Six methods I use to read financial reports

For Seres Group in the first half of the year, net profit attributable to shareholders was a loss of RMB 1.717 billion. Sounds acceptable? Look instead at adjusted net profit—i.e., excluding one-off items—and the loss widens to RMB 2.379 billion. Another red flag: "One business carries the entire company." The company appears to be growing overall, but in reality, growth is entirely propped up by a single business line while another collapses. For Xiaomi, smartphone sales are declining while auto sales are rising; if you don’t examine them separately, you might wrongly conclude the whole company is performing well. A reminder: numbers must also be interpreted within their industry context. An 18% gross margin is excellent for retail—but subpar for software. Discussing figures in isolation from industry benchmarks is meaningless. There’s another layer: comparisons. The analysis articles you scroll past often lead with year-on-year (YoY) growth, quarter-on-quarter (QoQ) growth, or two-year compound growth rates. These are all analytical tools. Tools themselves are neutral—but their users are not. For the same company and identical data, changing the comparison method can completely reverse the narrative. To highlight growth, report YoY; to cast doubt, emphasize QoQ decline. Analysts always pick the most favorable benchmark. The more such analyses you consume, the more cluttered your information becomes—and the harder it is to form your own judgment. Remember: *what* to compare and *how* to compare are choices made by the author—not inherent properties of the numbers. Numbers themselves don’t lie; the choice of reference point does. Finally, three sentences capture the essence: When you see a key figure, first ask: *What accounting口径 (basis/definition) was used?* When comparing to the prior period, confirm the basis hasn’t changed; when comparing to peers, verify the basis is comparable. These three sentences alone can prevent half of all financial-report misinterpretations. 04 Once you’ve read the numbers and clarified the accounting basis, ignoring how institutions and market rumors view the company can be perilous—this is the fourth point: institutional commentary versus “unofficial memos.” Institutional commentary needs little introduction, right? Professional analysts—such as Morgan Stanley, Goldman Sachs, UBS, Citigroup overseas, and domestic brokers like CITIC Securities and China International Capital Corporation (CICC)—study companies daily, publish research reports, assign ratings, and set target prices. These professionals have names and reputations; they bear responsibility when wrong. But remember—they also have positions and commercial interests. Sometimes they’re “topped up” (influenced), though rarely uniformly so. Therefore, institutional views should be cross-checked. First, examine target prices. What is a target price? It’s the price a broker estimates the stock could reach *if every step in its forecast scenario unfolds perfectly*. For Geely, 22 brokers collectively set an average target price of RMB 29—yet its current market price is only around RMB 18.5. Don’t assume brokers expect a 60% upside. Rather, they mean: *only if every assumption in their model holds true* will the stock reach RMB 29. If any single assumption fails, the target price becomes irrelevant. More important than target-price revisions is *model reclassification*. Citigroup initially valued Seres as a growth stock, assuming continued high-speed expansion. Later, it switched to valuing Seres as a traditional automaker—effectively acknowledging that high-growth days were over. A downward target-price revision changes only a number; switching valuation models changes the entire logic. Numbers can be tweaked; once the model shifts, the whole framework collapses. Also, institutions often disagree on the same earnings report. After Xiaomi’s latest quarterly results, Goldman Sachs recommended “Buy,” Nomura rated it “Neutral,” and Morgan Stanley highlighted a “surprise” in smartphone gross margins. Three experts—three divergent takes. Whom do you trust? Trust those whose facts and figures align with the actual financial report—those you can verify line-by-line. If their claims check out against the report, give their analysis extra weight. Then there’s another voice—far less reliable: the “unofficial memo.” Unofficial memos are unattributed, unsubstantiated rumors circulating online—e.g., “XX Company has secured a USD 500 million order from Tesla” or “XX is under investigation.” You’ll frequently encounter such posts on social media—some sounding highly plausible.

UBS: China’s economic growth will slow, but a soft landing remains achievable

• As of end-October, the RMB/USD exchange rate remained broadly stable around 7.1 compared to end-September, despite fluctuations driven by alternating periods of geopolitical tension and easing. Meanwhile, supported by a stronger U.S. Dollar Index (DXY), the RMB appreciated by 0.9% against the CFETS (China Foreign Exchange Trade System) basket of currencies over the same period. In 2024, the RMB depreciated 2.9% against the USD but appreciated approximately 6% against the CFETS basket. • The RMB exchange rate is driven by multiple factors: resilient trade surpluses provide support, whereas the inverted Sino-U.S. interest-rate differential, concerns over slowing Chinese growth momentum, and tariff-related headwinds constitute major downside risks. In September and April 2022, the People’s Bank of China (PBOC) cut the foreign-currency deposit reserve requirement ratio by 200 and 100 basis points, respectively. In October 2022, the State Administration of Foreign Exchange (SAFE) raised the macro-prudential adjustment parameter for cross-border financing from 1.0 to 1.25; it was further increased to 1.5 in July 2023 and again to 1.75 in mid-January 2025. These measures boosted onshore USD liquidity, thereby alleviating RMB depreciation pressure. • In the near term, the RMB may strengthen. For 2026, the RMB/USD exchange rate is expected to remain broadly stable with two-way volatility. UBS forecasts that the USD will appreciate modestly against the euro and other major currencies in 2026, and the Sino-U.S. interest-rate differential will remain elevated—both exerting some depreciation pressure on the RMB central parity rate. On the other hand, China’s current-account surplus is projected to stay at a relatively high level of ~3% of GDP in 2026. Recent U.S.-China trade truce developments will help stabilize market confidence and mitigate the negative impact of potential U.S. tariff hikes. Moreover, the RMB’s prior depreciation against the CFETS basket since early 2025 provides a buffer. Authorities are expected to enhance flexibility in RMB exchange-rate management while avoiding deliberate use of the RMB to counter external uncertainties. UBS projects USD/CNY at 7.05 by end-2025 and 7.10 by end-2026, with the rate exhibiting two-way volatility throughout the year. Chart 70: RMB exchange rate broadly unchanged between end-September and end-October despite volatility Chart 71: RMB real effective exchange rate (REER) depreciation in 2023–2024 Chart 72: RMB exchange rate vs. competitor currencies Chart 73: Interest-rate differentials Financial markets • Affected by low base effects, year-on-year growth in profits of designated large-scale industrial enterprises accelerated to 22% in September—up from 20% in August—mainly driven by improvements in revenue and profitability. Revenue growth for these enterprises rose slightly to 3% YoY in September, from 2% previously. By sector, mining-sector profits saw their YoY decline narrow from 23% to 16%, supported by low base effects; manufacturing-sector profits surged to 30% YoY growth, up sharply from 7%. • Equity market outlook for 2026 (forecast): UBS equity strategists expect A-share aggregate earnings growth to accelerate to 8% YoY in 2026 (from 6% in 2025), primarily driven by faster nominal GDP growth and a narrowing year-on-year decline in the PPI—which would boost revenue growth. Additionally, supportive policy measures and ongoing “anti-overcompetition” initiatives are expected to lift profit margins. Notably, the A-share market’s equity risk premium remains above its historical average, whereas other emerging markets sit far below their long-term averages. Medium-term, we believe A-share valuations could rise further if incremental macroeconomic policies are introduced, earnings growth accelerates, and risk-free rates decline. Continued household savings flowing into equities, inflows of long-term capital, and further progress in market-cap management reforms will also support market performance. • Equity allocation strategy: “Growth stocks” are expected to outperform “value stocks,” given the still-favorable medium-term market outlook. “Cyclical stocks” are expected to outperform “defensive stocks,” as advancing “anti-overcompetition” efforts may narrow the PPI’s YoY decline and accelerate industrial-enterprise profit growth. Sector-wise, we favor sectors benefiting from China’s innovation momentum, ample liquidity, and a narrowing PPI YoY decline—specifically overweighting electronics, telecommunications, non-bank financials (securities firms), defense, nonferrous metals, chemicals, and power equipment.

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Jul 17, 2026

UBS raised its price target for Green Plains Renewable Energy to $20.00, citing improved EBITDA forecasts from the Advantage Nebraska facility and debt reduction strategies.

Investing.com

UBS raises Green Plains stock price target on stronger EBITDA outlook

Investing.com

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