Flash | 05 Feb 2025 11:49:26 ET │ 10 pages CITI'S TAKE MCT reported travel traffic and industry revs were up 5.9/7.0% yoy 501mn/Rmb677bn during 8-day CNY holiday, implying average spending per capita +1%, while MOT reported national passenger throughput up 5.8% with volume of railway/airline/roadway/waterway +5/+3/+6/+7% during the holiday. OTAs' share prices corrected today, which we attribute to 1) passenger throughput growth not picking up in last two days of CNY holiday as some investors had expected, e ...

February 5, 2025 03:36 PM GMT China Transportation | Asia Pacific Infrastructure Asia Pacific Industry View In-Line Measuring Risks from China – US Cross-Border E-commerce Growth Dynamics Key Takeaways What's new: The market is discussing potential downside risks to China-US cross- border e-commerce following the higher taxes on small parcels shipped from China to the US. Bear case – What if cross-border e-commerce demand is back to pre-Covid level? A down-cycle for air freight rates? We are unsure: Long ha ...

Summary of Thematic Equity Strategy Conference Call Industry Overview - The thematic equity market remains a growth market in 2025, with growth themes and key indices outperforming on an equally weighted basis, despite cap-weighted returns being influenced by the "Magnificent 7" stocks [1][2][3] Key Points Market Performance - Year-to-date, growth themes are outperforming value themes when measured on an equal-weighted basis, indicating a broadening of the growth trade beyond the Magnificent 7 [2][9] - The NASDAQ-100 has lagged behind the S&P 500 on a cap-weighted basis, but equal-weighted measures show that growth stocks are performing well [8][19] Investment Strategy - A balanced approach is recommended, focusing on incremental alpha opportunities within a Growth-Cyclicals/Defensives barbell allocation [3][10] - The strategy emphasizes managing risks associated with rising rates, AI disruptions, and tariffs, while maintaining exposure to growth, cyclicals, and defensives [7][43] Thematic Updates - Republic Services (RSG) has been added to the Thematic 30 recommended list, replacing Edison International (EIX) due to better expected returns and operational efficiency [5][35] - RSG is highlighted for its low market beta and expected improvement in return on equity (ROE) driven by operational efficiencies [36][37] Performance Metrics - Thematic 30 has outperformed the Russell 1000 benchmark by over 300 basis points, indicating strong performance amidst market volatility [29] - Growth themes have shown an average year-to-date total return of 4.68% on an equal-weighted basis, compared to 3.39% on a cap-weighted basis [25] Sector and Theme Analysis - Key themes include Artificial Intelligence, Digital Leisure, FinTech, and Pollution Solutions, with varying performance across sectors [14][27] - Notable performers include Wearable Technology (12.87% return) and Digital Leisure (12.31% return) on an equal-weighted basis, while Video Gaming has underperformed significantly (-6.28% return) [28][33] Additional Insights - The report emphasizes the importance of focusing on high-quality, less rate-sensitive exposures in defensives due to ongoing rate risks and inflation concerns [12][43] - The overall strategy suggests that investors should be patient and focus on incremental alpha opportunities rather than attempting to time market rotations [11][44] Conclusion - The thematic equity landscape in 2025 is characterized by a focus on growth, with a balanced approach recommended to navigate various market risks. The addition of Republic Services to the recommended list reflects a strategic shift towards companies with strong operational efficiencies and lower market sensitivity.

J P M O R G A N CEEMEA Credit Research 05 February 2025 What we learned from meetings with 30 EM corporate investors Cautiously constructive; OW HY but shying away from riskier names; A 'carry-year' ahead We met/spoke with ~30 EM corporate credit investors (mostly real money, some fast, mostly dedicated, some cross-over / opportunistic) in London and US over the past 2 weeks with respect to CEEMEA credits. Key takeaways Investors remain generally constructive and engaged, but more defensively positioned Spr ...

Summary of Texas Instruments Inc (TXN) Capital Management Call Company Overview - **Company**: Texas Instruments Inc (TXN) - **Industry**: Semiconductor - **Market Cap**: $164.49 billion [7] Key Points Capital Expenditure and Financial Targets - TXN reiterated its capital expenditure (capex) plans, maintaining a capex spend of $5 billion for 2025 and a floor of $2 billion for 2026, contingent on revenue growth [2][11] - The company is nearing the end of its capex investing cycle, which is expected to transition from a depreciation headwind to a tailwind in the coming years [11][21] Inventory and Sales Expectations - An analog inventory replenishment is anticipated in 2025, as sales remain approximately 25% below peak levels [2][12] - TXN is expected to benefit significantly from this replenishment due to its expanded 300mm manufacturing capacity [10][12] Earnings Projections - TXN is projected to achieve peak sales of $20 billion, with peak gross margins of 70% and peak operating margins of 52%, leading to a long-term peak EPS of over $10.00 [3][17] - Free cash flow (FCF) per share is expected to grow from $1.64 in 2024 to between $8 and $9 as sales recover to 2022 levels [4][31] Valuation and Investment Rating - The current target price for TXN is set at $235.00, reflecting a 30.2% expected return, with a Buy rating reiterated based on anticipated 100% EPS growth [5][35] - TXN trades at a premium to peers, justified by its quality and growth potential [36] Margin and Cost Structure - TXN's operating margins have decreased significantly, from 53.6% in 1Q22 to an estimated 29.5% in 1Q25, but are expected to recover as the high capex phase concludes [21] - The company plans to increase the proportion of revenue manufactured on its 300mm facility from 60% to 70% by 2026, which could reduce costs by 40% compared to 200mm wafers [26] Market Position and Risks - TXN has shifted its revenue mix towards industrial and automotive markets, increasing from 46% in 2015 to 69% in 2024, which may provide margin benefits [29] - Risks include dependence on the industrial end market, competition from companies like Analog Devices and Microchip, and potential product obsolescence due to lower R&D spending compared to competitors [41][42] Financial Performance Metrics - Projected revenue for 2025 is $16.7 billion, with a gradual increase to $20 billion by 2027 [9] - EPS estimates for 2025 are projected at $5.38, with further growth expected in subsequent years [6] Conclusion - Texas Instruments Inc is positioned to benefit from an anticipated recovery in analog inventory and has a strong outlook for earnings growth, supported by strategic capex and a favorable shift in market focus. The company remains a top pick in the analog semiconductor space, with a solid investment rating and growth potential.

February 5, 2025 09:00 PM GMT China Equity Strategy | Asia Pacific Positions of Active Long-only Managers in China/HK Chinese equities continued to show outflow from foreign funds in January 2025, though at a slower pace vs. December 2024. Passive funds had US$0.7bn outflows and active funds had US $1.7bn outflows. EM LOs added underweights in China to 2.9ppt. Foreign domiciled funds flow: Chinese domestic funds flow: Short interest ( Exhibit 14 , Exhibit 15 ): M Update Morgan Stanley Asia Limited+ Chloe Li ...

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 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.

Global FX Strategy FX Compass: EUR still underpricing tariff risk Figure 1: Breakevens diverge vs oil and point to inflationary risks of tariffs 1.80 1.90 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70 2.80 60 65 70 75 80 85 90 95 100 Feb-23 Apr-23 Jun-23 Aug-23 Oct-23 Dec-23 Feb-24 Apr-24 Jun-24 Aug-24 Oct-24 Dec-24 WTI crude oil, 1st contract ($/bbl) US 5-year inflation breakeven (%, rhs) Source: Bloomberg, UBS Fears of US tariffs have driven a surge in realized FX volatility this week, but so far have had limit ...

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 ...