Investment Rating - KGI Financial (2883 TT) downgraded to Neutral [3][4] Core Insights - Taiwan Insurance sector is expected to receive regulatory support, but it may be insufficient to mitigate the damage already done to earnings and capital positions [3][7] - India Insurance sector shows stronger-than-expected ULIP sales growth of 19% YoY compared to industry APE growth of 14%, indicating positive near-term prospects for HDFC Life [3][8] - SMFG (8316 JP) remains Neutral despite a raised price target, with a forecasted total shareholder return (TSR) of 60% due to ongoing buybacks [3][13] Taiwan Insurance - Regulatory measures are anticipated to support life insurers in restoring FX reserves, but the impact on earnings and capital positions is likely to be detrimental [7] - KGI's FY25e EPS and DPS have been revised down by an average of 24% and 20% respectively, reflecting the challenges posed by currency fluctuations [7][8] - KGI's price target is set at NT$18.8, with a recommendation to buy on weakness if the stock falls below NT$15 [7] India Insurance - HDFC Life's APE growth was 19% YoY, driven by strong individual and group APE growth [8] - The upcoming Insurance Amendment Bill could allow for 100% FDI in the sector, although the open architecture model may face resistance from insurers [8] SMFG - Price target raised to Y4,180, with a forecast of Y300 billion in buybacks for FY25 [13][16] - SMFG's ROE is projected to remain below 10%, while Mizuho is expected to accelerate buybacks and achieve over 11% ROE [3][13]

Investment Ratings - Coforge: Overweight (O/W) with a price target (PT) of Rs2,080 [3][4] - Qualcomm: Overweight (O/W) with a price target (PT) of $185 [3][4] - Apple: Overweight (O/W) with a price target (PT) of $240 [5] - BE Semiconductor: Overweight (O/W) with a price target (PT) of €121 [6] - Celestica: Overweight (O/W) with a price target (PT) of $115 [6] Core Insights - Coforge's management is optimistic about industry-leading growth and margin expansion, expecting a 14% EBIT margin in FY26 [3][4] - Qualcomm's acquisition of Alphawave for $2.4 billion is aimed at enhancing its Data Center portfolio, positioning it competitively in the custom AI ASIC market [6] - Apple's WWDC event revealed limited AI updates, indicating a focus on retaining its existing consumer base rather than attracting new switchers [5][6] - Taiwan's May exports surged by 38.6% year-over-year, driven by strong shipments to the US, indicating robust demand in the tech sector [9] Detailed Highlights - Coforge's proactive sales strategy and large deal execution are expected to drive robust growth in FY26, with a strong pipeline of large deals [3][4] - Qualcomm's strategic acquisition of Alphawave strengthens its position in the Data Center market, with competitors in Asia including Alchip and Mediatek [6] - Apple suppliers such as Murata, Sunny Optical, AAC, and Genius Optical are highlighted as key players in the supply chain [5][6] - BE Semiconductor is preparing for its Capital Markets Day, with expectations for market sizing and customer insights [6] - Celestica's competitive landscape in Switching includes major players like Inventec, Accton, and Arista, with significant growth opportunities identified [6] - OpenAI has reached $10 billion in annual recurring revenue, indicating strong demand for custom AI ASIC projects [6]

Investment Rating - The report maintains a Neutral rating for Tata Motors, indicating cautious optimism regarding its aggressive targets in the passenger vehicle (PV) and commercial vehicle (CV) segments [4][5]. Core Insights - Tata Motors aims for a 40% market share in the CV segment by FY30, with a target of achieving a teens EBITDA percentage and strong free cash flow (FCF) [5]. - In the PV segment, Tata Motors expects to exceed market growth, targeting a 16% market share by FY27 and 18-20% by FY30, with double-digit EBITDA and Rs 10 billion FCF for PV internal combustion engine (ICE) vehicles [5]. - The company plans to diversify its EV strategy, focusing on high-end segments and new launches, while anticipating positive EBITDA margins in the EV segment [5]. - Koito Manufacturing has postponed the expected profitability of its LiDAR business by two years, now targeting FY2030 for profitability, citing a slowdown in automobile demand and shifts in OEM development policies [3][6]. Detailed Highlights - Tata Motors presented a comprehensive outlook during its India Investor Day, emphasizing aggressive targets for market share and margins in both PV and CV segments [4][5]. - Koito's LiDAR business briefing revealed increased R&D efforts and a revised sales guidance through FY2030, with a focus on adapting to changing market conditions [3][6]. - The report notes a shift in the ADAS/AD development landscape, with developed countries focusing on rule-based autonomous driving while Chinese manufacturers adopt end-to-end self-driving technologies [6][9].

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies covered. Core Insights - The impact of China's rare-earth export ban is significant, affecting key Asian automakers like Suzuki and Ford, with production halts reported [1][5] - The sentiment around BYD has improved, with investors noting a bottoming out in sentiment, while concerns remain for Geely and Great Wall Motor [1][12] - The Indian defense sector is poised for growth, with expectations to increase defense spending to 2.5% of GDP by FY30, indicating a potential doubling of defense spending [1][11] - The EU building materials sector is showing signs of improvement, driven by positive factors such as increased defense spending and a potential recovery in residential construction [1][13] Detailed Highlights - **Japan Auto**: Suzuki halted production of its Swift model due to the rare-earth export ban but resumed operations shortly after, indicating that the situation may not be as severe as initially thought [1][5] - **China Auto Feedback**: Pricing competition has moderated, and BYD's sales volume has responded positively without significant price cuts, improving investor sentiment [1][10][12] - **Indian Defense**: The Ministry of Defense's commentary suggests that conditions are aligning for a significant increase in defense spending, attracting investor interest in various defense companies [1][11] - **EU Building Materials**: The sector is experiencing a strong move, with cement shares leading the way, supported by positive results from companies and a firming sentiment for construction recovery [1][13] Sector Key Newsflow - US auto suppliers are urging immediate action to address China's rare earth restrictions [1][13] - Suzuki's production of the Swift is set to return to normal from June 16 [1][13] - Chinese officials have summoned EV executives to discuss self-regulation in the ongoing price war [1][13] - BYD plans to nearly triple its dealer network in South Africa, reflecting its growth strategy [1][13] - China's NEV retail sales increased by 30% year-on-year in May, indicating strong market demand [1][13]

Investment Rating - The report maintains an Underweight (UW) rating on Lynas Rare Earths and a Neutral (N) rating on MP Materials [2][9]. Core Insights - The rare earths industry is facing significant supply chain disruptions due to China's export restrictions on key heavies like Terbium and Dysprosium, which are critical for electric vehicles and advanced technologies [9]. - Despite potential trade negotiations between the US and China, the damage to the supply chain may be lasting, prompting a shift towards developing non-Chinese sources of rare earths [9]. - The oil sector is expected to see strong refining margins, with a projected surplus of 2.6 million barrels per day (mbd) in Q4 2025, leading to a price floor for Brent crude between $55-60 and WTI between $50-55 [3][15]. Rare Earths Sector Summary - China controls approximately 70% of rare earth production, 85% of processing capacity, and 99% of heavies production, which has led to a scramble for alternative sources among automakers [9]. - Lynas Rare Earths and MP Materials are identified as key beneficiaries of the push for ex-China supply, with Lynas having over 85% exposure to NdPr, which is not currently restricted [9]. - The report expresses caution regarding the sustainability of the current rally in rare earth prices and the timing of commercial production volumes from alternative sources [9]. Oil Sector Summary - The report highlights five conditions necessary for crude prices to decline, with only two expected to materialize: a surge in OECD inventories and a flattening crude curve [15]. - Refining margins are anticipated to remain strong due to limited new capacity coming online, influenced by China's export restrictions and closures of US/EU plants [3][15]. - The report suggests that product stocks are expected to build, but low starting levels should support prices and margins [15].

Investment Ratings - Broadcom: Overweight (O/W) with a price target (PT) of $250 [4] - TSMC: Overweight (O/W) with a price target (PT) of $1275 [6] - Hon Hai: Overweight (O/W) with a price target (PT) of $210 [7] - Wistron: Neutral (N) with a price target (PT) of $118 [9] - Ciena: Overweight (O/W) with a price target (PT) of $86 [10] - Lumentum: Overweight (O/W) with a price target (PT) of $87 [11] - TIS: Neutral (N) with a price target (PT) of Y4,700 [12] - SCSK: Neutral (N) with a price target (PT) of Y4,400 [13] Core Insights - Broadcom is expected to see significant AI XPU growth, with AI revenues projected to rise from $12.2 billion in 2024 to $31.2 billion by 2026, surpassing street consensus [5] - TSMC maintains strong gross margins (GMs) and anticipates a revenue compound annual growth rate (CAGR) of approximately 20% through 2029, supported by price increases and a faster ramp of N2 technology [6][8] - Hon Hai's sales in May were impacted by TWD appreciation, but AI demand remains strong, with expectations of reaching 2,000 rack shipments in Q2 [7][9] - Wistron is focusing on GDR issuance to support AI system growth, with expectations of sustained revenue driven by robust demand for Dell's GB200 systems [9][15] - Ciena's revenue and order strength indicate robust growth in the optical market, driven by cloud and service provider investments [10] - Lumentum is updating its revenue expectations due to strong demand in optics, forecasting a quarterly revenue target of $500 million ahead of schedule [11] Detailed Highlights - Broadcom's AI revenue growth is expected to significantly exceed consensus estimates, with a bullish outlook for the AI sector overall [5] - TSMC's pricing strategy includes anticipated price hikes for leading-edge nodes, with a focus on maintaining high gross margins [6][8] - Hon Hai's revenue growth is expected to continue, driven by AI server demand, despite short-term currency impacts [7][9] - Wistron's capital raise is aimed at supporting AI system growth, with expectations of increased shipments in the coming months [9][15] - Ciena's strong sales trends are attributed to increased cloud investments, indicating a positive outlook for the optical market [10] - Lumentum's demand strength is leading to an upward revision in revenue forecasts, reflecting robust drivers in the optics sector [11]

Investment Rating - The report maintains an "Overweight" rating for Anta Sports [1] Core Insights - Anta Sports has continued the stable trend observed in the first quarter of this year, supported by healthy inventory levels and optimistic sales and performance [1] - The target price for Anta Sports has been raised from HKD 140 to HKD 142 [1] - The retail sales guidance for Anta Sports remains unchanged, with expected growth rates of high single digits for Anta, mid single digits for Fila, and over 30% for other brands [1] - The operating profit margin guidance is maintained, with expected margins of 20% to 25% for Anta, approximately 25% for Fila, and 25% to 30% for other brands [1] - Due to increased investment in MaiaActive and the planned acquisition of JackWolfskin to be completed in June, the earnings forecast for Anta Sports for 2025 to 2027 has been raised by 1% to 2% [1]

Investment Rating - The report assigns a "Neutral" rating to Hong Kong Exchanges and Clearing Limited (00388) with a target price of HKD 340 for the next 12 months [1] Core Insights - The report highlights that improvements in the new stock listing channels for Hong Kong Exchanges are a significant long-term benefit for the Greater China stock market, as the Stock Connect programs have fundamentally changed the investment landscape for both Hong Kong and mainland Chinese investors since their launch in 2014 [1] - It mentions that there are 26 Chinese concept stocks, which are constituents of the MSCI China and FTSE China indices, that have not yet been listed in Hong Kong, with a total market capitalization of USD 237 billion and an average daily trading volume of USD 2 billion over the past three months, representing approximately 5% and 6% of Hong Kong Exchanges' current market capitalization and daily trading volume, respectively [1] - According to sensitivity analysis, if all these stocks were to list in Hong Kong, it is anticipated that the earnings per share for Hong Kong Exchanges would increase by 6% by 2026 [1]

Group 1: Economic Context - China's consumption currently accounts for just 40% of GDP, with a savings rate exceeding 30%[3] - Elevated household savings lead to industrial overcapacity and persistent trade surpluses, impacting global trade dynamics[3] - Greater domestic consumption is essential for China's economic resilience and should be a top policy priority[11] Group 2: Geopolitical Influences - US-China negotiations emphasize the need for China to lift consumption to address trade imbalances[4] - Other countries are also pushing for China to increase domestic demand to avoid trade barriers due to excess capacity concerns[7] - The recent US/UK trade agreement includes provisions that may indirectly target China's manufacturing practices[8] Group 3: Investment Implications - The consumer and internet sectors in China are attractively valued, with EPS trends showing a solid upturn[16] - If policy support for consumption increases, both EPS growth and P/E multiples could re-rate significantly, starting from over 20% below the 10-year average[16] - Proactive support for consumption could lead to a slower pace of debt accumulation and easing deflation pressures in China[17]

Investment Rating - The report assigns an "Overweight" rating to Workday with a price target of $295.00 for December 2025, revised from a previous target of $310.00 [2][14]. Core Insights - Workday is expected to maintain consistent performance despite macroeconomic uncertainties, with positive trends in customer acquisition and revenue growth [1][12]. - The company has reported a significant increase in its 12-month subscription backlog, which reached $7.63 billion, up 15.6% year-over-year, exceeding consensus expectations [1][12]. - Workday's total revenue for the first quarter was $2.24 billion, reflecting a year-over-year growth of 12.6%, driven by subscription revenue growth of 13.4% [1][12]. - The report highlights the company's strong performance in various sectors, particularly in Technology & Media and Manufacturing, each surpassing $1 billion in annual recurring revenue [1][12]. - Workday's operating margin for the first quarter was reported at 30.2%, which is approximately 2 percentage points above consensus estimates, indicating strong operational efficiency [1][12]. Summary by Sections Financial Performance - The first quarter results showed a 12-month subscription backlog of $7.63 billion, up 15.6% year-over-year, and total revenue of $2.24 billion, up 12.6% year-over-year [1][12]. - Subscription revenue was $2.06 billion, reflecting a 13.4% increase year-over-year, with a notable adjustment for leap-year comparisons showing a 15% increase [1][12]. - The adjusted operating margin for the first quarter was 30.2%, expanding over 400 basis points year-over-year, with GAAP free cash flow of $421 million, representing an 18.8% margin [1][12]. Growth Drivers - Workday is focusing on full-suite offerings, with over 30% of new wins in the first quarter being full-suite contracts, consistent with previous quarters [1][12]. - The company is also seeing momentum in its AI product offerings, with new annual contract value (ACV) from AI products more than doubling year-over-year [12][14]. - The launch of WorkdayGO is aimed at midmarket customers, facilitating quicker implementations and contributing to growth in this segment [12][14]. Guidance and Outlook - For the second quarter, Workday anticipates a 12-month subscription backlog growth of 15.5% year-over-year, which is above consensus expectations [12]. - The company maintains its fiscal year 2026 subscription revenue outlook of approximately $8.8 billion, reflecting a 14% year-over-year growth [12]. - Workday's guidance for the second quarter includes a total revenue growth of 12.2% year-over-year, aligning closely with market expectations [12].