5 February 2025 Global Energy Storage Global Energy Storage: Gigafactory expansion still strong but investment slowing 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 Global battery manufacturing capacity is estimated to grow by 43% y-o-y in 2025 which will exceed demand growth of 25-30%. Global battery capacity grew by 34% y-o-y to 2.8TWh in YE24 (vs. demand of 1.2TWh). C ...

Summary of Conference Call Notes Industry Overview - The report focuses on the **China services sector**, specifically the **Caixin China General Services Business Activity Index (PMI)** Key Points 1. **PMI Decline**: The Caixin services PMI decreased to **51.0 in January** from **52.2 in December**, indicating continued expansion in the service sector but at a slower pace [3][4] 2. **New Business Index**: The new business index fell to **51.0 in January** (down from **52.7 in December**), suggesting a slowdown in new business activity [4] 3. **Outstanding Business Index**: The outstanding business index decreased to **49.4 in January** (from **50.9 in December**), indicating a contraction in outstanding business [4] 4. **Export Orders**: The new export orders sub-index increased to **51.2 in January** (up from **48.9 in December**), suggesting improved demand for exports [4] 5. **Employment Sub-index**: The employment sub-index edged down to **48.8 in January** (from **49.4 in December**), reflecting a reduction in workforce as companies focus on efficiency [4] 6. **Price Indicators**: Input prices sub-index rose slightly to **50.8** (from **50.7 in December**), while output prices sub-index decreased to **50.3** (from **50.5 in December**), indicating squeezed margins [5] 7. **Cost Pressures**: Companies reported that higher raw material and labor costs contributed to the rise in input prices, but they are willing to absorb some costs to support sales [5] Additional Insights - The decline in employment is attributed to a lack of capacity pressure and a focus on cost-cutting measures by firms [4] - The overall sentiment indicates a cautious outlook for the service sector, with potential risks stemming from rising costs and reduced hiring [5]

Mild rise of polysilicon prices amid supply cut – The average market price of rod-type polysilicon rose 2-3% from Rmb36.5-40.6/kg to Rmb37.2-41.7/kg in January, while that of granular silicon also edged up 3% from Rmb38/kg to Rmb39/kg in the month, per price data from the China Silicon Industry Association. According to the Association, PRC monthly polysilicon output dropped 43.4% yoy and 6.6% mom to 970k MT in January. Most polysilicon suppliers are actively fulfilling the commitments of industry self-regu ...

Summary of Global Gas and Power Insights - February 2025 Industry Overview - The report focuses on the global liquefied natural gas (LNG) market, particularly the impact of China's new tariffs on US LNG imports and the subsequent effects on global trade flows and pricing dynamics. Key Points China's Tariff on US LNG - China announced a 15% tariff on US LNG imports effective February 10, 2025, which is expected to reshape global trade flows but have limited impact on Asian JKM LNG and European TTF natural gas prices [1][7][24] - In 2024, the US supplied only 5.6% of China's total LNG imports, and in 2023, only 4.0% of US LNG exports went to China, indicating a minimal direct impact on the overall market [7][24] Historical Context - The report references the 2019 scenario where China diversified its LNG imports away from the US due to tariffs, leading to a 12% year-over-year increase in total LNG imports from other countries [2][8] - US LNG exports grew by 68% year-over-year in 2019, compensating for the loss of demand from China with increased exports to Europe and other regions [10] Price Forecasts - Price forecasts for 1Q25 and 2Q25 TTF have been raised to $15.4/MMBtu and $15.0/MMBtu, respectively, reflecting a 14% and 11% increase from previous forecasts due to higher-than-expected European gas demand [4][21] - JKM price forecasts for 1Q25 and 2Q25 have also been increased to $14.4/MMBtu and $15.0/MMBtu, with a 3% and 11% increase from prior forecasts [5][22] Market Dynamics - European gas demand has been buoyed by lower temperatures and a decline in wind and hydro power generation, which fell by 18% and 27% year-to-date, respectively [4][21] - The potential reduction of LNG exports from Indonesia could tighten the global LNG market, although the actual impact may be muted due to high LNG prices dampening domestic demand [24] Long-term Outlook - With new US LNG export terminals coming online from 2025, TTF and JKM prices are expected to enter another down cycle post-2026, similar to the price declines observed in 2019 [3][15] - The long-term implications for US Henry Hub prices are complex, with potential LNG curtailments affecting market dynamics, but a constructive outlook on long-term prices remains [20] Additional Insights - The report highlights the interplay between AI developments and energy demand, suggesting that advancements in AI could lead to increased energy consumption, particularly in natural gas [20] - The report emphasizes the importance of monitoring Indonesia's LNG export policies and their potential impact on global supply dynamics [24] Conclusion - The global LNG market is currently facing significant shifts due to geopolitical factors, changing demand patterns, and evolving supply dynamics. The anticipated tariff on US LNG imports by China is expected to have limited immediate effects on pricing, but the long-term outlook remains uncertain with new export capacities and potential market adjustments.

Flash | 05 Feb 2025 07:29:32 ET │ 11 pages PDD Holdings Inc (PDD.O) Quick Thoughts On USPS' Suspension Of Inbound Parcels from China (Including Hong Kong) CITI'S TAKE USPS announced a temporary suspension of international inbound parcels from China (including Hong Kong) effective 4-Feb. We believe this is likely aimed at ensuring its systems are integrated with US CBP system on latest custom clearance procedures following the implementation of new tariffs by US on imports from China. We estimate ~30-50% of ...

February 5, 2025 07:50 AM GMT Investor Presentation | Japan Energy & Utilities: Industry View In-Line Focus in 2025: 1) earnings outlook, 2) changes in management stances, 3) the Japanese government's Seventh Basic Energy Plan and the new GHG emissions target. Key Takeaways Related report: Japan Energy & Utilities Industry: P/B Enhancement Plans (Jan 2025) (9 Jan 2025) Next (7th) Strategic Energy Plan Draft Calls for Making Most of Renewables and Nuclear Power (18 Dec 2024) Japan's Nuclear Reboot (11 Oct 20 ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **US Economics** sector, specifically analyzing trade data and its implications for the economy. Core Insights and Arguments - The **trade balance** in December widened significantly from **-$78.9 billion** to **-$98.4 billion**, attributed to increased imports and a decline in exports [1][4][6] - **Goods imports** rose by **4.1%**, while **goods exports** fell by **4.2%** [4][6] - A notable increase in imports was driven by **industrial supplies**, particularly **finished metal shapes** [7][8] - Approximately **$11.3 billion** of the total increase in goods imports came from **Switzerland**, which saw a rise from **-$3.9 billion** to **-$13.0 billion** in trade deficit [5][7] - The **goods trade deficit** with **Canada** increased from **-$5.0 billion** to **-$7.9 billion**, while the deficit with **Mexico** remained stable at **-$15.2 billion** [5] Potential Risks and Considerations - There is uncertainty regarding whether the strong imports are due to **front-loading** ahead of potential tariffs, although recent data does not clearly indicate this [6][8] - The **threat of tariffs** could lead to further widening of the trade deficit, particularly with Canada and Mexico, following a **30-day delay** in tariffs [10][11] - The report suggests that trade data may remain **volatile** in the coming months due to these tariff implications [10] Additional Important Information - The report highlights that **exports** also fell across various sectors, with the most significant declines in **autos** and **industrial supplies** [9] - The overall increase in imports from countries like **Australia** (+77% MoM) and **Hong Kong** (+284% MoM) suggests potential one-off disruptions, possibly related to seasonal adjustments [8] - The widening trade deficit is expected to exert downward pressure on **GDP growth** in Q1, although this may be offset by stronger investment or inventory levels [10]

Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **Global Foreign Exchange (FX) Market** and the implications of **US tariffs** on various currencies, particularly the **EUR**, **CAD**, and **GBP** [3][8][25]. Core Insights and Arguments 1. **US Tariff Announcements**: The US announced a 25% tariff on imports from Canada and Mexico and a 10% tariff on China, which initially caused a spike in the USD but was later unwound due to a one-month delay in tariff implementation [3][8]. 2. **Market Sentiment**: There is a prevailing market consensus that the US will primarily use tariffs as a negotiating tool, leading to a limited lasting impact on the broad USD and implied FX volatility [4][9]. 3. **Inflationary Risks**: US inflation breakevens are rising, indicating that the market is pricing in inflationary risks associated with tariffs, despite falling oil prices [4][10]. 4. **EUR Underpricing Tariff Risk**: The EUR is perceived to be underpricing the risk of tariffs, with short-dated implied EUR/USD volatility trading below realized volatility, suggesting a market expectation of normalization rather than turbulence [5][16]. 5. **Political Uncertainty in Europe**: Domestic political risks in Europe are skewed towards less favorable outcomes for the EUR, particularly with upcoming elections in Germany and ongoing political tensions in France [17][22]. 6. **CAD and USDCAD Dynamics**: The USDCAD currency pair has been volatile due to tariff announcements, with a key level identified at 1.48. The market is advised to buy dips near 1.41, reflecting a broader bullish view on the USD [28][30]. 7. **GBP Outlook**: The GBP has been one of the few currencies benefiting from US tariff risks, but it remains the weakest performer in G10 currencies year-to-date. The upcoming BoE rate decision is expected to result in a 25 basis point cut [25][26][27]. Additional Important Content - **Economic Data Impact**: Recent US economic data has been mixed, with strong manufacturing data contrasted by weak job openings, contributing to uncertainty in the growth outlook [20][24]. - **Future Tariff Deadlines**: Key upcoming dates include the 30-day tariff delay deadline on March 4 and the Liberal leadership contest on March 9, which could significantly impact market expectations [32][35]. - **FX Trade Recommendations**: The report includes various FX trade recommendations, such as being short EUR/JPY and long EUR/USD volatility swaps, reflecting the analysts' views on market positioning [37]. This summary encapsulates the critical insights and implications discussed in the conference call, focusing on the FX market's response to US tariffs and the broader economic landscape.

Summary of Alphabet Inc. Conference Call Company Overview - **Company**: Alphabet Inc. - **Date**: February 5, 2025 - **Analyst**: Doug Anmuth, J.P. Morgan Key Points Financial Performance - **4Q Results**: Alphabet's revenue increased by 12% (FXHN) with operating income margin at 32.1%, slightly below expectations [2][8] - **Search & YouTube Growth**: Search revenue grew approximately 13% (FXHN), and YouTube revenue increased by over 14% (FXHN), both in line with estimates [2][8] - **Network Revenue Decline**: Network revenue decreased by 4% year-over-year, contributing to the overall revenue shortfall [2][8] Capital Expenditure (Capex) - **2025 Capex Guidance**: Google anticipates a significant capex increase to approximately $75 billion, a 43% rise following a 63% increase in 2024 [2][3] - **Investment Focus**: Capex will primarily be allocated to AI infrastructure, including servers, data centers, and networking equipment [2][3] Cloud Business - **Cloud Revenue Growth**: Google Cloud revenue grew by 30% to nearly $12 billion in 4Q, but this was 2% below estimates [2][7] - **Capacity Constraints**: Google Cloud is experiencing capacity constraints, with demand exceeding supply, which is expected to ease as more capacity comes online [2][7] Cost and Margin Outlook - **Operating Margin**: The operating income margin for 4Q was 32.1%, reflecting a year-over-year expansion of 465 basis points [2][7] - **Depreciation Impact**: Costs are expected to rise due to accelerated depreciation, projected to grow by 60% in 2025 [2][7] - **Margin Expansion Expectations**: Despite cost pressures, a modest margin expansion of 50 basis points is anticipated for 2025 [2][7] Market Sentiment and Comparisons - **Stock Reaction**: Google shares fell over 7% following the 4Q results due to concerns over heavy infrastructure investment and lower revenue growth expectations [2][3] - **Comparison with Meta**: The market's reaction to Google's capex contrasts with Meta's 60%+ capex increase, attributed to perceived returns on AI investments being more evident in Meta's advertising business [2][3] Future Projections - **Revenue and Income Estimates**: 2025 revenue estimates for Alphabet have been adjusted down by less than 1%, while operating income estimates have decreased by 2% primarily due to higher depreciation [2][9] - **Price Target**: The price target for GOOGL shares is set at $220 for December 2025, based on a valuation of approximately 22 times the estimated GAAP EPS of $10.03 for 2026 [2][5] Additional Insights - **Advertising Growth**: Solid advertising growth was noted, particularly in financial services and retail sectors, contributing to the overall positive sentiment despite the challenges [2][7] - **AI Innovations**: Continued investment in AI is viewed positively, with expectations that AI Overviews are monetizing similarly to traditional search [2][3] This summary encapsulates the key insights from the conference call regarding Alphabet Inc.'s financial performance, strategic investments, and market outlook.

4 February 2025 | 11:42PM EST +1(917)343-3110 | brian.k.lee@gs.com Goldman Sachs & Co. LLC Nick Cash +1(212)357-6372 | nick.cash@gs.com Goldman Sachs & Co. LLC | PNR 12m Price Target: $104.00 | | --- | | Price: $98.26 | | Upside: 5.8% | PNR reported solid 4Q24 results, with margins and EPS exceeding expectations. While sales guidance was a slight disappointment, mostly due to the resi recovery taking longer than expected to materialize among other headwinds (e.g., FX and progressing 80/20), the company is c ...