Summary of China Equity Strategy Conference Call Industry Overview - The focus is on the **AI-related stocks in China** and their performance compared to global counterparts, particularly in the context of crowding metrics and institutional investment trends [1][2]. Key Points 1. **Crowding Metrics**: - Current crowding data indicates that while crowding for China's AI stocks has increased, it remains low compared to the peak in June 2023. The crowding score for US AI stocks increased by 0.2 over two years, while China's increased only by 0.02 year-to-date [1]. - A-share AI stocks have underperformed compared to offshore counterparts, with institutional positions elevated before the rally but subsequently reduced [1]. 2. **Performance Comparison**: - AI-related stocks in China are up **24% year-to-date**, outperforming the broader MSCI China index by **9%**. HK and ADR internet and tech stocks rose **31%**, while A-share tech stocks increased by **9%** [2]. - Institutional investors were overweight in A-share tech prior to the rally, while they were underweight in HK and ADR stocks, suggesting potential for increased institutional holdings in the latter [2]. 3. **Market Outlook**: - The MSCI China index is trading at **11.3x forward P/E**, close to the historical average of **11.7x**, indicating potential for near-term consolidation as investors await earnings results and policy reviews [3]. - Preference is given to A-shares over HK stocks due to their underperformance year-to-date (-16%) and resilience to geopolitical issues [3]. 4. **Investment Strategy**: - The analysis suggests that stocks with reasonable but improving crowding metrics are likely to outperform in the near term. As a result, **Alibaba** has been added to the model portfolio, replacing **PDD Holdings** [4][19]. 5. **Sector Preferences**: - The report remains positive for the full year, citing supportive government policies, improving company profitability, and a slowdown in property price declines. Preferred sectors include high-dividend names, internet, A-share TMT, and select consumer stocks [7]. Additional Insights - **Institutional Flow Data**: There is evidence that long-only investors, particularly from emerging markets, have begun to reallocate to China positions year-to-date, indicating a potential shift in investment sentiment [2][18]. - **Risks**: The report highlights risks such as a hard landing in the property market, capital outflows due to currency depreciation, and slow structural reforms, which could impact market stability [39]. This summary encapsulates the key insights and strategic recommendations from the conference call, focusing on the dynamics of AI-related stocks in China and the broader market context.

19 February 2025 | 2:46PM EST Apple Inc. (AAPL): iPhone 16e announcement, largely as expected Apple introduced the new iPhone 16e on February 19, 2025, the fourth generation of its lower-priced iPhone SE product line. The refreshed iPhone 16e represents the first upgrade for the entry-level iPhone since March 2022 when Apple released the iPhone SE 3. The iPhone 16e is the first smartphone to include the Apple designed cellular modem C1, which was largely expected but is notable as it marks a shift away from ...

Summary of Bilibili Inc 4Q24 Earnings Call Company Overview - **Company**: Bilibili Inc (BILI.O, BILI US) - **Industry**: China Internet and Other Services - **Market Cap**: US$9,359 million - **Stock Rating**: Equal-weight - **Price Target**: US$18.00, representing an 11% downside from the current price of US$20.33 as of February 19, 2025 Financial Performance - **Total Revenue**: Rmb7.6 billion, a 22% year-over-year increase and 1% above Morgan Stanley estimates [1][2] - **Non-GAAP Operating Profit**: Rmb481 million, 19% above Morgan Stanley estimates and 21% above consensus [2] - **Non-GAAP Net Income**: Rmb453 million, in line with Morgan Stanley estimates and 20% above consensus [2] Revenue Breakdown - **Mobile Games**: Rmb1.8 billion, down 1% quarter-over-quarter but up 79% year-over-year, driven by the contribution from the game "San Mou" [6] - **Live Broadcasting and VAS**: Rmb3.1 billion, up 8% year-over-year, showing resilience [6] - **Advertising**: Rmb2.4 billion, up 24% year-over-year, maintaining industry-leading growth [6] - **E-commerce and Others**: Rmb465 million, down 16% year-over-year [6] Cost and Profitability Metrics - **Gross Profit**: Rmb2.788 billion, with a gross margin of 36.1%, up 9.9 percentage points year-over-year [2] - **Operating Profit**: Rmb126 million, a significant improvement from previous quarters [2] - **Net Income**: Rmb90 million, a notable recovery from losses in prior quarters [2] Key Insights - **Operational Efficiency**: Improved management of operating expenses, particularly in general and administrative costs, contributed to better profitability [2] - **Market Position**: Bilibili continues to show strong growth in advertising revenue, indicating a robust market position despite challenges in other segments [6] - **Future Guidance**: The company is expected to continue its growth trajectory, with revenue projections for the next fiscal years showing an upward trend [3] Risks and Considerations - **Upside Risks**: Stronger-than-expected advertising revenue growth and better user retention for mobile games could enhance performance [9] - **Downside Risks**: Potential competition leading to lower monthly active user growth and higher costs in sales and marketing could impact margins [9] Conclusion Bilibili Inc's 4Q24 results reflect a strong recovery in revenue and profitability, driven by effective cost management and growth in key segments like advertising and live broadcasting. However, the company faces challenges from competition and market dynamics that could affect future performance.

Asia Pacific Equity Research 20 February 2025 Correction (See disclosures for details) BYD- H&A Lift PTs to HK$600/Rmb560 on expectations that BYD will become the 'Toyota' of the global EV marketplace Share price strength set to continue: We have spoken to nearly 200 investors over the past one week on calls and in meetings following placing BYD on Positive Catalyst Watch on 7 Feb (here) and the company's reverse roadshow where we had the chance to test drive BYD's latest models (here). All in all, we belie ...

A c t i o n | 20 Feb 2025 16:33:13 ET │ 22 pages Alibaba Group Holding Stepped-up Capex Spend to Capture AI & Cloud Inflection Growth CITI'S TAKE FY3Q25 result marks a pivotal change of sentiment with CMR reaccelerated to +9% yoy and TTG EBITA returned to positive 2% yoy growth, AIDC targets to turn quarterly profitable in FY2026 and stepped-up capex investment to capture the inflection point of AI transformation era. Being the Asia No. 1 and world No. 4 cloud service provider and having developed the propr ...

China Materials Flash | 19 Feb 2025 22:39:53 ET │ 9 pages 2025 On-ground Demand Monitor Series #19– Funding Availability Rate Data Tracker CITI'S TAKE In this series of notes, we aim to track and analyze high-frequency, on- ground demand trends in China – market expectation on a demand recovery has been mostly cautious. Our revised near-term sector pecking order is: Steel, Cement, Coal, Gold, Copper, Aluminum, and Lithium stocks (see our notes: China Steel – Shifting Our Near-term Sector Pecking Order and C ...

Summary of China Auto Sector Conference Call Industry Overview - The conference call focused on the **China Auto Sector**, particularly the long-term outlook for Chinese carmakers in the context of global competition and innovation [1][8]. Core Debates and Insights 1. **Innovation and Competitiveness** - Chinese carmakers are seen as leading in innovation, potentially surpassing Western leaders like Tesla due to fierce market competition and a robust industry ecosystem [2][3]. - The global volume of Chinese autos is projected to expand from **18 million to 40 million units**, indicating significant growth potential [2]. 2. **Long-term Addressable Market and Profit Pool** - Chinese carmakers currently hold **20% of global market share** and over **60% of the EV market share**, but only **11% of global market cap** and **8% of profit pool** [4][73]. - The potential for profit growth exists through market share gains in China and emerging markets, premiumization, and eventual penetration into developed markets [24][30]. 3. **Competition Dynamics** - Large OEMs in China are agile adopters of technology, leveraging partnerships and scale to democratize innovations faster than new entrants [3][48]. - The competition is shifting from electric powertrains to intelligence, particularly in smart cockpit and autonomous driving technologies [13][14]. 4. **Profit Allocation** - The report discusses the balance of power between OEMs and suppliers, suggesting that OEMs currently retain significant bargaining power [49][56]. - Suppliers, while becoming more competitive, often face challenges in achieving high pricing power against OEMs [50][52]. 5. **Comparison with US Peers** - The report argues against directly benchmarking Chinese companies against US peers due to differing market dynamics and competitive advantages [60][64]. - Chinese carmakers are viewed as more agile than their Western counterparts, benefiting from a less burdensome legacy of internal combustion engines [68][72]. Key Financial Insights - **Stock Recommendations**: - BYD is favored for its scale and cost leadership, while Li Auto is highlighted for its AI initiatives [4]. - **Market Cap Rankings**: As of February 19, 2025, the market cap ranking is: Xiaomi > BYD > Li Auto > Geely > XPeng > Great Wall Motor [36][42]. Additional Considerations - **Market Challenges**: - The report acknowledges potential barriers such as Western protectionism, tariffs, and the inability of Chinese carmakers to access lucrative Western markets [21][23]. - **Future Outlook**: - Despite current challenges, there is optimism regarding the long-term growth potential of Chinese carmakers, with expectations that their share of the global profit pool could rise significantly [73][78]. Conclusion - The China Auto Sector is positioned for significant growth driven by innovation, competitive dynamics, and market expansion opportunities, despite facing challenges from global market access and competition. The long-term outlook remains positive for leading Chinese carmakers, particularly in the EV segment.

Key Takeaways from the Conference Call Industry Overview - The report focuses on the **China Express industry** for January 2025, highlighting the performance of major players in the sector [1][8]. Volume Growth - All major players in the express delivery sector achieved **year-over-year (YoY) volume growth** despite the earlier Chinese New Year (CNY) [2]. - **SF Express** led the market with a **16% YoY volume growth**, attributed to more stable service during CNY [2][12]. - **STO Express** replaced **Yunda** as the third-largest player in the industry, achieving **12% YoY volume growth** [2][12]. - **Yunda** lagged behind with only **3% YoY volume growth**, while **YTO Express** recorded a **6% YoY increase** [2]. Revenue Performance - **SF Express** also outperformed in terms of revenue, reporting a **6.5% YoY revenue growth** [3]. - **STO Express** and **YTO Express** followed with **5.1% YoY** and **1.5% YoY revenue growth**, respectively [3]. - **Yunda** experienced an **8% YoY revenue drop**, indicating a significant underperformance compared to its peers [3]. Average Selling Price (ASP) - The ASP for **Yunda** saw the largest decline, with an **11% YoY drop**, making it the lowest among its competitors [4]. - Other players also experienced ASP declines: **SF** at **8.2%**, **STO** at **6%**, and **YTO** at **4%** [4]. - Despite the overall decline, all players except Yunda achieved **month-over-month (MoM) ASP growth** due to price hikes during CNY [4]. Market Share Insights - As of January 2025, the market shares were as follows: - **SF Express**: 8.1% (up 0.3 percentage points YoY) - **Yunda**: 12.2% (down 1.1 percentage points YoY) - **STO**: 12.3% (no change YoY) - **YTO**: 13.8% (down 0.9 percentage points YoY) [5][6]. Industry Consolidation - The negative revenue growth of Yunda is viewed as a sign of **industry consolidation**, which is considered a positive signal for the industry and leading players [12]. - The overall performance indicates strong industry volume growth, despite the challenges faced by some players [12]. Conclusion - The express delivery sector in China is experiencing a dynamic shift, with leading players like SF Express capitalizing on stable service and growth opportunities, while others like Yunda face challenges that may lead to further consolidation in the industry [12].

Flash | 20 Feb 2025 10:55:55 ET │ 11 pages China Battery Materials Lithium into 3rd week of Feb – Looming pressure on ASP amid rising inventory CITI'S TAKE Lithium prices surprisingly remained largely flattish WoW last week, hovering at ~Rmb76k/t for battery-grade, even as we saw the supply was scheduled to come back online as expected (+17% WoW). We believe the transactions in the spot market should be limited, and downstream players are holding a wait-and-see attitude, evidenced by (1) downstream inventor ...

Summary of Key Points from the Conference Call Industry Overview - The focus is on the small-cap perspective in tech-related subindustries, particularly semiconductor-related companies [3][4] - The overall industry view is categorized as "In-Line" by Morgan Stanley MUFG Securities [1] Semiconductor Industry Insights - There is no change in earnings growth trends at semiconductor testing and cutting-edge package companies [5] - Orders for electrical power equipment have been increasing due to production capacity constraints and future delivery projects, with demand driven by the replacement of aging equipment, renewable energy, data centers, and power grid battery systems [7] - The market for front-end semiconductor processing equipment (SPE) is dull in 2025, with risks including a slowdown in China and ongoing adjustments in SPE for power chips [8] - Strong demand for high-bandwidth memory (HBM) in DRAM SPE is noted, but a cautious outlook is maintained for commodity DRAM [8] - A recovery in NAND is observed after a prolonged downturn, with advancements in cryogenic etching and hybrid bonding technologies [8] - Demand for photoresist-related materials remains strong, particularly for EUV applications [8] - The timing of recovery in automotive and industrial equipment demand has been delayed, with strong demand noted only for testing-related components [9] Market Forecasts - Forecasts for various end markets indicate fluctuations in unit sales, with notable projections for servers, PCs, smartphones, and light vehicles [10] - For example, smartphone sales are projected to decline from 1,206 million units in 2023 to 1,164 million in 2024, before recovering to 1,283 million by 2026 [10] - The forecast for electric vehicles (BEV) shows significant growth, with projections increasing from 8 million units in 2024 to 14 million by 2026 [10] Stock Price Trends - Stock price trends for semiconductor equipment-related companies are tracked, with various companies showing different performance metrics [12][15][21] - The Nikkei average serves as a benchmark for comparison, with specific companies like Tokyo Electron and ASML highlighted for their stock performance [13][14] Company-Specific Performance - Detailed sales performance data for specific companies in the semiconductor supply chain is provided, showing year-over-year changes in sales [27][28] - For instance, Shinko Electric Industries reported a significant decline in plastic packaging sales, dropping by 40% in one quarter [28] - Other companies like AJINOMOTO and Taiyo Holdings also show varying performance metrics, indicating a mixed outlook across the sector [28] Conclusion - The semiconductor industry is experiencing a complex landscape with both challenges and opportunities, particularly in the context of evolving technologies and market demands [8][9] - Continuous monitoring of demand trends, stock performance, and company-specific earnings will be crucial for investors looking to navigate this sector effectively [8][27]