Investment Rating - The report maintains an "Overweight" (OW) rating on equities and bonds, while being "Underweight" (UW) on credit and commodities/cash [3][20]. Core Insights - Chinese equities have significantly outperformed the S&P 500 and European markets in February, driven by a supportive stance from President Xi towards the private sector [2][3]. - Despite the positive performance of Chinese equities, domestic mutual fund and ETF flows have not matched this trend, indicating a cautious sentiment among local investors [2][11]. - The "Two Sessions" event scheduled for March 4th/5th is expected to confirm a supportive expansionary stance for domestic listings, which could further enhance A-share returns [3][19]. Summary by Sections Market Performance - The report highlights a major reversal in equity performance, with low volatility and value stocks outperforming carry and momentum strategies [1]. - Asian markets, excluding Japan, and European equities have outperformed US equities, driven by improved sentiment regarding geopolitical issues and fiscal policies [1][2]. Sector Analysis - The technology and consumer discretionary sectors have shown strong performance in H-shares compared to A-shares, with notable gains in stocks like Alibaba (+65% YTD) and Xiaomi (+50% YTD) [3][9]. - The report indicates that sectors such as industrials, energy, and utilities have underperformed relative to IT and cyclicals [3][10]. Investment Strategy - The report emphasizes a focus on diversification across assets and regions due to lower expected returns and increased risks [3][20]. - There is a noted tactical risk of equity corrections due to bullish sentiment and elevated valuations, prompting a focus on hedges [3][20].

Investment Rating - The report indicates a bullish outlook for aluminium prices, forecasting a rise to $3,100/t by Q4 2026, which is 14% above current forwards [3][47][68]. Core Viewpoints - China's aluminium production is expected to peak in 2026, necessitating higher prices to stimulate new supply from other regions, particularly Indonesia and India, to avoid significant deficits in 2027-2028 [3][8][47]. - The analysis is based on three main pillars: low inventories, solid green demand, and the peak of Chinese supply [9][10][16]. Summary by Sections Low Inventories - As of the end of 2024, reported inventories were only sufficient to cover 9 days of consumption, a decrease from 20 days in 2019 [10][11]. - Total inventories covered 49 days of demand, which is just above the lows seen in 2006-2007 [10][11]. Solid Green Demand - The report forecasts a 2% average annual growth in aluminium demand through 2028, slightly below the 3% average from 2015-2024 [16][19]. - Demand from electric vehicles (EVs) is projected to increase significantly, with aluminium content in EVs expected to rise from 4.6 million tonnes to over 12 million tonnes by 2030 [19]. - Solar energy has been a major growth driver, contributing 3.3 million tonnes of demand growth from 2019-2024, accounting for 40% of total global demand growth [19][20]. China Supply Peak - China's aluminium production capacity is capped at 45.4 million tonnes per annum, a limit established in 2017 to address overcapacity [27][28]. - The report anticipates that this cap will be reached by early 2026, after which production will not exceed this level [28][32]. - The policy has led to improved profitability for Chinese aluminium smelters, as higher prices benefit the industry without increasing capacity [29][41]. Price Forecast - The forecast indicates that aluminium prices will initially face headwinds due to cost deflation, dropping to $2,500/t by June 2025, before rising to $2,650/t by December 2025 [47]. - By late 2026, margins are expected to rise to around 30%, near historical highs, before new investments in India and Indonesia bring the market back into balance [47][50].

Investment Rating - The report downgrades Eutelsat to Sell due to competitive pressures, execution risks, and rising debt burdens, while AT&T, BT, Cellnex, DT, Elisa, T-Mobile US, and Verizon are rated as Buy due to their strong market positions and satellite partnerships [37][48][50]. Core Insights - The number of Low Earth Orbit (LEO) satellites is projected to increase from approximately 7,000 today to around 30,000 by 2030 and 78,000 by 2035, assuming most new satellite companies meet their launch targets [4][12][51]. - Satellite services are viewed as more of an opportunity than a threat to telecom operators, with the potential for augmented satellite-wireless services to enhance revenue for terrestrial telecom providers [5][31]. - Capacity constraints will limit the competitive threat from satellite broadband, with estimates suggesting that only about 8% of the US population could be served competitively by satellite broadband by 2035 [19][80]. Summary by Sections Satellite Launch Projections - If new satellite companies achieve their targets, LEO satellites could increase significantly, with projections of 30,000 by 2030 and 78,000 by 2035 [4][12][51]. - There are concerns regarding the feasibility of these targets due to regulatory, economic, and sustainability issues [15]. Competitive Landscape - The report indicates that the risk to telecom operators from satellite communication services is limited due to capacity constraints and regulatory concerns [11][18]. - Existing wireless and broadband services are expected to outperform pure satellite services in most scenarios, particularly in urban areas [26]. Market Opportunities - The report highlights that satellite services could provide significant benefits in rural areas and for specific applications such as military and emergency services [26][31]. - Partnerships between terrestrial telecom providers and satellite operators are increasing, suggesting a trend towards complementary service offerings rather than direct competition [31][36]. Eutelsat's Position - Eutelsat is seen as vulnerable due to competitive pressures and execution risks, leading to a downgrade in its rating [37][48]. - The company faces challenges from new entrants like Starlink and Amazon's Project Kuiper, which are expected to disrupt the existing satellite market [37].

Investment Rating - The report maintains a "Buy" rating for Microsoft Corp. (MSFT) with a 12-month price target of $500, representing a potential upside of 22.5% from the current price of $408.21 [1][22]. Core Insights - Microsoft is positioned to capitalize on long-term trends such as Gen-AI, public cloud consumption, SaaS adoption, and digital transformation, which are expected to drive sustainable EPS growth [17][20]. - The company is adjusting its capital expenditures (CapEx) towards shorter-lived assets, indicating a prudent investment strategy in AI capacity with a focus on returns [1][17]. - Microsoft’s cloud business is projected to reach nearly $250 billion by FY27, representing a compound annual growth rate (CAGR) of approximately 22% from FY24 levels [17][20]. - The report highlights Microsoft's strong competitive position across all layers of the cloud stack, which is expected to enhance customer retention and lifetime value [18][20]. Financial Projections - Revenue is forecasted to grow from $245.1 billion in FY24 to $361.2 billion in FY27, with EBITDA increasing from $131.7 billion to $201.6 billion over the same period [2][11]. - EPS is expected to rise from $11.80 in FY25 to $18.30 in FY27, reflecting a robust growth trajectory [2][11]. - The report anticipates a significant increase in AI revenue, projected to scale to a $13 billion run rate, representing a year-over-year growth of 175% [1][17]. Market Positioning - Microsoft is trading at a discount compared to Oracle, with a 30x CY25 EV/FCF ratio versus Oracle's 49x, indicating potential value for investors [1][22]. - The company has a strong balance sheet with approximately $300 billion in remaining performance obligations (RPO) and a net debt/EBITDA ratio of (0.3), showcasing financial strength [1][2][11]. - The report emphasizes Microsoft's efficient capital allocation strategy, which includes successful acquisitions and share repurchases, contributing to a compelling total return story [17][20].

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies within it [2]. Core Insights - The report highlights a positive trend in property transactions, with primary sales volume increasing by 33% week-over-week (wow) and 29% year-over-year (yoy), while secondary transactions rose by 23% wow and 72% yoy [7][42]. - The easing measures implemented have led to a significant improvement in new home searches, with the heat index for new home searches up by 1.5% wow and 6% above pre-easing levels [4][19]. - The report indicates that the average inventory balance has decreased by 0.1% wow and 0.4% from the end of 2024, with inventory months at 25.5 [11][55]. Summary by Sections Policy Developments - The China Securities Regulatory Commission (CSRC) proposed coordinated support for property developer financing to mitigate bond default risks, aligning with the National Association of Financial Regulators' (NAFR) recommendations [3]. - The Ministry of Housing and Urban-Rural Development (MOHURD) has requested an accelerated development of a wait-list system for affordable housing participants and expanded affordable housing supply [3]. Market Performance - In the primary market, tier-1 cities saw an average sales volume increase of 34% wow and 43% yoy, while the Pearl River Delta (PRD) cities experienced a 48% wow and 72% yoy increase [25][27]. - Secondary market performance showed a 72% yoy increase in sales volume, with agents and homeowners expressing negative price appreciation expectations [42]. Sales and Completions - Year-to-date (YTD) primary gross floor area (GFA) sold was up 10% yoy, while secondary GFA sold was up 12% yoy [39][44]. - The report anticipates a 20% yoy decline in completions for January 2025, with a projected 3% yoy increase for the full year [60][63]. Valuations - Offshore developers are trading at an average 34% discount to end-2025 estimated net asset value (NAV) and 0.4 times 2025 estimated price-to-book (P/B) ratio [68]. - Onshore developers are trading at a 20% discount to end-2025 estimated NAV and 0.5 times 2025 estimated P/B ratio [68].

Investment Rating - The report reinitiates coverage of copper with a medium-run price forecast range of $10,500 to $11,500 per tonne, with average price forecasts of $9,740 per tonne for 2025 and $11,175 per tonne for 2026, indicating a bullish outlook for the copper market [3][10]. Core Insights - The copper market is expected to experience deficits of 180,000 tonnes in 2025 and 250,000 tonnes in 2026, driven by strong electrification demand, China stimulus, and supply constraints [3][10][49]. - Electrification demand is projected to account for all copper demand growth through 2030, with significant contributions from grid investments, which are expected to add over 300,000 tonnes annually to global copper demand [3][12][17]. - China’s stimulus measures are anticipated to contribute 35% to global copper demand growth in 2025, outweighing the negative impact of tariffs [27][28]. Summary by Sections Electrification Demand - The electrification megatrend is reshaping copper demand, with a notable 4% year-on-year increase in refined copper demand in China despite a 10% drop in the construction sector [3][10]. - Grid investment is expected to rise significantly, with the US utilities capex forecasted to increase from an average of $103 billion (2020-2023) to $145 billion (2024-2027), a 40% increase [16][17]. China Copper Stimulus - China’s stimulus is projected to add 2 percentage points to copper demand growth, while tariffs are expected to reduce it by only 0.8 percentage points [27][28]. - The report forecasts a 4% growth in China’s refined copper demand in 2025, driven by structural electrification and stimulus measures [3][10]. Supply Constraints - The report highlights that copper demand will require substantial growth in mine and scrap supply, with a forecasted increase of 4 million tonnes by 2030 [3][10]. - The price of $10,500 per tonne is deemed necessary for the development of new mine capacity to avoid significant deficits by the early 2030s [3][42]. Price Forecast - The copper price is expected to rise above $10,500 per tonne in Q1 2026, with a cap at $11,500 per tonne due to substitution effects with aluminum [3][10][42]. - The report indicates that the copper price will establish a new floor of $10,500 per tonne by 2026, driven by rising capital and operational expenditures in mining [42][43]. Market Balance - The copper market is projected to shift from a surplus in 2024 to deficits in 2025 and 2026, with refined production expected to increase while consumption outpaces production [49][59]. - The report anticipates a record high annual average copper price in 2025 and 2026, with higher prices leading to an acceleration in scrap supply and firmer mine supply growth through 2030 [49].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - China's export dominance has strengthened from 2017 to 2024, with its share of global exports rising from 12.9% to 14.8% and its trade surplus more than doubling from approximately USD 420 billion to nearly USD 1 trillion [4][26][27] - The annual average growth rate of China's nominal exports was 6.7% during 2017-2024, significantly higher than the 5.1% growth rate of imports [7][13] - The shift in trade patterns indicates a growing reliance on emerging market (EM) economies, with their share in Chinese exports increasing from 46% in 2017 to 55% in 2024, and imports from EM economies rising from 39% to 51% [13][22] Summary by Sections Trade Growth and Trends - Between 2017 and 2024, China's nominal goods exports grew by 58%, while imports increased by 42%, highlighting a significant disparity in growth rates [7][30] - The strength in Chinese export growth was broad-based, including upstream materials and downstream products, while import growth was concentrated in commodities and basic materials [17][30] Bilateral Trade Dynamics - China's trade balance improved against most major economies, with notable increases in trade surpluses with the US, rising from USD 276 billion in 2017 to USD 361 billion in 2024 [27][28] - The report highlights a marked shift in China's trade from developed markets (DM) to emerging markets (EM), with exports to countries like Russia and ASEAN growing over 10% per year [13][18] Geopolitical Influences - The report identifies a strong correlation between geopolitical closeness to China and changes in trade patterns, with countries that are geopolitically aligned with China increasing their trade with it [23][24] - The analysis indicates that geopolitical factors have become increasingly important in shaping bilateral trade relations, particularly in the context of the US-China trade tensions [30][47] Product-Specific Insights - Chinese exports of transportation equipment, chemicals, and machinery showed robust growth, while imports of transportation equipment declined [17][31] - The trend of import substitution is evident, with Chinese exports of autos and machine tools significantly exceeding imports by 2024 [40][42]

Investment Rating - The report maintains an Overweight rating for both China A and H shares, indicating a positive outlook for both markets [39][39][39] Core Insights - The launch of DeepSeek-R1 has led to increased investor optimism regarding Chinese growth and equity performance, with MSCI China rallying 26% since January, while A shares gained 7% [1][7][39] - The return gap between A and H shares has expanded to 15%, which is historically significant and suggests a potential market leadership rotation [8][16][27] - The A-H market rotation model predicts a 2% outperformance for A shares in the next three months, driven by less stretched valuations and potential macroeconomic policy stimulus [3][17][19] Summary by Sections Market Performance - MSCI China has outperformed A shares significantly, with HSTECH rising 31% and STAR50 Index increasing by 13% since the launch of DeepSeek-R1 [1][7][39] - The report notes that the historical average return gap typically remains within +/-10%, and exceeding 15% has a high probability of reversal [8][16][27] Valuation and Economic Factors - Current trading valuations are 11.5x for MSCI China and 13.1x for CSI300, with the A-H valuation premium narrowing from 34% to 14% [19][25][27] - The upcoming "Two Sessions" are expected to reiterate an expansionary fiscal policy stance, which could favor A shares due to their higher sensitivity to domestic policy announcements [19][39] Sector and Index Preferences - Small/mid-cap A-share indices such as STAR50, ChiNext, and CSI1000 are expected to outperform due to their higher exposure to AI-related sectors [39][40] - Among large-cap indices, CSIA500 is preferred for its greater exposure to technology and innovative sectors, while HSTECH is anticipated to continue performing well due to upward earnings revisions driven by AI adoption [39][40]

Research +65-6889-1199 | timothy.moe@gs.com 高盛(新加坡) 私人公司 干丰丰. CFA 2025年2月23日 | 8:19PM HKT 中国市场寻思: 计划A股投资正当时 DeepSeek-R1的推出点燃了投资者对于中国经济增长和股市表现的乐观情绪。MSCI中 国指数自1月份触底以来已上涨26%，离岸互联网板块领涨（恒生科技指数上涨 31%），而A股涨幅为相对温和的7%。过去三个月，A股和港股的回报差距扩大至 15%,处于历史区间的第99百分位,是2018年以来第二大回报差距,仅低于2022年 11月至2023年2月重新放开反弹初期的MSCI中国指数跑赢沪深300指数30%的表现。 我们的A-H市场轮动模型显示，未来三个月市场的领先地位可能发生轮动，并预测A股 将跑赢2%。经验表明，当A股和港股的回报差距超过15%时，市场主导地位逆转的后 验概率为95%。我们在模型中考虑了六个关键宏观和市场因素（经济增长、宏观政 策、监管/地缘政治、公司基本面、估值以及流动性/市场情绪），预计估值未处高位 以及潜在的宏观刺激政策将是推动A股迎头赶上的关键因素。当前MSCI中国指数和 ...

Investment Ratings - Sanhua is rated as Buy, LeaderDrive and Moons' Electric are rated Neutral, and Best Precision is downgraded to Neutral from Buy [2][4][5][20]. Core Insights - The report updates market share expectations for key humanoid robot supply chain stocks, reflecting a more optimistic outlook for Sanhua, while indicating increased competition for Best Precision [1][4]. - Sanhua is expected to achieve a market share of 70% in the high-spec humanoid robot actuator assembly business by 2025E-30E, up from a previous estimate of 50% [2]. - LeaderDrive's net income forecasts for 2024E-30E have been revised up by up to 21% due to its entry into the PRS business, projecting a 5% global market share [4]. - Best Precision's long-term global PRS market share forecast has been revised down to 10% from 15% due to anticipated competition [4][21]. - Moons' Electric is expected to see an 8% increase in net income forecasts for 2024E-30E, driven by potential upgrades in content value [5]. Company Summaries Sanhua - Sanhua is a leader in HVAC control and thermal management components, with a strong growth potential in the auto/EV sector [33]. - The 12-month target price for Sanhua is set at Rmb36.5, based on a 21x 2030E P/E [34]. LeaderDrive - LeaderDrive is recognized as a domestic leader in China's harmonic reduction gear market, with a focus on expanding its applications [41]. - The 12-month target price for LeaderDrive is Rmb134.6, based on a 45x 2030E P/E [42]. Best Precision - Best Precision aims to become a competitive supplier of planetary roller screws for humanoid robots, with a projected 10% global market share starting in 2027E [37]. - The 12-month target price for Best Precision is Rmb28.2, based on a 32x 2030E P/E [38]. Moons' Electric - Moons' Electric is positioned to become a key player in the humanoid robot coreless motor supply chain, with expectations for increased revenues from coreless motor applications [45]. - The 12-month target price for Moons' Electric is Rmb53.3, based on a 37x 2030E P/E [46].