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.

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Chinese consumer market** during the Lunar New Year (LNY) period, focusing on spending trends and specific sectors such as **entertainment, home appliances, and ACGN goods** [2][11][30]. Core Insights and Arguments Consumer Spending Trends - **Overall Consumption**: The Ministry of Culture and Tourism reported **501 million trips** during the LNY, a **5.9% year-on-year increase**, with total spending reaching **RMB 677 billion**, up **7% year-on-year** [2]. - **Consumption Breakdown**: There is a notable divergence in spending between **soft luxury goods** in tier-1 cities and **affordable treats** in lower-tier cities, with the latter showing stronger demand [2][11]. - **Household Financial Health**: Households in tier-1 cities are more affected by property price declines, leading to a greater need to repair balance sheets compared to lower-tier city households [2]. Hot Sectors - **Box Office Performance**: The box office during LNY totaled **RMB 9.51 billion**, a **19% year-on-year increase**, and **1.6 times** the pre-COVID level [3][18]. - **ACGN Goods**: The market for ACGN (Anime, Comics, Games, Novels) goods reached **RMB 169 billion** in 2024, growing **41% year-on-year**, with expectations to reach **RMB 309 billion** by 2029 [13][15]. - **Home Appliances**: Trade-in related home appliance sales reached approximately **RMB 240 billion**, up **12.3% year-on-year**. However, a slowdown in sales growth is anticipated for 2025, with estimates dropping to **5% year-on-year** from a consensus of **9-12%** [30][31]. Sectors Underperforming - **Macau Tourism**: Inbound tourists to Macau during LNY were **1.31 million**, down **4% year-on-year**, with gaming revenue (GGR) falling **10% year-on-year** [4]. - **Hainan Duty-Free Sales**: Duty-free sales in Hainan dropped **16% year-on-year** to approximately **RMB 2.1 billion**, with visits down **19.2% year-on-year** [4][40]. Investment Recommendations - **Long Positions**: Recommendations include **YUM China**, **Miniso**, **MGM China**, and **Haier H**, which are expected to benefit from resilient mass consumption spending and trends in affordable goods [11][12]. - **Caution on Home Appliances**: The home appliance sector is viewed with caution due to potential risks in 2025 sales growth, influenced by tariffs and previous demand pull-forward [30][31]. Additional Insights - **E-bike Market**: E-bike sales reached **55 million units** in 2023, with a boost from trade-in policies. The top players include **Yadea** and **Aima** [36][37]. - **Cultural Travel Trends**: There is a shift towards local cultural and heritage travel, with a **30% year-on-year rise** in outbound travel orders reported by Trip.com [40]. This summary encapsulates the key points discussed in the conference call, highlighting both opportunities and risks within the Chinese consumer market during the Lunar New Year period.

09 Feb 2025 21:43:44 ET │ 13 pages V i e w p o i n t | US Internet and Software 4Q24 Cloud Compare: Industry Growth Downticks Slightly CITI'S TAKE We recap results for the top 4 cloud providers post CQ4 earnings. Overall industry growth slowed by ~110bps to +24.5% Y/Y on weaker non-AI Azure results and softer GCP results due to capacity constraints. Cloud growth trajectories varied as MSFT's Azure constant currency (CC) growth ticked down to +31% YoY from +34%, while AMZN's AWS growth remained largely stabl ...

10 February 2025 Global Energy Storage Global Energy Storage: Energy storage demand continues to surge on renewables and data centers Neil Beveridge, Ph.D. +852 2918 5741 neil.beveridge@bernsteinsg.com Brian Ho, CFA +852 2918 5772 brian.ho@bernsteinsg.com Hengliang Zhang +852 2918 7871 hengliang.zhang@bernsteinsg.com ESS battery demand increased by 74% y-o-y to 321GWh in 2024. We expect it will grow by 31% to 420GWh in 2025, but we also think this could be conservative given the project pipeline. With more ...

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: China Materials, specifically in the sectors of aluminum, lithium, gold, steel, cement, coal, glass, and battery metals [1][2][3][4][5][6] Core Insights and Arguments - **Aluminum and Lithium Production**: Domestic production of aluminum and lithium is resuming post-Chinese New Year (CNY) holiday, with multiple aluminum plants in Sichuan gradually restarting operations [1][30] - **Lepidolite Mine Resumption**: A leading lithium battery producer has resumed production at its lepidolite mine in Jiangxi, which is expected to enhance domestic lithium carbonate supply [2][33] - **Gold Demand**: Gold prices increased by 2.1% week-over-week (WoW) to US$2,856/oz, with total gold demand reaching a record of 4,975 tons in 2024, driven by central bank purchases [3][39] - **Steel Market Stability**: Steel prices remained flat WoW, with slight increases in long steel inventories (up 9.1% WoW) and flat steel inventories (up 5.5% WoW) [3][9] - **Cement Market Weakness**: Cement prices were flat at Rmb399/ton, with weak supply and demand in southwest China during CNY [4][43] - **Coal Price Decline**: Coal prices decreased by 0.3% WoW to Rmb704/ton, with a notable drop in inventory levels [4][42] - **Glass Market Dynamics**: Glass fiber prices remained flat, while float glass prices increased slightly by 0.2% WoW [5] Additional Important Insights - **Trade Tensions**: Escalating trade tensions between the US and China, including a 10% incremental tariff on Chinese goods announced by the US [1][24] - **Inventory Levels**: Significant increases in inventory levels for various materials post-CNY, with glass inventory rising by 40% and solar glass inventory increasing to 39 days [5][6] - **Tariff Implications**: The State Council of China announced additional tariffs of 15% on US-origin coal and liquefied natural gas, indicating ongoing trade disputes [4][42] - **Market Sentiment**: Despite bullish sentiment in the steel market, supply pressures are limiting price increases, highlighting a cautious outlook for the near term [21][30] This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current state of the materials industry in China, along with significant market dynamics and external factors influencing these sectors.