00:00Specific notes to watch as far as this specific earnings is concerned.
00:04Yeah, I think in the short term, you can see that going into the print.
00:07There's been a lot of pressure.
00:08You know, after Q1, which is a blowout result, stock did exceptionally well.
00:12They issued $5 billion in eight shares.
00:13We all saw that.
00:15But since then, it's just been a pretty steady derating.
00:17And I think a lot of that is really driven by a lot of this volatility around probably
00:22two specific things.
00:23The first is the domestic auto sector.
00:25It's continued to be weak, and I think that has become a drag, even for CATL.
00:29The second is just this high volatility in the prices.
00:32We saw lithium prices spike, I think, back in April or May, almost up to 200,000 RMB per
00:36ton in the futures exchange.
00:38It's back down about 150,000 now.
00:40So this volatility is giving investors, I think, a bit of pause on what the actual impact is
00:45going to be on the margins.
00:46What do you think it's going to be?
00:48The longer term stories.
00:49The longer term story, as you can see with all the buy ratings, ourselves included, is
00:54very good.
00:54I think there's very little doubt about how strong the position of CATL is for a long-term
01:00investor.
01:00It's just there's all this near-term noise around the costs, around the demand picture
01:05in the near term.
01:06That's getting people a bit of pause, especially after how well the shares did after the Q1 print.
01:14Eugene, I want to ask here about the CXMT trading debut, this sort of mammoth debut that we're
01:20expecting to come through.
01:22Does that create any selling pressure for the sort of blue-chip names like CATL?
01:29Yeah, that's a great point.
01:30One of the pieces of work we've done recently is looking at this liquidity siphoning phenomenon
01:35over the last couple of months.
01:36You could even say even longer than that, probably into late last year as well, with
01:40the raft of IPOs in H-share as well as abroad.
01:43You know, don't remember, like, don't forget that, you know, just a couple of weeks ago
01:46with that SpaceX IPO.
01:48And in the future, you know, over the next couple of months, you are expecting these big
01:51US IPOs.
01:52You have the CXMT IPO.
01:53You had a couple more H-share big IPOs coming up as well.
01:56And that all seems to pressure a lot of that flow, especially on the Hong Kong market,
02:00from the existing stocks.
02:03I want to ask also, just sticking with onshore Chinese markets, are you, I mean, what do
02:09you make of the sort of drop that we've seen in volumes?
02:11I think a three-month low yesterday.
02:13Is this a blip?
02:14Is this something longer term?
02:18I think that the volume picture will start to recover.
02:21I mean, there's a bit of seasonality, you can imagine, on top of that.
02:24But I think one of the issues is just there was so much euphoria, you could say, around
02:29that tech hardware trade earlier this year.
02:32And just seeing that start to ebb down, I think has been probably the biggest headwind
02:36in terms of flows.
02:37Now, based on our discussion with investors, I don't think anyone is giving up, you could
02:41say, on the AI trade.
02:42I think most people do see that as a continued to be a growth driver for global markets.
02:46It's just have we sort of run ahead of ourselves.
02:49And I think that's the question that a lot of investors are trying to sort out today.
02:52Yeah.
02:53And, you know, as you put out, there's a lot of noise, a lot of news, a lot of information,
02:56a lot of listings, you know, a lot of scrambling for your attention, really.
03:01Today, I want to ask you about this robo-taxi that news, which is encouraging news, but the
03:07market doesn't seem to be as receptive to good news as it used to be.
03:12Yeah, that's a great point.
03:13I think right now, it is a deluge of different data points on tech, on hardware, who has
03:19the latest model, who has the best robo-taxi system.
03:22What's the policy like?
03:23What's the policy like?
03:24And there's just so much I think investors have to absorb at any given time that it makes
03:28it hard for any one piece of good news to stand out.
03:31Ironically, bad news seems to stand out very quickly.
03:33When you look at things like CapEx numbers, people seem to get very angsty about what's
03:37going on there.
03:38But the overall picture, I think, is, yeah, it is difficult for any of these themes that
03:43really were really kind of hot last year to stand out today in this market.
03:47So how are you looking at that?
03:48Because that's interesting.
03:49So robo-taxis and cars, you know, and we were talking during the break on this.
03:52So most sectors seem to be headed in the direction of where autos are now, in the competition
03:57that they seem to be finding themselves in.
04:01How do you look at that as an opportunity or as a risk to any sort of sector call?
04:06It's very difficult for China investors right now because the domestic market almost ends
04:11up going into that, you know, the well-trodden phrase, involutionary phase, right?
04:15And that's what happened to EVs.
04:17Arguably speaking, that could happen to robo-taxis.
04:19We're seeing a lot of these new players.
04:21You know, currently, there's a three incumbents, which is Baidu, Pony AI, Rewrite.
04:25But, you know, we saw the Momentum IPO come out a couple weeks ago.
04:28And they're looking at robo-taxis.
04:30Horizon Robotics, another company.
04:32XPeng, another company.
04:33So you're seeing even more players moving into what was seen as a pretty kind of, you
04:38know, walled-off space.
04:39But that just doesn't ever seem to be the case in China.
04:42Yeah.
04:42There seems to be a moat, but there's 50 people in that moat.
04:45And I think, you know, AI Labs is another good example.
04:47So what's the advice to investors, whether that's sector, index, or overall market strategy?
04:51I mean, the simple answer is being only exposed to China markets, it's very difficult.
04:58You have to make sure these players have a legitimate story to get out of China, effectively,
05:02that export story.
05:03So like a CATL or a BYD, for that matter, you can see that those overseas numbers continue
05:07to be strong.
05:07And even with the robo-taxis sector, you have players like WeRide, they're very clearly
05:11trying to say, we want to move into the Middle East.
05:13We want to move to Europe.
05:14We want to go to Singapore, et cetera, et cetera, et cetera, to try to give investors a bit
05:18of, I guess, relief that they don't necessarily have to be, you know, dealing with a lot of
05:23domestic margin pressure.
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