Morgan Stanley-China Financials April TSF Shifting from quantity to quality-此为英文文档

Morganstanley

May12,202408:47PMGMT

RESEARCH

ChinaFinancials|AsiaPacific

AprilTSF:Shiftingfrom

quantitytoquality

WehadforecastthatTSFgrowthwouldtrendtowards8%in2024onpolicyshifttoqualityofcreditgrowth.WebelievethenegativeTSFnumberandM1growthinAprilwerepartlyduetothesqueezingoutofcreditsusedpurelytoinflatetheTSF

numberinpastyears,whichispositiveforbanks.

AprilnumbersshowpolicymakerswillingtotoleratenegativemonthlyTSFdataforqualityofcreditgrowth.PolicymakersreversedwindowguidancewithpoliciesfocusingonsqueezingoutcreditsusedtoinflateTSFgrowthinthepastcoupleofyears,including:1)changingfinancialGDPcalculationsfromJan2024todiscouragelocalgovernmentsfrompushingcreditgrowthtomeetGDPgrowthtargets;2)

requiringlargeSOEstocentralizefundinganddepositsatbanksviatheirgroup

financecompaniestodiscourageself-circulatingloansbetweenbanksandlarge

SOEsvialowyieldloans,whichinturnbecomehigh-costdepositsbacktobanks;and3)repeatedcommentsfromthePBoConreducingthefocusonmonthlynewTSFgiventhealreadylargebaseofexistingcredits,whichcanbeoptimized.The

dedicatedStateCouncilmeetingsinAprilenforcingthenewpolicydirection(whichstartedatthebeginningof2024)combinedwithcontinuedfront-loadingofcreditsandsomequarter-endpushforcreditgrowthinMarchledtonegativeTSFinApril.

Timingofgovernmentbondissuance,LGFVtighteningandconservative

consumercreditextensionalsoimpactedAprilTSF.Governmentbondissuanceismuchloweryoy,whichwebelievecouldbemorebackend-loadedin2024duetohealthybusinessactivityin1Q24,andduetoheightenedfocusonthequalityof

projectsqualifyingforgovernmentbonds,whichcantakesometimetoassess.CorporatebondissuancewasalsonegativeduetocontinuedstrictcontrolsonLGFVbondissuance,inourview.Inadditiontoconservativeconsumerloan

extensionbybanks,webelievemorerationalpersonalbusinessloanscouldalso

starttoimpactretailloangrowth.Notably,thePBoCalsoindicateditwillreviewtheeffectivenessofsupportivepoliciesforprivatesectorandSMEcredit.

Webelievethefocusonqualityisbetterforbanksandthewiderfinancial

system.AmajorportionoftheloansthathavebeenusedtoinflateTSFaremoney-losingforbanks,thereforereducingsuchcreditswillsupportbanks'NIMandcapitalratios.AlsowebelieverequiringlargeSOEstocentralizefundinganddepositsat

banksviatheirgroupfinancecompaniescanalsohelpreducefundingcostsfor

banks,althoughithasnegativelyimpactedreportedgrowthincorporatedepositsandM1,asdepositsfromgroupfinancecompaniesarerecordedasdepositsfromotherfinancialfirms.

Update

MorganStanleyAsiaLimited+

RichardXu,CFA

EquityAnalyst

+8522848-6729

Richard.Xu@

ChiyaoHuang

EquityAnalyst

+8523963-4624

Chiyao.Huang@

BerylYang

ResearchAssociate

+8523963-2224

Beryl.Yang@

ChinaFinancials

AsiaPacific

Attractive

IndustryView

MorganStanleydoesandseekstodobusinesswith

companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionson

communicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.

Morganstanley

RESEARCH

Update

NegativeAprilTSFnumberssuggestrationalizationofcredit

growthisunderway

HeadlineTSFgrowthslowedto8.3%inApril,inlinewithourexpectationofaslow-downinTSFgrowthtowards8%withthebulkoftheslowdowninearly2024.AprilTSFwas

negativeRmb199bn(notseensinceOct2005),andwasmainlydraggedbybondfinancing,undiscountedbillsandtoalesserextentRMBloans.TogetherwithmoderatingM1andM2growth,weseesignsthatpolicymakersareintentionallysqueezingoutlow-qualityself-circulatingcreditsattheexpenseoftemporarilyweakerTSFnumbers.

Exhibit1:NewTSFinAprilis-Rmb199bnandRmb1.4tnloweryoy.Sequentialdeclineingovernmentandcorporatebondfinancingandundiscountedbankers'billaremajordrags.

TotalSocialFinancing(Flow)

TotalSocialFinancing

LoansinRMB

LoansinFX

Entrustedloans

Trustloans

Undiscountedbankers'acceptance

Corporatebond

Governmentbond

Non-finenterpriseequityfinancing

Rmbbn

(199)

331 (31) 9 14(449) 49 (98)19

April-24

YoY

(1,424)

(113)

1

1

2

(314)

(245)

(553)

(81)

MoM

(5,066)

(2,961) (85) 56 (54)(804)(405)(561)(4)

March-24

Rmbbn

4,868

3,292

54

(47)

68

355

455

463

23

April-23Rmbbn

1,225

443 (32) 8 12(135)294455

99

April-22Rmbbn

933

362 (76) (0) (62)(256)365391

117

Source:PBOC,MorganStanleyResearch

First,wenotethatgovernmentbondfinancingislowerYTDin2024comparedto

2023.Inthefirstfourmonthsof2023,governmentbondsaddedRmb2.28tn,which

equatesto24%ofthefull-yearincreaseseenin2023.Incomparison,thefirstfourmonthsof2024sawgovernmentbondsincreaseattheslowerpaceofRmb1.26tn,roughly14%ofourestimatedtotalgovernmentbondfinancingfor2024.Webelievethishasbeendrivenby:

•Strictrequirementsregardingthequalityofprojectsthatgovernmentbondscanbeusedtosupport;

•IndustrialinvestmentandprofitaswellasexportshaveshownsignsofreboundingYTD,reducingtheneedtofront-loadgovernmentbonds.

Second,corporatebondfinancingmoderatednotablytoRmb49bninApril(down

Rmb250bnyoy),reversingthetrendin1Q24.ThisshowscontinuedtighteningofLGFVbondfinancingwhilebondfinancingdemandfromothernon-infrastructureSOEs-whichseemedtoincreasein1Q24totakeadvantageofthelow-rateenvironment-likely

moderatedaswell.

MorganStanleyResearch3

4

49.3

Update

Exhibit2:CorporatebondfinancingwasmodestinAprilwhilegovernmentbondfinancingwasnegativeRmb98bn,suggestingnotablyslowerpaceofgovernmentbondfront-loadingthanin2023

2000

1500

1000

500

0

-98.4

-500

Jan-Feb-Mar-Apr-May-Jun-Jul-Aug-Sep-Oct-Nov-Dec-Jan-Feb-Mar-Apr-

23232323232323232323232324242424

Corp.bondnetfinancing,RmbbnGovernmentbondnetfinancing,Rmbbn

Source:PBOC,MorganStanleyResearch

Exhibit3:CorporatebondissuancewasRmb49bninApril,weakerthanpreviousmonths

500

450

400

350

300

250

200

150

100

50

0

455

366

336

294

171

49

Feb

Mar

Apr

20242023

Source:PBOC,MorganStanleyResearch

Third,undiscountedbankers'billsfellRmb449bnmom,comparedto-Rmb135bnmominApril2023.Thisislikelyaresultoftheclean-upofself-circulatingloansfor

arbitrage,whereacorporatecouldapplyforabanker'sacceptancebillanddiscountitatanotherbank,anddepositthecashbackatahigherratethanthediscountrate,which

enablesthecorporatetoearnaspreadwithverylittlecashinputonitsown.Thiscan

happenwhenthedepositrateishigherthantheloanyield,whichiseffectivelybanks

willingtotakeanegativeinterestmargintoinflatebalancesheetgrowth.Webelievethesharperdeclineincorporateshort-termloansispartlyforthisreason(afterrisingin

1Q24).

Additionally,theweakertrendinnewhouseholdloans(downRmb276bnyoyinApril)

indicatesstillsluggishretailcreditdemand,andlikelymorerationalhouseholdoperatingloanextensionbybanks.

Exhibit4:Sequentialdeclineinbothnewshort-andlong-termhouseholdloansinAprilpartlyseasonal,butscaleisbiggerthansameperiodin2023.Newshort-termcorporateloansdeclinedRmb410bnmomandRmb300bnyoy–asignthatsomelow-quality

arbitrageloansarebeingcleanedup.

April-24

April-23

Change-%

Change-Rmbbn

YTD2024

YTD2023

Change-%

Change-Rmbbn

TotalRMBloans

730

719

2%

11

10,190

11,319

-10%

(1,129)

Totalhouseholdloans

(517)

(241)

114%

(276)

813

1,469

-45%

(656)

S/tloans

(352)

(126)

180%

(226)

5

640

-99%

(635)

L/tloans

(167)

(116)

44%

(51)

808

829

-2%

(20)

Totalcoporateloans

860

684

26%

176

8,630

9,674

-11%

(1,044)

S/tcorp.loans

(410)

(110)

273%

(300)

2,560

3,060

-16%

(500)

Billfinancing

838

128

555%

710

(662)

(852)

-22%

190

Mid-L/tcorp.loans

410

667

-39%

(257)

6,610

7,347

-10%

(737)

Source:PBOC,CEIC,MorganStanleyResearch

SlowerdepositgrowthanddeclineincorporatedepositsandM1werealsoduetoclean-upofself-circulatingloans

Withslowercreditgrowth,depositgrowthalsoslowedto6.6%yoyinApril,downfrom

Morganstanley

RESEARCH

Update

7.9%inMarch.BothhouseholdandcorporatedepositsdeclinedaroundRmb1.85tn

sequentially,whichwaspartlyseasonalgiventheusualquarter-endwindow-dressingof

loananddepositsizes.Intermsofyoytrend,householddepositgrowthwasstilldecentat11.4%,whilecorporatedepositgrowthfellto-0.8%yoy.Webelievethedropincorporatedepositsissharperthanwhatseasonalfactorswouldsuggest,andisadirectresultoftheclean-upofself-circulatingloans.Togetherwithsomemoderationinbusinessactivity,M1growthdeclinedto-1.4%yoyinApril.

WebelievethenotabledeclineincorporatedepositsandM1werealsopartlyduetorequirementsoflargeSOEstocentralizefundinganddepositsatbanksviatheirgroupfinancecompanies,whosedepositsareclassifiedasdepositsfromnon-bankfinancialfirmsratherthancorporates.Thisistodiscourageself-circulatingloansbetweenbanksandlargeSOEsvialowyieldloans,whichinturnbecomehigh-costdepositsforbanksduetothelowercostsondepositsfromothernon-bankfinancialfirms.Thishassupportedtheyoygrowthofdepositsfromnon-bankfinancialfirmstoremaininpositiveterritory,

despitelikelyweakdepositgrowthfromothernon-bankfinancialfirmssuchassecuritiesfirms,trustcompaniesetc.

Exhibit5:Corporatedepositgrowthturned-0.8%yoyinApril2024,partlyattributedtoclean-upofself-circulatingloansandrelateddeposits

%

40

35

30

—TotalRmbdeposityoy%

—HHdeposityoy%

—Corp.deposityoy%

25

20

15

11.4

10

6.6

5

0

(0.8)

-5

Exhibit6:

Rmb1.8tn

Bothhouseholdandcorporatedepositsfellaroundsequentially

RmbbnHouseholdCorporateGovernmentNBFI

8,000

6,000

4,000

2,000

0

-2,000

-4,000

-1872.5

-1850

Source:PBOC,MorganStanleyResearch

Source:PBOC,MorganStanleyResearch

Exhibit7:M1andM2sequentiallylowerinApril

8,000

6,000

4,000

2,000

-

(2,000)

(4,000)

(6,000)

M2sequential

growth,

RmbbnM1sequentialgrowth,

Rmbbn

Source:PBOC,MorganStanleyResearch

Exhibit8:M1growthslippedto-1.4%yoyinAprilwith

rationalizationofself-circulatingloansbysomelargecorporates

%

M2yoy—M1yoy

7.2

-1.4

27.5

25.0

22.5

20.0

17.5

15.0

12.5

10.0

7.5

5.0

2.5

0.0

-2.5

-5.0

Source:PBOC,MorganStanleyResearch

MorganStanleyResearch5

6

Rmbbn

YoY

Morganstanley

RESEARCH

Update

Exhibit9:

Depositsatnon-bankfinancialinstitutionsdeclinedsequentiallyinApril2024withsloweryoygrowth

2000

Monthlydepositgrowthatnon-bankfinancialinstitutions

1500

1000

500

0

-500

-1000

-1500

-2000

Source:PBOC,MorganStanleyResearch

16.0

12.0

8.0

4.0

-

(4.0)

(8.0)

(12.0)

(16.0)

14

12

10

8

6

4

2

0

6.8

Morganstanley

RESEARCH

Update

Otherchartsandtables

Exhibit10:YoYgrowthinTSF(excludingequityfinancing)furtherdeclinedto8.4%inApril

11.5

11.0

10.5

10.0

9.5

9.0

8.5

8.0

TSF,excl.equityfinancing,yoy%

8.4

Source:PBOC,MorganStanleyResearch

Exhibit11:HeadlineTSFgrowthmoderatedto8.3%inApril

TotalSocialFinancing(Balance)

TotalSocialFinancing

LoansinRMB

LoansinFX

Entrustedloans

Trustloans

Undiscountedbankers'acceptance

Corporatebond

Governmentbond

Non-finenterpriseequityfinancing

April-24

Rmbbn

389,930

244,920

1,780

11,180

4,120

2,590

31,780

71,060

11,530

yoy

8.3% 9.1% -4.3% -1.3% 9.9%-13.7% 0.9%13.8%

5.3%

March-24

Rmbbn

390,320

244,590

1,810

11,170

4,100

3,030

31,830

71,150

11,510

yoy

8.7%9.2%-3.7%-1.3%9.6%-3.2% 1.3%14.7%

6.1%

February-24

Rmbbn

385,710

241,290

1,760

11,220

4,030

2,680

31,530

70,690

11,480

yoy

9.0%9.7%-5.4%-0.7%7.5%-9.2%0.7%15.1%

6.4%

Source:PBOC,MorganStanleyResearch

Exhibit12:Householdandcorporatedepositsgrowthslowedto6.8%YoYinApril

—TotalRmbdeposit,yoy%—Depositatrealeconomy(HH+Corp),yoy%

16

Source:PBOC,MorganStanleyResearch

Exhibit13:Corporatedemanddepositproxy(M1-M0)was-3.7%inApril

Rmbbn60,00058,00056,00054,00052,00050,00048,00046,000

Corporatedemanddepositproxy(M1-M0),Rmbbn

—Corporatedemanddepositproxy(M1-M0),yoy

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-3.7%

-4.0%

-6.0%

Jan-22Apr-22Jul-22Oct-22Jan-23Apr-23Jul-23Oct-23Jan-24Apr-24

Source:PBOC,MorganStanleyResearch

MorganStanleyResearch7

8

Update

Exhibit14:NewRMBloanswereRmb331bninAprilvs.Rmb443bninApril2023

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

-

3,949

3,292

1,818

977

331

443

Feb

Mar

Apr

20232022

20242023

Source:PBOC,MorganStanleyResearch

Exhibit16:TotalRMBloangrowthfurtherrationalizedto9.6%inApril

30.0

25.0

20.0

15.0

10.0

9.6

5.0

-

Totalloans(Rmb)DomesticHHloansDomesticcorp.loans

Source:PBOC,CEIC,MorganStanleyResearch

Exhibit18:Newlong-termHHloansdeclinedRmb167bnyoyandnewshort-termHHloansdeclinedRmb352bnyoy

800

600

400

200

0

-200

-400

-600

104

487

627

353

491

452

-

-167

-

-352

Jan-24Feb-24Mar-24Apr-24

S/tloansL/tloans

Source:PBOC,CEIC,MorganStanleyResearch

Exhibit15:MonthlygovernmentbondfinancingwasnegativeRmb98bn

1,000

800

600

400

200

0

-200

814

602

601

455

463

-98

Feb

Mar

Apr

20242023

Source:PBOC,MorganStanleyResearch

Exhibit17:Undiscountedbillbalancedeclinednotablyby13.7%yoyinApril

Rmbbn18,00016,00014,00012,00010,000 8,000 6,0004,000

2,000

0

Jan-20

Mar-20

May-20

Jul-20

Sep-20

Nov-20

Jan-21

Mar-21

May-21

Jul-21

Sep-21

Nov-21

Jan-22

Mar-22

May-22

Jul-22

Sep-22

Nov-22

Jan-23

Mar-23

May-23

Jul-23

Sep-23

Nov-23

Jan-24

Mar-24

0.8

%50403020100

-10-20

-30

UndiscountedbillDiscountedbillTotalbill,yoy%IndustrialYTDsales,yoy%

Source:PBOC,CEIC,MorganStanleyResearch

Exhibit19:Newmedium-tolong-termcorporateloanswereRmb410bn,downRmb257bnyoy,whilebilldiscountincreasedbyRmb838bnMoM

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

-500

-1,000

-1,500

3,310

1,460

1,600

1,290

838

980

530

410

-277-250-410

-973

Jan-24Feb-24Mar-24Apr-24

S/tcorp.loansBillfinancingMid-L/tcorp.loans

Source:PBOC,CEIC,MorganStanleyResearch

Morganstanley

RESEARCH

Update

ValuationComps

Exhibit20:Valuationcomparison

Source:Refinitiv,MorganStanleyResearchestimates;closingpricesasofMay10,2024

MorganStanleyResearch9

10

Morganstanley

RESEARCH

Update

DisclosureSection

TheinformationandopinionsinMorganStanleyResearchwerepreparedoraredisseminatedbyMorganStanleyAsiaLimited(whichacceptstheresponsibilityforitscontents)and/orMorganStanleyAsia(Singapore)Pte.(Registrationnumber199206298Z)and/orMorganStanleyAsia(Singapore)SecuritiesPteLtd(Registrationnumber200008434H),regulatedbytheMonetaryAuthorityofSingapore(whichacceptslegalresponsibilityforitscontentsandshouldbecontactedwithrespecttoanymattersarisingfrom,orinconnectionwith,MorganStanleyResearch),and/orMorganStanleyTaiwanLimitedand/orMorganStanley&CoInternationalplc,SeoulBranch,and/orMorganStanleyAustraliaLimited(A.B.N.67003734576,holderofAustralianfinancialserviceslicenseNo.233742,whichacceptsresponsibilityforitscontents),and/orMorganStanleyWealthManagementAustraliaPtyLtd(A.B.N.19009145555,holderofAustralianfinancialserviceslicenseNo.240813,whichacceptsresponsibilityforitscontents),and/orMorganStanleyIndiaCompanyPrivateLimitedhavingCorporateIdentificationNo(CIN)U22990MH1998PTC115305,regulatedbytheSecuritiesandExchangeBoardofIndia(“SEBI”)andholderoflicensesasaResearchAnalyst(SEBIRegistrationNo.INH000001105);StockBroker(SEBIStockBrokerRegistrationNo.INZ000244438),MerchantBanker(SEBIRegistrationNo.INM000011203),anddepositoryparticipantwithNationalSecuritiesDepositoryLimited(SEBIRegistrationNo.IN-DP-NSDL-567-2021)havingregisteredofficeat18thFloor,Tower2,OneWorldCenter,Plot-841,JupiterTextileMillCompound,SenapatiBapatMarg,LowerParel,Mumbai400013,IndiaTelephoneno.+91-22-61181000;ComplianceOfficerDetails:Mr.TejarshiHardas,Tel.No.:+91-22-61181000orEmail:tejarshi.hardas@;Grievanceofficerdetails:Mr.TejarshiHardas,Tel.No.:+91-22-61181000orEmail:msic-compliance@whichacceptstheresponsibilityforitscontentsandshouldbecontactedwithrespecttoanymattersarisingfrom,orinconnectionwith,MorganStanleyResearch,andtheiraffiliates(collectively,"MorganStanley").

Forimportantdisclosures,stockpricechartsandequityratinghistoriesregardingcompaniesthatarethesubjectofthisreport,pleaseseetheMorganStanleyResearchDisclosureWebsiteat/researchdisclosures,orcontactyourinvestmentrepresentativeorMorganStanleyResearchat1585Broadway,(Attention:ResearchManagement),NewYork,NY,10036USA.

Forvaluationmethodologyandrisksassociatedwithanyrecommendation,ratingorpricetargetreferencedinthisresearchreport,pleasecontacttheClientSupportTeamasfollows:US/Canada+1800303-2495;HongKong+8522848-5999;LatinAmerica+1718754-5444(U.S.);London+44(0)20-7425-8169;Singapore+656834-6860;Sydney+61(0)2-9770-1505;Tokyo+81(0)3-6836-9000.AlternativelyyoumaycontactyourinvestmentrepresentativeorMorganStanleyResearchat1585Broadway,(Attention:ResearchManagement),NewYork,NY10036USA.

AnalystCertification

Thefollowinganalystsherebycertifythattheirviewsaboutthecompaniesandtheirsecuritiesdiscussedinthisreportareaccuratelyexpressedandthattheyhavenotreceivedandwillnotreceivedirectorindirectcompensationinexchangeforexpressingspecificrecommendationsorviewsinthisreport:ChiyaoHuang;RichardXu,CFA.

.

GlobalResearchConflictManagementPolicy

MorganStanleyResearchhasbeenpublishedinaccordancewithourconflictmanagementpolicy,whichisavailableat/institutional/research/conflictpolicies.APortugueseversionofthepolicycanbefoundat.br

ImportantRegulatoryDisclosuresonSubjectCompanies

AsofApril30,2024,MorganStanleybeneficiallyowned1%ormoreofaclassofcommonequitysecuritiesofthefollowingcompaniescoveredinMorganStanleyResearch:BairongInc.,BankofChengduCoLtd,ChinaMerchantsBank,ChinaMinshengBankingCorp.,FutuHoldingsLtd,QifuTechnologyInc.

Withinthelast12months,MorganStanleymanagedorco-managedapublicoffering(or144Aoffering)ofsecuritiesofBankofChinaLimited.

Withinthelast12months,MorganStanleyhasreceivedcompensationforinvestmentbankingservicesfromBankofChinaLimited,HTSC.

Inthenext3months,MorganStanleyexpectstoreceiveorintendstoseekcompensationforinvestmentbankingservicesfromAgriculturalBankofChinaLimited,BairongInc.,BankofChinaLimited,BankofHangzhouCoLtd,BankofNingboCo.Ltd,ChinaCITICBankCorporationLimited,ChinaConstructionBankCorp.,ChinaEverbrightBankCoLtd,ChinaInternationalCapitalCorp.Ltd.,ChinaMerchantsBank,CITICSecuritiesCo.,EastMoneyInformationCoLtd,FutuHoldingsLtd,GFSecurities,HaitongSecurities,HTSC,HuaXiaBank,IndustrialandCommercialBankofChina,IndustrialBankCo.Ltd.,Lufax,NoahHoldingsLtd,PingAnBank,PostalSavingsBankofChinaCoLtd,QifuTechnologyInc,ShanghaiPudongDevelopmentBank.

Withinthelast12months,MorganStanleyhasreceivedcompensationforproductsandservicesotherthaninvestmentbankingservicesfromAgriculturalBankofChinaLimited,BankofBeijingCoLtd,BankofChinaLimited,BankofCommunications,BankofHangzhouCoLtd,BankofNingboCo.Ltd,ChinaCITICBankCorporationLimited,ChinaConstructionBankCorp.,ChinaEverbrightBankCoLtd,ChinaInternationalCapitalCorp.Ltd.,ChinaMerchantsBank,ChinaMerchantsSecuritiesCoLtd,ChinaMinshengBankingCorp.,CITICSecuritiesCo.,GFSecurities,HaitongSecurities,HTSC,HuaXiaBank,IndustrialandCommercialBankofChina,IndustrialBankCo.Ltd.,PingAnBank,ShanghaiPudongDevelopmentBank.

Withinthelast12months,MorganStanleyhasprovidedorisprovidinginvestmentbankingservicesto,orhasaninvestmentbankingclientrelationshipwith,thefollowingcompany:AgriculturalBankofChinaLimited,BairongInc.,BankofChinaLimited,BankofHangzhouCoLtd,BankofNingboCo.Ltd,ChinaCITICBankCorporationLimited,ChinaConstructionBankCorp.,ChinaEverbrightBankCoLtd,ChinaInternationalCapitalCorp.Ltd.,ChinaMerchantsBank,CITICSecuritiesCo.,EastMoneyInformationCoLtd,FutuHoldingsLtd,GFSecurities,HaitongSecurities,HTSC,HuaXiaBank,IndustrialandCommercialBankofChina,IndustrialBankCo.Ltd.,Lufax,NoahHoldingsLtd,PingAnBank,PostalSavingsBankofChinaCoLtd,QifuTechnologyInc,ShanghaiPudongDevelopmentBank.

Withinthelast12months,MorganStanleyhaseitherprovidedorisprovidingnon-investmentbanking,securities-relatedservicestoand/orinthepasthasenteredintoanagreementtoprovideservicesorhasaclientrelationshipwiththefollowingcompany:AgriculturalBankofChinaLimited,BankofBeijingCoLtd,BankofChinaLimited,BankofCommunications,BankofHangzhouCoLtd,BankofNingboCo.Ltd,ChinaCITICBankCorporationLimited,ChinaConstructionBankCorp.,ChinaEverbrightBankCoLtd,ChinaInternationalCapitalCorp.Ltd.,ChinaMerchantsBank,ChinaMerchantsSecuritiesCoLtd,ChinaMinshengBankingCorp.,CITICSecuritiesCo.,GalaxySecurities,GFSecurities,HaitongSecurities,HTSC,HuaXiaBank,IndustrialandCommercialBankofChina,IndustrialBankCo.Ltd.,Lufax,PingAnBank,PostalSavingsBankofChinaCoLtd,ShanghaiPudongDevelopmentBank.

Anemployee,directororconsultantofMorganStanleyisadirectorofIndustrialBankCo.Ltd..Thispersonisnotaresearchanalystoramemberofaresearchanalyst'shousehold.MorganStanley&Co.LLCmakesamarketinthesecuritiesofNoahHoldingsLtd,QifuTechnologyInc.

TheequityresearchanalystsorstrategistsprincipallyresponsibleforthepreparationofMorganStanleyResearchhavereceivedcompensationbaseduponvariousfactors,includingqualityofresearch,investorclientfeedback,stockpicking,competitivefactors,firmrevenuesandoverallinvestmentbankingrevenues.EquityResearchanalysts'orstrategists'compensationisnotlinkedtoinvestmentbankingorcapitalmarketstransactionsperformedbyMorganStanleyortheprofitabilityorrevenuesofparticulartradingdesks.

MorganStanleyanditsaffiliatesdobusinessthatrelatestocompanies/instrumentscoveredinMorganStanleyResearch,includingmarketmaking,providingliquidity,fundmanagement,commercialbanking,extensionofcredit,investmentservicesandinvestmentbanking.MorganStanleysellstoandbuysfromcustomersthesecurities/instrumentsofcompaniescoveredinMorganStanleyResearchonaprincipalbasis.MorganStanleymayhaveapositioninthedebtoftheCompanyorinstrumentsdiscussedinthisreport.MorganStanleytradesormaytradeasprincipalinthedebtsecurities(orinrelatedderivatives)thatarethesubjectofthedebtresearchreport.

Certaindisclosureslistedabovearealsoforcompliancewithapplicableregulationsinnon-USjurisdictions.

Morganstanley

RESEARCH

Update

STOCKRATINGS

MorganStanleyusesarelativeratingsystemusingtermssuchasOverweight,Equal-weight,Not-RatedorUnderweight(seedefinitionsbelow).MorganStanleydoesnotassignratingsofBuy,HoldorSelltothestockswecover.Overweight,Equal-weight,Not-RatedandUnderweightarenottheequivalentofbuy,holdandsell.InvestorsshouldcarefullyreadthedefinitionsofallratingsusedinMorganStanleyResearch.Inaddition,sinceMorganStanleyRe