Nickel Industries | Asia Pacific February 25, 2025 05:30 AM GMT Risk Reward Update What's Changed | Nickel Industries (NIC.AX) | From | To | | --- | --- | --- | | Price Target | A$1.05 | A$1.00 | | Bull Case | A$2.55 | A$2.30 | | Updated Components | | | | EPS | | | | Bull Base Bear Scenarios | | | Risk Reward for Nickel Industries (NIC.AX) has been updated Reason for change We have updated our model to reflect CY24 actual numbers after the CY24 result. Our CY25-27e EPS forecasts fall 9.8%, 4.7% and 5% resp ...

February 23, 2025 08:06 PM GMT 2024 preliminary net income up 10% YoY Foxconn Industrial Internet Co. Ltd. | Asia Pacific Reaction to earnings Unchanged In-line Largely unchanged Impact to our investment thesis Financial results versus consensus Impact to next 12-month consensus EPS Source: Company data, Morgan Stanley Research FII announced preliminary 2024 revenue of Rmb609.1bn (+27.9% YoY) and net income of Rmb23.2bn (+10.3% YoY). This implies 4Q24 revenue of Rmb172.8bn (+1% QoQ, +17% YoY) and net income ...

Summary of Key Points from the Conference Call on Co-Packaged Optics Technology Industry and Company Involved - **Industry**: Co-Packaged Optics (CPO) Technology - **Company Discussed**: TSMC (Taiwan Semiconductor Manufacturing Company) Core Insights and Arguments - **Definition and Importance of CPO**: CPO utilizes semiconductor technology to create optical engines (OE) that function as optical transceivers, significantly reducing the size of key components such as signal modulators and light generation systems. This technology addresses issues like space constraints in data centers and rising power consumption, particularly as data rates increase to 3.2T to 6.4T, where CPO becomes advantageous, and beyond 6.4T, it becomes essential [4][5][6] - **Stages of Adoption**: The implementation of CPO is categorized into three stages: 1. OE on circuit boards (already deployed) 2. OE on substrates (expected meaningful adoption in data center switches) 3. OE on interposers (in R&D phase, earliest deployment expected in 2027 or later) [4][5] - **Role of TSMC**: TSMC is anticipated to play a crucial role in OE production due to its capabilities in various process nodes and hybrid bonding. The company has developed the COUPE (Compact Universal Photonic Engine) platform, which is already in its second generation [4][5] - **Challenges Facing CPO**: - **Thermal Management**: Critical issue as optical signals are sensitive to heat, complicating heat dissipation when close to electronic ICs. - **Manufacturing Complexity**: Involves sophisticated integration techniques due to different process nodes for PICs (65nm) and EICs (7nm). - **Repairability**: Traditional optical modules are easily replaceable, necessitating some level of pluggability for OEs [4][5] - **Beneficiaries of CPO Technology**: Foundries and OSATs (Outsourced Semiconductor Assembly and Test) are positioned to benefit from the development of CPO technology. Additionally, larger IC substrates will be required to accommodate the increased number of components [4][5] Other Important but Potentially Overlooked Content - **Market Context**: The discussion highlights the growing demand for efficient data transmission solutions in the context of rising data center power consumption and the need for reduced latency in AI data transmission [4][5] - **Analyst Certification and Disclosures**: The report includes standard disclaimers regarding potential conflicts of interest and the objectivity of the research, emphasizing that J.P. Morgan may have business relationships with TSMC [3][10][12] This summary encapsulates the critical points discussed in the conference call regarding CPO technology and its implications for TSMC and the broader semiconductor industry.

Summary of TCL Tech Conference Call Company Overview - **Company**: TCL Tech - **Industry**: LCD and OLED display panel manufacturing - **Market Position**: Second-largest LCD display panel supplier in China, largest gaming monitor and LTPS panel maker globally [doc id='34'] Key Financial Insights - **Earnings Forecast**: Earnings forecast raised by 12-18% for 2025-26, reflecting a positive outlook on TCL's panel business [doc id='1'][doc id='31'] - **Revenue Growth**: Expected panel business revenue CAGR of 16% from 2024-26, driven by large panel area shipments and improved ASP [doc id='9'][doc id='2] - **Free Cash Flow (FCF)**: Anticipated sustained improvement in FCF due to disciplined capex and enhanced operating cash flow [doc id='3'][doc id='1'] Valuation and Price Target - **Price Target**: Increased from Rmb4.00 to Rmb6.00, implying a 1.9x 2025E P/BV [doc id='4'][doc id='28] - **Current Stock Price**: Rmb4.88 as of February 24, 2025 [doc id='6'] - **Market Capitalization**: Rmb91.6 billion (approximately US$12.7 billion) [doc id='6'] Panel Business Insights - **Panel Shipments**: Large panel area shipments expected to grow at a CAGR of 15% from 2024-26, supported by the acquisition of LGD Guangzhou G8.5 fab and ramp-up of T9 fab [doc id='2'][doc id='9] - **Average Selling Price (ASP)**: Anticipated increase in large-size LCD panel ASP by 3% in 2025 and 1% in 2026 due to improved product mix [doc id='2'][doc id='9] - **Gross Profit Margin (GPM)**: Expected GPM growth of 2.7ppt in 2025 and 1.7ppt in 2026, driven by product mix improvement and peak depreciation in 2026 [doc id='17'][doc id='2] Risks and Market Sentiment - **Stock Performance**: TCL's stock has underperformed the A-share Electronics Index by 22ppt since October 2024, indicating market skepticism about the sustainability of panel price recovery [doc id='20'][doc id='9] - **Debt Levels**: Net debt projected to decrease from Rmb144.8 billion in 2024E to Rmb138.6 billion in 2025E [doc id='5'] Industry Outlook - **Supply-Demand Dynamics**: Expected undersupply in large panels in 2024, with a potential oversupply in 2025, followed by another round of undersupply from Q3 2026 [doc id='35'] Additional Insights - **Capex Plans**: Total capex expected to decline by Rmb5 billion in 2025, stabilizing in 2026 [doc id='3] - **Depreciation Trends**: Combined depreciation for the panel business expected to peak in 2026, allowing for faster revenue growth compared to depreciation [doc id='2'][doc id='9] This summary encapsulates the critical insights from the TCL Tech conference call, highlighting the company's financial performance, market position, and future outlook.

Summary of Conference Call Notes Industry Overview - **Industry**: Greater China Materials, specifically focusing on cobalt production and its market dynamics in the Democratic Republic of the Congo (DRC) [1][2] Key Points 1. **Cobalt Export Suspension**: The DRC has suspended cobalt exports for four months starting February 22, 2025, to address oversupply issues. The DRC produced approximately 70% of global cobalt in 2024 [2][7]. 2. **Impact on CMOC**: - CMOC produced 114,000 tons (kt) of cobalt in 2024 and plans to produce 110kt in 2025, all sourced from DRC operations. - Cobalt is estimated to contribute around 11% to CMOC's mining gross profit (GP) in 2024. - CMOC is expected to have approximately 40kt of cobalt inventory by the end of 2024, which may partially offset shipment volume losses during the export suspension. - If the ban is lifted on time, potential increases in cobalt prices could enhance CMOC's future sales [3][7]. 3. **Impact on Huayou**: - Huayou's annual cobalt production from its DRC mine is estimated to be only several thousand tons, resulting in minimal direct earnings impact from the suspension. - However, potential price increases in cobalt may positively affect Huayou's other cobalt-containing products, such as MHP and precursors [3][7]. Financial Projections and Risks 1. **CMOC Valuation**: - A discounted cash flow (DCF) model is used for CMOC, applying a weighted average cost of capital (WACC) of 8.0% with an assumed annual revenue growth of 2% beyond the explicit forecast period [8]. 2. **Huayou Valuation**: - Huayou's price target is derived from a DCF model with a WACC of 10.9% and a steady-state revenue growth rate of 2%, considering a slower penetration rate in ternary lithium-ion batteries compared to market expectations [9]. 3. **Risks**: - Upside risks include stronger-than-expected metal prices in 2025 and higher copper output beyond company guidance. - Downside risks involve weaker cobalt prices due to low demand from industrial sectors and domestic electric vehicles (EVs), as well as slower recovery in the global macroeconomy affecting other metal prices [12][15]. Additional Insights - The suspension of cobalt exports is a significant event that could reshape market dynamics, particularly for companies heavily reliant on DRC cobalt, such as CMOC and Huayou. - The potential for price hikes in cobalt and related products could create opportunities for companies to enhance profitability if managed effectively during the suspension period [3][7].

February 23, 2025 09:41 PM GMT China Equity Strategy | Asia Pacific Sector Allocation & Focus List Changes - Rotating from Defensive to Tech Adoption Upgrade Media&Ent, IT & Cons Disc, downgrade Materials, Energy, Telecom & Utilities on more positive stance on China equity given tech adoption and equity risk premium alleviation. Add Meitu, HKEX, Espressif and Alibaba to China/HK Focus List, and Espressif and Tuopu to A-share Thematic list. Following our China upgrade report (China Equity Strategy: Getting O ...

24 February 2025 REMD Michelle Kwok* Head of Asia Real Estate and HK Equity Research The Hongkong and Shanghai Banking Corporation Limited michellekwok@hsbc.com.hk +852 2996 6918 Oliver Yu* Analyst, Asia Real Estate The Hongkong and Shanghai Banking Corporation Limited oliver.y.o.x.yu@hsbc.com.hk +852 2288 2050 China Real Estate Equities 10 signs the market has bottomed China We highlight 10 signals that the China housing market has bottomed. Three years on, national new home sales have shrunk 48% vs the 20 ...

ab 24 February 2025 Global Research China Outlet Sector Can outlets continue to expand in China? 239 outlets in China in 2023; still less penetration than in the US | Stock Code | Company name | Close Price Market Cap | | EPS | | 24-26 EPS | | PE | | PEG | | PB | | ROE | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | （lc） US$ mn | 2024E | 2025E | 2026E | CAGR | 2024E | 2025E | | | | 2026E 2025E 2026E 2024E 2025E 2026E 2024E 2025E 2026E | | | ...

Summary of Semiconductor Capital Equipment Conference Call Industry Overview - The focus is on the Semiconductor Capital Equipment industry, specifically the Wafer Fabrication Equipment (WFE) segment - The WFE forecast for 2025 has been revised from $96 billion (down 6% year-over-year) to $99 billion (down 3%), and for 2026 from $101 billion (up 6%) to $103 billion (up 4%) [1][2][35] Key Insights - **NAND Market Dynamics**: - There is a tactical setup for NAND, but concerns about its durability due to end-market trends persist [1][35] - The revision in forecasts is primarily driven by NAND ($1 billion) and DRAM ($2 billion) adjustments [2][35] - Brownfield investments in NAND are occurring earlier than expected, leading to an increase in upgrade assumptions from $12 billion to $15 billion for 2025-2026 [3][41] - Major players like Samsung, Kioxia, and YMTC have resumed spending, which may drive near-term spending despite profitability concerns [3][46] - **DRAM Market Outlook**: - DRAM remains a contentious topic, with forecasts varying significantly among companies [4][29] - Some companies predict growth in DRAM WFE, while others forecast flat or declining trends [4][29] - The expectation is that 2025 will be a digestion year for DRAM after a record 2024, with a projected WFE of $25 billion [38][39] - **Company Forecast Divergence**: - Companies have differing forecasts for 2025 WFE, with TEL and Kokusai predicting flat growth, while LAM, KLA, and SCREEN expect moderate growth [28][29] - The consensus is that leading logic will see growth, trailing logic will decline, and NAND will increase [22][28] Additional Important Points - **Record Shipments**: - Q4 2024 saw stronger-than-expected shipments, with total Core-5 shipments reaching $21.7 billion, marking an 11% quarter-over-quarter increase and a 21% year-over-year increase [21][22] - NAND shipments from LAM, AMAT, and TEL totaled $1.11 billion, up 101% quarter-over-quarter and 63% year-over-year [22] - DRAM shipments reached $3.35 billion, up 35% quarter-over-quarter and 8% year-over-year [22] - **Geopolitical Factors**: - There is a noted decline in China’s contribution to Core-5 revenue, dropping from 40% to 32%, while South Korea's share increased from 15% to 22% [24][26] - **Future Considerations**: - The industry is unlikely to see significant greenfield investments outside of China during 2025-2026, with a focus on upgrades instead [39] - The competitive dynamics in NAND may lead to increased spending, potentially reigniting a layers race that could affect long-term industry health [46] This summary encapsulates the key points discussed in the conference call regarding the Semiconductor Capital Equipment industry, highlighting the current trends, forecasts, and potential risks.

Summary of Key Points from the Conference Call Industry and Company Involved - **Industry**: Global Economics and Strategy - **Companies**: BAE Systems, Mitsubishi Heavy Industries Core Insights and Arguments 1. **German Election Outcomes**: Preliminary results indicate a two-party coalition, with CDU/CSU, SPD, and Greens failing to secure a two-thirds majority for constitutional changes, potentially leading to market disappointment regarding fiscal stimulus [3][4] 2. **US Economic Indicators**: Anticipation of a benign US core PCE release, with a forecasted year-over-year decrease from 2.8% to 2.5% [4] 3. **Global Growth Forecast**: Expected slowdown in global growth for 2025/2026, primarily due to US tariffs on China, which may negatively impact an already struggling economy [7] 4. **Defence Spending in Europe**: EU Commission's suggestion to exempt defence spending from fiscal rules could lead to increased defence budgets, supporting a bullish outlook on European equities and non-US defence stocks [7] 5. **BAE Systems Valuation**: BAE faces risks including government defence budget uncertainties, contract execution capabilities, and political risks in Saudi Arabia, with approximately 40% of its business derived from North America [11] 6. **Mitsubishi Heavy Industries Risks**: Risks include sluggish capital expenditure due to economic downturns in major markets, rising costs, and yen appreciation [12] Additional Important Content 1. **Market Dynamics**: The report highlights the potential for fiscal easing in Germany and the implications of higher defence spending on market narratives, particularly for bond yields and equity spreads [3][7] 2. **Investment Ratings**: Both BAE Systems and Mitsubishi Heavy Industries are rated as "Buy," indicating positive expectations for their stock performance [26][33] 3. **Geopolitical Considerations**: The report emphasizes the need for increased self-reliance in European defence spending, with current EU spending at 2.0% of GDP compared to 3.4% in the US, suggesting a significant gap that needs to be addressed [7] 4. **Emerging Market Sentiment**: Optimism in China tech equities is noted, with MSCI China gaining 25% since mid-January, although the broader emerging market sentiment remains mixed [7] This summary encapsulates the critical insights and data points from the conference call, providing a comprehensive overview of the current economic landscape and specific company outlooks.