Industry and Company Overview * **Industry**: China Software and IT Services * **Focus**: GenAI, AI adoption, and its impact on various sectors * **Key Companies**: Kingsoft Cloud, iFlytek, Kingsoft Office, VNET, Envicool, Huawei, Xiaomi, ByteDance, and others Key Points 1. GenAI Progress and Adoption * **GenAI Models**: Chinese GenAI models, such as ByteDance Doubao and DeepSeek v3, have shown significant improvements in reasoning and multimodality capabilities, closing the gap with global leaders like OpenAI's GPT-4. * **Training Efficiency**: Innovations in software and hardware have significantly reduced the training and inferencing costs of GenAI models, making them more accessible and cost-effective. * **AI Adoption**: AI adoption is expected to accelerate in 2025, driven by improved model performance, lower costs, and increased user comfort with AI-enabled interfaces and applications. 2. AI Cost Efficiency and Industry Participation * **Cost Efficiency**: Lower AI costs are expected to attract more industry participants and users, leading to a flourishing AI ecosystem. * **Vertical and Light-Edge Models**: These models provide cost-effective and customizable solutions for various industry customers and consumer electronics, further driving AI adoption. 3. Well-Positioned Companies * **Kingsoft Cloud**: Benefits from robust AI compute demand, especially from Xiaomi's investments in edge AI and autonomous driving. * **Kingsoft Office and iFlytek**: Beneficiaries of faster AI penetration in cloud and edge applications. * **VNET**: Market share winner in the data center market, riding the AIDC demand from hyperscalers. 4. AI CapEx and Data Centers * **AI CapEx**: Expected to increase in 2025 due to competition among tech giants and usage spikes. * **Data Centers**: Third-party IDC demand is expected to recover driven by hyperscalers' GenAI investments and stable in-house IDC construction. * **Envicool**: Well-positioned to gain market share in liquid cooling due to increasing demand for high-power-density IDCs. 5. AI Adoption in Consumer and Enterprise Markets * **Consumer Market**: AI adoption is rapidly ramping up, with consumer electronics becoming a new battleground. Examples include AI-enabled wearables, toys, notepads, and smart car cockpits. * **Enterprise Market**: More AI projects are moving from proof of concept to production, with SOEs taking the lead. Finance, energy, telcos, manufacturing, and healthcare industries are leading the AI adoption. 6. Agentic Workflow and AI Commercialization * **Agentic Workflow**: LLMs are being optimized for agentic workflows, enabling more reliable and efficient AI applications. * **AI Commercialization**: AI commercialization among enterprise software companies is at an early stage, with many companies offering free AI features to encourage user engagement and pilot projects. 7. Valuation and Risk * **Valuation**: The China software sector is currently trading at a discount compared to its historical average PE, reflecting investor concerns over limited access to advanced GPUs and lower willingness to pay for software and AI applications amid macro pressures. * **Risk**: Investing in the technology and AI sector involves a high degree of risk, including rapid technological changes, increasing competition, and exposure to macroeconomic cycles.

ab 10 January 2025 Powered by YES UBS Evidence Lab Global Research China 360 Household habits - new survey insights Smaller cities more upbeat In most categories, the share of consumers spending more in the past six months has been stronger in tier-3 cities than tier-1/2. In some segments, the trends clearly diverge: while the data suggest a rebound in the share of tier-3 consumers spending more on baijiu, this figure barely budged in higher-tier cities. The same pattern is evident in beer and soft drinks, ...

January 10, 2025 09:12 AM GMT Sustainability Around the Globe | Investors' Key Focus Areas in 4Q24 M Inside this report we share recaps of our most read notes in 4Q24 as well as investors' feedback. Next we list focus areas by readership and upcoming relevant events hosted/co-hosted by our team. Powering Digital Infrastructure : We recap trends in de-bottlenecking solutions for power demand, growing demand for new natural gas-fired power generation and related infrastructure, power "additionality" considera ...

FICC Research Economics 10 January 2025 US Outlook When tempest tossed, embrace chaos Winds are blowing, literately and figuratively, intensifying uncertainty about what the flood of upcoming policy announcements on January 20 will mean for activity and rates. With activity resilient and disinflationary confidence intact, the FOMC seems content to downplay rate hikes. As the page turns to 2025, a figurative tempest... Much has happened since our most recent publication, on December 20, living up to expectat ...

Summary of the Thematic Equity Strategy Conference Call Industry and Company Overview - The conference call focuses on the **US Growth** sector, particularly the **NASDAQ-100** index and its associated stocks, emphasizing the **Growth at a Reasonable Price (GARP)** strategy. Core Points and Arguments 1. **Reverse DCF Framework**: The reverse DCF approach is utilized to assess growth rates that markets may be pricing into stocks, which helps define the GARP strategy. This method involves making assumptions about discount rates and terminal multiples to solve for cash flows that equate net present value to price [1][2][28]. 2. **Market Volatility**: The current market setup indicates a high percentage of NASDAQ-100 market capitalization is facing difficult implicit growth setups, leading to expectations of increased volatility in the US Growth sector [3][30]. 3. **GARP Strategy**: During periods of volatility, the GARP strategy is emphasized, focusing on stocks where consensus estimates align or exceed market-implied growth rates, potentially reducing reliance on continuous earnings beats to outperform [4][10]. 4. **Citi Research Baskets**: Citi has created three GARP baskets based on reverse DCF screening for the NASDAQ-100 and top growth themes, including AI, Digital Leisure, FinTech, Video Gaming, and Wearable Tech [5][12]. 5. **Magnificent 7 Analysis**: The analysis of the "Magnificent 7" (META, AMZN, GOOGL, AAPL, MSFT, NVDA, TSLA) shows varying growth setups, with META having the least onerous setup, while AAPL, MSFT, and TSLA may require stronger performance to meet market expectations [6][35]. 6. **S&P 500 Outlook**: A target level of 5700 for the S&P 500 is suggested to balance risk-reward dynamics, with a current fair value range around 5500 [8]. 7. **Interest Rate Impact**: The higher valuation segment of the market, particularly the NASDAQ-100, is facing headwinds from rising interest rates, contributing to a more significant pullback compared to the broader S&P 500 [9]. 8. **Valuation Metrics**: The NASDAQ-100 is currently at top decile valuation levels, with forward earnings growth expectations also at 20-year highs, leading to a middling PEG ratio compared to historical data [13][14]. 9. **Growth Themes Performance**: The top growth themes (AI, Digital Leisure, FinTech, Video Gaming, Wearable Tech) are highlighted for their attractive growth trajectories and reasonable valuations, although AI is noted to have the toughest growth setup [40][46]. Important but Overlooked Content 1. **Market-Implied Growth Setup**: The current market-implied growth expectations for the NASDAQ-100 are more challenging than in previous years, indicating a need for stocks to exceed analyst expectations to perform well [27][30]. 2. **Sector Allocations**: The sector allocations within the GARP baskets reveal a significant concentration in Information Technology, particularly in the cap-weighted basket [59][66]. 3. **Investment Strategy**: Investors are advised to selectively add growth names on pullbacks, with an acknowledgment of potential volatility ahead, suggesting a cautious approach to broader positioning [67]. This summary encapsulates the key insights and strategic recommendations from the conference call, providing a comprehensive overview of the current landscape in the US Growth sector and the NASDAQ-100 index.

J P M O R G A N Global Markets Strategy 11 January 2025 The J.P. Morgan View All Eyes on US: Balancing the AI Cycle, Trump Policies and a Narrowing Fed Path; Special Focus on Japan The broad and dominant theme of our 2025 macroeconomic and markets outlook remains the continuation of US exceptionalism. This should be reinforced this year by the AI theme, potential deregulation and changes in trade, fiscal and energy policies. Technological innovation and the broadening of the AI cycle will remain an importan ...

10 January 2025 | 2:45PM JST Japan Economics Analyst Impact of US-China Tariffs: Can Japan Benefit? (Ota) Tomohiro Ota +81(3)4587-9984 | tomohiro.ota@gs.com Goldman Sachs Japan Co., Ltd. Akira Otani +81(3)4587-9960 | akira.otani@gs.com Goldman Sachs Japan Co., Ltd. Yuriko Tanaka +81(3)4587-9964 | yuriko.tanaka@gs.com Goldman Sachs Japan Co., Ltd. Andrew Tilton +852-2978-1802 | andrew.tilton@gs.com Goldman Sachs (Asia) L.L.C. Investors should consider this report as only a single factor in making their inves ...

Summary of Trip.com Group Ltd Conference Call Company Overview - **Company**: Trip.com Group Ltd (Ticker: TCOM.O) - **Industry**: China Internet and Other Services - **Market Cap**: US$44.224 billion - **Current Share Price**: US$64.90 (as of January 8, 2025) - **Price Target**: US$81.00, representing a 25% upside potential Key Points 1. Operational Performance - 4Q24 operations were on track, with management confident about revenue growth in the teens for 2025, supported by stable domestic hotel Average Daily Rate (ADR), outbound recovery, and market share gains [1][2][4] - Domestic hotel ADR remained flat year-over-year (YoY) in 4Q24, outperforming the industry which saw a low-single-digit decline [2] 2. Revenue Growth Drivers - Management expects stable ADR in 2025 due to slowing hotel supply growth and a continued strong leisure demand, which constitutes 70-80% of total demand [2] - Corporate travel budgets are expected to remain flat in 2025 [2] 3. Air Ticketing and Travel Consumption - Air ticketing volume grew in high single digits YoY in 4Q24, aligning with industry trends, while prices normalized YoY [3] - Despite recent air crash incidents, travel consumption on the platform remains resilient, with increased spending per user in 2024 [3] 4. Outbound Travel Recovery - Outbound travel growth in 2025 is projected to exceed pre-COVID normalized levels, with international air capacity expected to recover to 100% of 2019 levels by year-end 2025 [4] - The company's recovery rate is 120% compared to 2019, significantly outperforming the industry by 35-40 percentage points [4] 5. Market Share and Tour Offerings - Packaged tours have only recovered to 50-60% of pre-COVID levels, but the rise of self-guided tours is helping the company gain market share in both domestic and outbound travel [5] - Trip.com aims to increase revenue without compromising overall profitability, focusing on volume growth with a take rate of 7-8%, compared to global peers at 15-16% [6] 6. Shareholder Returns - Management plans to enhance total shareholder return from the current 20% of free cash flow (FCF) through a combination of buybacks and dividends [7] 7. Financial Projections - Revenue projections for the next fiscal years are as follows: - 2024: Rmb 52.866 billion - 2025: Rmb 60.519 billion - 2026: Rmb 67.792 billion - Expected EPS for 2025 is Rmb 27.02, with a P/E ratio of 15.8 [8] 8. Risks and Challenges - Potential risks include rising competition from domestic players like Tongcheng Travel and Meituan, macroeconomic uncertainties, and FX headwinds that could lower travel demand [13] 9. Valuation Methodology - Key assumptions include a WACC of 10.5%, terminal growth of 3%, and an FX rate of 7.6 [11] Conclusion Trip.com Group Ltd is positioned for growth in 2025, driven by stable domestic performance, a strong recovery in outbound travel, and strategic focus on increasing market share. However, the company faces competitive and macroeconomic challenges that could impact its performance.

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the global rates market, focusing on the implications of recent economic data and central bank policies on interest rates and bond yields across various regions including the US, Europe, and Japan. Core Insights and Arguments 1. **Market Sentiment on Rates** - The sell-off in rates was led by the front-end following the December payrolls print, indicating a shift in policy pricing that pressures risky assets. The market may be overestimating the upside risks around the rate path, but yields have not yet reached a self-correcting point [1][5][10]. 2. **US Federal Reserve Outlook** - Economists expect the Fed to cut rates only twice in 2025, with cuts anticipated in June and December, reflecting a shift in focus back to inflation risks. The softer average hourly earnings in December contributed to this outlook [2][5]. 3. **Global Yield Trends** - Recent upward pressure on US and global yields has been particularly pronounced in Gilts, with a notable sell-off in GBP currency. The upcoming data releases are critical for determining the trajectory of yields [1][21]. 4. **European Rates Dynamics** - European yields have also increased, influenced by the weakness of the EUR against the USD. The divergence in US-EU rates is attributed to trade policy uncertainties, with expectations of lower European yields over 2025 despite recent sell-offs [11][13]. 5. **UK Gilt Market** - The UK Gilt market faces increased uncertainty due to rising yields and a weakening GBP. The expectation is for the BoE to cut rates more than the market anticipates, which could help absorb elevated duration supply [21][26]. 6. **Japanese Wage Data** - Recent wage data in Japan supports expectations for a rate hike by the BOJ in January, with indications of increasing wage growth momentum. This could lead to higher JPY rates across the curve [22][26]. 7. **Inflation Pricing Vulnerabilities** - Front-end inflation pricing has unwound much of the post-election widening, aligning with forecasts of around 2.5% inflation by year-end. However, there remains vulnerability to tariff concerns that could pressure inflation expectations [10][26]. 8. **Sovereign Spread Reactions** - The recent sell-off in core rates has not led to significant widening in sovereign spreads, indicating a more muted reaction compared to previous instances of bearish impulses from the US [16][26]. Additional Important Insights 1. **Bank Regulation and Treasury Demand** - The potential easing of bank regulations could support demand for Treasuries, with estimates suggesting significant changes in bank demand for USTs based on regulatory adjustments [10][26]. 2. **Market Positioning and Flows** - The report highlights the current market positioning, indicating a mix of bullish and bearish sentiments among investors, with implications for future trading strategies [41][49]. 3. **Forecasts for G10 10-Year Yields** - The forecast for G10 10-year yields shows a gradual decline across various currencies, with specific projections for USD, GBP, and JPY yields over the next quarters [27][30]. 4. **Central Bank Actions and Market Impact** - The anticipated actions of central banks, including the Fed and ECB, are expected to influence market dynamics significantly, with implications for interest rates and economic growth [32][36]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the global rates market.

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the fund flows in Emerging Markets (EM), particularly in Asia excluding China, and highlights significant trends in foreign institutional investor (FII) activities, domestic retail flows, and mutual fund positioning in various markets, including India and South Korea [1][5][41]. Core Insights and Arguments - **FII Flows**: EM Asia ex-China experienced FII selling of **US$0.5 billion** week-over-week (wow), primarily driven by India, which saw outflows of **US$0.9 billion**. Conversely, South Korea recorded inflows of **US$0.7 billion** [5][41]. - **Southbound Flows**: Southbound flows into Hong Kong saw strong inflows of **US$6.3 billion**, marking the highest weekly buying since February 2021, largely attributed to approximately **US$4 billion** in buying from Tencent [5][23]. - **Domestic Equity Mutual Funds in India**: Domestic equity mutual fund inflows rebounded to **US$4.8 billion** in December from **US$4.3 billion** in November, representing a **13% month-over-month** increase. This marks the eighth consecutive month with inflows exceeding **US$4 billion** [31][37]. - **China Fund Positioning**: Allocations to Chinese equities in global mutual funds remained low, with net allocation at **6.8%**, which is in the **8th percentile** over the past five years. Active mutual funds are underweight in Chinese equities by **300 basis points** [6][18][20]. - **Northbound Holdings**: Data from HKEx indicated a **US$21 billion** outflow in Northbound holdings during the fourth quarter of 2024, primarily in the Utilities, Materials, and Consumer Staples sectors [7][41]. Additional Important Insights - **Sector Performance**: The report highlights that financial services saw significant increases in holdings as a percentage of the listed market cap, while utilities and materials faced the largest outflows [9][10]. - **Top Buying and Selling Stocks**: Notable stocks with significant net buying included CATL and WuXi AppTec, while Wanhua Chemical and Kweichow Moutai were among the top sellers [11][12]. - **Systematic Investment Plans (SIPs)**: Inflows via SIPs in India remained robust at **US$3 billion**, indicating strong retail investor confidence [31][36]. - **Global Equity Mutual Fund Flows**: Globally, equity mutual funds saw inflows of **US$26 billion**, contrasting with outflows of **US$25 billion** the previous week, with US funds contributing **US$11 billion** to the inflows [5][41]. This summary encapsulates the key points from the conference call, providing insights into the current state of fund flows in emerging markets, particularly focusing on the dynamics in India and China.