Asia Pacific Equity Research 07 February 2025 BYD- H&A Placing on Positive Catalyst Watch: The advancement in AD solution and adoption Riding on two mega trends in 2025: 1) rising adoption of AD solution and 2) exploiting overseas opportunity: BYD-H is up 18% YTD vs. HSCEI 6%. We believe two investment themes will dominate the China auto market this year and are very relevant to the company: Penetration of L2+ advanced autonomous driving (AD) feature will rise sharply, driven by rapid reduction of BOM (bill ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **US Multi-Industrials** sector, highlighting recent manufacturing data and trends in the industry [1][2]. Core Insights - **US Industrial Recovery**: Commentary from recent earnings reports indicates the onset of a US industrial recovery expected in **2025**, driven by improving customer sentiment and order trends, despite a weaker end to **2024** [2][4]. - **PMI Improvements**: The **ISM PMI** improved by **1.7 points month-over-month (M/M)** to **50.9**, marking the first month of expansion since **October 2022**. This reflects stronger new order expansion and a return to growth in export orders [4][39]. - **Business Confidence**: Business confidence for the upcoming year reached its highest level in nearly three years, with over **50%** of respondents anticipating increased manufacturing production in **2025** [4][41]. - **Capital Investment Lag**: Industrial capital investment typically lags behind sentiment by **1-2 quarters**, suggesting that the positive sentiment may lead to increased investments in the near future [2][4]. Manufacturing Data - **US Industrial Production**: In **December**, US manufacturing industrial production increased by **60 basis points (bps)** M/M, with notable strength in durable goods, particularly aerospace and miscellaneous transportation equipment, which rose by **6.3%** [11][13]. - **New Orders**: New orders for non-defense capital goods excluding aircraft increased by **53 bps** M/M, indicating a positive trend in demand [15][30]. - **Capacity Utilization**: Capacity utilization for manufacturing increased by **0.3 points M/M** to **76.5%** in December, reflecting improved operational efficiency [24][26]. Regional Insights - **Philly Manufacturing Activity**: The Philadelphia manufacturing activity index saw a significant increase, with current business activity rising sharply M/M, indicating robust production and order levels [10][55]. - **Texas Manufacturing**: Texas manufacturing activity also improved, with both current and future activity indexes showing M/M growth, particularly in new orders, which reached their highest level since **April 2022** [10][57]. International Context - **China's Manufacturing**: The official China PMI decreased by **1 point M/M**, indicating contraction, while the Caixin PMI remained slightly above **50**, suggesting mixed signals in the Chinese manufacturing sector [17][72]. - **European Manufacturing**: The Eurozone PMI showed signs of moderating contraction, with the strongest future growth expectations in nearly three years, indicating a potential recovery in the European manufacturing landscape [17][20]. Additional Observations - **Small Business Optimism**: The NFIB Small Business Optimism Index improved by **3.4 points M/M**, reflecting increased confidence among small businesses regarding future economic conditions [45][46]. - **CEO Economic Outlook**: The CEO Economic Outlook Index improved by **12 points quarter-over-quarter (Q/Q)**, indicating a more favorable outlook among corporate leaders [20][55]. This summary encapsulates the key points from the conference call, providing insights into the current state and future expectations of the US Multi-Industrials sector, along with relevant international trends.

Flash | 06 Feb 2025 10:03:30 ET │ 12 pages China Battery Materials Lithium into 1st week of Feb – Downstream extended the resilience albeit inched down during CNY CITI'S TAKE Latest weekly inventory was largely flattish vs end of Jan, mainly attributable to the production cut & resilient downstream demand amidst the CNY period. Our channel check with ZE Consulting suggests that Top- 5 battery makers' Jan-25 production pipeline was flattish MoM to Dec-24 and +89% YoY. In the meantime, the production pipeline ...

V i e w p o i n t | 06 Feb 2025 12:06:57 ET │ 20 pages Emerging Markets Economics EM Under "America First Trade Policy": What's Next, Who's Exposed? wei.zheng.kit@citi.com CITI'S TAKE Early weeks of Trump's 2nd administration show greater uncertainty, bolder (and less targeted) tariff threats, a US foreign policy that appears more assertive, and China showing signs it wants to negotiate. What's next? We assess impact of targeted tariffs on semiconductors, pharmaceuticals, and steel & aluminum. We also asses ...

February 6, 2025 09:19 AM GMT China Coal Energy Co., Ltd. | Asia Pacific Risk Reward Update What's Changed | China Coal Energy Co., Ltd. (1898.HK) | From | To | | --- | --- | --- | | Price Target | HK$8.50 | HK$9.12 | | Bull Case | HK$10.60 | HK$11.37 | | Base Case | HK$8.50 | HK$9.12 | | Bear Case | HK$5.22 | HK$5.60 | | Updated Components | | | | EPS | | | | Bull Base Bear Scenarios | | | Risk Reward for China Coal Energy Co., Ltd. (1898.HK) has been updated Reason for change We raise our 2024-26 net prof ...

February 6, 2025 05:29 AM GMT NVIDIA Corp. | North America Reiterating Top Pick as the DeepSeek selloff is a buying opportunity While sentiment has worsened around potential longer term risks, near term business continues to firm, Blackwell supply visibility continues to build, customer desire to spend is clearly on display; Maintain Top Pick. Key Takeaways Our take from last week (here) on the threat from DeepSeek has been reinforced by incremental industry conversations, as well as several published repor ...

February 6, 2025 03:55 AM GMT China Property | Asia Pacific Weekly Database Tracker #5 Weekly primary unit sales were -42% YoY and -91% WoW. Weekly secondary unit sales were -59% YoY and -97% WoW, respectively. All YoY are based on comparison with 2024 Chinese New Year week. No new launch projects or sell-through data were monitored due to the holiday. Weekly primary unit sales in 50 cities were -42% YoY (vs. -8% YoY last week) and -91% WoW for the week ended February 2: Tier 1 city sales were -12% YoY (vs. ...

China Equity Strategy | Asia Pacific February 6, 2025 09:00 PM GMT A-Share Sentiment Improved after CNY Holiday A-share sentiment improved with the strong Chinese AI theme and higher trading volume, despite lingering geopolitical risk. We reiterate caution and preference for defensiveness, dividend yields, cash returns, and/or greater earnings certainty. Avoid stocks with tariff risks . A-share investor sentiment improved with higher trading volume vs. prior cutoff date: Weighted MSASI and simple MSASI impr ...

V i e w p o i n t | 06 Feb 2025 09:40:02 ET │ 11 pages China Economics Gauging US Business Exposure to China Amid Trade Dispute CITI'S TAKE China has announced an anti-trust probe into Google. This comes in the wake of US imposing 10% additional tariffs on imports from China. We note that Google has a limited business presence in China. However, business activities of US multinational enterprises (MNEs) in China are likely to be of greater importance to the US than its exports to China – US MNEs generated > ...

Summary of Cisco Systems Inc. FQ2 Preview & VAR Call Recap Company Overview - **Company**: Cisco Systems Inc - **Industry**: Telecom & Networking Equipment - **Market Cap**: $250.59 billion - **Current Stock Price**: $62.57 (as of February 5, 2025) - **Price Target**: $68.00 - **Fiscal Year Ending**: July 2025 Key Takeaways - **Earnings Report**: Cisco is set to report FQ2 earnings on February 12, 2025, after market close [3] - **Positive Environment**: A strengthening data center spending environment is expected to support Cisco's results, despite soft spending from the US Federal sector [4][8] - **Order Growth Expectations**: Anticipated orders are expected to grow in the mid-to-high teens year-over-year (Y/Y) for inorganic orders and low-single digits for organic orders [4][8] - **Data Center Demand**: Increased demand for data centers is driven by customers modernizing infrastructure for additional capacity and adopting multi-cloud environments [4] - **Service Provider Outlook**: Service provider data points are largely optimistic, although Juniper's routing results present some caution [4][8] - **Federal Sector**: The US Federal sector is not expected to recover yet, with campus spending also under scrutiny following Juniper's results [4][8] Financial Metrics - **Earnings Per Share (EPS)**: - FY25e: $3.63 - FY26e: $3.85 - FY27e: $4.19 [6] - **Revenue Growth**: Expected to be 3.7% for FY25 and FY26 [32] - **Operating Margin**: Projected at 33.8% for FY25 [32] - **Free Cash Flow (FCF) Growth**: Expected to grow by 14.6% in FY25 [32] Market Positioning - **Valuation Multiple**: Cisco is projected to trade at a ~16x multiple, with a potential path to mid-$60s on earnings revisions as the spending environment improves [4][8] - **Competitive Landscape**: Cisco is becoming more aggressive in winning deals, particularly against competitors like Arista Networks and Juniper Networks [17][18] - **Partnerships**: The partnership with Nutanix is viewed as an attractive opportunity, enhancing Cisco's market position [17] Risks and Considerations - **Federal Spending**: Continued weakness in the US Federal sector could impact overall performance [8] - **BEAD Opportunity Delay**: The Broadband Equity, Access, and Deployment (BEAD) funding opportunity is expected to be pushed from 2025 to 2026 due to changing criteria [14][15] - **Integration Challenges**: The integration of Splunk is critical; poor integration could lead to share losses and affect growth [18][30] Conclusion - **Investment Rating**: Cisco is rated as Overweight with a price target of $68.00, reflecting confidence in its ability to navigate the current market dynamics and capitalize on growth opportunities in the data center and networking sectors [6][17]