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Exports, component imports and substitution are key factors In the coming weeks/months, some Chinese sectors may see temporary negative impacts from demand disruption (transport, oil, retail) and component supply bottlenecks (tech, auto, machinery), but some may also benefit from some substitution potential or margin relief (steel, F&B, nonnuclear alternative energy). Thereafter, we see greater export potential for some raw materials/energy for reconstruction, with tech and nuclear energy as the areas that may feel lingering impact beyond 1-2 quarters. Japan earthquake/power supply: Is power shortage the biggest problem facing corporate Japan? Reflexive price action has created opportunities Some Buy-rated names that sold off excessively last week (and show significant upside to our TP) are COSCO Pacific (CL), CEA, Lenovo, Dalian Port, AAC; Neutral-rated Dongfang Electric and TPV Tech are also well below TP. On the flip side, the double-digit surge by Xinjiang Goldwind (H) and China High Speed (both Neutral) may be premature (ASP/volume risks persist despite nuclear substitution benefits).
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