Summary of Key Points from the Agency MBS Weekly Report Industry Overview - The report focuses on the Agency Mortgage-Backed Securities (MBS) market and related investment products, including AAA Collateralized Loan Obligations (CLOs) and Agency CMO floaters. Core Insights and Arguments 1. **Market Performance and Trends** - Mortgages have remained resilient amid recent market volatility, with production coupon OAS tightening to 30 basis points, aligning with the fair value target of 25 to 35 basis points [10][12][13]. - Large funds increased their MBS overweights by 0.3% to 12.5% in January, while underweights in Treasuries rose by 1.1% to 20.1% [3]. 2. **Investment Preferences** - Preference for 6.0% and 6.5% Agency floaters is reiterated due to their attractive pricing and excess returns across various rate scenarios [17][18][25]. - AAA CLOs have tightened to 117 basis points, nearing historic tights, while Agency CMO floaters are at historic wides, indicating a divergence in risk and return profiles [26][27][28]. 3. **Issuance and Demand Projections** - Projected net issuance for Agency MBS in 2025 is $225 billion, with gross issuance expected to reach $1.1 trillion [25]. - Demand is anticipated from banks ($100 billion), money managers ($150-200 billion), and foreign investors ($100 billion) [25]. 4. **Refinance and Prepayment Trends** - The Fannie Mae RALI Index reported a 0.5% week-over-week increase in refinance applications, with a 50.9% year-over-year rise [24]. - Freddie Mac noted a 9 basis point drop in 30-year fixed rates, averaging 6.76% [24]. 5. **Convexity and Hedging Needs** - Convexity hedging needs have increased, with a model suggesting that investors would need to shed/add $44-47 billion of 10-year Treasury equivalents if rates move by 50 basis points [13][14]. Additional Important Insights 1. **Comparative Analysis of Investment Products** - Agency floaters are viewed as more attractive than AAA CLOs from a historical perspective, despite the latter's minimal credit risk [33]. - The discount margins on new issue Agency CMO floaters have widened since 2021, indicating a potential opportunity for investors [28]. 2. **Market Sentiment and Expectations** - A poll indicated that approximately 65% of investors expect tighter spreads over the next month, reflecting a bullish sentiment [10]. - The Fed Funds futures market anticipates two rate cuts by the end of 2025, suggesting a lower cap risk for floaters [47]. 3. **Risks Associated with Floating Rate Investments** - Agency CMO floaters face cap risk, which can affect their pricing and returns, while AAA CLOs are subject to call and prepayment risks [44][51]. 4. **Performance Metrics** - Performance was mixed, with belly coupons outperforming while wings underperformed, highlighting the need for careful selection within the coupon stack [18]. This summary encapsulates the critical insights and trends within the Agency MBS market as discussed in the report, providing a comprehensive overview for potential investors and stakeholders.

28 February 2025 | 4:42PM CST Appotronics Corporation Ltd. (688007.SS): Data update post 2024 prelim results Appotronics reported 2024 prelim results, in-line with its previous announcement. Total revenue was Rmb2,418mn in 2024, growing by 9% yoy. Net profits was Rmb29mn, declining by 72% yoy, slightly lower than the mid-point of Rmb25mn-35mn in previous announcement. We fine-tune 2025E-26E earnings forecasts by -4% to factor in the latest prelim results. Our 12-month target price remains Rmb11, which is ba ...

28 February 2025 Asian FX Focus Currencies Doubling down on tariffs US President Trump said in a social media post on 27 February that there will be an additional 10% tariffs on all imports from mainland China from 4 March because of the unresolved fentanyl issue. This was rather unexpected, because, originally, the 4 March timeline was for the delayed 25% tariffs on Mexico and Canada (as an earlier 10% tariff on China was already implemented on 4 February). Taken together with the "America First Trade Poli ...

Summary of Asia-Pacific Strategy: CY4Q/2H24 Earnings Monitor Industry Overview - The report focuses on the Asia-Pacific region, specifically the MXAPJ index, which includes 510 companies representing 67% of the index's market capitalization [1][5]. Key Financial Metrics - Actual CY24 earnings are tracking at 97% of full-year estimates according to Bloomberg consensus [1]. - CY4Q24 profits grew by 11% year-over-year (YoY) but decreased by 17% quarter-over-quarter (QoQ) [1]. - For the full year CY2024, profits are expected to increase by 18% YoY [1]. Revenue and Margin Analysis - Excluding financials, CY4Q24 revenues increased by 16% YoY and 2% QoQ, with a net margin increase of 70 basis points (bps) compared to 4Q23, but a decrease of 210 bps compared to 3Q24 [2]. - For CY24, revenues are projected to grow by 9% YoY, with a net margin increase of 170 bps compared to CY23 [2]. Earnings Surprises and Market Performance - Among the companies that reported CY4Q24 results, 30% beat consensus estimates, 24% were in line, and 46% missed, with a median earnings surprise of -4% [2][8]. - Markets performing above historical averages include China and Singapore, while Thailand, Korea, and China A are tracking below historical averages [2]. Sector Performance - Sectors with results tracking below historical averages include Materials, Consumer Staples, Energy, and Industrials [2]. - Notable sector performance includes: - Communication Services and Industrials showing the most positive surprises [8]. - Energy, Consumer Discretionary, and Utilities showing the least positive surprises [8]. Earnings Revisions - Since the start of the quarter, MXAPJ 2025E earnings have been revised down by 1.8%, primarily due to underperformance in Korea and Indonesia, as well as the Materials, Info Tech, and Energy sectors [10]. - Conversely, earnings for Taiwan and Singapore markets have been revised upward [10]. Conclusion - The earnings monitor indicates a mixed performance across the Asia-Pacific region, with certain markets and sectors outperforming while others lag behind historical averages. Investors should consider these dynamics when making investment decisions in the region [4][29].

Summary of Conference Call Company and Industry - **Company**: SoundHound - **Industry**: Voice AI and Conversational AI technology Key Points and Arguments 1. **Record Revenue Growth**: In Q4 2024, SoundHound reported revenue of $35 million, marking an increase of over 100% year-over-year, achieving the top end of their revenue guidance for the year [1] 2. **Three-Pillar Business Strategy**: SoundHound's strategy includes a voice commerce ecosystem, AI customer service, and voice assistant technology, which is expected to enhance business momentum [2][3] 3. **Strong Automotive Pipeline**: The company is engaged in numerous RFPs and POCs with major automotive brands, including four EV brands like Lucid and TOG [3] 4. **Healthcare Sector Wins**: SoundHound secured contracts with notable healthcare providers such as Duke Health and Wellstar Health System, indicating strong repeat business in this sector [3] 5. **Expansion in Restaurants**: Partnerships with major QSRs like Burger King and Whataburger highlight the growing adoption of AI customer service in the restaurant industry [3] 6. **Diverse Customer Base**: The company is expanding its reach across various sectors, including retail, government, and military, with significant contracts signed [4][5] 7. **Agentic AI Leadership**: SoundHound positions itself as a leader in enterprise conversational AI, emphasizing the importance of agentic AI in optimizing performance and achieving complex goals [4][5] 8. **CES Participation**: The company showcased its technologies at CES, generating significant interest and partnerships with industry leaders [5] 9. **Competitive Performance**: SoundHound's AI technology outperformed competitors like Google and OpenAI in accuracy and latency, reinforcing its competitive edge [6] 10. **Financial Performance**: Q4 revenue was $34.5 million, with a full-year revenue of $85 million, reflecting an 85% growth [7][8] 11. **Strong Backlog**: The company ended the year with a cumulative subscriptions and bookings backlog of nearly $1.2 billion, up over 75% year-over-year [8] 12. **Investment in R&D**: R&D expenses increased by 60% year-over-year, driven by acquisitions and a commitment to innovation [10] 13. **Path to Profitability**: SoundHound aims to achieve adjusted EBITDA profitability by the end of 2025, focusing on scale and high ROI investments [13] 14. **Market Opportunities**: The automotive sector presents a significant revenue opportunity with over 90 million light vehicles produced annually, while the restaurant sector has a serviceable market worth tens of billions [8][9] 15. **Integration of Acquisitions**: The company is actively integrating acquisitions to enhance its product offerings and streamline operations [11][12] Other Important Content 1. **Impact of Economic Conditions**: The company benefits from both economic growth and challenging conditions, as businesses seek AI solutions for innovation and cost-saving [26] 2. **Customer Engagement**: SoundHound is focusing on customer engagement and internal IT support use cases, leveraging its acquisitions to enhance service offerings [20][21] 3. **Long-Term Contracts**: The company is pursuing multi-year contracts in new verticals like energy, which are expected to provide stable revenue streams [19] 4. **Flexibility in Offerings**: SoundHound is open to partnerships for technologies that enhance its platform, ensuring comprehensive solutions for customers [29] 5. **POC to Revenue Timeline**: The transition from POCs to full contracts can vary, but existing relationships can lead to quick deployments [29]

Summary of Eli Lilly & Co Conference Call Company Overview - **Company**: Eli Lilly & Co (LLY) - **Industry**: US Biopharmaceuticals - **Rating**: Outperform - **Price Target**: $1,100.00 USD by February 25, 2025 - **Current Price**: $881.40 USD - **Market Cap**: $835.717 billion USD - **Dividend Yield**: 0.7% [4][31] Key Points and Arguments Pricing Strategy - Eli Lilly announced a price reduction for Zepbound starting doses (2.5mg and 5mg) to $349 and $499 per month, respectively, reflecting decreases of 12.5% and 9.1% [8] - The launch of the Zepbound Self Pay Journey Program will reduce prices for higher doses (7.5mg and 10mg) to $499 for the first fill and refills within 45 days [8][3] Market Dynamics - The FDA's resolution of the semaglutide shortage is expected to boost demand for Eli Lilly's products, particularly Mounjaro and Zepbound [2] - The prohibition of compounding semaglutide is anticipated to be a significant catalyst for Eli Lilly's market share growth [2] Growth Metrics - LillyDirect prescriptions are now included in IQVIA data, leading to a notable increase in weekly script numbers [2][9] - Eli Lilly's Tirzepatide products (Mounjaro and Zepbound) are adding approximately 1.3 million scripts every four weeks, outpacing Novo Nordisk's offerings [15] Market Share Insights - Eli Lilly holds a 53.7% market share in the GLP-1 category when including Trulicity, with Tirzepatide products capturing 48.8% of the market share in the latest week [16] - Mounjaro and Zepbound are showing accelerating growth in lower doses, indicating a strong uptake among new patients [15] Financial Projections - Adjusted EPS is projected to grow from $6.32 in FY23 to $22.77 in FY25, with a significant drop in adjusted P/E from 139.5x to 38.7x over the same period [7][31] - The stock is expected to outperform the market index by more than 15 percentage points [10] Additional Important Information - The report includes a detailed analysis of weekly TRx (total prescriptions) and NRx (new prescriptions) data for GLP-1 products, highlighting Eli Lilly's competitive position against Novo Nordisk [15][19] - Risks include potential pressures on the obesity total addressable market (TAM), manufacturing expansion challenges, and high-risk M&A activities [36][37] Conclusion Eli Lilly & Co is positioned for significant growth in the biopharmaceutical sector, particularly in the GLP-1 market, driven by strategic pricing, regulatory developments, and strong prescription growth metrics. The company's proactive approach to market access and pricing strategies is expected to enhance its competitive edge and financial performance in the coming years.

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Autos & Shared Mobility - **Research Firm**: Morgan Stanley Asia Limited Core Insights 1. **Tesla's FSD Launch**: Tesla is preparing to roll out its Full Self-Driving (FSD) software in China, with customers who previously paid Rmb64k (US$8.8k) eligible for the release [1] 2. **Impact on L2+ NOA Adoption**: The anticipated launch of Tesla's FSD could accelerate the adoption of L2+ Navigate on Autopilot (NOA) features across China's New Energy Vehicles (NEVs), following BYD's recent mass adoption of Advanced Driver Assistance Systems (ADAS) [1] 3. **Competitive Landscape**: Tesla's influence is shifting local players towards end-to-end neural networks for their AD solutions, indicating a potential increase in competition within the China smart EV ecosystem [1] 4. **Pricing Strategy**: It remains to be seen if Tesla will maintain the Rmb64k price for FSD, as many local competitors are offering NOA software for free [1] Regulatory and Operational Challenges 1. **Data Ownership and Computing Power**: Regulatory hurdles persist for Tesla regarding data training and transfer outside China for the FSD launch. The ownership of training data and access to necessary computing power will be critical amid ongoing geopolitical tensions [2] Additional Information - **Analyst Team**: The report includes insights from various analysts at Morgan Stanley, including Tim Hsiao, Adam Jonas, Cindy Huang, and others [3] - **Investment Banking Relationships**: Morgan Stanley has investment banking relationships with several companies in the automotive sector, which may influence their research objectivity [4][14][16] Stock Ratings Overview - The report includes stock ratings for various companies in the China automotive sector, indicating a mix of Overweight (O), Equal-weight (E), and Underweight (U) ratings for companies like BYD, NIO, and Geely [57][59] Conclusion - The anticipated launch of Tesla's FSD in China is expected to have significant implications for the adoption of autonomous driving technologies in the region, while regulatory challenges and competitive dynamics will play a crucial role in shaping the market landscape.

Summary of Key Points from the Conference Call Industry Overview - The current cycle in the China internet sector is characterized by AI proliferation, cost efficiency, and technological breakthroughs, differing from previous cycles [1][2] - The competition landscape has shifted towards advanced technology and cost-efficient models rather than traditional competitive dynamics [2] Company-Specific Insights Tencent - Tencent's AI strategies are expected to be detailed in upcoming earnings, focusing on the integration of DeepSeek across various offerings, enhancing user experience [3] - The integration includes applications in Weixin Search, Enterprise Weixin, QQ Browser, and others, with notable upgrades to the Yuanbao chatbot [3] - Anticipated spending on AI and cloud services is projected to be less than that of Alibaba and ByteDance, with expectations of over RMB100 billion in FY26 for both competitors [3] Alibaba - Positive outlook for Alibaba, driven by accelerated cloud revenue and capital expenditure investments to leverage AI opportunities [4] - Anticipation of a model upgrade following Qwen 2.5-max, which is expected to attract market attention [4] - Alibaba's advanced technology and open-source models are highlighted, with significant improvements in unit economics for AIDC entering FY26 [4] Baidu - Baidu has seen a surprising acceleration in cloud revenue growth at 26% YoY, significantly above market expectations [5] - AI generative search results have reached approximately 83% of Baidu users, indicating strong user engagement [5] - Positive growth in online marketing revenue is expected in the second half of the year, supported by improved user experience and AI monetization [5] Market Valuation - The valuation of the China internet sector is viewed as undemanding, trading at a discount compared to US peers [6] - Recent earnings results for large and mid-cap companies in the sector have generally met or exceeded expectations, indicating a positive market sentiment [6] Additional Insights - The anticipated spending on AI and cloud services by major players indicates a robust investment trend in the sector, with significant capital expenditures expected from Alibaba and ByteDance [3][4] - The shift towards AI-driven models and applications is expected to redefine competitive dynamics in the China internet sector, moving away from traditional competition [2]

Summary of Key Points from the Conference Call Industry Overview - **S. Korea Technology**: Industry view is cautious [1] - **Greater China Technology Hardware**: Industry view is in-line [1] - **Semiconductor Production Equipment (Japan)**: Industry view is attractive [1] Core Insights and Arguments - **AI Technology**: - AI chips and supply chain are highlighted with key players including Alchip, TSMC, ASE, and others [3] - Edge AI adoption is expected to drive more upside in the smartphone supply chain due to favorable conditions [4] - China's capital expenditure is driven by faster inference and low-cost AI adoption [4] - **Semiconductor Cycle**: - The industry is moving past the 'Euphoria' stage of the semiconductor cycle, indicating a cyclical downturn [5] - The S&P 500 has been outperforming semiconductors since October 2024 [7] - **Market Performance**: - The relative performance of AI vs. Non-AI sectors has shown convergence since the introduction of ChatGPT, with no longer a premium on NTM P/E [10] - Traditional tech is experiencing macro tailwinds, moving closer to a trough cycle [13][16] - **Memory Market**: - The DRAM cycle is moving past the euphoria stage, with earnings and guidance turning cautious [29] - Memory inventory levels are near historical highs, indicating potential oversupply [37] Important but Overlooked Content - **Subsector Performance**: - Performance metrics for various semiconductor subsectors from January 2025 show mixed results, with MLCC and Cloud Semis performing positively while Data Center Hardware and Networking Equipment are underperforming [23] - **Demand Forecasts**: - Demand for servers, PCs, and smartphones is projected to fluctuate, with specific year-on-year changes noted for each category [55] - The overall MLCC market is expected to see an increase in total addressable market (TAM) due to cloud and Edge AI, adding approximately US$600 million by 2026 [52] - **High Bandwidth Memory (HBM)**: - HBM total addressable market (TAM) is forecasted to grow significantly, with a compound annual growth rate (CAGR) of 109% from 2023 to 2027 [41] - HBM usage per GPGPU and ASIC is expected to increase, indicating a growing demand for high-performance memory solutions [41] - **Pricing Trends**: - Quarterly pricing trends for DRAM and NAND flash indicate fluctuations, with expectations of price increases in early 2024 followed by declines later in the year [54] This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the semiconductor and technology industries.

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Chinese Shipping** industry, particularly in the context of the **Asia Pacific** region and the implications of the **US Proposed Section 301 Investigation** [1][2]. Core Insights and Arguments - The **U.S. Trade Representative (USTR)** is seeking public comments on a Section 301 investigation targeting **Chinese Maritime, Logistics, and Shipbuilding** sectors, proposing extra charges on Chinese operators and vessels built in China [2][7]. - Proposed actions could significantly impact **global capital expenditure (capex)** flows in shipbuilding, potentially leading to inflationary pressures on U.S. imports [7]. - The **container shipping** sector is expected to remain in a downcycle, with negative implications for companies such as **CSH**, **OOIL**, and **SITC** if the proposed actions are implemented [7][8]. - **China** is a crucial buyer of **U.S. agricultural goods** and **petroleum exports**, and additional charges on Chinese shipping companies could hinder trade growth [7][8]. Statistical Data - As of January 2025, **Chinese shipyards** hold approximately **67%** of the global existing order book deadweight tonnage (dwt), followed by **Korea** at **18%** and **Japan** at **11%** [8]. - If the proposed actions are enacted, the container shipping industry is expected to see limited impact on the global shipping landscape, with marginally negative effects on Chinese liners due to U.S. route exposure [8]. Additional Important Points - The **Morgan Stanley Research** team emphasizes the potential for increased intra-Asia supply pressure if smaller containerships exit U.S. routes due to competition, which could also adversely affect **SITC** [8]. - The report highlights the importance of monitoring the developments in the shipping sector as they could have broader implications for trade and investment strategies in the region [5][7]. Conclusion - The proposed Section 301 investigation by the U.S. could reshape the dynamics of the Chinese shipping industry, affecting trade relationships and investment flows. Stakeholders are advised to remain vigilant regarding these developments and their potential impacts on market conditions and company performance [2][7][8].