February 9, 2025 08:40 PM GMT Investor Presentation | Asia Pacific M Foundation Revival of Tech Innovation vs Tariffs Related Reports: Bull vs Bear: Revival of Tech Innovation vs Tariffs (Feb 7, 2025) Morgan Stanley Asia Limited Robin Xing Chief China Economist Robin.Xing@morganstanley.com +852 2848-6511 Jenny Zheng, CFA Economist Jenny.L.Zheng@morganstanley.com +852 3963-4015 For important disclosures, refer to the Disclosure Section, located at the end of this report. Foundation M Bull Arguments In the Ea ...

Summary of Key Takeaways from the Expert Call on New Energy Tariffs and Market Trading Industry Overview - **Industry**: Power Utilities in China, specifically focusing on new energy and renewable energy sectors [1][7] Core Insights 1. **Market Reform Policy**: The new energy sector is set to fully enter market trading, with the policy aimed at supporting healthy development rather than controlling renewable capacity addition [3][4] 2. **Contract for Difference (CFD) Mechanism**: This mechanism will protect the renewable tariff for new projects, fixing both price and volume for the execution period unless the project opts out. A price floor will be established to ensure reasonable returns [4][9] 3. **Inclusion of New Projects**: Approximately 40% of new project volume will be included in the new mechanism in 2025, based on current renewable market trading percentages [5][9] 4. **Impact on Existing Projects**: Existing projects will continue to enjoy mechanism tariffs similar to coal power benchmark tariffs, with minimal changes expected due to the new policy [9][11] 5. **Future Installations**: Solar and wind installations are projected to remain around 300GW annually through 2030, with an expected 320GW in 2025 [9][13] Additional Important Points 1. **Green Certificates**: The value of green certificates is already included in the mechanism tariff, and there will be no secondary sales of these certificates [12][9] 2. **Energy Storage**: The policy does not focus on energy storage, and the removal of storage requirements for renewable projects is not a new development [14][9] 3. **Offshore Wind and Distributed Energy**: The impact on offshore wind is expected to be limited, while tariffs for distributed energy projects may decline, potentially accelerating construction before June 2025 [15][9] 4. **Provincial Variations**: The percentage of projects entering the mechanism will vary across provinces, and individual projects may also differ in their participation [10][11] Conclusion - The new policy is anticipated to accelerate market reform in China's new energy sector without immediate severe impacts on existing market trading prices. The focus is primarily on new projects commencing after June 2025, with existing projects protected under the new tariff mechanisms [11][9]

We placed BYD on Positive Catalyst Watch last week (see here) in anticipation of competitive product launches at its technology day yesterday (Feb 10) accelerating the adoption of L2+ autonomous driving (AD) in China. Indeed, BYD unveiled its latest city-level and highway NOA (navigation on autopilot) solution, or 'BYD God's Eye system', at the event. Chairman/ Founder Mr. Wang Chuanfu announced that 21 BYD models will be equipped with the latest 'God's Eye' solution, covering all models priced above Rmb100 ...

Summary of the China Cosmetics Industry Research Industry Overview - The cosmetics industry in China is facing a challenging year with weak consumption sentiment and no clear signs of recovery [2][6] - Brands are preparing for potential further decline or flat sales, implementing stringent cost controls including headcount reductions [2][6] - Market consolidation is ongoing, with leading players gaining market share from smaller and foreign brands [2][6] - A trend of consumption trade-down is observed across all levels, from prestige to mass brands [2][6] Key Companies Giant Bio - **Product Life Cycle**: Giant has leveraged synthetic biology for mass production of recombinant collagen, benefiting from policy support and demand for anti-aging products [3][6] - **Core Product Growth**: The Collagen Stick has become a hero product, supported by collaborations with key opinion leaders (KOLs) [3][6] - **Marketing Strategy**: Giant's product-driven sales and marketing create a barrier to entry for competitors, emphasizing scientific credibility and customer education [3][6] - **Valuation**: Target price set at HK$61.0, based on a 28x 2024E P/E, reflecting faster growth prospects compared to historical averages [9][10] Proya - **Agility and Scale**: Proya's competitive advantage lies in its ability to adapt quickly to market changes while maintaining large sales volumes [7][11] - **Leadership Transition**: The company is undergoing a leadership transition with expectations of a two-year adjustment period [7][11] - **Valuation**: Target price set at RMB112.8 based on DCF valuation, reflecting strong cash flow and long-term investor perspectives [11][12] Risks - **Giant Bio**: Risks include intense competition, niche market position, rising online channel development costs, and regulatory risks [10] - **Proya**: Risks involve competition from local and international brands, failure to develop new products, weaker digital operations, and potential economic slowdown impacts [12] Market Trends - The competitive landscape is shifting, with consumers increasingly favoring medical beauty and leading domestic brands over international options [2][6] - The upcoming Goddess Festival (Women's Day) is expected to further highlight the competitive dynamics within the industry [1][2] Conclusion - The China cosmetics industry is currently in a state of flux, with significant challenges ahead. Leading domestic brands like Giant and Proya are well-positioned to navigate these challenges, but they must remain vigilant against competitive pressures and market changes.

10 February 2025 Trade tensions have intensified but may accelerate policy easing (7 February). The US has imposed a 10% tariff on goods imported from China, which we estimate to reduce China's GDP by 0.3ppt. But it may be a blessing in disguise, pushing Beijing to implement more forceful fiscal easing and structural reforms. Among all the policy initiatives laid out by the Third Plenum last year, fiscal sustainability was not only considered as a long-term objective, but also essential for restoring local ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **US Economics** sector, particularly analyzing inflation trends and the impact of tariffs on consumer prices. Core Insights and Arguments - **Core CPI and PCE Inflation Forecasts**: A forecast of a **0.34% month-over-month increase** in core CPI for January is presented, leading to a **0.31% increase** in core PCE inflation, which is softer than the **0.50% increase** observed last January due to a slowdown in shelter inflation [1][5][7]. - **Tariff Impact**: The report discusses the potential impact of **10% tariffs on imports from China** and delayed tariffs on Canada and Mexico, suggesting that the overall effect on prices may be more minimal than anticipated by the market [1][8][9]. - **Consumer Inflation Expectations**: A significant jump in **1-year ahead consumer inflation expectations** was noted, rising from **3.3% to 4.3%**, with longer-term expectations also increasing slightly [12][13]. - **Wage Growth Trends**: Average hourly earnings rose by **0.5% month-over-month** in January, indicating some strength but not necessarily signaling reaccelerating wage inflation. The report highlights that wage growth dynamics may reflect a catch-up of wages for existing workers to higher market wages [10][11]. Additional Important Content - **Inflation Metrics**: The report provides detailed inflation forecasts for various metrics, including core CPI and core PCE, with projections indicating a gradual easing of inflation rates over the coming quarters [16]. - **Service Prices**: It is expected that service prices will slow down in the coming months, contributing to the overall inflation trend [17]. - **PPI and CPI Relationship**: The report emphasizes the relationship between PPI goods prices and potential increases in CPI goods prices, particularly as tariffs come into effect [22]. - **Market Sentiment**: The report notes that more firms are planning to raise prices than those planning to raise worker compensation, indicating a cautious outlook on inflationary pressures [29][32]. This summary encapsulates the critical insights and forecasts regarding inflation trends and economic indicators as discussed in the conference call, providing a comprehensive overview for investors and stakeholders in the US economy.

V i e w p o i n t | 10 Feb 2025 15:38:42 ET │ 19 pages Taiwan Electronics & Semiconductors Taiwan technology sector monthly tracking – High-end applications support a good start of the year CITI'S TAKE Based on Taiwanese technology companies' reported Jan sales, we note that advanced applications such as AI lead better YoY momentum at the beginning of the year. Server players Jan sales were tracking ahead (-11% MoM/+81% YoY). Wiwynn and Accton both delivered better-than-seasonality monthly sales due to robu ...

10 February 2025 U.S. Semiconductors and Semiconductor Capital Equipment U.S. Semiconductors - Deconstructing 2024 Stacy A. Rasgon, Ph.D. +1 212 756 4403 stacy.rasgon@bernsteinsg.com Alrick Shaw +1 212 969 1458 alrick.shaw@bernsteinsg.com Arpad von Nemes +1 212 969 1518 arpad.vonnemes@bernsteinsg.com On the surface, 2024 was a solid upturn for the semiconductor industry, with total sales rising 19% YoY following an 8% decline in 2023. Growth was however dominated by memory (which rose 79% YoY following 2023 ...

Summary of Key Points from the Conference Call Industry Overview - **Industry**: China Autos & Shared Mobility - **Date**: February 10, 2025 - **Market Context**: Overall January sales were better than expected due to trade-in subsidy extensions, but most electric vehicle (EV) manufacturers have extended or increased promotions to secure orders during the low season in Q1 [1][5] Company-Specific Insights BYD - **Price Trends**: January blended price decreased by 0.5% month-over-month (MoM) with discounts slightly down by 0-1% [2] - **Promotions**: Continued offering trade-in subsidies of Rmb6-8k and Rmb5k insurance subsidies [2] - **Future Strategy**: Upcoming smart driving strategy to be unveiled, with potential L2+ NOA features in new models [2] - **Key Questions**: 1. Will highway NOA be standard across all models or limited to mid/high-end editions? 2. Expected price gap between new and legacy models is speculated to be Rmb5-10k. 3. Will there be official price cuts on legacy models to boost Q1 sales? [2] Li Auto - **Price Stability**: Blended prices remained steady MoM in January, with non-cash incentives increasing in February [3] - **Promotions**: Offering an additional Rmb6-8k replacement subsidy across all models [3] - **Market Sentiment**: January sales were lackluster, supporting bearish market views that further discounts may be forthcoming [3] NIO - **Price Stability**: Retail prices were largely steady MoM in January, with increased non-cash incentives in February [3] - **Promotions**: Offering Rmb10k cash subsidies and additional BaaS vouchers, with a reduction in spec upgrade subsidies [3] XPeng - **Price Trends**: Blended prices fell by 2% MoM, with specific models seeing price reductions of 2-6% [4] - **Promotions**: Introduced a 0% interest rate and 0% down payment campaign for certain models [4] Market Dynamics - **Discount Trends**: Anticipation that discounts will persist or worsen in the coming weeks as OEMs aim to reduce inventory ahead of new model launches in March/April [5] - **Competition**: Monitoring local players' adoption of L2+ NOA in the mass market segment, which could introduce new competition in 2025 [5] - **Upcoming Launches**: Pricing strategies for new models from Tesla, AITO, Xiaomi, BYD, Denza, and XPeng are under observation [5] Promotional Changes Summary - **Tesla**: Introduced an Rmb8k insurance subsidy for Model 3 and a 0% interest rate [9] - **Xiaomi**: No changes in promotions [9] - **Li Auto**: New local subsidies and financing promotions introduced [9] - **NIO**: Adjusted subsidy structure and increased BaaS vouchers [9] - **XPeng**: Launched a 0% interest rate and down payment campaign [9] - **BYD**: Continued existing discounts without changes [9] Conclusion - The Chinese auto market, particularly in the EV segment, is experiencing aggressive promotional strategies as companies navigate a low sales season. The focus on subsidies and pricing adjustments indicates a competitive landscape as manufacturers prepare for new model launches and seek to maintain market share.

Summary of BYD Company Limited Conference Call Company Overview - **Company**: BYD Company Limited - **Industry**: China Autos & Shared Mobility - **Date of Call**: February 10, 2025 Key Points Industry and Market Position - BYD is popularizing L2+ Advanced Driver Assistance Systems (ADAS) in the mass market with 21 concurrent model facelifts, which is expected to enhance its market presence despite potential discounts on existing models [1][8] - The launch of 21 facelift models, equipped with the new God's Eye System C (DiPilot 100), was a significant highlight of the intelligent strategy launch event [2][3] Product Launches and Strategy - The pricing strategy for the new models is in line with market expectations, and the volume of launches is anticipated to increase store traffic and minimize consumer hesitation [3][4] - The introduction of ADAS features across various models, including those priced under US$10,000, is a strategic move to enhance safety perceptions among consumers [5][6] Technological Advancements - BYD's NOA (Navigate on Autopilot) portfolio now includes three ADAS solutions, with God's Eye System C focusing on highway navigation without LiDAR [4] - The company's emphasis on safety, comparing ADAS to modern airbags, positions these features as essential rather than optional [6] Financial Performance and Market Reaction - BYD's stock price increased by over 20% in the week leading up to the call, outperforming the Hang Seng Index, indicating positive market sentiment [7] - Future stock performance will depend on order conversion and the ability to maintain competitive pricing amidst potential price wars [7] Risks and Considerations - There are concerns regarding the impact of the new model launches on demand for legacy models lacking advanced ADAS features [6] - The company may need to further reduce prices on existing models to remain competitive, which could lead to a price war in the industry [7] Financial Metrics - Current market capitalization is approximately Rmb928.65 billion, with a share price of HK$330.20 as of February 10, 2025 [9] - Projected revenue growth from Rmb602.32 million in FY2023 to Rmb995.29 million by FY2026, indicating a strong growth trajectory [9] Future Outlook - Monitoring is advised on the potential for scale benefits and cost savings in ADAS hardware, as well as the competitive landscape regarding L2+ ADAS adoption among peers [12] - The company faces both upside risks, such as faster overseas expansion and stronger demand for its electric vehicle models, and downside risks, including weaker-than-expected demand for new energy vehicles [17] Conclusion BYD's strategic focus on enhancing its ADAS offerings and launching a significant number of facelift models positions it well in the competitive automotive market. However, the company must navigate potential pricing pressures and market demand challenges to sustain its growth momentum.