Institutional Research

Following a fireside chat, J.P. Morgan remains Overweight on Hongfa Technology and raises its target price from Rmb43 to Rmb46. The report sees stronger order visibility, faster AIDC 800V adoption, expanding system-solution opportunities and durable pricing discipline supporting above-industry growth.

• FY27E-28E earnings estimates rise 7%, while the Dec-2027 DCF-based target price rises 7% to Rmb46.
• AIDC-related revenue could exceed 50% year-on-year growth in 2026 and potentially double as projects enter mass production in 2027-28.
• Order coverage is three to six months for most products, with some orders booked into 2027.
• Average utilization is 85-90%, supporting operating leverage while capacity expands in China and overseas.
• Gross profit margin improved 1.1 percentage points quarter-on-quarter in 2Q26; the report expects recovery toward 35-40%.
• Industry consolidation, scale, product breadth and global customer relationships are expected to support further market-share gains.

Nomura highlights 29 Chinese late-breaking abstracts out of 96 at ESMO 2026, including five of 12 presidential-symposium presentations. The report flags several oncology readouts for closer attention when detailed results are released in October.

• ESMO 2026 will be held in Madrid on 23-27 October.
• Chinese drugs account for 29 of 96 late-breaking abstracts.
• Five Chinese LBAs—LBA6, LBA7, LBA8, LBA9 and LBA11—are among 12 presentations in the presidential symposium.
• Nomura sees the abstract selection as evidence of improving quantity and quality in China innovative drugs.
• The institution specifically flags LBA7, LBA77, LBA11, LBA66, LBA67, LBA71 and LBA1 for attention.

The report expects temporary revenue-growth convergence in the upcoming quarter, followed by faster medium-term growth at TAL. It raises profit forecasts and target prices while highlighting AI-enabled products, disciplined expansion and cost control as key drivers.

• EDU/TAL are expected to post August-quarter revenue growth of 23%/22% year on year in US-dollar terms.
• Goldman Sachs forecasts non-GAAP operating-profit growth of 27% for EDU and 78% for TAL in the seasonally strongest profit quarter.
• EDU’s 12-month targets are US$71 per ADR and HK$55 per H-share; TAL’s is US$16.1.
• TAL’s content-solutions slowdown and learning-tablet volumes are near-term pressure points, though higher ASPs are expected to help over time.

Morgan Stanley views AT&S's expanded collaboration with Marvell as confirmation that AI and cloud infrastructure demand is tightening access to advanced ABF substrate capacity. The firm sees positive implications for Overweight-rated Unimicron and Nan Ya PCB.

• Marvell was identified as the previously unnamed anchor customer behind AT&S's Kulim expansion alongside AMD.
• Morgan Stanley interprets the agreement as strategic priority access to a supply-chain bottleneck rather than an additional expansion beyond June's €1.5–2.0 billion plan.
• The build-out includes Plant 2 fit-out plus a new substrate-core and advanced-packaging facility backed by long-term customer commitments.
• Morgan Stanley maintains a positive ABF-segment view and cites positive implications for Unimicron and Nan Ya PCB.

J.P. Morgan forecasts China AI operating profit rising from US$27bn in 2026E to US$243bn in 2030E as token demand grows about 60x. Its preferred exposures are Alibaba, Tencent and Zhipu, which it believes offer differentiated routes to value capture across the stack.

• China AI token consumption is projected to grow about 60x from 2026E to 2030E, with enterprises representing about 69% of 2030E consumption.
• Industry operating profit is forecast to rise from US$26.5bn in 2026E to US$243.3bn in 2030E.
• Models plus applications are expected to move from a US$5.9bn operating loss in 2026E to US$132.0bn profit in 2030E.
• Hardware remains the early-cycle profit leader, but downstream is projected to contribute 64% of the increase in annual industry operating profit through 2030E.
• J.P. Morgan identifies Alibaba, Tencent and Zhipu as preferred exposures under its Opportunity × Scarcity × Value Capture framework.

BofA Global Research argues that AI tools such as Muse could make insurance shopping easier and weaken agent incentives that keep attractive customers with incumbent carriers. The report identifies Progressive as a likely beneficiary while warning that personal-lines-focused brokers face a shrinking commission pool.

• Muse reportedly recorded 900k downloads in its first six days, reviving debate over AI-led insurance disintermediation.
• The report argues that buyer-side AI agents could continuously solicit and compare customized insurance quotes.
• Progressive is described as an AI winner because of underwriting analytics, scale and direct-channel customer-acquisition capabilities.
• Insurance brokers face an uncertain but non-zero long-term revenue-growth headwind, estimated conceptually at 50bps, 100bps or 200bps.
• Goosehead is identified as particularly exposed because it is a pure-play personal-lines distributor.

Morgan Stanley finds growing confidence that near-packaged optics will begin to be trialed in 2028, supported by the Open CPX MSA and rising scale-up-network requirements. Most optical suppliers remain capacity constrained for 12–18 months, with InP substrates identified as the key bottleneck.

• NPO adoption is viewed as increasingly likely from 2028, although first-generation architectures may change materially over time.
• Most component and system suppliers were reportedly sold out for the next 12–18 months.
• InP substrate availability is the principal supply constraint across EMLs, CW lasers, pump lasers and gold boxes.
• Morgan Stanley prefers Keysight because it can benefit across alternative optical architectures.
• Lumentum and Coherent remain in focus as early NPO/CPO designs are expected to use high-power external lasers.
• Google is expected to remain by far the largest OCS implementation, while later deployments may be smaller.

Conference speakers expect ASEAN demand and tight feeder-vessel supply to support intra-Asia rates, while transpacific rates may fall after the National Day holiday. A gradual Red Sea normalization by 2027 would pose the greatest freight-rate downside to Asia-Europe trade.

• Shanghai-to-Southeast Asia freight rates rose more than 30% in September.
• East China port congestion created vessel waiting times of about 3–10 days in September.
• Large containership newbuild orders recently exceeded US$15bn in aggregate.
• UBS expects Chinese-port congestion and transpacific rates to moderate after the National Day holiday.

Following a factory tour, UBS expects further 2026 upside for Sinbon Electronics, supported by order visibility in semiconductor equipment through 2030. The firm maintains Buy, raises 2026E EPS by 7.7%, and lifts its price target from NT$278 to NT$300.

• Management expects robust semiconductor-equipment order growth through 2030, supported by volume, complexity and new customers.
• Sinbon plans to send data-center liquid-cooling products for sampling in H226; UBS sees sampling outcomes as a potential catalyst.
• UBS raises 2026E EPS to NT$14.98 from NT$13.91 and maintains Buy with a NT$300 target.
• A new factory is under construction and scheduled to begin operating in 2028.

Post-NVIDIA CES, UBS argues that a shift to fully liquid-cooled Rubin racks should increase cold-plate content per rack even after assumed ASP cuts. It prefers AVC and Jentech, while highlighting Auras' stronger-than-expected Q4 sales ramp.

• NVIDIA's Rubin architecture is expected to move from hybrid cooling to 100% liquid cooling across major rack components.
• UBS assumes roughly a 50% cold-plate ASP reduction for VR but expects greater cold-plate count per GPU rack to offset it.
• Supply-chain checks suggest MCL testing could support an overclocked VR200 SKU by year-end 2026 or early 2027.
• AVC's implied Q4 2025 sales are above UBS and Street expectations; Auras' ramp in Thailand drove a Q4 beat.