Equity Research U.S. Gaming, Leisure & Lodging 6 February 2025 BYD 4Q24 Review: So You're Saying There's a Chance Solid 4Q report, as expected. Post election bump was downplayed, but likely for the sake of conservatism. Our estimates tick modestly higher. PT to $78, remain EW. BYD reported 3%/6% upside vs. us/Cons property adjusted EBITDAR. Compared to our model, outperformance was driven by Locals, Online and Managed, while MW&S was in-line with our estimate (and 2% ahead of Cons.). Looking forward, our 20 ...

Wanhua Chemical | Asia Pacific February 6, 2025 05:51 AM GMT Spreads and share price diverged but valuation fair Investors are curious for the reasons behind the weak share price performance despite recent product price hikes. We think the uncertainty in 4Q24 earnings and valuation is key, while tariff impact could be milder than it appears. Maintain EW. Price hikes across regions but share price diverged. Since the overseas price hikes by BASF and Wanhua in early Jan, Huntsman also followed and hiked MDI p ...

February 6, 2025 01:11 AM GMT | Exhibit 1: | | | Solar products – Price summary | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 2/5/2025 Polysilicon (Rmb/kg) Wafer-182mm | | Wafer-210mm | Cell-182mm | Cell-210mm | Polysilicon | Wafer-182mm | (USD/pc) Cell-182mm (USD/W) | | | | | (Rmb/pc) | (Rmb/pc) | (Rmb/W) | (Rmb/W) | (USD/kg) | | | | | Weekly ave | 39.0 | 1.18 | 1.55 | 0.29 | 0.30 | 21.00 | 0.16 | 0.04 | | | WoW | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% | | | ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Australian and New Zealand fixed income markets, particularly the interest rate strategies and economic indicators affecting these regions [2][4]. Core Insights and Arguments - **Global Trade Policy Uncertainty**: The current global trade policy remains uncertain, which reinforces a bullish bias on yields in the fixed income market [2][4]. - **Australian Retail Spending**: Positive retail spending news in Australia does not challenge the Reserve Bank of Australia's (RBA) forecasts, indicating a stable economic outlook [2][4]. - **Inflation Dynamics**: Recent Consumer Price Index (CPI) reports confirm that inflation dynamics in Australia have largely normalized, setting the stage for a gradual easing cycle [2][4]. - **RBA Rate Cuts**: A first RBA rate cut is fully priced for February 2025, with the overall pricing for 2025 appearing fair. The market anticipates a slight directional bias towards paying May RBA Overnight Indexed Swaps (OIS) with 55 basis points of cuts priced in [5][4]. - **New Zealand Labor Market**: New Zealand's 4Q labor market data shows rising unemployment, now up 1.7 percentage points from the trough, which may prompt the Reserve Bank of New Zealand (RBNZ) to implement another 50 basis point cut [17][4]. - **Mortgage Rates in NZ**: Despite new mortgage rates decreasing, average mortgage rates are still rising due to older mortgages rolling off, indicating a lack of cyclical traction in the New Zealand economy [27][4]. Additional Important Insights - **Market Positioning**: The report suggests staying received on AUD 3Yx1Y IRS and being underweight the belly of the ACGB Sep-26/Nov-28/Apr-33 fly, as this curve point is rich relative to the 3s/10s curve [2][4]. - **Cross-Market Dynamics**: The AUD has recently rallied on idiosyncratic factors, diverging from trends seen in other markets, which suggests a preference for intra-market expressions rather than cross-market trades [12][4]. - **RBNZ's Easing Cycle**: The RBNZ's rapid pivot to an easing cycle has seen NZD 1Yx1Y outperform AUD, but the market remains hesitant to push terminal rates materially below 3% [18][4]. - **Trade Recommendations**: The report includes specific trade recommendations such as receiving NZD 1Yx1Y IRS and holding NZGB Apr-33s against MMS [40][4]. Conclusion - The Australian and New Zealand fixed income markets are navigating a complex landscape of economic indicators, central bank policies, and market dynamics. The anticipated easing cycles in both countries, alongside the unique challenges faced by the New Zealand labor market, present both risks and opportunities for investors in these regions [2][4].

Summary of Inter's 4Q24 Conference Call Highlights Company Overview - **Company**: Inter (Ticker: INTR) - **Date of Conference Call**: February 6, 2025 Key Highlights Loans and Growth - The company is comfortable growing its loan book at a **25-30% year-over-year** pace despite macroeconomic challenges [7] - Efforts have been made to reduce volatility by hedging loan origination with durations greater than **1 year** since early 2023 [7] - The return on equity (ROE) for new loans is better than that of the back-book, indicating improved loan performance [7] Net Interest Margin (NIM) - The company continues to guide for an average **20 basis points (bps)** NIM expansion per quarter, although this is not linear [7] - Key drivers for NIM expansion include: - Changes in loan mix - Scaling up consumer finance products with interest rates around **6% per month** - Funding costs remaining around **65% of the CDI** [7] Asset Quality and Risk Management - The cost of risk is expected to remain around **5-5.2%**, similar to levels observed in 2024 [7] - The company is taking marginal risks in Pix finance while focusing on growing secured lines like FGTS and home equity [7] Efficiency and Cost Management - The company aims to achieve a **30% efficiency target** and is committed to cost reduction initiatives [7] - Higher than average volume processed in the app has led to increased data processing and third-party expenses [7] - Personnel expenses have risen as some teams met their goals and provisions for variable expenses were made [7] Capital and Dividends - The **CET1 ratio** for the bank stands at **15.2%**, impacted by **170 bps** mark-to-market from inflation-linked bonds [7] - Dividend distributions remain important, with a payout ratio of **20-25%** in recent years, and a recent announcement implies a yield of approximately **1.5%** (~R$200 million) [7] Credit Card and Consumer Finance - Breakdown of credit card usage: **80%** transactor, **5%** Pix finance, with the remainder being revolving vs. installments [11] - The company aims to increase interest-earning balances, expecting transactor usage to decrease to **75-78%** in 2025 [11] - The BNPL (Buy Now Pay Later) segment shows lower non-performing loans (NPL) compared to credit cards, with **20-25%** down payment [11] - The LDR (Loan to Deposit Ratio) is expected to remain around **75%**, potentially increasing to **80%** [11] Market Outlook - The private payroll segment is viewed as promising, with an estimated total addressable market (TAM) of **R$100-200 billion** [11] Additional Insights - The company has invested approximately **R$4 billion** in liquidity through tax-exempt structured notes, which penalize NIM but contribute positively when considering tax rates [7] - The company has been paying IOC (Interest on Capital) to maintain equity at the holding level, which is more tax-efficient [7] This summary encapsulates the critical points discussed during Inter's 4Q24 conference call, highlighting the company's growth strategies, financial performance, and market outlook.

A fresh start for the new year Equity Research Report 6 February 2025 China Equity Strategy Equity Strategy DeepSeek a re-rating catalyst. The development of DeepSeek has attracted the attention of global markets – it reconfirmed China's continued ability to innovate, and in this note, we explore other evidence of China's underestimated innovation capability. In 2023, China accounted for an impressive quarter of global patent filings. However, the relatively low correlation between the CSI300's PE and China ...

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Technology and Express Delivery in China - **Date**: February 6, 2025 Core Insights 1. **Government Initiatives**: Premier Li Qiang emphasized the need for enhanced coordination between markets and policies, aiming to promote scientific and technological innovation and increase counter-cyclical adjustments [5][4][1] 2. **Express Delivery Performance**: During the Spring Festival holiday, China's express delivery sector processed 1.9 billion packages, with a 31% increase in package collection and a 26.7% increase in shipments year-over-year [5][4][1] 3. **DeepSeek's Growth**: DeepSeek's daily active users (DAUs) exceeded 20 million within 21 days of its official launch, positioning it competitively against ChatGPT and ByteDance's Doubao [5][8][1] Company-Specific Developments 1. **Temu and Shein Retailers**: These retailers are required to pay an additional 30% of the retail value of goods as a deposit, which will be adjusted based on actual tax charges from U.S. tariffs, raising concerns about potential logistical delays [4][6][1] 2. **BYD's Strategic Moves**: BYD plans to hold an intelligence strategy conference on February 10 to discuss updates on smart driving capabilities and aims to hire 20,000 employees in Zhengzhou in Q1 [5][8][1] 3. **Xiaomi's Sales Target**: Xiaomi has set a target to sell 10,000 units of its luxury EV SU7 Ultra in 2025 [5][8][1] 4. **XPeng's Autonomous Driving Ambitions**: XPeng's CEO expressed confidence that the company could achieve Level 3 autonomous driving across all scenarios by the second half of 2025, with plans to expand its EV offerings [5][8][1] 5. **JD.com's Acquisition Interest**: JD.com has reportedly renewed interest in acquiring Germany's electronics retailer Ceconomy AG, although details remain unconfirmed [5][8][1] Additional Noteworthy Information - **Macau Travel Statistics**: Macau saw a 0.6% year-over-year increase in total inbound and outbound travelers during the Spring Festival, totaling 4.91 million [5][4][1] - **Market Context**: The report highlights the ongoing challenges and opportunities within the Chinese technology sector, particularly in light of government policies and market dynamics [5][4][1]

Summary of Shenzhen Envicool Technology Co Ltd Conference Call Company Overview - **Company**: Shenzhen Envicool Technology Co Ltd - **Ticker**: 002837.SZ - **Market Cap**: Rmb27,482.5 million - **Current Share Price**: Rmb37.16 (as of February 5, 2025) - **52-Week Range**: Rmb46.68 - Rmb13.16 - **Analyst Rating**: Overweight - **Price Target**: Rmb33.00 Key Industry Insights - **Industry**: China Industrials, specifically focusing on cooling technology and high-performance GPUs - **Market Trends**: - Recent stock price correction of Envicool by 18% over two trading days, compared to CSI300's decline of 1% [2] - Concerns regarding lower demand for high-performance GPUs and slower growth in liquid cooling penetration [1][7] - Anticipated 30% year-on-year growth in cloud capital expenditures to US$340 billion in 2025, down from ~50% in 2024 [7] Core Perspectives - **Short-term Outlook**: Slightly negative due to market corrections and demand concerns [3] - **Long-term Outlook**: Constructive, driven by the growth of AI applications and decreasing costs, which are expected to benefit Envicool [1][7] - **Liquid Cooling Market**: Lower expectations for total addressable market (TAM) and penetration rates due to reduced demand for high-performance chips [7] Financial Performance - **Earnings Growth**: Year-on-year growth slowdown noted in 4Q24 earnings compared to the first nine months of 2024 [7] - **EPS Forecast**: Projected 33% year-on-year EPS growth in 2025, with a valuation methodology applying a 35x P/E ratio [10] Risks and Opportunities - **Risks**: - Potential for lower-than-expected shipments of GB200 and slower adoption of liquid cooling technology, which may negatively impact volume and pricing in the near term [7] - Global economic slowdown and rising raw material prices could lead to margin contraction [12] - **Opportunities**: - Strong relationships with major companies like Huawei and Bytedance, with Bytedance maintaining a robust capex guidance of approximately Rmb160 billion for 2025 [7] - Positive outlook for overseas market exploration, particularly in Southeast Asia, leveraging competitive product offerings and project experience [7] Conclusion - The recent stock price correction of Shenzhen Envicool Technology Co Ltd presents a potential entry opportunity for investors, with a long-term positive outlook supported by the growth of AI applications and strategic partnerships [7]

Summary of the Conference Call on China Materials - Steel Industry Industry Overview - The report focuses on the **China Materials** sector, specifically the **steel industry** and its demand trends in China as of February 2025 [1][7]. Key Points and Arguments 1. **Demand Recovery Expectations**: Market expectations regarding demand recovery in the steel sector remain cautious, with a revised near-term pecking order established as Steel, Cement, Coal, Gold, Copper, Aluminum, and Lithium [1][7]. 2. **Steel Production Data**: - Total steel production in China from January 31 to February 6 was **8.1 million tons (mt)**, reflecting a **0.2% week-over-week (WoW)** increase and a **0.6% year-over-year (YoY)** increase. - Year-to-date steel production totaled **48.9 mt**, down **4.8% YoY** [2]. - Breakdown of production: - Rebar: **1.8 mt** (+3.5% WoW, -4.3% YoY) - Hot-Rolled Coil (HRC): **3.2 mt** (+0.2% WoW, +2.7% YoY) - Cold-Rolled Coil (CRC): **0.8 mt** (-1.7% WoW, +2.7% YoY) [2]. 3. **Steel Inventory Levels**: - As of February 6, total steel inventory was **16.7 mt**, up **6.4% WoW** but down **6.0% YoY**. - Inventory breakdown: - Steel mills: **5.2 mt** (+4.7% WoW, +2.3% YoY) - Traders: **11.5 mt** (+7.2% WoW, -9.4% YoY) [2]. 4. **Apparent Consumption**: - For the week of January 31 to February 6, apparent consumption was **7.1 mt**, a significant **44.6% WoW** increase and **20.7% YoY** increase. - Year-to-date apparent consumption was **43.3 mt**, down **16.4% YoY** [2]. - Breakdown of apparent consumption: - Rebar: **1.3 mt** (16x WoW, -91.6% YoY) - HRC: **3.0 mt** (+10% WoW, +11.8% YoY) - CRC: **0.8 mt** (+34.1% WoW, -0.3% YoY) [2]. Additional Important Insights - The report emphasizes the importance of monitoring high-frequency demand trends to identify potential investment opportunities and risks within the steel sector [1][7]. - The data indicates a mixed performance across different steel products, with rebar showing significant volatility in apparent consumption [2]. - The overall cautious sentiment in the market suggests that investors should remain selective and consider broader economic indicators when evaluating investment opportunities in the materials sector [1][7].

Summary of Weichai Power Conference Call Company Overview - **Company**: Weichai Power - **Industry**: Heavy-Duty Truck (HDT) and Engine Manufacturing Key Points and Arguments Stock Performance - Weichai's stock has shown a positive shift in 2025, with H-shares up 8% and A-shares up 2% year-to-date, reversing the negative trend of 2024 where H-shares fell by 9% and A-shares remained flat [2][4] Heavy-Duty Truck (HDT) Market Outlook - The outlook for HDT demand is optimistic, driven by China's trade-in initiatives, despite a 28% year-over-year decline in January 2025 HDT sales to 70,000 units due to early Lunar New Year effects [2][8] - Anticipation of improved sales in February 2025 is supported by a stable outlook for the year, aided by the newly announced China IV trade-in policy aimed at reducing emissions [2][4] Large-Bore Engine Expansion - Weichai is strategically expanding in large-bore engines, which is expected to enhance its presence in the data center sector, addressing the growing power demand [3][9] - The company sold 6,000 units of large-bore engines in the first nine months of 2024, with a 15% increase in average selling price, although volume growth fell short of the annual target [9] KION's Performance - Weichai's German subsidiary, KION, reported strong 4Q24 results, with a 15% increase in share price over the past month, driven by robust performance and new initiatives with Nvidia [4][8] - KION's restructuring plan aims for cost savings of €140-160 million by 2026, which is expected to positively impact Weichai [4][8] Valuation and Investment Thesis - Weichai is rated Overweight with a price target of HK$19.00 for H-shares and Rmb21.00 for A-shares, based on discounted cash flow (DCF) valuation [6][15] - The company has a dividend yield of approximately 6%, supported by ongoing initiatives to enhance shareholder returns [4][15] Risks to Outlook - Key risks include a slower-than-expected recovery in HDT sales, weaker market-share gains, and underperformance of KION [14][16] LNG Truck Market - LNG truck sales in January 2025 saw only a 4% year-over-year decrease, indicating a positive trend with a domestic penetration rate rising to 22% from 19% a year ago [8] Additional Important Insights - The early timing of the Lunar New Year has distorted sales data, and the decline in January HDT sales is not considered meaningful in isolation [8] - Weichai's strategic initiatives across hydrogen fuel cells, hydraulic components, and excavator engines are gaining traction, indicating a diversified growth strategy [13][15] This summary encapsulates the critical insights from the Weichai Power conference call, highlighting the company's performance, market outlook, strategic initiatives, and associated risks.