UBS March China on-the-ground research: semiconductors and autos gain focus, capital goods cool down
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UBS March China on-the-ground research: semiconductors and autos gain focus, capital goods cool down
UBS uses company visits, NDRs, earnings calls, and UBS quant crowding data to monitor China market investor interest, viewing TTI as having structural growth opportunity, expecting a muted start for E2W demand in 2026 but potential upside in e-moped demand, and judging Middle East disruptions as having limited impact on COSCO.
- In March, the sectors with the largest increase in investor-visit share were semiconductors, healthcare equipment and services, and autos.
- Visit share declined more clearly for capital goods, consumer durables and apparel, and commercial and professional services.
- TTI management guided to around 6% total revenue growth for 2026, 10-12% for Milwaukee, and remains confident in reaching a 10% EBIT margin target in 2027.
- The E2W industry may have a slow start in 2026 due to the absence of subsidies and tighter regulation, but 2026-model ASPs are usually about 10% higher and new-product launches may provide upside catalysts.
- COSCO's recurring net profit fell 37% year-over-year in 2025, but management says Middle East-related capacity contributes about 4% of revenue, so the impact is manageable.
Report interpretation
Overview
This report is part of UBS's China On-the-Ground monthly series and tracks shifts in investor interest in the China market and company-level 2025 performance and 2026 outlook based on company visits, NDRs, earnings calls, management dialogues, and UBS quant crowding indicators. Its core coverage includes SMID, autos, electric two-wheelers, transport, and sectors with elevated heat such as semiconductors, healthcare equipment and services, and capital goods.
Core views
The central theme of the report is that structural opportunities and macro headwinds coexist. For TTI, UBS held its confidence after holding a CFO NDR in Shanghai, arguing the company can still capture growth through product innovation, execution strength, and downstream demand from AIDC and data centers, helping it navigate a softer macro backdrop. In autos and E2W, 2026 may start slowly due to the lack of subsidies, tighter regulation, and inventory digestion from older models, but e-moped substitution for e-bikes, higher-ASP 2026 models, and new product launches could act as catalysts. In transport, COSCO's 2025 profits declined, yet management views revenue impact from Middle East-related capacity as limited and believes fuel surcharge adjustments can help ease cost pressure. On sector heat, visit share for semiconductors, healthcare equipment and services, and autos rose in March, while capital goods and commercial and professional services cooled.
Analysis framework
The report combines three types of evidence: first, UBS company visits, NDRs, and earnings calls in China; second, investor visit data from UBS China Corporate Access; and third, UBS Quant Research crowding factors. By comparing month-over-month changes in industry-level investor visit share and layering long-short crowding, it assesses shifts in investor interest and potential trade crowding risk.
Methodology notes
Changes in industry-level company visit share are used to measure shifts in investor attention, while crowding factors assess whether long or short positioning is crowded.
Sectors where visit share rises and crowding remains negative, such as healthcare equipment and services and autos, may signal rising attention while trading is still not crowded. Sectors with falling visit share and bullish crowding, such as capital goods, materials, and commercial and professional services, may have weaker risk-reward.
Different valuation methods were applied to different companies.
Techtronic and Sunresin use a three-stage DCF, COSCO Shipping uses EV/IC, Ninebot uses PE multiples, and CFMoto Power uses DCF.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Techtronic Industries (0669.HK)Core company; SMID; Buy mentioned
- Strengths
- Milwaukee growth remains strong, demand for service and maintenance is resilient, and data-center, energy infrastructure, and high-end manufacturing create structural opportunities, with room to expand in Europe's under-penetrated markets.
- Weaknesses
- Consumer tool demand could be affected by lower oil prices and weaker disposable income, and exposure to home renovation and new home construction is growing slowly.
- Comparison
- The company is said to be able to continue outgrowing peers under macro headwinds, and historically it has outperformed peers in some cycles through new products and geographic expansion.
- Risks
- U.S. consumer demand weaker than expected, product launches underwhelming, rising commodity costs or RMB appreciation compressing margins, SG&A overruns, and changes in environmental and tariff policy.
- NinebotE2W beneficiary; relative preference in report
- Strengths
- A strong e-moped lineup may benefit from higher e-moped demand and premium e-bike demand.
- Weaknesses
- Industry regulation, pricing competition, and execution of the new-product business remain uncertain.
- Comparison
- Compared with traditional e-bike makers, Ninebot could benefit more if consumer preference shifts toward e-mopeds.
- Risks
- A reversion of travel preferences to buses and subways, worsening industry price competition, and underperformance of new businesses like robotic mowers and ATVs.
- CFMoto Power / ZeehoE2W and large-displacement motorcycle beneficiary; relative preference in report
- Strengths
- The e-moped product supply base is strong and could benefit from conversion of non-compliant e-bikes to e-mopeds; improved overseas demand and tariff exemptions would also be upside.
- Weaknesses
- Uncertainty remains around loosening restrictions on large-displacement motorcycles and product acceptance.
- Comparison
- In a scenario of higher e-moped penetration, this company has an advantage over OEMs lacking an e-moped product line.
- Risks
- Easing of bans on mopeds and motorcycle riding lower than expected, higher raw material costs, launch and acceptance of large-displacement products below expectations, failure of export tariff exemption, and product safety incidents.
- COSCO Shipping (601919.SS)Transport coverage company; Buy mentioned
- Strengths
- Middle East-related capacity contributes only about 4% of total revenue, management views the impact as limited; fuel-cost pressure can be partially offset by surcharge mechanisms; plans to strengthen network coverage in Southeast Asia, Latin America, and the Middle East.
- Weaknesses
- Recurring net profit declined 37% year-on-year in 2025, container shipping revenue in USD was down 7% year-on-year, and TEU revenue on international routes declined 14% year-on-year.
- Comparison
- Cross-Pacific performance outperformed the market, with faster throughput growth at overseas terminals than in China.
- Risks
- Intensifying shipping competition, an economic slowdown reducing container volumes, decarbonization regulation adding costs that may not be fully passed through, and regulatory scrutiny as profitability rises.
- Semiconductors and semiconductor equipment sectorOne of the sectors with the highest rise in investor attention in March
- Strengths
- Industry visit share rose about 4 percentage points month-over-month, indicating a meaningful increase in investor interest.
- Weaknesses
- Crowding charts show semiconductors in a relatively bullish-crowded range, so rising attention may come with trade-crowding risk.
- Comparison
- Led the increase in visit share relative to healthcare equipment and services and autos.
- Risks
- Long-side crowding, earnings realization risk, and valuation volatility.
Key data
- TTI 2026 revenue guidanceTotal about 6%; Milwaukee 10-12%; Ryobi about 3%Management guidance for Milwaukee is viewed as conservative, with a higher internal target.
- Milwaukee 2025 revenue mixServices and maintenance 47%; technology, energy and manufacturing 32%; home renovation and new housing construction 13%; data centers account for about 15-16% of MilwaukeeData-center-related demand is expected to grow by about 15%.
- TTI margin targetReach 10% EBIT margin by 2027Management remains confident.
- E2W 2026 industry demand guidanceOEM guidance indicates industry demand down 0-10%Q1 domestic retail declined year-on-year; Q2 may recover gradually.
- E2W ASP change2026 model-year vehicles are typically about 10% higherAfter digesting older-inventory, 2026 models should start to dominate shipments from Q2 onward.
- Electric scooter and e-bike mixAbout 2:8 in 2025, potentially up to 5:5 or higher in 2026Some non-compliant e-bikes may shift toward e-mopeds.
- COSCO 2025 recurring net profitdown 37% year-on-year5% below UBS and 2% below the market consensus.
- COSCO 2025 cash dividendFinal dividend RMB 0.44/share, cash payout ratio around 50%Based on 2025.
- COSCO fleet sizeContainer fleet capacity of 3.6m TEU in 2025; could reach 4.42m TEU after new deliveriesIn 2025, 12 new vessels of about 200,000 TEU were added, with total newbuilding orders of 54 ships.
- EU ETS compliance costUS$160-170mCOSCO management estimated fleet cost for 2025.
- March sectors with rising visit shareSemiconductors, healthcare equipment and services, autosUBS quant team and company visit data.
- March sectors with declining visit shareCapital goods, consumer durables and apparel, commercial and professional servicesCapital goods fell by about 4 percentage points, while consumer durables and apparel fell by about 3 percentage points.
Impact & implications
For portfolio positioning, the report suggests investor interest is rotating from some traditional manufacturing and capital goods toward semiconductors, autos, and healthcare equipment services. TTI's key setup lies in strong demand for Milwaukee professional tools, structural growth from data centers, energy infrastructure and high-end manufacturing, expansion in Europe, and margin expansion. E2W's core opportunity is less in total industry scale than in share gains from regulatory-driven e-moped substitution and stronger OEM positioning of high-quality product lines. For COSCO, the focus is on freight rates, fleet expansion, fuel clauses, regional route mix, and carbon-cost pass-through capability.
Risks
- If macro demand is weaker than expected, demand for tools, consumer goods, E2W, and shipping may be pulled down.
- Tighter regulation may suppress near-term E2W sales and may also change product mix and channel inventories.
- Commodity prices, oil prices, and FX volatility could compress margins at manufacturing companies.
- Shipping-supply expansion, falling freight rates, and carbon compliance costs could weigh on COSCO earnings.
- Visit intensity and crowding reflect investor behavior and are not equivalent to fundamental certainty.
- The report input does not provide a full target price and current stock price, so upside valuation cannot be quantified.
What to watch
- Whether TTI can deliver Milwaukee 10-12% growth in 2026 and progress toward 10% EBIT margin in 2027.
- How much data centers, energy infrastructure, and high-end manufacturing contribute to Milwaukee revenue.
- E2W shipments of 2026 models after older inventory digestion, ASP expansion, and the cadence of new-product launches in 2026 Q2 onward.
- Whether sales mix between e-mopeds and e-bikes shifts materially from 2:8 to 5:5.
- COSCO cross-Pacific contract negotiations, fuel clause implementation, and EU ETS cost pass-through.
- Whether the elevated visit heat in semiconductors, healthcare equipment and services, and autos persists and whether capital goods continue to cool.