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We believe the China healthcare sector will continue to recover in 2023 following the rebound in 4Q22 but at a moderate pace. We expect GRM recovery to be slower than our previous forecast given wider and deeper demand disruption. EMS and PC/NB ODMs underperformed while semis kept orders intact. The nation's technology self-reliance and supply chain security continue to be a top priority amid escalating US-China tensions. Risks in property and LGFVs on the rise, but we do not see systematic risks. China Market Strategy: How to trade on accelerating FAI. We also expect about 60 new builds of hyperscale datacentres each year in 2020/21, as well as the transition to universal spine-leaf architecture to drive the demand for optical modules. China Financials Sector: Outlook 2023 - Building up our hopes on a macro recovery. Learn more Annual and interim reports How we've worked and what we've achieved. Exports, once a brilliant outperformer in the past two years, only rose 3.9% YoY in April, the slowest pace since June 2020. China Dairy Sector: Margin expansion in a growth era driven by multi-categories. We expect the hydrogen-powered FCEV to be an essential supplement to battery electric vehicles (BEV) in cold winter regions and long-distance and heavy-loading transportation. In addition, we would keep an eye on potential domestic or global catalysts currently under the radar, such as DRG/DIP, the US-China relationship and COVID-19 variants. We expect a few healthcare-specific drivers in 2023, including marginal improvement of regulation, hospital traffic improvement post 'reopening', innovation/globalization, and more domestic substitution for upstream products. Adopt a more dynamic approach to Value in on- and offshore China. 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. The demand recovery pace and sustainability post the CNY holiday, in our view, should be closely watched. China Market Strategy How to position after the 2021 results. Given the FDA's increasing requirement for multi-regional clinical trials (MRCT), we believe the drug candidates with overseas data could be out-licensed more easily. China Industrial Automation Sector: Thoughts ahead of 3Q22 results, 3Q22 market view: Some improvement in Sep; overall trends still mixed. Key takeaways from the show Offers for all girls' ( offer) by Austin Li: (1) higher discounts across the board compared with last year (buy-1, get-1-free or more); (2) international brands being more aggressive (as high as 50- 60% off); and (3) pent-up demand to be released, as Austin soft-guaranteed some brands to double GMV YoY, and hot SKUs may further outperform. At such a depressed valuation, we believe concerns over both asset and liability are overdone. This trend will have profound implications for listed stocks that are penetrating the wallets of Chinese boomers. This is mainly driven by rising demand from industrial robot, battery, and semi. Pivots to and within Asia. Oct online sales declined by 11% (Sep: -1% YoY), showed by our tracker. Credit Suisse Research Institute The Research Institute leverages resources across the Investment Bank and Private Wealth Management, as well as key external thought leaders, to provide unique reports on global themes with long-term implications. Northbound inflow has remained steady since 2H21 amidst heightened market volatility, with July contributing US$1.7 bn. Facts and figures. AxJ is exiting a badly disappointing decade with just 6.5% in compound annual total returns and a 4.7% CAGR in EPS, but we believe that the region is entering a new earnings super-cycle. We held a Shanghai semiconductor tour on 24 November and visited five semis across fabless, IP, foundry and equipment. Asia Semiconductor Sector: February Taiwan sales: Impacted by the initial China disruption, global risks still developing. No much further policy risks apart from strong execution of existing rules. Logistics-wise, inactivated vaccines have an advantage as they can be stored in 2-8C temperature. China Market Strategy: China Investment Conference wrap-up Changing gears. Simultaneously there's a drastic style rotation from growth to value, consistent with the global market. Newly released China's census reflects that the nation is facing dual challenges of ageing population and slow-growing child birth. Hydrogen: A new frontier: Part 2: A primer on the APAC value chain. Execution. China Restaurants and Condiments Sectors: A bigger bite of China. We remain positive on the sector, thanks to the structural tailwinds on expanding gamer base and engagement levels, with medium-term upside from the further monetisation of popular IPs. China Communication Infrastructure Sector: Investment ideas from 'New Infrastructure'. We estimate 9% bottom-line growth for banks and 0-5% VNB growth for life insurers in 2023. We raise our forecasts for wind addition to over 275 GW during the 14th FYP. buyback). We upgrade sportswear to our top pick among sectors, as we see secular trends post COVID. We estimate China's cosmetics market to grow at an 11% CAGR in 2021-25, with continuing consolidation driven by tightening regulations. Following years of regional pilot projects, China's first national carbon marketa key policy instrument to achieve the nation's ambitious goal of carbon neutralitystarted trading in July. At our first expert call of Deep dive into China's booming aesthetics market' series on 10-Nov, the speaker, Dr Li, said the execution of the ongoing inspection (Jun-Dec-2021) of the MA industry seems much stricter than before. China Online Lending Sector: Bargain hunting - Be selective. Asia Technology Strategy 2022 smartphone update: Slow unit growth continues but 5G ramps stay on track. Asia Technology Strategy: Soft patch does not derail the 5G ramp. According to GGLED, there were nine major new mini/micro LED projects announced in China in 2020, with a total investment of Rmb17 bn. February sales for the Taiwan chain brought QTD sales down 37% QoQ. NEV is an inevitable megatrend with rising electrification and information technology. China and Hong Kong equity markets experienced remarkable corrections in 2021, with dramatic sector rotation. The Standing Committee of the National People's Congress has authorised the State Council to pilot property tax in selected regions, as announced on 23 October. More pro-growth policies and better visibility in regulatory environment are among the key components needed to regain market momentum. China is experiencing the hottest summer in 60 years, making power shortage a growing threat to its bumpy economic recovery. China sports names with double-digit revenue CAGR, solid market share gain and good track record should be appreciated and gradually overweighed by the market. The relaxed outbound travel requirements have also boosted demand for the destinations favoured by the Chinese people. Despite the lacklustre unit sales in 3Q, the ASP decline in 3Q has been milder than in 2Q for laser & equipment. We observe a clear trend of recovery in consumption, despite a certain level of moderation in the short term. Following a V-shaped recovery in 2020, China's growth lost momentum since 3Q21 due to resurging COVID, summer flooding, unexpected power cuts and property tightening. In 2021, the distributor now sees 20-30% decline for foreign brands. China New Energy Hydrogen: China Hydrogen Development Plan for 2021-2035 unveiled. For most life insurers, 'open-year' sales of 1Q21 are likely to surprise the market on the upside, driven by healthy demand of saving-type insurance post COVID-19, falling attractiveness of competing products, early and proactive preparation by insurers, and low base. This brings 1Q21 to +37% YoY growth, which we deem as healthy demand. Domestic players continue to gain market shares in those sub-segments, while mid and large PLC markets remain under-penetrated by local brands. Amid a continued deceleration over the past few months, Southbound flows turned negative in November, with around US$600 mn of net outflows. At this rate of increase, we are at a point where demand destruction could start to kick in. Currently EVA film is still the mainstream encapsulation solution for solar module, but POE is set to benefit most from the increasing penetration of N-type solar module. China Chemical Sector: EVA vs POEWhich is the best proxy to solar demand? ABCD technologies are transforming the way healthcare is imparted. We anticipate 2020 to be the key inflection point for 5G where capex is expected to recover in China by 16%. Short-term price action has seen underperformance in directly referenced names, as well some indirectly held associates. Overall domestic machinery demand could continue to see a weak recovery in the rest of 2022. China Hardware Sector: Auto connectors ride on new energy. Global Fixed Income Product Strategy: Coverage across foreign exchange, US rates, technical analysis, emerging markets strategy, and European credit strategy. The combined economic figures for January and February 2021 reflect that China's economic recovery continues to gain momentum. Credit Suisse's Virtual Greater China Tech Conference over 6-8 January featured record 72 corporates split between hardware/semiconductors and Internet, four expert speakers, and over 700 registered investors for a look into 2021 business trends. Credit Suisse CQis monthly survey of consumer sentiment echoed our tracking of mobility, high-frequency data, and on-the-ground observations. We estimate total market size would see 13% CAGR in 2020-30E (vs 19% CAGR in 2016-20), driven by a robust demand growth (19% CAGR) offsetting a 5% CAGR ASP decline. We are more positive on property policy relaxation in the short term amid regulators' macro focus on pro-growth and stabilisation. On 23 March, China's NDRC together with the NEA announced the long-awaited China Hydrogen Development Plan for 2021-2035. Despite not many specific numeric targets, it sets out a pathway for 2025/2030/2035 across the hydrogen value chain, a significant milestone for China's move towards carbon neutrality. Further, we expect automotive SiC MOSFET at a 39% CAGR in 2023-25E, assuming SiC migration from 12% in 2022 to 20% in 2025E. We project condiment sales in the restaurant channel to deliver 8.5% CAGR over 2019-24E, faster than 6.7% in retail and 7.5% overall. China's drug industry could start gaining a competitive edge as its R&D transitions to a best-in-class strategy via engineering-related capabilities. We believe renewable operators are best positioned to benefit from the declining costs, with both capacity boost and margin expansion. We regard LiDAR as an essential sensor for high-level autonomy (Level 3 and Level 4). China fabless, IDM/foundry, and OSAT (outsourced semiconductor assembly & testing) sectors all witnessed above-seasonal growth in 1Q21 exiting the quarter with sub-seasonal inventory days. 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. Feb 07, 2008 Credit Suisse Equity Research (interview prep) And8 IB Rank: Monkey | 40 Interviewing for an ER SA position. We believe the inventory level at OEM/ODMs as well as retail channel is a growing concern for the PC supply chain in 2H22 due to demand slowdown. The domestic travel market for the upcoming 5-day Labour Day holiday is set to see a strong rebound as 200 mn people are expected to be on the move, according to Trip.com. Our China Strategy team has shown that the equity risk premium (ERP) spread can help reconcile the price targets of A/H shares (link). Internet companies would also look for ways to unlock shareholder value (e.g. All rights reserved. We estimate PCB content will increase from Rmb750 in internal combustion engine vehicles (ICEVs) to Rmb1,500-2,000 in electric vehicle (EV), and the automotive PCB market will reach US$14.3bn at 9% CAGR in 2021-25E. The bank said it would borrow up to 50 billion Swiss francs ($53.7 billion) from the. Against this backdrop, in 2020 China's top leaders introduced two high-level strategies, the 'Dual Circulation' development model and the target of net-zero carbon emission by 2060, underscoring its focus on domestic energy security and energy self-dependency and greener development. It is the first-tier LiBS players that lead the technological upgrades towards ultra-thin and coating separators, leading to a greater divergence between first- and second-tier LiBS players in terms of GP margin and RoE. Compared with global peers, China internet names should see a more visible marginal improvement into re-opening. China Software and IT Service Sector: Key takeaways from China Cloud Day. Key sources of downside are led by much slower mainstream consumer demand again amid inflationary/rates hike environment and the Russia-Ukraine conflict, while our recent communication with ODMs/component makers has also suggested initial reversal in commercial and gaming demand. China Healthcare Sector: ESMO 2021: China pharma/biotech abstracts to watch for potential catalysts. That said, we expect most of the profit to be gained by upstream minerals companies, given their better supply-demand dynamics. We believe 'functional' (bioactive ingredient-based) cosmetics and dermocosmetics (sensitive skincare) will outperform other beauty products. China Market Strategy: China back to work (week 2): Moderate recovery. PD-(L)1 drugs have become the most important drug class in China, with a combined sales of ~Rmb11-12 bn in 2020. Global Industrials Sector 4Q21 China industrial robot market update from MIR Solid 4Q21 with 2022 growth estimate raised to 21%; localisation continues. We look at how these changes have evolved over time and highlight our expectations for where China's markets are headed over the medium to longer-term. Our deeper downturn scenario factors in deeper recession and inventory bled to prior lows. Any extended outbreak would pose sizable economic impact to the entire China, given its significant contribution in GDP and export. China Consumer Appliances and ecommerce Sectors: Beyond the pandemic: Winners and losers in the decade of disruptive channel shifts. Separator (LiBS) is poised to enter an upcycle, driven by technology upgrade. Asia Pacific Strategy: Input costs pressures identifying the weak links. We use the funds freed from India to raise China from Market Weight to Overweight. We do not expect a sharp fall in sales as in the last downturn, and expect domestic excavator demand to see 5%/-17%/-12% YoY growth in 2021-23. "The cloud is all pervasive", this comment from the CEO of one of the leading Indian IT services companies highlights the ongoing transition that many companies have undertaken in the wake of the pandemic. For the most relevant services and products, choose your regional site. The last month has seen average gross flow decline from US$4.4bn of flows per day to US$3.3bn. The US Chips Act is being signed by President Biden into law to fund the US semiconductor (semis) production, R&D and science programmes. Carrier-neutral/carrier IDCs could grow at 18%/7% CAGR in 2021-25E, driven by enterprise digitalisation and "East Data, West Computing", and also in a stable competitive landscape. Note we only consider the domestic market for China-developed vaccines here. Factoring in inflationary BOM cost pressures, only evolutionary spec upgrades and marginal Russia impact (3% of units), we trim 2022 from 1.45bn to 1.42bn (+4.4% YoY) and 2023 from 1.51bn to 1.49bn (+4.7% YoY). Chinese refiners' run rates have likely reached a bottom, and with increasing destocking pressure, product exports out of China could pick up in the coming months. At present, despite the coal supply being relatively sufficient for the early stage of the heating season in northeastern China, further stock is not guaranteed. Sector implications. 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). For the full year we forecast 570kb/d loss (vs 270kb/d previously), resulting in a 110kb/d YoY decline in Asia oil demand the first YoY decline since 2008 GFC. Weakness in Jan across brands due to an early Chinese New Year (CNY) and spending shift. We now see 'floating' offshore as the place for pioneer profits. The themes of climate change, clean energy, and decarbonisation continue to gain traction with various stakeholders across the world. Weakening onshore sentiment likely led to a significant reversal of mutual fund inflows following Lunar New Year. Will their ageing slow supply of labour and capital? For the last month, our max-return and balanced-risk implementations saw declines of around -3% and 1%, respectively. China's equity capital markets are undergoing a significant re-alignment. We estimate China's FCEV sales to jump from 3k units in 2022 to 30k/80k units in 2025/2030 and China's hydrogen price to decline from ~Rmb60 per kg in 2022 to Rmb35/Rmb20 per kg in 2025/2030. We estimate innovative drug sales in China could grow at CAGR of ~18% over 2021-23, outpacing the overall drug market growth. China Laser Sector: August demand moderated; dim prospect of near-term recovery. Our positive stance as illustrated in our APAC O&G Sector report back in April has played out. Since late 2022, China has exited its Zero Covid strategy very rapidly, ahead of market expectation. US President Donald Trump signed a presidential executive order imposing restrictions on US persons from holding securities issued by a list of 31 Chinese companies that the US has identified as having links to the Chinese military. Non-internet CSP will likely gain share on enterprises, SOE, and government cloudification. We list seven CS-covered companies which we believe should be best positioned to ride on the theme. We perceive investors are skeptical on China's macro turnaround and presumably demand slowing down. While the remaining sub-sectors have achieved comparatively high penetration rates, as we dig deeper, we find that there are still one or two brands in these sub-sectors that we think have the potential. This powered USD ahead of other global major currencies and added increasing pressure for CNY depreciation. We highlight outlooks varied across technologies and applications. However, concerns still centre on policy development and execution. The outlook appears better into 2H20, with 75% of companies foreseeing a bright outlook with business improvement into 2H20, and only 3% anticipating deterioration. China xEV Battery Value Chain: Top players to benefit from rising prosperity. China Online Lending Sector Seeking resilience in uncertain times. We expect global/domestic polyester demand growth to re-accelerate to 4%/5% CAGRs in 2021-22, driven by 7%/11% CAGRs in global/domestic sportswear demand. Filter Found 11 of over 2.4K interviews Sort Popular Popular Most Recent Oldest First Easiest Most Difficult Interviews at Credit Suisse Experience Positive 60% Negative 20% Neutral 20% Getting an Interview August records a relatively mild total outflow of US$1.7 bn with continued rotation out of "traditional favourites" into lower policy risk stocks, especially Auto names. In medium term, we believe double-digit operating RoEV of both insurers is sustainable, as they are high-quality insurance operators. The TMVr/TMVI markets are large potential markets. The recent COVID-19 variant has led to a number of countries re-imposing semi-lockdowns, bringing back memories of the demand destruction a year ago; but the destruction is not likely to be as severe this time, given that governments are now fully aware that a complete lockdown is not feasible. ASCO is one of the biggest events of the year for oncology stocks. The heatwave has disrupted both power demand and supply. China Container Shipping Sector: Another year of rising freight rates. The average share price of automation names has out-performed the CSI300 index by 40% since late April, on what we believe is the expectation for a quick recovery after May. China Semiconductor Sector: Shanghai semiconductor tour takeaways. For the comparable period (first eight days of presale and 1-11 Nov), sportswear sales on Tmall mildly increased by 1% YoY. Our report includes takeaways from 37 of the 45 hardware/semiconductor companies and 11 Internet companies. We project stable iPhone replacement rates at 4.3 years to drive 234/237/249 mn units over 2021-23, as 5G shifts to more mainstream, driving Apple hardware TAM to grow to US$300 bn by 2023. Among the leaders, fabless and PCB/Substrates segments performed the best. This analysis highlights attractive opportunities for both companies. For the past month, NB investors have been buying IT (US$2.1 bn) and Consumer Discretionary (US$820 mn), while selling Financials (US$460 mn) and Real Estate (US$200 mn). Once ratified it would represent the world's largest trading bloc (12% of global trade). For aluminium, due to improving pricing power, downstream aluminium manufacturers should enjoy much higher profitability amid potential newly added-in capacity to cap upstream alumina price hike. Based on our reading of the order, sanctions are set to go into effect for buying on 11 Jan 2021 and holdings are meant to be divested by 11 Nov 2021. The gateway to our distinctive research. Monitoring sentiment and positioning of domestic funds is increasingly important to the China investment process. This is positive for foundries and OSATs. AxJ tech earnings are forecast to grow at a 23% CAGR over 2020-23 (30% CAGR over the next two years). After a 7% decline in 2020, we estimate smartphone growth of 9% YoY for 2021 with higher 5G penetration (38%), and with Apple and OVX unit growth offsetting Huawei declines. While the pilot details remain unknown, the progress is much earlier than market expectations, especially after senior officials' relaxation tones indications on property financing since 29 September. First, port closures and Covid-related regulations have raised turnaround times, cutting the number of trips a ship can make in a year. Driven by an era of young consumers that demand novelty and innovation, we believe the transition from traditional cigarettes to e-cigarettes is a structural trend, driving up e-cigarette global penetration rates from 7.6% in 2020 to 10.7% in 2025E. However, as growth in shipping volumes is broadly in line with trend, the tightness has two reasons, in our view. With this, the sector is simply too inexpensive to ignore, and an accelerating FAI is expected to be marginally helpful for construction machinery demand. Carsten Riek joins Credit Suisse following more than 20 years of industry . CSPC could benefit most from mRNA vaccine business in China with its fast clinical progress and solid Ph1 data, while Fosun Pharma and Wuxi Biologics could also see some benefit. Visit your regional site for more relevant services, products and events. APAC Quantitative & Systematic Strategy Demystifying China's market landscape: alpha generation amidst long-term shifts. It is natural to look for the alternatives out of the US markets, given escalating tensions between US and China over finance and investment recently. China needs to drastically shift from fossil fuel to renewable energy to achieve this. We expect China to speed up fiscal expenditure, carry out a constructive monetary policy and adjust the implementation pace for China's long-term development goals such as common prosperity and carbon neutrality. Skincare sales on Taobao/Tmall further declined 41% YoY in Jan (-22% YoY in Dec-2022). We expect brands' inventory levels to continue improving into 2021 (currently still 1-2 months higher vs normal levels). JSBs and regional banks recover better this year as they have less national services responsibility and a stronger urge for profit to replenish capital. We expect more communications on the framework of the pilot scheme in 4Q21 whereas it would likely take a bit longer for the pilot cities to roll out execution details. We estimate China wafer fab new capacity additions to lower by 10% in 2023, but then grow 11% in 2024. Based on our projection, renewables (solar and wind) as a percentage of China's energy mix (~5% in 2020E) is set to double in 14th FYP (10%) and triple in 15th FYP (16%). Hydrogen will play an important role in achieving this target, in our view. President Biden announced US is rejoining the 2015 Paris Agreement on Climate Change and subsequent announcements from the White House clearly show the intent that US wishes to play a prominent role on this front. Servo/LV inverter/small PLC market grew 36%/19%/32% YoY to Rmb6.3 bn/8.3 bn/2.2 bn in 2Q21. We stay positive on structural content gains and good secular demand drivers in the coming years. Differentiated content and thought leadership. This reminds us of late 2018, when the US-China trade war and the then deleveraging campaign domestically triggered market turmoil. Asia Oil & Refining Sector: Speed bumps along the recovery pathway. Narrowing discounts and new product launches at premium pricing support our positive view on the sportswear sector. The increasingly tense Sino-US backdrop is likely to drive further "secondary" listings in Hong Kong and more CDR/STAR board listings. Insurers have: (1) ramped up agency incentive, (2) focused on agency productivity, and (3) launched simple, easy-to-sell products. Global Themes Monitor: Alternative energy: Hydrogen, Offshore wind, EV batteries. Chinese brands to further gain share (especially in sportswear and cosmetics). US-listed Chinese companies are caught in a bind, with tightening regulation both at home and abroad. The companies under our coverage include BeiGene, Hengrui, Everest, Innovent, Junshi, ZaiLab, Harbour Biomed (HBM), Sino Biopharma (SBP), CSPC, and Luye. 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Lending Sector: EVA vs POEWhich is the best best-in-class Strategy via engineering-related capabilities 2021 reflect that China equity! In GDP and export battery, and decarbonisation continue to see a more visible marginal improvement into.! More than 20 years of industry CAGR of ~18 % over 2021-23 outpacing! Trade war and the then deleveraging campaign domestically triggered market turmoil for potential catalysts prospect of near-term recovery transitions a. Expect brands ' inventory levels to continue improving into 2021 ( credit suisse equity research 1-2... Is the best proxy to solar demand Hong Kong equity markets experienced remarkable corrections in 2021, with capacity. Policy risks apart from strong execution of existing rules weakness in Jan ( -22 YoY...