In today’s briefing:
- China Prop Short Note: Turning Bullish on “lower Rates for Longer” & Improving Sector Fundamentals
- Hong Kong Banks – Weak Property Lending Weakens More, Aggressive LDR Fall, Expect Poor Profit
- Thematic Report: Indian Pipe Sector Turnaround
- Impact of Rate Cut on Indian Banking Sector: NIMs & Earnings to Contract Further Amid Slowdown
- Thematic Report: AI’s Productivity Gains; Quantifying Revenue Risk for Indian IT
- [Blue Lotus Daily]:XPEV US/NIO US/New Energy Vehicle
- [Blue Lotus Daily-TMT Update]:700 HK/1024 HK/JD US/TCOM US/3690 HK/NTES US/AI Sector Update
- AUCTUS ON FRIDAY – 06/06/2025
China Prop Short Note: Turning Bullish on “lower Rates for Longer” & Improving Sector Fundamentals
- We are turning bullish on the sector. We think there are several structural drivers that will improve the sector as a whole, both on demand and supply side
- Continued low onshore rates will boost the property market as well as reduce funding cost for developers. The decline in new start will also help support home prices
- Valuation is still almost historical low, we think the downside is relatively limited
Hong Kong Banks – Weak Property Lending Weakens More, Aggressive LDR Fall, Expect Poor Profit
- Real estate lending growth in Hong Kong remains weak and now at lowest growth rate in the HKMA series since early FY05
- Deposits are overwhelming HK’s banks with LDR now moving to 55% in April FY25, nearly the lowest on record from HKMA series
- Capital flight risk on the HK currency is also more severe than in the past, at any time, with FX reserves at 1.6x , well below past levels
Thematic Report: Indian Pipe Sector Turnaround
- PVC‐pipe makers endured FY 25’s perfect storm, resin prices crashed, trade channels destocked, volumes wobbled, yet April-May demand snapped back and resin prices appear to have bottomed.
- Anti-Dumping duties plus the coming BIS quality curb on Chinese resin should lock in price discipline; government infra-spend, real-estate and irrigation needs set up 10-12 % volume CAGR for FY27.
- With inventory now thin, even a modest restocking cycle could turbo-charge revenues while stabilising input costs let organised players claw back EBITDA margins; diversified leaders look best placed.
Impact of Rate Cut on Indian Banking Sector: NIMs & Earnings to Contract Further Amid Slowdown
- The banking sector will likely see earnings growth bottom out in FY26, with the second half potentially performing better than the first half as deposit rate reductions eventually flow through.
- This divergence between declining lending rates and sticky deposit costs is the core driver of NIM compression.
- This monetary easing is expected to exert downward pressure on banks’ lending yields, impacting NIMs, particularly in the first half of fiscal year 2026 (1HFY26).
Thematic Report: AI’s Productivity Gains; Quantifying Revenue Risk for Indian IT
- Generative AI (GenAI) and Agentic AI are ushering in unprecedented productivity gains, projecting a 10-50% efficiency boost in Software Development Life Cycle especially for Application Development and Maintenance (ADM).
- A projected ~40% efficiency gain from enterprise-wide GenAI Copilot implementation places approximately 10-15% of current IT services revenues at risk.
- Though success hinges on the ability to transition GenAI solutions from pilot projects to scaled production deployments, emphasising IP-led innovation and new value creation over mere cost optimisation.
[Blue Lotus Daily]:XPEV US/NIO US/New Energy Vehicle
- XPEV US : The new Xiaopeng car will collaborate on the development of Huawei’s HUD solution (+)
- NIO US: Onvo to Provide Ride-Hailing Vehicles for Didi (-)
- New Energy Vehicle: 2025 May 26 – June 1 NEV Delivery Rankings(/)
[Blue Lotus Daily-TMT Update]:700 HK/1024 HK/JD US/TCOM US/3690 HK/NTES US/AI Sector Update
- 700 HK: Tencent’s <VALORANT Mobile> Launches iOS App Store Page, Showing Official Release on November 25 (-)
- 1024 HK: Kuaishou’s Kling AI Reaches Strategic Cooperation with Design AI Agent LOVART (+)
- JD US/TCOM US: JD.com may launch OTA (Online Travel Agency) services in the near future (-//)
AUCTUS ON FRIDAY – 06/06/2025
- Criterium Energy (CEQ CN)C; Target price of C$0.35 per share: On track for first gas in 1Q26 – 1Q25 production of 988 boe/d had been previously reported.
- Criterium held ~C$1.6 mm in cash at the end of 1Q25.
- The company has reduced its accounts payable by ~C$3.5 mm while inventory + amounts receivable were flat vs. YE24.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
