UBS China Field Research: Semiconductors, Medical Devices and Automotive Gain Attention, Capital Goods Cool Off

Overview

This is a UBS China field research monthly report focused on 2025 results and 2026 outlook. The report combines on-site company visits, NDRs, conference calls, earnings presentations, and the UBS quant team's company-visit and crowding data to cover TTI, electric two-wheelers, COSCO Shipping, and changes in Chinese sector interest. The overall picture is structurally differentiated: TTI and some companies benefiting from electric motorcycles have clearer growth drivers, while COSCO Shipping faces freight-rate and cost variables but has limited revenue exposure to Middle East risks; at the industry level, semiconductors, medical devices and services, and automotive are gaining traction, while capital goods and other sectors are seeing lower attention.

Core views

The core views are as follows: First, TTI still has structural growth opportunities driven by AIDC buildout, Milwaukee professional tools, European market expansion, and new categories such as PPE and storage, and should be able to navigate macro pressure through product innovation and execution. Second, the electric two-wheeler industry may be a slow year in 2026 because of insufficient subsidies and tighter regulation, but inventory digestion, new model launches after the new national standard, and consumers shifting from non-compliant electric bicycles to electric motorcycles may benefit companies with strong electric-motorcycle lines such as Ninebot and Zeeho/CFMoto. Third, COSCO Shipping's 2025 profit declined, but its dividend payout ratio is about 50%. Freight rates in 2026 may be supported by volume growth in emerging markets and supply-chain disruptions; Middle East-related revenue is low, and fuel costs can be cushioned by fuel surcharges. Fourth, UBS company-visit data suggest that investors' interest is shifting from some crowded and cooling sectors toward semiconductors, medical devices and services, and automotive.

Analysis framework

The report combines bottom-up company research with top-down observations of industry heat: management and channel feedback are gathered via the TTI CFO Shanghai NDR, an electric two-wheeler conference call, dealer and supply-chain expert feedback, and the COSCO Shipping earnings call; the UBS quant research team's A-share company-visit data are then used to calculate month-on-month changes in industry visit share; crowding factors are combined to judge whether investor interest has become crowded. In terms of valuation, TTI and Sunresin use three-stage DCF, COSCO Shipping uses EV/IC, Ninebot uses P/E multiples, and CFMoto uses DCF.

Methodology notes

• field_researchCompany field research and NDR

  Form a first-hand view through management communications, dealer feedback, and industry expert interviews.

  The report cites the TTI CFO Shanghai NDR, an electric two-wheeler conference call, dealer and supply-chain expert feedback, and information from the COSCO Shipping earnings call.

• Quant / factor / portfolio theoryCompany-visit share and crowding factor

  Use changes in company-visit share to gauge shifts in investor interest, and use the crowding factor to judge whether trading or holdings are crowded.

  The UBS quant team aggregates A-share company-visit data by industry and tracks month-on-month changes in visit share; the crowding score ranges from about -30 to 30, with negative values indicating more short crowding and positive values indicating more long crowding.

• Valuation methodsDCF, EV/IC, and P/E valuation

  Different companies use different valuation frameworks to derive target prices.

  TTI, CFMoto, and Sunresin use DCF; COSCO Shipping uses EV/IC; Ninebot uses P/E multiples.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Techtronic Industries (0669.HK)

  Core coverage company, rating mentioned as Buy

  Strengths

  Strong Milwaukee growth, AIDC-related demand, expansion from low European market share, strong product innovation and execution, and management confidence in a 10% EBIT margin in 2027.

  Weaknesses

  Consumer tools demand may be affected by oil prices and disposable income, and Ryobi grows more slowly.

  Comparison

  The report believes the company can continue to outperform peers amid macro headwinds.

  Risks

  U.S. consumer demand weaker than expected, new product launches below expectations, commodity prices and a stronger-than-expected renminbi, SG&A overruns, and policy changes in the U.S. or abroad.

• COSCO Shipping (601919.SS)

  Transportation coverage company, rating mentioned as Buy

  Strengths

  Dividend payout ratio is about 50%; Middle East-related revenue share is low; fuel costs can be cushioned by surcharges and contract terms; and the company has plans to expand in emerging markets and regional route networks.

  Weaknesses

  Recurring net profit fell 37% YoY in 2025, container shipping gross margin contracted by 10 percentage points, and operating cash flow fell 34% YoY.

  Comparison

  Middle East-related capacity is about 10% of global supply, but contributes only about 4% of the company's revenue, so its exposure to disruption is smaller than that of the overall industry.

  Risks

  Intensifying shipping competition, recession pressure on container volumes, emission-compliance costs that cannot be fully passed through, and regulatory scrutiny triggered by rising profits.

• Ninebot

  Potential beneficiary of rising electric-motorcycle demand

  Strengths

  Its strong electric-motorcycle product line may benefit from consumer preference shifting from non-compliant electric bicycles to electric motorcycles.

  Weaknesses

  The industry is starting 2026 slowly, and regulation and price competition remain pressures.

  Comparison

  Compared with ordinary electric-bicycle OEMs, companies with strong electric-motorcycle supply are more likely to benefit from the structural shift.

  Risks

  Travel preferences shifting back to buses and subways, worsening industry price competition, and weaker-than-expected new businesses such as robot lawn mowers and off-road vehicles.

• CFMoto Power / Zeeho

  Beneficiary tied to electric motorcycles and large-displacement motorcycles

  Strengths

  The electric-motorcycle line may benefit from the new national standard and demand migration; large-displacement motorcycle demand could also have upside if city-level restrictions on motorcycles are relaxed.

  Weaknesses

  Highly sensitive to raw material costs, product launch timing, and market acceptance.

  Comparison

  Compared with OEMs that lack electric-motorcycle lines, it is better positioned to capture the structural shift in electric two-wheelers.

  Risks

  Relaxation of motorcycle restrictions falling short of expectations, higher raw material costs, large-displacement motorcycle launches and acceptance below expectations, failure to secure export tariff exemptions, and product safety incidents.

• Semiconductors, medical devices and services, and automotive sectors

  Industries with rising investor visit interest in March

  Strengths

  Company-visit share increased month on month, and medical devices and services and automotive still show relatively low crowding despite rising visits.

  Weaknesses

  Rising interest does not equal earnings improvement, and company fundamentals still need to be validated.

  Comparison

  Compared with capital goods and business and professional services, these sectors show better marginal improvement in the visit data.

  Risks

  Visit momentum may reverse, and changes in crowding may lead to trading volatility.

Key data

• TTI 2026 revenue guidanceabout 6% total growthMilwaukee is expected to grow 10-12%, Ryobi about 3%, and management is confident in a 10% EBIT margin in 2027.
• Milwaukee 2025 revenue mixServices and maintenance 47%, technology/energy/manufacturing 32%, home improvement and new-home construction 13%Data centers account for about 15-16% of Milwaukee, and are expected to grow about 15%.
• Electric two-wheeler industry demand2026 industry demand may fall 0-10%Q1 retail demand may decline by about 12% YoY; after Q2, it may gradually normalize as old inventory is cleared and new models are launched.
• Electric motorcycle and electric bicycle structureAbout 2:8 in 2025, and may move toward 5:5 or higher in 2026Tighter regulation may push demand away from non-compliant electric bicycles and toward electric motorcycles.
• COSCO Shipping 2025 recurring net profitdown 37% YoYThis was 5% and 2% below UBS and consensus estimates, respectively; the proposed final dividend is Rmb0.44 per share, with a cash dividend payout ratio of about 50%.
• COSCO Shipping 2025 container shipping revenuedown 7% YoY in U.S. dollar termsTotal volume grew 6% YoY; international-route revenue per TEU fell 14% YoY.
• COSCO Shipping Middle East risk exposureRelated capacity is about 10% of global supply, but revenue contribution is about 4%Management believes Middle East tensions have limited impact on the company's revenue.
• EU ETS carbon compliance costUS$160-170mThe company's estimated 2025 fleet EU carbon compliance cost.
• Industries with rising visit share in MarchSemiconductors, medical devices and services, automotiveFrom UBS quantitative research company-visit data.
• Industries with declining visit share in MarchCapital goods, durable consumer goods and apparel, business and professional servicesCapital goods and business and professional services also showed a relatively long-biased crowded profile.

Impact & implications

For investors, the report suggests that structural opportunities in China still lie in areas with clear product cycles, industry trends, and improving visit momentum, such as semiconductors, medical devices and services, automotive electrification, and TTI's professional-tool chain; meanwhile, sectors such as capital goods with high crowding and declining visit interest warrant caution. At the company level, TTI's Milwaukee, data-center-related demand, and new-category expansion support medium-term growth; electric two-wheelers face short-term pressure, but regulatory changes may lift electric motorcycle penetration; COSCO Shipping's profits are affected by freight rates and costs, but regional supply-chain restructuring, small- and mid-sized vessel orders, and fuel clauses may provide some buffer.

Risks

• TTI faces risks from weaker-than-expected U.S. consumer demand, slower-than-expected new product launches, rising commodity prices and a stronger renminbi, SG&A overruns, and policy changes.
• The electric two-wheeler industry faces risks from insufficient subsidies, tighter regulation, inventory disruptions, price competition, and declining demand.
• COSCO Shipping faces risks from intensifying shipping competition, recession-driven weakness in container volumes, emission-compliance costs, regulatory intervention, and freight-rate volatility.
• Industry visit and crowding data only reflect changes in investor interest and cannot directly replace earnings forecasts or valuation judgments.
• Some charts and OCR text in the report contain noise, and some data should be checked against the original report and company disclosures.

What to watch

• Whether TTI's Milwaukee growth reaches 10-12% and progress toward the 10% EBIT margin target in 2027.
• The persistence of demand for professional tools from data centers, energy infrastructure, and high-end manufacturing.
• Whether old inventory is cleared after Q2, new national-standard models are launched, and ASP improvements materialize in electric two-wheelers.
• Whether the sales mix between electric motorcycles and electric bicycles shifts from 2:8 toward 5:5.
• COSCO Shipping's trans-Pacific contract negotiations, fuel-surcharge implementation, and EU ETS cost pass-through.
• Whether company-visit heat and crowding in semiconductors, medical devices and services, and automotive continue to improve after March.