Discussed 1. **Palo Alto Networks (PANW)** - Expected to shine in the upcoming quarter, particularly after recent acquisitions [3][8]. - Positioned well to compete against cloud cost narratives [3]. 2. **CrowdStrike (CRWD)** - Favorable outlook due to minimal M&A or memory concerns, with strong growth potential [3][7]. - Anticipated to outperform in the upcoming quarter [3]. 3. **Zscaler (ZS)** - Currently on the sidelines due to unclear organic growth metrics, particularly regarding the Red Canary acquisition [11][12]. - Despite concerns, checks indicate strong demand for core offerings and AI security portfolio [12]. 4. **Okta (OKTA)** - Mixed sentiment among investors, focusing on growth opportunities and competitive dynamics against Microsoft [13][14]. - Stable performance with a solid pipeline for identity-related offerings [13]. 5. **SailPoint (SAIL)** - Despite a recent decline in stock price, the company shows potential for growth with strong partner feedback on product adoption [15]. - Expected to maintain mid-high 20% total ARR growth in 2026 [15]. 6. **SentinelOne (S)** - Improved checks with strong renewal trends and traction for AI offerings, though competitive dynamics remain challenging [16][17]. - Expectations for modest upside in revenue growth, contingent on maintaining investor confidence [17]. 7. **Netskope (NTSK)** - Underperformed the market but shows stable demand and competitive positioning in the SASE market [18]. - Anticipated ARR growth of over 30% YoY in the upcoming quarter [18]. Core Insights and Arguments - The cybersecurity sector is expected to benefit from AI advancements, with platforms like PANW and CRWD positioned to leverage this growth [3][7]. - Companies that are consolidating market share and are well-exposed to growth themes are likely to perform better in the current environment [3]. - The performance of cybersecurity stocks is being influenced by broader market trends and investor sentiment, particularly regarding risk assets [18]. Additional Important Points - The upcoming earnings reports for several companies are expected to show potential upside surprises in ARR and revenue growth, indicating a positive outlook for the sector [21]. - The competitive landscape remains challenging, with larger players like Microsoft impacting smaller vendors [13][14]. - The overall sentiment in the cybersecurity market is cautious, with investors closely monitoring organic growth metrics and competitive dynamics [12][17]. This summary encapsulates the key points discussed in the conference call regarding the cybersecurity industry and its major players, highlighting both opportunities and challenges ahead.

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **AI** industry, specifically the themes of **AI Adopters** and **AI Infrastructure**. Concerns regarding **AI disruption** are affecting various service industries, including financial advisory and brokerage [2][4]. Core Insights - **AI Disruption Concerns**: Market fears about AI disruption have expanded beyond software to include a broader range of service industries. This has led investors to reassess the earnings durability of service-oriented business models, impacting their performance [2]. - **Service Exposure**: The concept of 'service exposure' has emerged as a critical factor influencing thematic performance. The analysis categorizes 25 GICS Industry Groups into Service and Non-Service categories, revealing that portfolios with higher service exposure have underperformed [3]. - **Performance Metrics**: The **AI Adopters** sub-theme has a service exposure of **53%**, significantly higher than other themes. This high exposure introduces uncertainty regarding competitive dynamics and pricing sustainability, which is reflected in current market pricing [4]. - **AI Infrastructure**: In contrast, the **AI Infrastructure** theme has the lowest service exposure at **14%** and has shown the strongest year-to-date performance. This theme is less vulnerable to service disruption risks and benefits from ongoing capital expenditure and demand for compute, semiconductors, and enabling hardware [5]. Quantitative Analysis - Six quantitative lenses are used to evaluate the attractiveness of themes: 1. Information ratio 2. Earnings revision breadth 3. Bottom-up estimates 4. Valuation 5. Mutual fund positioning 6. Factor exposures - **AI Infrastructure** stands out with strong risk-adjusted performance, favorable earnings revisions, and positive fund positioning among outperforming mutual funds [6]. Additional Insights - The year-to-date performance of thematic portfolios is inversely related to their service exposure, indicating that lower service exposure correlates with better performance [3][8]. - The report emphasizes the importance of being selective within the **AI Adopters** theme, recommending a focus on companies that possess pricing power to navigate the uncertainties introduced by AI adoption [4]. Conclusion - The analysis indicates a clear distinction between the performance and risk profiles of **AI Adopters** and **AI Infrastructure**. Investors are advised to consider service exposure as a key factor in their investment decisions within the AI sector [2][5].

Summary of Key Points from the Conference Call Industry Overview: Chinese Banking Sector Key Financial Metrics 1. **Total Social Financing (TSF) and New Loans**: In January 2026, new TSF reached Rmb 7.2 trillion, an increase of Rmb 0.2 trillion year-on-year, while new loans totaled Rmb 4.7 trillion, a decrease of Rmb 0.4 trillion year-on-year, reflecting a growth rate of 6.1% [5][12][13] 2. **Outstanding Balances**: Outstanding balances for TSF and new loans expanded by 8.2% and 6.1% year-on-year, respectively, compared to 8.3% and 6.3% in December 2025 [1][5] Retail and Corporate Loans 3. **Retail Credit**: Retail credit saw a new increase of Rmb 0.5 trillion, with a growth rate of 0.5%. New retail short-term loans increased by Rmb 0.1 trillion, while medium-to-long-term loans increased by Rmb 0.35 trillion, indicating weak household mortgage demand due to declining property prices [1][2] 4. **Corporate Loans**: New corporate loans amounted to Rmb 4.5 trillion, a year-on-year decrease of Rmb 0.3 trillion, with a growth rate of 8.7%. The decline was attributed to weaker credit demand and a shift towards bond financing [2][5] Deposit Growth 5. **Deposit Increases**: Deposits achieved a strong net growth of Rmb 8.1 trillion, a year-on-year increase of Rmb 3.8 trillion, corresponding to a growth rate of approximately 10%. Retail deposits increased by Rmb 2.1 trillion, while non-bank financial institution deposits rose by Rmb 1.5 trillion [6][12] 6. **Deposit Migration**: A notable shift from deposits to non-deposit financial products was observed, attributed to maturing time deposits at the beginning of the year. This "deposit migration" is expected to have limited impact on the stability of bank liabilities and funding costs [6] Monetary Indicators 7. **M1 and M2 Growth Rates**: M1 and M2 growth rates were reported at 4.9% and 9.0%, respectively, indicating a month-on-month rebound. The narrowing of the M1-M2 gap was likely influenced by the timing of the Lunar New Year and improved capital market performance [6][10] Future Expectations 8. **Outlook for 2026**: Banks anticipate that corporate loans will remain the primary driver of new credit in 2026, despite the current challenges in the retail loan sector [3] Additional Insights 9. **Government Bond Issuance**: The increase in TSF was driven by front-loaded government bond issuance of Rmb 1.0 trillion, which saw a year-on-year increase of Rmb 0.3 trillion [5] 10. **Impact of Central Bank Policies**: The People's Bank of China (PBOC) has expanded consumer loan interest subsidy policies, which may have contributed to the slight increase in retail short-term loans [1] This summary encapsulates the critical financial metrics, trends, and expectations within the Chinese banking sector as discussed in the conference call.

February 13, 2026 02:20 AM GMT China Industrials | Asia Pacific Catalyst Driven Idea - Tesla Optimus Gen 3 Launch Tesla's Gen 3 Optimus is likely to be unveiled in 1Q26. We anticipate that enhancements in hand dexterity and body structure could benefit the China humanoid value chain. What and when is the catalyst? Tesla (covered by Andrew Percoco) has signaled an upcoming Gen 3 Optimus unveil by 1Q26. The China supply chain is highly sensitive to Optimus updates, as indicators of broader industry progress, ...

Summary of Conference Call Notes Industry Overview - **Industry**: Capital Goods, specifically focusing on the **Data Center** sector in Europe - **Key Topic**: Transition to **800vDC data center architecture** and developments in **Solid State Transformers (SST)** Core Insights and Arguments 1. **Investor Interest**: There has been a significant increase in investor interest regarding the shift to 800vDC data center architecture since the initial report in September 2025, with many analysts focusing on this topic during Q4 earnings calls [3][1] 2. **Leading Companies**: Delta Electronics and Eaton are identified as global leaders in the 800vDC space, while European suppliers are still debating their positioning [1][2] 3. **Revenue Growth**: Companies in the capital goods sector reported exceptional growth in data center orders for Q4 2025, with Vertiv at +252%, Eaton at +200%, and ABB at approximately +140% [11] 4. **Market Size Projections**: The global co-location capital expenditure is expected to grow by **+109% YoY** in 2026, significantly higher than previous forecasts [19][16] 5. **SST Development**: The competition in SST development is intensifying, with Delta and Eaton generating revenue from SST products, albeit at a small scale. Other companies like GE Vernova and JST are in testing phases [8][2] 6. **Future Penetration Rates**: Estimates suggest a **30% penetration rate** of 800vDC in all data centers by 2030, with ABB projecting a more aggressive **40-50%** [10] 7. **Company Strategies**: Legrand anticipates that the architecture shift will be neutral to negative for 20% of its DC products but neutral to positive for 80%. They have strategies in place to address product gaps [9] Additional Important Points 1. **Medium-Voltage Suppliers**: Companies with existing DC know-how are better positioned to adapt to the new architecture, while others may need to evolve significantly [7] 2. **Gradual Transition**: The transition to 800vDC will take time, with intermediate technologies expected to play a role before full adoption [9] 3. **Liquid Cooling Market**: The liquid cooling market is projected to reach **$2.5 billion** in 2025, growing at **+127% YoY** [28] 4. **Analyst Ratings**: Morgan Stanley maintains an **Overweight** rating on Schneider and Legrand, with **Equal-weight** ratings on ABB and Siemens, indicating a positive outlook for these companies in the data center space [2] This summary encapsulates the key insights and developments discussed in the conference call, highlighting the ongoing transition in the data center industry and the competitive landscape among key players.

Summary of Key Points from the Conference Call Industry Overview - The discussion centers around the **AI industry** and its impact on the broader **technology sector** and **credit markets**. The debate on whether AI is merely hype or a transformative technology has shifted towards the latter as of 2026, supported by strong earnings reports from major hyperscalers [2][3]. Core Insights - **AI Investment Surge**: The 4Q earnings reports from large hyperscalers indicate a significant commitment to AI, with projected capital expenditures (capex) for hyperscalers reaching **$740 billion in 2026**, up from **$570 billion** at the beginning of the year. This reflects a growing demand for computing resources that exceeds supply [4][5]. - **Future Capex Dynamics**: Less than **20%** of the forecasted AI investment by **2028** has been spent, indicating substantial future spending. The upcoming phase of investment will increasingly rely on credit markets rather than equity funding due to the scale of required capex [5]. - **Record Bond Issuance**: Investment-grade (IG) bond issuance is expected to reach a record **$2.25 trillion in 2026**, driven by AI-related capex and increased M&A activity. This surge may widen IG spreads but does not signal an end-of-cycle dynamic [6]. Market Reactions - **Disruption Risks**: There is growing anxiety in the markets regarding the disruptive potential of AI, particularly in the software sector, which has already seen a **23% decline** in the S&P Software Index year-to-date, contrasting with a flat performance in the broader S&P 500 [10]. - **Credit Market Impact**: The software sector's struggles are affecting credit markets, especially US leveraged loans and business development companies (BDCs), with software loans down approximately **3.4%** year-to-date [10]. The concentration of rapid expansion in lower-rated, highly leveraged issuers complicates risk assessment in leveraged credit [10]. Future Outlook - **Sector Sentiment**: Weak sentiment in the software sector is expected to persist, with uncertainty about which companies may face existential risks as AI adoption progresses. While defaults remain low currently, a rise in defaults could lead to recoveries below historical averages due to the asset-light nature of many affected companies [11]. Additional Insights - The report emphasizes the importance of understanding the financial health and operational fundamentals of private companies in the software sector, as transparency is often limited [10]. This summary encapsulates the critical points discussed in the conference call, highlighting the transformative potential of AI, the implications for capital markets, and the ongoing challenges faced by the software sector.