Daily Investment Strategy
Daily focus：Johnson Elec（0179）
In 1Q FY26, company’s sales slipped just 2% YoY. The Automotive Products Group (APG) made up 84% of revenue but fell 9% in Asia as foreign car brands ceded share, while the Industrial Products Group (IPG) accounted for 16% and grew 14% in EMEA, underscoring a diversified customer and geographic mix. Management believes the existing order backlog will support a rebound in 2Q–3Q, marking 1Q as the year’s trough. The company has formed two 50/50 joint ventures with Shanghai Mechanical & Electrical (registered capital RMB 150mn) to deepen China’s industrial-grade humanoid-robot supply chain. The Shanghai JV targets channels and customer service, whereas the Shenzhen JV produces core components such as motors and actuators, accelerating domestic penetration while retaining export flexibility. IPG’s gross margin exceeds APG’s by 2–4 ppts and, fueled by humanoid robots, data-center liquid cooling and other sectors, should keep outpacing automotive, lifting group gross margin above 23% and diluting cyclical risk; relocating the Shenzhen plant will further strengthen cash flow. As U.S.–China tariff uncertainty subsides—management sees little chance of new hikes—pent-up orders are likely to return; with a solid net-cash balance sheet, downside is limited and upside potential substantial.
US PPI in June lower than expected
he US producer price index (PPI) in June fell to 2.3% on an annual basis, lower than the market expectation of 2.5%, and the monthly rate remained unchanged at 0%. This data became the most watched focus of the market yesterday, easing investors' concerns about inflationary pressure and reinforcing expectations that the Federal Reserve may cut interest rates later this year. Under the influence of this good news, the S&P 500 index rose in the early trading, but then fluctuated due to other factors and closed at 6263.58 points for the whole day, basically unchanged. The PPI data showed that core inflationary pressure weakened, mainly due to the stability of energy and commodity prices, as well as the improvement of the supply chain. This not only reflects that the US economy is gradually getting rid of the haze of high inflation, but also provides more policy flexibility for the Federal Reserve.
Hong Kong Stock Connect recorded a net inflow of HK$1.6bn on Wednesday, of which Meituan (3690) recorded the largest net inflow of HK$860mn, followed by China Construction Bank (0939); Tencent (0700) recorded the largest net outflow of HK$1.76bn, followed by Xiaomi (1810).
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