**Summary**: This document provides an in-depth analysis of the Chinese automotive industry, focusing on key trends, forecasts, and investment opportunities. It covers various segments, including EVs, traditional OEMs, supply chains, dealerships, and OEM reforms. The report highlights the following key points: **1. EV Market Growth**: * China's EV market is expected to grow significantly, with wholesales reaching 28.3 million units in 2025. * Local brands are gaining market share, with a projected 70% market share in 2025. * PHEVs are becoming increasingly popular, with a projected 48% mix in 2025. * Global OEMs are losing market share due to intense competition and price wars. **2. Traditional OEMs**: * Geely is preferred due to its strong EV lineup and exposure to replacement demand. * SAIC and GAC are facing challenges, but reforms and partnerships could improve their prospects. * SOE OEM reforms are expected to gain momentum, with potential for improved profitability and efficiency. **3. Supply Chain**: * Smart driving technology is gaining traction, benefiting hardware providers like Horizon Robotics. * China suppliers are expanding overseas, driven by global EV supply chain decoupling. * Hesai is downgraded to Equal-weight due to its significant rally since November 2024. **4. Dealerships**: * Dealerships are shifting from global luxury brands to Chinese EVs. * Zhongsheng is preferred due to its strong bargaining power and customer base. * Yongda and Meidong are downgraded to Equal-weight due to their exposure to luxury brands and potential for margin pressure. **5. OEM Reforms**: * SAIC and GAC are undergoing reforms to improve efficiency and profitability. * Chang'an is a successful example of SOE reform. * SAIC and GAC H-share are preferred due to their unique advantages. **Investment Opportunities**: * **EVs**: XPeng, ZEEKR, Li Auto, and NIO are expected to benefit from significant operating leverage and potential profit turnaround. * **Traditional OEMs**: Geely is preferred due to its strong EV lineup and exposure to replacement demand. * **SOE OEM Reforms**: Chang'an, SAIC, and GAC H-share are preferred due to their potential for improved profitability and efficiency. * **Supply Chain**: Horizon Robotics is preferred due to its strong ADAS solutions and market position. * **Dealerships**: Zhongsheng is preferred due to its strong bargaining power and customer base. **Conclusion**: The Chinese automotive industry is undergoing significant transformation, driven by the rapid growth of EVs and technological advancements. This presents both challenges and opportunities for various stakeholders. Understanding the key trends and investment opportunities is crucial for navigating this dynamic landscape.

Industry Overview * **Plasma Supply Uptick**: The supply of albumin, IVIg, and pdFVIII saw a notable increase in 4Q24, driven by factors such as new collection center openings and increased exports. * **Price Concerns**: Despite the supply increase, prices may fall slightly in 2025 due to subpar demand, lack of academic promotion, and stricter hospital prescription control. * **Valuation Concerns**: The plasma segment is currently trading at a 34% discount to the 5-year average, reflecting concerns about pricing and competition from rHSA. * **Challenges and Opportunities**: The industry faces challenges such as falling prices and competition, but also opportunities such as increased exports, product mix shifts, and structural growth driven by academic promotion, production yield improvement, and new product innovation. Key Products and Companies * **Albumin**: Domestic albumin outgrew imported albumin in 4Q24, with Tiantan maintaining the leading market share. * **IVIg**: Tiantan maintained its leading position in the IVIg market, followed by RAAS, Taibang, and Hualan. * **pdFVIII**: RAAS was the largest player in the pdFVIII market, followed by Hualan, Taibang Bio, and Tiantan. * **PCC**: Tiantan led the PCC market, followed by Taibang, Nanyue, and Hualan. * **Human Fibrinogen**: RAAS and Boya led the market, followed by Taibang, Hualan, and Green Cross. Valuation and Market Dynamics * **Valuation**: The plasma fractionators' valuation is at a trough and likely to stay depressed in the near term due to falling prices and temporary market dynamics. * **Market Dynamics**: Supply expansion could drive further pricing correction for major PDMPs, especially in retail pharmacies. Plasma players should manage through by increasing exports and shifting their product mix towards high-margin products. Conclusion The China plasma industry is facing challenges and opportunities. While supply has increased, prices may fall due to subpar demand and competition. However, the industry has the potential for structural growth driven by factors such as increased exports, product mix shifts, and new product innovation.

Key Points **Industry/Company Involved**: - SK Hynix (000660.KS) **Core Views and Evidence**: - **4Q24E Earnings Outlook**: SK Hynix is expected to report better-than-expected 4Q24E operating profit (OP) of +W8.3tr, driven by robust HBM3E demand growth and a 4Q DRAM ASP increase of +9% QoQ. [doc id='1'] - **DRAM ASP Growth**: Despite a projected deceleration in overall DRAM industry ASP growth to -7% QoQ in 1Q25E, Hynix's DRAM ASP is expected to remain intact, with flat growth in 1Q25E. [doc id='3'] - **HBM3E & HBM4 Leadership**: Hynix is expected to maintain its leadership in the HBM market due to its 1bnm and advanced MR-MUF technology in HBM3E & HBM4 for high-end AI applications. [doc id='1'] - **2025E Outlook**: SK Hynix's 2025E OP is forecasted to be W39.4tr, higher than the market consensus of W31.8tr, driven by a HBM mix exceeding 50% of total DRAM revenue. [doc id='4'] - **Strategic Decision**: Hynix's decision to use 1bnm & advanced MR-MUF technology for HBM4 will solidify its HBM dominance and expedite the launch schedule of HBM4 in 2Q25E and mass production in 2H25E. [doc id='4'] - **Buy Rating**: Citi maintains a Buy rating on SK Hynix, expecting the company to stay resilient amid challenging pricing conditions in the conventional memory market. [doc id='5'] **Other Important Points**: - **Market Consensus**: The market consensus for 4Q24E OP was W7.9tr, lower than the expected W8.3tr. [doc id='2'] - **NAND ASP Decline**: Despite a projected +9% QoQ growth in NAND B/G in 4Q24E, NAND ASP is expected to fall -7% QoQ due to weak mobile NAND demand. [doc id='2'] - **2025E Valuation**: Citi's target price for SK Hynix is W340,000, based on a 2.5x 25E P/B and a 30% premium to the stock's historical average PB during a structural demand growth phase. [doc id='19'] - **Risks**: Downside risks include a downturn in DRAM demand, weaker NAND demand than forecasts, and a collapse in global consumption. [doc id='20'] - **Investment Strategy**: Citi believes SK Hynix is well positioned to benefit from the DRAM market recovery driven by limited supply growth and its technology leadership in DRAM. [doc id='18'] - **Valuation**: The target price is derived by applying 2.5x 25E P/B, obtained by applying a 30% premium to the stock's historical average PB during a structural demand growth phase. [doc id='19'] - **Risks**: Downside risks include a downturn in DRAM demand, weaker NAND demand than forecasts, and a collapse in global consumption. [doc id='20']

Industry Overview * **Global WFE Spend**: The global wafer fabrication equipment (WFE) spend is expected to reach $95 billion in 2025, a decrease of 5% year-over-year. This is primarily driven by a decline in mature logic and industrial/auto demand, offset partially by leading-edge AI investments and HBM investments in DRAM. * **Market Segmentation**: The WFE market is segmented into logic (foundry + IDM) and memory. Logic is expected to grow by 13% year-over-year, while memory is expected to decline by 38%. * **Key Players**: The "Big Three" (TSMC, Samsung, and Intel) account for approximately 65% of the global WFE spend. TSMC is expected to be the largest spender, followed by Samsung and Intel. TSMC * **2025 CapEx**: TSMC's 2025 capital expenditure (CapEx) is expected to be higher than $40 billion, slightly higher than the Street's consensus of $35-$38 billion. * **Growth Drivers**: TSMC's CapEx is expected to increase throughout the year due to improving non-AI semiconductor demand. * **Valuation**: Citi's target price for TSMC is NT$1,540, based on a 23x multiple of its 2025-26E average earnings per share (EPS). Samsung * **2025 CapEx**: Samsung's 2025 CapEx is expected to be similar to 2024, with a flexible approach to managing it. * **Valuation**: Citi's 12-month target price for Samsung is W83,000, based on a sum-of-the-parts (SOTP) methodology. Intel * **2025 CapEx**: Intel's 2025 CapEx is expected to be $20-$23 billion, lower than the Street's consensus of $24 billion. * **Risks**: Intel faces risks related to PC end-market demand, competition, customer risk, and macroeconomic conditions. * **Valuation**: Citi's target price for Intel is $22.00, based on a 26x multiple of its 2025 estimated EPS. Other Key Points * **KLA Corp**: Citi has a Buy rating on KLA Corp, with a target price of $832 based on a 30x multiple of its 2025E earnings. * **Nova Ltd**: Citi has a Buy rating on Nova Ltd, with a target price of $240 based on a 31x multiple of its CY26 EPS. * **Overall Rating**: Citi has a Buy rating on the semiconductor equipment industry, with a focus on large cap and SMID cap names such as KLAC and NVMI.

January 12, 2025 11:10 PM GMT Investor Presentation | Asia Pacific M Foundation Policy Undershoot Unless Social Dynamics Evolve Morgan Stanley Asia Limited • Insufficient monetary easing leads to financial market instability or worsens deflationary pressure Robin Xing Chief China Economist Robin.Xing@morganstanley.com +852 2848-6511 Zhipeng Cai Economist Zhipeng.Cai@morganstanley.com +852 2239-7820 For important disclosures, refer to the Disclosure Section, located at the end of this report. Foundation M In ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the oil industry, specifically the impact of recent sanctions on Russia's energy sector and the resulting implications for oil prices and market dynamics [1][2]. Core Insights and Arguments - **Brent Oil Price Movement**: Brent oil prices increased by 4% to $80 per barrel following the announcement of broad sanctions on Russia's energy sector, which targeted producers, shippers, traders, and insurers [1][2]. - **Sanctions Impact**: The new sanctions are estimated to affect vessels that transported 1.7 million barrels per day (mb/d) of oil in 2024, accounting for 25% of Russia's oil exports, predominantly crude oil [1][10]. - **Production and Price Forecast**: Despite high uncertainty, the base case for Russian oil production remains unchanged at 10.6 mb/d for 2025, with Brent prices expected to average between $70 and $85 per barrel [17][22]. - **Short-term Price Upside Risks**: The risks to the Brent price forecast are skewed to the upside in the short term, with potential prices exceeding $85 per barrel if Russian production drops by 1 mb/d [1][23][28]. - **OPEC+ Role**: It is assumed that OPEC+ will stabilize the market by utilizing its spare capacity and increasing production, limiting the long-term price impact of lower sanctioned supply [1][24]. Additional Important Insights - **Market Dynamics**: The report highlights that cold winter weather has tightened oil supply and demand dynamics, contributing to the price rally [4][5]. - **Changing Market Perceptions**: There has been a shift in market perception regarding the oil balance for 2025, with declining US crude inventories and effective OPEC+ compliance leading to a projected deficit in Q4 2024 [5][6]. - **Freight and Refined Product Markets**: The announcement of sanctions led to a 10% increase in global dirty tanker freight rates and a 3% increase in clean product tanker rates, indicating a significant market reaction [41][45]. - **Hedging Recommendations**: Oil producers are advised to hedge downside risks by taking advantage of the price increase and call skew through producer three-way options [40][36]. Conclusion - The sanctions on Russia's energy sector have created significant volatility in the oil market, with potential for both short-term price increases and long-term stabilization through OPEC+ actions. The report emphasizes the importance of monitoring these developments for investment decisions in the oil sector [1][23][40].

Flash | 12 Jan 2025 15:34:03 ET │ 10 pages TCL Technology Corp (000100.SZ) What's New from Citi China Tech and Telecom Day – 10bn a Conservative Guidance; Tightness Likely in 2026 CITI'S TAKE TCL Tech joined Citi China Tech and Telecom Day on 10 Jan. Key takeaways include: (1) Co. revises up CSOT 2024 net profits to c. Rmb6bn and believes Rmb8-10bn 2025 NP guidance is conservative. (2) D&A will go up by Rmb1-2bn in 2025 , but will start to decrease from 2026 with pace of Rmb2bn every year. (3) Channel inven ...

January 12, 2025 10:57 PM GMT China Musings | Asia Pacific Policy Undershoot Unless Social Dynamics Evolve -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 0.8 1.0 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23 Jun-24 Dec-24 China Social Dynamics Indicator (Z-score) 4th year into PPI deflation - Policy: shantytown renovation Covid lockdown - Policy: abandons Covid-zero Source: CEIC, Morgan Stanley Research For important discl ...

Summary of Key Points from Goldman Sachs Global Economics Comment Industry Overview - The report focuses on the potential impact of tariffs on inflation and Federal Reserve (Fed) policy in the context of the U.S. economy, particularly under the Trump administration's anticipated tariff announcements on China and European autos [2][3]. Core Insights and Arguments - **Tariff Impact on Inflation**: The baseline forecast anticipates a 3.4 percentage point increase in the U.S. overall effective tariff rate, which is expected to raise core Personal Consumption Expenditures (PCE) inflation by approximately 0.3 percentage points over the next 12 months [2]. - **Fed's Reaction to Tariffs**: The report questions whether the Fed will adopt a hawkish stance in response to tariff-driven price increases, noting that historical data provides limited insight due to few instances of tariff increases in modern economic history [3][4]. - **Value-Added Tax (VAT) Analysis**: The analysis uses data from over 70 VAT changes in developed markets (DM) to estimate inflation and policy responses, finding that a 1 percentage point VAT increase raises year-over-year inflation by 50 basis points for the next 12 months, with no significant long-term impact [6][7]. - **Central Bank Responses**: Historical evidence suggests that central banks have not responded hawkishly to one-time price increases driven by VAT changes, indicating a potential similar response to tariff-driven inflation [8][11]. - **Inflation Overshoot Concerns**: Despite concerns that recent inflation overshoots could lead to a more sensitive central bank response, the report finds no evidence of policy adjustments in high inflation periods following VAT increases [10][12]. Additional Important Points - **Expectations for Fed Policy**: The report concludes that the Fed is unlikely to raise rates in response to moderate inflation from tariffs, predicting a 50 basis point cut in 2025 and an additional 25 basis points in 2026 due to ongoing progress on underlying inflation [12]. - **Caveats in Analysis**: The analysis acknowledges that most VAT increases occurred in a post-2000 period of relatively benign inflation, which may not fully capture the current inflationary environment [10]. This comprehensive analysis provides insights into the potential economic landscape under the influence of tariffs and the Fed's likely policy responses, emphasizing the historical context of VAT changes as a parallel to understand tariff impacts.

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **Hong Kong/China Insurance** industry, particularly the impact of interest rate mechanisms on pricing strategies within the sector [1][4]. Core Insights and Arguments - **Floating Pricing Interest Rate Mechanism**: The introduction of a floating pricing interest rate mechanism is a significant development. The suggested pricing interest rates will be released quarterly by the IAC, considering the 5Y LPR, 5Y term deposit rate, and 10Y treasury bond yield [2][7]. - **Current Pricing Rates**: Major insurers, including **China Life** and **Ping An Life**, have announced that they will maintain their current pricing interest rates for traditional products at **2.5%**, par at **2.0%**, and universal life’s guaranteed rate at **1.5%** [2][3]. - **Interest Rate Spread Loss Risk**: The industry is currently facing a key concern regarding interest rate spread loss risk, as China's 10Y treasury bond yield has decreased to approximately **1.6%**, down over **100 basis points** since mid-2023. This decline has prompted regulators to cut pricing interest rates by **100 basis points** [3][4]. - **Impact on Insurers**: With the strong growth in par products, it is anticipated that insurers' interest rate sensitivity may decline further in the full-year results for 2024 and beyond. However, the resolution of this issue may take time [3][4]. Additional Important Information - **Regulatory Changes**: The CBIRC has established a dynamic adjustment mechanism for pricing interest rates, with the first suggested rate cap set at **2.34%** for Q1 2024. Insurers are required to adjust their caps if current caps are more than **25 basis points** higher or lower for two consecutive quarters [7]. - **Market Outlook**: The overall industry view remains attractive, indicating potential for growth despite current challenges [4][5]. - **Investor Tracking**: The new floating pricing interest rate mechanism allows investors to easily track new inflow profitability, although the downward trend in inforce business liability costs is a critical factor to monitor moving forward [7]. Company Ratings - The report includes stock ratings for various companies in the insurance sector, with notable ratings such as: - **AIA Group Ltd**: Overweight - **Ping An Insurance Group Co of China Ltd**: Overweight - **China Life Insurance Co Ltd**: Equal-weight - **China Pacific Insurance Group Co Ltd**: Overweight - **PICC Group**: Overweight [56]. This summary encapsulates the essential insights and developments discussed in the conference call, providing a comprehensive overview of the current state and outlook of the Hong Kong/China insurance industry.