Tag: Business

MSFT, Alphabet, Meta, Amazon all expected further increase in capex

What you are seeing in 3q25 capex spending…

What you are hearing from mgmt.

MSFT – “now expects capital investment growth in fiscal 2026 to exceed that in fiscal 2025”.

Alphabet – “expect significant increase in 2026 capex” / 2025 capex to be in a range of $91 billion to $93 billion” vs $85 bn guided in 2q25.

Meta – “capital expenditures would be notably larger in 2026 than 2025”. / 2025 capex to be $70-$72 billion vs $66-72 billion guided in 2q25.

Amazon – “we expect our full-year cash CapEx to be ~$125 billion in 2025, and we expect that amount to increase in 2026” vs ~$118bn guided in 2q25

 

 

Is pharmaceutical and biotech industry “technology”?

My rule of thumb is that technology is deflationary.

Via technology improvement, people get more for the same price.

This is evident in chip technology, where the same amount of money buys you  newer chips with better performance each year. It’s more obvious when you notice that the “best” chips of previous years will always cost less if you wait.

It’s not always the case in other industries.

The same can of coke will cost you more over the years!

Pharmaceutical and biotech can be technology.

One example is the genome sequencing cost, which has dropped significantly.

Over the years, a drug normally will see its price drop significantly, thus patients shall pay much less for the exact same product.

However, during the period of a few years, drug price may increase, before the price erosion. This period is coke-like.

Things are moving fast… within China’s financial system

Last year, Huarong, now China CITIC Financial Asset Management (2799.HK), bought into Bank of China H-share, becoming a over 3% shareholder. And it took one non-executive board seat of Bank of China right after.

Great Wall AMC, became a over 3% sharehoder of Minsheng Bank and got 1 non-executive board seat.

Xinda, via purchasing convertible bonds, became a over 3% sharehoder of Shanghai Pudong Development Bank.

These shouldn’t be taken lightly, as banks are heavily regulated in China. So there were political decisions made.

What I don’t understand about robotaxi…

For the same destination, Baidu’s Apollo robotaxi in Shenzhen will charge RMB 125 (before coupon) vs RMB 40 on Didi express (affordable tier, before coupon) and RMB 50 for regular taxi.

Didi charges 125 before coupon
Didi Express charges 40 before coupon
Regular taxi charges 50

What’s also interesting is that Baidu’s robotaxi estimates that it will take 79 minutes!

Meanwhile Didi estimates it’s about 31 minutes, which is in-line with other map apps’ estimates.

Baidu robotaxi charges more than 2x the taxi price and takes more than 2x the time…

Well done.

Attaching the breakdown of Baidu robotaxi fare (before coupon)

BYD hit a ceiling in China?

BYD domestic volume in May shows no growth yoy, despite overseas growth of 137% yoy.

YTD (Jan-May), BYD domestic volume has grown 27.5% yoy, but in May it’s flattish yoy at below 300k.

The big promotion in May is probably a reason –  dealers might had been waiting for the discount, so that May volume is low.

Current consensus is for BYD to sell ~5.4mn cars in 2025, with overseas contributing 0.8mn and domestic sales reaches 4.6m (to grow near 20% yoy).

China overall passenger car market can grow actually, with cheaper models, large population (4x US!), and shorter holding period for each car (due to battery).

In 2024, U.S. new vehicle sales reached approximately 15.9 million units.

16mn x 4 is 64 million cars per year for China vs. ~22.6 mn passenger cars sold in 2024 in China.

The infrastructure is unlikely to support a sudden increase, but if it increases to 30mn pear year, 70% NEV -> 21mn, 30-33% m/s for BYD -> ~6-7mn is probably the ceiling of domestic volume for BYD.

Notable decline in Baijiu stocks

See my previous posts on Baijiu here (Jun 2024) and here (Sep 2024) – concerns on volume growth and the ability to further increase profitability.

While premium Baijiu company like Moutai can still do ok, as key product’s market price is still higher than its ex-factory price, the price gap is narrowing, which means Moutai’s distributors are having a bad time.

The end demand is additionally weak after Chinese gov’s recent liquor ban.

Moutai’s stock price has declined by ~15% since mid-May (1645 -> 1401). Currently, Jun 16 is one of the lowest closing price in 2025, worse than Apr 7 when tariff hit.

However, this represent a buying opportunity I believe.

Besides Moutai, other Baijiu brands stock also declined. Wuliangye has declined about 15% from its peak this year. In fact, it’s more than 10% lower than end of 2019 level (~rmb 133 per share)!

Luzhou Laojiao has declined about 25% from its peak this year.

They are trading at 20x (5% earnings yield, Moutai) and 14x (7% earnings yield, Wuliangye), and 12x (8% earnings yield, Laojiao) LTM earnings, compared with ~1.6% China’s gov bond yield.

Bizarre Numbers (2)

Detective Conan IP generated less than 1500mn rmb revenue in a year, with film being the largest contribution (~50%).

PopMart’s Labubu generated over 3000mn rmb revenue last year, while most people don’t know Labubu’s stories, its origin, its value, etc.

Bizarre Numbers

UPS and FedEx reported revenue per piece/package is ~$13-$14 (1q25).

SF Express, the most premium express in China, reported ASP of 15.5 rmb in 2024 and ASP of 14.6 rmb in 1q25.

Other express delivery companies in China reported ASP of 2.3 rmb (YTO) and 2.05 rmb (STO and Yunda) in 2024.

Meanwhile, ZTO+YTO+STO+Yuanda+SF -> 330k package per day!

FedEx +UPS is ~40k package per day.

 

Vanke no more monthly report?

It was a tradition for Vanke to disclose its official monthly sales report, which includes information such as sqm (pre) sold, $ amount (pre) sold, and new projects added.

Here is the last one for Dec 2024 monthly report from Vanke; haven’t found 2025 monthly reports for Jan, Feb and Mar 2025.

Here is a monthly chart for monthly contracted sales in rmb 100mn, from Jul 2022 to Dec 2024.