credit suisse equity research

We expect China's equity market to remain resilient on the back of recovering economy, lower tightening and more reasonable valuation, despite uncertainty in variant development, regulations, and geopolitical tension. IPv6 available. China Property Management: High growth + high visibility + high quality. In our sector report in December 2021, we forecasted the Chinese Electrolyte space to enjoy a favourable S/D environment in 2022, and elevated electrolyte/LiPF6 prices to sustain until end-2022 after a 307%/727% spike. 4 0 obj The nation's technology self-reliance and supply chain security continue to be a top priority amid escalating US-China tensions. We expect the fundamental backdrop for premium brands to remain strong in 2021, underpinned by continued demand recovery and tight demand-supply dynamics. Securities Research: Semiconductors ANL-ASO. Currently only covering power companies, the market is likely to expand trading activities to more sectors such as auto and cement. Asia Technology Strategy 2022 smartphone update: Slow unit growth continues but 5G ramps stay on track. Global Healthcare Sector: AI, Blockchain, Cloud and Data Analytics: Transforming healthcare landscape. China remains determined to develop a domestic semiconductor ecosystem, with an ultimate goal of being independent from the US, or with the least reliance on US technologies. It provides thought-provoking thematic analysis, differentiated trading ideas and coordinated global views. China Banks Sector: Be very selective in a challenging year. China Healthcare Sector Outlook 2022: If Winter comes, can Spring be far behind? We expect the government to accelerate issuance of local special bonds in the remaining months of the year, making infrastructure FAI the major driver to stabilise the economy. Of the loss to net exporters, ~85% is in RU, SA, IQ, the UAE, KW, and IR. NEV and renewable energy are the major beneficiaries from the replacement of ICE cars and fossil fuels. Norway is a good example of how govt. China's consumption loan market and SME loan market have ample room for growth in the long term. Structural shortage may persist under the current long-term contract mechanism and likely not ease soon in the peak season. The most comprehensive and up-to-date resource of its kind. The three telcos/BAT had only completed 37%/45% of their FY21E capex in 1H21; the expected acceleration in capex should be a core earnings improvement driver for the communication infrastructure supply chain. However, we see the April/May Covid lockdown in parts of China had a negative impact on 2Q22 drug/device sales and we adjust down 2Q22 earnings. APAC Quantitative & Systematic Strategy: Southbound sentiment tracker: Rotation to Consumer/Healthcare from Financials/Tech. Visit your regional site for more relevant services, products and events. Gross turnover impact remains significant at around 11% of A-share turnover, while the Northbound free float stake is currently around 8%. We prefer JD, Midea and Xiaomi as the biggest winners and downgrade Gree/Robam to NEUTRAL/UNDERPERFORM. Our report includes takeaways from 60 TMT companies with companies presenting a more mixed view vs. the outlook from our January Greater China Conference reflecting the Russia-Ukraine conflict, Covid-19 conditions in China, and rising inflationary pressures. Weakness in Jan across brands due to an early Chinese New Year (CNY) and spending shift. China Healthcare Sector Sideways market expected in 2H22, with focus back on company fundamentals. China xEV Battery Value Chain: Electrolyte and SeparatorProfitability divergence ahead. China Market Strategy - 2H21 Outlook: Beyond normalisation and regulation. It was dominated by companies from the technology, consumer, industrials, healthcare, and property sectors. Asia Pacific Strategy - 2H outlook: Challenging times with some silver linings. The estimated additional pay is $48,522 per . We observe a clear trend of recovery in consumption, despite a certain level of moderation in the short term. China OEM automation grew 28% YoY in 2Q21, implying a 21% 2-Y CAGR. APAC Quantitative & Systematic Strategy Southbound sentiment tracker aggressive buying of internet stocks. We are positive on the sustainability of the recovery. (b) low-base effect amid COVID-19 volume down 45% YoY in 1Q20, which stand-alone offers ~12 pp annual growth for full year 2021. 5G tracked higher outside China in 4Q21 on the new iPhone ramp up and Samsung's rising push in the mid-tier, lifting units to 560mn, above CS 545mn and the high-end of market expectations 500-550mn. China Semiconductor Sector: Beacons of light on the stormy sea Initiating on WFE and wafer companies. Compared with global peers, China internet names should see a more visible marginal improvement into re-opening. Swift order corrections beyond the demand reduction should drive a classic 3 quarter downturn and bottom in 1Q23. Despite recent pullback in the Apple supply chain due to a reset on AirPods (revised down to 120 mn 2021) and 1H21 order expectations, the Chinese supply chain would benefit from vertical integration. Declines in copper foil and epoxy resin prices accelerated in Jun/Jul, while glass fabric stayed low after the sharp cut in Feb. Material prices have returned to 1H20 levels, and we expect them to be manageable in the rest of this year. We expect this trend to continue. Hydrogen: A new frontier: Part 2: A primer on the APAC value chain. We believe such control measures imposed have put both online and offline consumption on a downward spiral. In addition to fighting the outbreak, the central and local governments are trying to stabilise the economy, with work resumption as top priority. IPv6 available. Internet companies will negotiate to resolve issues including platform security and mutual benefits as they dismantle walled gardens. Thanks to government stimulus in reaction to COVID-19, China's construction activities continued to surprise the market on the upside. China TMT Sector: How to invest in China's cloud. We estimate that well-managed direct retail stores and e-commerce platforms should have a higher operating margin profit of 2-3 pp than the wholesale channel. China Cosmetics Sector: Ascent of C-beauty brands. We introduce a new CS China online tracker, and our first volume covers Taobao, Tmall, and JD sportswear sales (Douyin will be added in the next update). China Insurance Sector: 1H21 results wrap and 2H21 outlook. Despite the lower temperature bringing down daily consumption at power plants in southern China, the market remains tight amid supply reduction. The use of ABCD has resulted in increased shift of medical care into patients' homes, improved medical services and supply chain efficiencies, enabled better utilisation of healthcare plans, and tapped a large wellness segment (in addition to illness). China Metals and Mining Sector: Positive drivers remain intact despite rising volatility. Credit Suisse's emergency lifeline from the Swiss central bank has provided the embattled lender with only limited relief, with its battered share price resuming its descent on Friday. Ten economies in Asia (the A-10: China, India, Indonesia, Japan, Philippines, Vietnam, Thailand, Korea, Malaysia, and Taiwan) were incrementally 50% of global GDP and 60% of exports and sent US$5tn in capital to the world (2010-19). Despite a weak overall 2022, we estimate that most types of equity funds saw inflows in 4Q22. Our Southbound strategy has returned flat YTD. We believe laser cutting machine will grow faster than general metal cutting machine driven by laser penetration, but we believe in monetary terms, there is still pressure for laser to achieve positive growth. in 2022/23, after 4%/13% increase in 2020/21. The demand recovery pace and sustainability post the CNY holiday, in our view, should be closely watched. Please note that certain products and services described on this site may not be available in your jurisdiction. To push the market further, we may need more decisive measures in the next few months, especially during the 'Two Sessions' in Mar. China Telecom Sector: The overlooked 'new infrastructure' gems. Better foot traffic and activities will boost sales in sportswear, cosmetics, household appliances, property, catering, baiju and condiment. 1 (Aug-2022). China Sportswear Sector: Navigating through short-term uncertainties, before reaching the next new high. We continue to see strong momentum in 4Q20, evidenced in expansionary PMI, recovering retail sales and a positive surprise in exports, and confirmed by CQi's key indicators updates. We cut our 2020 product spread forecast by 21% on average, and believe the GRM rebound in February could be short-lived. Fed began to hike interest rate and discussed plans to shrink its balance sheet. In the materials space, the demand increase and tight supply are expected to create a favourable supply-demand dynamic for steel and cement sectors, boding well for prices and profitability. APAC Quantitative & Systematic Strategy: Southbound sentiment tracker: sector rotation accelerated amidst record monthly outflow. APAC Quantitative & Systematic Strategy: Southbound sentiment tracker net buying re-accelerating, amidst a gross volume slowdown. Taking into account CS Auto team's raised expectations about xEV penetration rates (57% in 2030E vs. previous 45% on tightening CO2 emission regulations) and assuming higher energy density/unit (72kWh/unit vs. previous 62kWh led by battery technology upgrade), we raise our 2030E xEV battery demand forecast to 1.8TWh (previous 1.5TWh), implying a 30% CAGR. APAC Quantitative & Systematic Strategy: Enhancing China exposure with A/H aware portfolios. Omicron-triggered strict containment measures in China's key cities in 1H22, caused severe disruptions to an economy that had already slowed since 3Q21. Ideas and solutions to complex problems. (4) Competition: With government's anti-trust efforts, dominant leaders are more mindful of market share, creating opportunities for others to catch up. Global Telecoms Sector: Broadband: Wiring up the world. In silicon, it has developed more internal silicon, raised content at TSMC, and created new SiP content. The bank's EMEA head of equity research is Tim Ramskill, who joined 12 years ago from Dresdner. After record new launches in 4Q20/1Q21, the pace of launches has normalised. We forecast LiBS blended ASP to deliver a 7% CAGR through to 2025. However, as growth in shipping volumes is broadly in line with trend, the tightness has two reasons, in our view. We cannot rule out pricing power in the turbine and cable supply chain, albeit our base case is that in turbines, only SGRE is profitable to 2025E; We estimate IRRs for developers of current 'fixed bottom' foundation projects are c5-6% post-tax nominal, often with developers taking power price risk. APAC Quantitative & Systematic Strategy: China mutual fund positioning - 2022 review. In 2023, we expect cost reduction to be the key driver of demand recovery and earnings growth for China utilities and renewables companies. Due to a slow recovery outlook, we cut 2022/23E earnings by 21-163%/0- 44% and cut TPs across the sector. China Healthcare Sector: 2021 outlook: Strong growth ahead, especially for CRO, biotech, and medical devices. Asia Semiconductor Sector: 2023 Outlook - Resetting to lower trough before driving into rebound. Near-term upgrades will be evolutionary but still improve the camera (image stabilisation, larger sensors, improved wide angle), display (faster refresh), processor (enabling AI, multimedia/graphics, and app development), and RF (more mmWave, Wifi 6E), and smaller notch. Our Global Wealth Report analyzes the household wealth of 5 billion people across the globe. This marks the first hydrogen game plan from the central government since President Xi's net-zero pledge back in 2020. Overall online cosmetics grew by 32% YoY in 2020, albeit slowing down from 49% YoY in 2019 on Tmall/Taobao. It includes commitments in goods, services, investment, intellectual property rights, competition, etc., but in this note, we focus on goods. We expect China's technology self-reliance initiatives to bring profound changes along with associated investment opportunities. We take July's overall macro data announced on 15 Aug as slightly negative for construction machinery demand. Property remained one of the key challenges, and new loans to the household sector sharply contracted. After decades of successful reforms and opening-up, it is the right time for China to seek to achieve high-quality development in a greener and more sustainable way. Other live sessions will be livestreamed as scheduled and be available online until 6 July. CQis recent sportswear survey (21 Nov) show that the China Pride trend is slowing. In our view, BTX and collagen stimulator should see the biggest upside among all products. Find out more about what we are doing to advance sustainability in our business, measure progress and report against our targets in our sustainability report, part of our annual reporting suite. We are negative on coal-fired IPPs due to coal cost pressure and increasing competition. China is the second-largest source of "unicorns" in the world. We see stocks attractive on a cross-cycle view but still see risk being early, with potential cuts continuing in 4Q22 amid high inventory and muted demand. For offshore wind, we calculate capacity addition could reach 52 GW and tendering volume could pick up significantly in 2022. China Mobile's 700MHz and China Unicom's 2.1GHz tenders are believed to take place possibly in Mar/Apr, while China Telecom should also launch its tender in 1H21. APAC Energy Sector Are we getting towards the point of demand destruction? China Dairy Sector: Margin expansion in a growth era driven by multi-categories. Downstream solar module companies should also benefit from the demand acceleration. Divergence between PPI and CPI is gaining traction in China. China's 'New Infrastructure' is one of the key initiatives in the National 14th Five Year Plan. One of the most discussed topics is what would be the LiBS future price trend after the price war in 2019-20. China Passenger Vehicle Sector: 2021 outlook. China Market Strategy: Ride on domestic recovery and resilient export. We estimate China's cosmetics market to grow at an 11% CAGR in 2021-25, with continuing consolidation driven by tightening regulations. Higher oil prices hurt the current account, add to inflationary pressures and increase sensitivity to Fed rate hikes. Should you have any questions regarding a specific product or service offering, please reach out to your Credit Suisse representative. In medium term, we believe double-digit operating RoEV of both insurers is sustainable, as they are high-quality insurance operators. China Mobile expects more than 200 mn units of 5G smartphones and 100 mn other smart connected device shipments in 2021. YTD, Southbound investors have posted net inflow of US$37 bn, representing more than 40% of the full-year inflow in 2020. Less sticky cost structures than in DMs could insulate earnings in a downturn. We found 533 assets were in-licensed and 122 assets out-licensed. With the shaved growth in 2022, we believe the downside risk in 2023 is also shaved and we expect the existing order backlog + healthy new energy market + potential for recovery of the traditional end-market to support growth in 2023. Over 150 companies attended our 11th China Investment Conference. We forecast a moderate downturn followed by a mild recovery and prefer tech companies positioned for share gain opportunities to outperform a weaker tech cycle. China Market Strategy: Infrastructure FAI back to spotlight to stabilise the economy. Despite decelerating growth from a high base, we expect the global IGBT market to grow at a 13% CAGR in 2023-25E, driven by automotives 16%. We highlight the different types of funds, AUM trends, and take a detailed look into different funds' holdings. We expect demand to recover after mid-2023 for sportswear and in later 2023 for catering. to 11.6GW p.a., reflecting growth in new markets. The rising impact of domestic mutual funds will continue to be one of the most important stories in the region. Global Themes Monitor: Alternative energy: Hydrogen, Offshore wind, EV batteries. One of the most discussed topics during our virtual marketing, following our Connections Series and Chinese electrolyte initiation, is whether / when LiFSI could replace LiPF6 as mainstream electrolyte solute. Riding on the super trend. These six sub-sectors have penetration gap of 25-38 pp against comparable markets (Japan, Korea, and the US) and local brands have also displayed potential to gain market share. China Market Strategy: China Outlook 2021: Year of normalisations. We also see the silver lining coming from easing margin pressure in 4Q22/2023 as raw material costs soften. NEV is an inevitable megatrend with rising electrification and information technology. The carbon neutrality goal, together with peaking emission target by 2030, is the nation's first long-term climate goal. We estimate that by 2025, we could see ~45,000 TAVR annual operations in China. Asia Pacific Strategy: Input costs pressures identifying the weak links. Our global team revised up its metal prices forecasts to reflect the positive outlook for aluminum and copper. The positive stance, as laid out in our China Hydrogen Connection Series last year, remains intact, and this policy announcement should kick-start a wave of capex spending in the hydrogen value chain, in our opinion. The market's big P/E premium magnifies the risks. China Home Appliances Sector: Navigating through the storm. Asia Oil & Refining Sector: Speed bumps along the recovery pathway. 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