Daily Brief Equity Bottom-Up: Alibaba (BABA) 3Q25 Preview: Benefit from Boycott Against Competitor and Disposals and more

• We believe the boycott against JD.com benefited Alibaba’s Taobao and Tmall Group in 3Q25 results. 
• We believe 3Q25 results will not reflect the benefits of the disposal of Intime and Sun Art despite that Alibaba may not revise its financial data in 3Q25 results.
• We set a stock upside of 42% for the next twelve months.

• BHP plans for a small increase in uranium production at Olympic Dam, with speculation on the impact
• Interview with Grant Isaac from Cameco sheds light on the uranium market trends

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• SMIC’s 1Q25 guidance is for revenue to increase by 6% to 8% QoQ, and the gross margin to range from 19% to 21%.   
• Client revenue contribution from China/Europe/US has changed from 80.8%/15.7%/3.5% in 4Q23 to 89.1%/8.9%/2% in 4Q24. These numbers indicate that SMIC is gradually becoming independent from Europe and the US. 
• SMIC’s guidance for the year 2025 is that revenue growth is expected to be higher than the industry average in the same markets.

• Qualcomm reported a strong financial performance in its latest quarter, with revenue increasing 17% year-over year to $11.67 billion, surpassing analyst expectations.
• Growth was primarily driven by increased sales in its handset and automotive segments.
• Despite a broader market slowdown, Qualcomm’s handset revenue rose 13%, benefiting from higher premium-tier smartphone sales and design wins with major manufacturers like Samsung and Chinese OEMs. The company also reported a 61% increase in automotive revenue to $961 million, reflecting strong demand for its Snapdragon Digital Chassis solutions.

• Advanced Micro Devices reported fourth-quarter revenue of $7.7 billion, a 24% increase year-over-year, driven by strong growth in the data center and client segments.
• The data center segment, which includes AI accelerators and server processors, delivered $3.9 billion in revenue, up 69% year-over-year but missing analyst expectations of $4.09 billion.
• The company gained market share in CPUs, securing key wins with hyperscalers like Microsoft, Meta, and Google.

• Alphabet Inc. has faced a significant market correction, with its stock declining by 5% over the past week, leading to a $200 billion reduction in its market capitalization.
• This sell-off followed the release of the company’s latest financial results, which, despite reporting revenue growth, highlighted structural challenges that have raised concerns among investors.
• The primary issues stem from Alphabet Inc.’s substantial capital expenditure on artificial intelligence, slowing momentum in cloud computing, and increasing competitive pressures from more agile AI players such as OpenAI and DeepSeek.

• LVC continues to increase its holdings in Henlius, indicating that LVC remains optimistic about Henlius as its internationalization process significantly accelerated. We are interested to see Lin Lijun’s next move. 
• In the short to medium term, based on our conservative forecast on peak sales of HANQUYOU/HANSIZHUANG in overseas markets and domestic product sales, Henlius’ market value could reach RMB13-16 billion.
• Considering other candidates(e.g. HLX15, HLX11, HLX14), indication expansion, drug combination, etc., revenue of Henlius could reach about RMB8-9 billion in the long term, with market value to reach RMB24-27 billion.

• Toyota Motor Corporation’s financial results for the second quarter of fiscal year 2025 reveal a period of cautious resilience amidst both internal challenges and external pressures.
• The company’s operating income for the first half of the fiscal year was recorded at JPY 2.4642 trillion, closely matching the figures from the same period last year, despite hurdles including production halts due to certification issues and the incremental costs associated with addressing these disruptions.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Long China Communications Construction (1800 HK), short China Railway Group Ltd H (390 HK) is a good strategy to capitalise on the recent underperformance of CCCC.
• CCCC has a stronger contract momentum than CRG – its FY24 new contracts were up 7.3%, but CRG was down 12.4%. CCCC is also better positioned for urban construction growth.
• In terms of dividend yield, CCCC is higher at 6.8% for FY25, yet CRG is only 6.3%. CCCC’s performance should pick up in the rest of 2025.

• Q4 Risks Remain: Market conditions deteriorated in late 2024, and key data points suggest a potential miss on Q4 earnings expectations.
• Focus on 2025 Outlook: Investors should shift attention to Shimano’s guidance, capital allocation strategy, and potential shareholder return initiatives in the coming year.
• Long-Term Value: Despite short-term uncertainties, Shimano’s strong fundamentals and disciplined strategy position it well for sustainable growth and high returns.