1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - In May, the A-share market rose slightly overall with a stable index but significant structural changes. The market style was biased towards micro-cap and medical sectors, with relatively average profit - making effects, decreased trading activity, and increased industry rotation speed [3][6]. - Due to the interweaving of internal and external factors, the index is expected to fluctuate in June. Although the most severe external risk disturbances may have passed, vigilance against the Trump administration's policy reversals is still needed. Domestic policies are actively implemented, and it is expected that exports will maintain high growth in the short - term, with consumption remaining an important driving force for economic recovery [3][31]. - There are three certain main investment lines: domestic demand consumption, domestic substitution, and under - weighted sectors by funds. In June, the market may tend to a defensive style, and attention should be paid to the Internet and consumption directions in the Hong Kong stock market [3]. 3. Summary According to the Directory 3.1 Three Market - Concerned Core Issues 3.1.1 Core Issue One: Stable Index Points but Significant Structural Changes - In May, the A - share market rose slightly overall, with the Shanghai Composite Index closing slightly higher. The WanDe Micro - cap Stock Index and CSI 2000 had relatively high gains, while the STAR 50 Index declined [6]. - In terms of industries, environmental protection and pharmaceutical biology led the gains, while electronics and social services led the losses. The market style was biased towards micro - cap and medical sectors. The micro - cap style outperformed in May, with the WanDe Micro - cap Stock Index rising 9.3%. The medical and healthcare sector rose 6.2%, outperforming other sectors [11][15]. - The market's profit - making effect was relatively average in May, with the net outflow of equity ETF funds exceeding 40 billion yuan. Market trading activity decreased, while industry rotation speed increased [20][26]. 3.1.2 Core Issue Two: Interweaving of Internal and External Factors, Expected Overall Index Fluctuation - The most severe short - term external risk disturbances may have passed, but vigilance against the Trump administration's policy reversals is still needed. Trump's previous trade frictions with many countries and his current short - term compromise are for a buffer for his anti - globalization policies [31][35]. - Trump's previous technology policies against China mainly restricted technology product exports and the development of Chinese enterprises. The new round of US technology policies may focus on restricting the AI industry [39][42]. - US stock enterprises may face greater profit pressure this time, and it is difficult to hedge through tax cuts. Domestic policies are actively implemented, and it is expected that the economy in the second quarter will remain resilient. Exports may maintain high growth in the short - term, consumption will still be an important driving force for economic recovery, industrial production will remain high, and investment growth is expected to remain high [44][50]. 3.1.3 Core Issue Three: What are the Certain Main Lines? - Domestic demand consumption: It has been the focus of domestic policies, and future policies are expected to continue to catalyze. The consumer industry has relatively low overseas revenue and more resilient performance. Some consumer industries, such as household products, food processing, professional services, and leisure food, are worthy of attention [73]. - Domestic substitution: In 2018, the domestic substitution direction once achieved excess returns. Two investment clues are worthy of attention: industries with high dependence on US imports and strong domestic supply capabilities, and industries with high dependence on US imports but the potential to improve domestic supply capabilities [84][85]. - Under - weighted sectors by funds: The "Action Plan for Promoting the High - Quality Development of Public Offering Funds" may have a profound impact on fund industry allocation. Some under - weighted sectors by funds are worthy of attention in the medium - to - long - term, including banks, non - bank finance, public utilities, and transportation, but short - term over - interpretation should be avoided [89]. 3.2 A - share Market: May Tend to a Defensive Style in June - Based on the combination of "economic reality" and "market sentiment", the market can be divided into four styles: balanced, pro - cyclical, defensive, and theme - growth and independent prosperity [98]. - In June, the economic reality or economic expectation is less likely to be "strong" in the short - term, and the market sentiment is expected to be weak. Therefore, the market style in June may tend to a defensive style [103][109]. - In a defensive style, attention should be paid to stable or high - dividend industries, such as public utilities, coal, and some sub - sectors [114]. - The five - dimensional industry comparison framework is used to comprehensively analyze and judge industry stock price performance. In May, under the assumption of a decline in market sentiment, the industry grouping effect was good, and the first - group industries achieved excess returns [119][123]. 3.3 Hong Kong Stock Market: Focus on Internet and Consumption Directions In May, the Hong Kong stock market rose, with a significant narrowing of the inflow of southbound funds but a relatively high trading proportion. Attention should be paid to the US restrictions on Chinese concept stocks listed in the US and investment in China. It is recommended to focus on the Internet, automobile, and service consumption directions in the Hong Kong stock market [3].

Investment Rating - The report maintains a "Buy" rating for Haier Smart Home (600690.SH) with a current price of 25.04 CNY and a target price of 35.54 CNY [1] Core Insights - The air conditioning business is significantly improving, and digital transformation is accelerating [1] - The company has seen substantial growth in both domestic and international markets, with a notable increase in retail sales and market share in the air conditioning sector [5][6] - The digital marketing and inventory reforms have enhanced operational efficiency and brand recognition [6] - The company continues to implement a high dividend policy, with a cash dividend ratio of 48.0% for 2024, expected to remain above 50% in the coming years [7] Summary by Sections Company Overview - Haier Smart Home has appointed a new board and executive team, with key positions filled to enhance operational focus across various regions and product lines [5][11] Financial Performance - The company reported a significant increase in air conditioning retail sales, outperforming the industry average [5] - The expected net profit for 2025 is projected at 21.5 billion CNY, with a consistent growth trajectory in subsequent years [7][10] Digital Transformation - The launch of AI data cloud has improved customer interaction and product offerings, leading to successful new product launches [6] - The digital inventory model has reduced operational costs for clients, resulting in a substantial increase in retail sales through new channels [6] Dividend Policy - The company maintains a high dividend payout, with a projected dividend yield of 4.8% for 2025, supported by a robust cash flow [7][10] Valuation Metrics - The report forecasts a price-to-earnings (P/E) ratio of 11 for 2025, indicating a favorable valuation compared to historical performance [7][10][14]

Quantitative Models and Construction Methods 1. Model Name: PB-ROE-50 - **Model Construction Idea**: The model is based on the PB (Price-to-Book) and ROE (Return on Equity) metrics, aiming to select stocks with favorable valuation and profitability characteristics[23] - **Model Construction Process**: - Stocks are selected based on their PB and ROE metrics - The portfolio is constructed by ranking stocks within the universe (e.g., CSI 800, CSI 500, or the entire market) - Regular rebalancing is performed to maintain the portfolio's alignment with the PB-ROE strategy[23][24] - **Model Evaluation**: The model demonstrates consistent positive excess returns in certain stock pools, indicating its effectiveness in capturing valuation and profitability factors[23] 2. Model Name: Large Block Trade Portfolio - **Model Construction Idea**: This model leverages the information embedded in large block trades, focusing on stocks with high transaction amounts and low volatility[29] - **Model Construction Process**: - Stocks are filtered based on "large transaction amount" and "low 6-day transaction volatility" - Monthly rebalancing is applied to maintain the portfolio's characteristics - The strategy is designed to capture the excess information from large block trades[29][30] - **Model Evaluation**: The model effectively identifies stocks with strong subsequent performance, as evidenced by its positive excess returns[29] 3. Model Name: Directed Issuance Portfolio - **Model Construction Idea**: This model captures the event-driven effects of directed issuance (private placements), focusing on stocks involved in such events[34] - **Model Construction Process**: - Stocks are selected based on the announcement date of directed issuance events - Factors such as market capitalization, rebalancing cycle, and position control are considered in portfolio construction - The strategy is designed to exploit the market inefficiencies surrounding directed issuance events[34][35] - **Model Evaluation**: The model demonstrates the ability to generate positive excess returns, indicating the continued relevance of directed issuance events in investment strategies[34] --- Model Backtesting Results 1. PB-ROE-50 Model - **Excess Return (CSI 500)**: -0.12% (weekly), 2.07% (YTD)[24] - **Excess Return (CSI 800)**: 0.63% (weekly), 2.60% (YTD)[24] - **Excess Return (Entire Market)**: 0.65% (weekly), 3.10% (YTD)[24] 2. Large Block Trade Portfolio - **Excess Return**: 0.01% (weekly), 23.39% (YTD)[30] 3. Directed Issuance Portfolio - **Excess Return**: 0.19% (weekly), 4.26% (YTD)[35] --- Quantitative Factors and Construction Methods 1. Factor Name: Logarithmic Market Cap Factor - **Factor Construction Idea**: This factor captures the size effect by using the logarithm of market capitalization[12][13] - **Factor Construction Process**: - The logarithm of the market capitalization of each stock is calculated - Stocks are ranked based on their logarithmic market cap values - The factor is applied to identify small-cap or large-cap stocks depending on the direction of the strategy[12][13] - **Factor Evaluation**: The factor shows strong performance in multiple stock pools, particularly in small-cap-dominated markets[12][14][16] 2. Factor Name: Momentum-Adjusted Large Trades - **Factor Construction Idea**: This factor measures the impact of large trades adjusted for momentum effects[12][13] - **Factor Construction Process**: - Large trade volumes are adjusted for recent momentum trends - Stocks are ranked based on the adjusted trade volumes - The factor is used to identify stocks with significant large trade activity and positive momentum[12][13] - **Factor Evaluation**: The factor demonstrates positive returns in certain stock pools, indicating its ability to capture momentum-driven large trade effects[12][14] 3. Factor Name: 6-Day Moving Average of Transaction Amount - **Factor Construction Idea**: This factor smooths transaction amounts over a 6-day period to identify trends in trading activity[12][13] - **Factor Construction Process**: - A 6-day moving average of transaction amounts is calculated for each stock - Stocks are ranked based on their moving average values - The factor is applied to identify stocks with increasing or decreasing trading activity[12][13] - **Factor Evaluation**: The factor shows mixed performance, with positive returns in some stock pools and negative returns in others[12][14] --- Factor Backtesting Results 1. Logarithmic Market Cap Factor - **Excess Return (CSI 300)**: 1.63% (weekly)[12][13] - **Excess Return (CSI 500)**: 1.08% (weekly)[14][15] - **Excess Return (Liquidity 1500)**: 0.65% (weekly)[16][17] 2. Momentum-Adjusted Large Trades - **Excess Return (CSI 300)**: 1.37% (weekly)[12][13] - **Excess Return (CSI 500)**: 1.05% (weekly)[14][15] - **Excess Return (Liquidity 1500)**: -1.23% (weekly)[16][17] 3. 6-Day Moving Average of Transaction Amount - **Excess Return (CSI 300)**: 1.34% (weekly)[12][13] - **Excess Return (CSI 500)**: 0.63% (weekly)[14][15] - **Excess Return (Liquidity 1500)**: -0.32% (weekly)[16][17]

Group 1: Manufacturing Sector - The manufacturing PMI for May 2025 is reported at 49.5%, a 0.5 percentage point increase from the previous month, aligning with market expectations[2][4] - The production index rose to 50.7%, up 0.9 percentage points from last month, indicating a recovery in production activities[5][14] - New orders index increased to 49.8%, up 0.6 percentage points, reflecting improved demand conditions[5][14] - High-tech manufacturing PMI stands at 50.9%, while energy-intensive industries continue to decline, with a PMI of 47.0%[6][19] Group 2: Service and Construction Sectors - The service sector PMI slightly increased to 50.2%, driven by the "May Day" holiday effect, with significant activity in tourism and hospitality[31][32] - The construction sector PMI is at 51.0%, down 0.9 percentage points, indicating a slowdown in expansion due to housing demand constraints, although infrastructure projects are accelerating[35][36] - Special bonds issuance in May reached 443.2 billion yuan, significantly higher than April's 230.1 billion yuan, supporting investment in infrastructure[35]

Manufacturing Sector - The manufacturing PMI for May 2025 is reported at 49.5%, a significant increase of 0.5 percentage points from the previous month, aligning with market expectations[2][4] - The production index rose to 50.7%, up 0.9 percentage points from last month, indicating a recovery in production activities[5][14] - New orders index increased to 49.8%, up 0.6 percentage points, reflecting improved demand conditions[5][14] - High-energy industries continue to decline, with the PMI dropping to 47.0%, down 0.7 percentage points, indicating ongoing challenges in these sectors[6] External Trade - The new export orders index rose to 47.5%, a significant increase of 2.8 percentage points, indicating a recovery in export activities following tariff reductions[21] - The import index increased to 47.1%, up 3.7 percentage points, suggesting improved import conditions[21] Service Sector - The service sector PMI increased slightly to 50.2%, up 0.1 percentage points, remaining in the expansion zone, driven by increased tourism and hospitality activities during the May Day holiday[31] Construction Sector - The construction PMI is at 51.0%, down 0.9 percentage points, indicating a slowdown in expansion primarily due to weakened housing demand, although infrastructure projects are accelerating[35] - Special bond issuance has increased significantly, with 443.2 billion yuan issued in May, up from 230.1 billion yuan in April, supporting investment in infrastructure[35]

Investment Rating - The report maintains a "Buy" rating for Nvidia (NVDA.O) [4][6] Core Insights - Nvidia's FY26Q1 revenue exceeded market expectations, reaching $44.062 billion, a year-over-year increase of 69% and a quarter-over-quarter increase of 12% [1] - The company's guidance for FY26Q2 is slightly below consensus expectations, with projected revenue of $45 billion, which is lower than the Bloomberg consensus of $45.454 billion [1][4] - The data center business is a key growth driver, with FY26Q1 revenue of $39.112 billion, up 73% year-over-year and 10% quarter-over-quarter [2] - The gaming segment achieved record revenue of $3.763 billion in FY26Q1, driven by the launch of Blackwell architecture chips [3] Summary by Sections Financial Performance - FY26Q1 revenue was $44.062 billion, exceeding Bloomberg consensus of $43.285 billion and the previous quarter's guidance of $43 billion [1] - Non-GAAP gross margin was 61.0%, down 12.5 percentage points quarter-over-quarter and 17.9 percentage points year-over-year, primarily due to $4.5 billion in inventory and procurement obligations related to H20 [1] - Non-GAAP net profit for FY26Q1 was $19.894 billion, a 31% increase year-over-year but a 10% decrease quarter-over-quarter [1] Business Segments - Data Center: Revenue of $39.112 billion, with computing revenue at $34.155 billion and networking revenue at $4.957 billion [2] - Gaming: Revenue of $3.763 billion, a 42% year-over-year increase and a 48% quarter-over-quarter increase [3] - Automotive: Revenue of $567 million, a 72% year-over-year increase, driven by rising demand for autonomous driving [3] Profitability Forecast - The report revises Nvidia's GAAP net profit estimates for FY2026 to FY2028 downwards to $113.88 billion, $149.20 billion, and $182.48 billion, respectively, reflecting a year-over-year growth rate of 56%, 31%, and 22% [4][5] - The projected GAAP EPS for FY2026 to FY2028 is $4.67, $6.11, and $7.48, respectively [5] Valuation Metrics - As of May 29, the closing price was $139.19, corresponding to a PE ratio of 30x for FY2026 and 23x for FY2027 [4]

Investment Rating - The report maintains a "Buy" rating for Nvidia (NVDA.O) based on strong demand for AI computing and robust shipment momentum from the Blackwell architecture [4][6]. Core Insights - Nvidia's FY26Q1 revenue reached $44.062 billion, exceeding market expectations with a year-over-year growth of 69% and a quarter-over-quarter increase of 12% [1][2]. - The company's guidance for FY26Q2 is slightly below consensus expectations, projecting revenue of $45 billion, which is lower than the Bloomberg consensus of $45.454 billion [1][4]. - The data center business is a key growth driver, with FY26Q1 revenue of $39.112 billion, reflecting a year-over-year increase of 73% [2][3]. Summary by Sections Financial Performance - FY26Q1 revenue was $44.062 billion, with a Non-GAAP gross margin of 61.0%, down from previous periods due to $4.5 billion in inventory and procurement obligations related to H20 [1][4]. - Non-GAAP net profit for FY26Q1 was $19.894 billion, with a corresponding Non-GAAP EPS of $0.81, surpassing the consensus estimate of $0.93 [1][4]. Business Segments - **Data Center Business**: Revenue of $39.112 billion in FY26Q1, with a significant contribution from Blackwell architecture, which is nearing completion in its transition [2][3]. - **Gaming Business**: Revenue reached $3.763 billion, marking a historical high driven by the launch of Blackwell architecture chips [3]. - **Automotive Business**: Revenue of $567 million, showing a year-over-year growth of 72%, primarily due to increased demand for autonomous driving [3]. Profitability Forecast - The report revises Nvidia's GAAP net profit estimates for FY2026 to FY2028 downwards to $113.882 billion, $149.200 billion, and $182.477 billion respectively, reflecting a year-over-year growth of 56%, 31%, and 22% [4][5]. - The projected GAAP EPS for FY2026, FY2027, and FY2028 are $4.67, $6.11, and $7.48 respectively [5][4].

Report Summary 1. Investment Rating No investment rating for the industry is provided in the report. 2. Core View The convertible bond market showed a slight recovery this week with continuous narrow - range fluctuations. Since the beginning of 2025, the convertible bond market has outperformed the equity market. Tariffs, fundamental trends, and macro - policies remain important influencing factors for the current convertible bond market. At present, investors can continue to focus on convertible bonds with excellent performance of underlying stocks in areas such as boosting domestic demand and domestic substitution [1][4]. 3. Summary by Directory Market行情 - From May 26 to May 30, 2025 (5 trading days), the convertible bond market slightly recovered with continuous narrow - range fluctuations. The weekly change of the CSI Convertible Bond Index was +0.2% (compared to - 0.1% in the previous trading week), while the CSI All - Share Index changed by - 0.1%. Since the beginning of 2025, the CSI Convertible Bond Index has risen by +3.6%, and the CSI All - Share Index has risen by +0.3%, indicating that the convertible bond market has performed better than the equity market [1]. - By rating, high - rated bonds (AA + and above), medium - rated bonds (AA), and low - rated bonds (AA - and below) had weekly changes of +0.27%, +0.03%, and - 0.04% respectively, with high - rated bonds having the largest increase. By convertible bond scale, large - scale convertible bonds (bond balance > 5 billion yuan), medium - scale convertible bonds (balance between 500 million and 5 billion yuan), and small - scale convertible bonds (balance < 500 million yuan) had weekly changes of +0.22%, +0.01%, and +0.01% respectively, with large - scale convertible bonds having the largest increase. By conversion parity, ultra - high - parity bonds (conversion value > 130 yuan), high - parity bonds (conversion value between 110 and 130 yuan), medium - parity bonds (conversion value between 90 and 110 yuan), low - parity bonds (conversion value between 70 and 90 yuan), and ultra - low - parity bonds (conversion value < 70 yuan) had weekly changes of +0.62%, - 0.21%, +0.02%, - 0.05%, and - 0.05% respectively, with ultra - high - parity bonds having the largest increase. By industry, the top 30 convertible bonds in terms of increase mainly came from building materials (3), chemical industry (3), electronics (3), and building decoration (3); the top 30 convertible bonds in terms of decline mainly came from the automobile (6), chemical industry (5), machinery and equipment (4), and household appliances (4) industries [2]. Convertible Bond Price, Parity, and Conversion Premium Rate - As of May 30, 2025, there were 473 outstanding convertible bonds (the same as at the end of last week), with a balance of 665.922 billion yuan (compared to 674.315 billion yuan at the end of last week). The average convertible bond price was 120.19 yuan (compared to 120.75 yuan last week), and the quantile was 72.9% (compared to 75.6% last week). The average convertible bond parity was 92.52 yuan (compared to 92.02 yuan last week), and the quantile was 61.5% (compared to 57.2% last week). The average conversion premium rate of convertible bonds was 30.3% (compared to 30.2% last week), and the quantile was 60.9% (compared to 60.8% last week). Among them, the conversion premium rate of medium - parity convertible bonds (conversion value between 90 and 110 yuan) was 23.4% (compared to 24.2% last week), higher than the median conversion premium rate of medium - parity convertible bonds since 2018 (19.8%) [3]. Convertible Bond Performance and Allocation Direction - The convertible bond market slightly recovered this week, with the CSI Convertible Bond Index rising by +0.2% and showing continuous narrow - range fluctuations recently. Since the beginning of 2025, the convertible bond market has outperformed the equity market. Looking forward, tariffs, fundamental trends, and macro - policies are still important influencing factors for the current convertible bond market. At present, investors can continue to focus on convertible bonds with excellent performance of underlying stocks in areas such as boosting domestic demand and domestic substitution [4]. Convertible Bond Rise Situation - The top 15 convertible bonds in terms of increase this week include Zhongqi Convertible Bond (18.54% increase), Limin Convertible Bond (16.22% increase), and Tianyang Convertible Bond (15.59% increase) [22].

Investment Rating - The report maintains a "Buy" rating for the company [5] Core Views - The company is expected to benefit from the upcoming release of new games and the progress in advertising commercialization [3] - The gaming business is anticipated to contribute positively to revenue growth, particularly with the launch of the S8 season of "Three Kingdoms" and the new mobile game "Shining! Yujun Girl" [1][2] - The company has a strong user base with MAU reaching 368 million and DAU at 107 million, indicating robust engagement [2] Summary by Sections Game Business Update - The company has updated its gaming portfolio with significant enhancements to "Shining! Yujun Girl" and the launch of the S8 season for "Three Kingdoms" [1] - The S7 season achieved a record high DAU, and the S8 season is expected to further boost user engagement through new features and events [1] Financial Performance - In Q1 2025, the company reported revenue of 7.003 billion RMB, a year-over-year increase of 24% [2] - The adjusted net profit for the same period was 362 million RMB, exceeding market expectations due to effective cost control [2] - The mobile gaming segment saw revenue growth of 76%, driven by stable performance from "Three Kingdoms" [2] AI Integration - AI technology has been deeply integrated into various business operations, enhancing content review efficiency and reducing production costs in game development [3] - The company plans to launch an AI tool for content creators by the end of 2025 [3] Profit Forecast and Valuation - The adjusted net profit forecasts for 2025 and 2026 have been raised to 2.146 billion RMB and 3.511 billion RMB, respectively [3][4] - The company is projected to achieve a revenue of 30.24 billion RMB in 2025, with a growth rate of 12.7% [4]

Investment Rating - The report maintains a "Buy" rating for Kuaishou-W (1024.HK) with a target price of HKD 68.8, compared to the current price of HKD 54.20 [4]. Core Views - Kuaishou's Q1 2025 performance slightly exceeded expectations, with total revenue of RMB 32.6 billion, a year-on-year increase of 10.9%, and adjusted net profit of RMB 4.58 billion, up 4.4% year-on-year [1][2]. - The growth in revenue is driven by the online marketing segment, which generated RMB 18 billion, reflecting an 8% year-on-year increase, and e-commerce GMV of RMB 332.3 billion, up 15.4% year-on-year [2]. - The report highlights the acceleration of commercialization for Kuaishou's AI capabilities, contributing to revenue growth and potential valuation increments [2]. Summary by Sections Financial Performance - Kuaishou's Q1 2025 gross margin was 54.6%, with operating profit at RMB 4.26 billion, a 6.6% year-on-year increase [1]. - Sales expenses rose to RMB 9.9 billion, a 5.5% increase year-on-year, attributed to increased subsidies for growth businesses [1]. - R&D expenses reached RMB 3.3 billion, a 16% increase year-on-year, reflecting investments in AI-related personnel [1]. Business Segments - Online marketing revenue was RMB 18 billion, slightly above expectations, driven by AI model improvements [2]. - E-commerce GMV was RMB 332.3 billion, with a 15.4% year-on-year growth, supported by a 30% increase in new merchants [2]. - Live streaming rewards reached RMB 9.8 billion, a 14.4% increase year-on-year, with significant growth in contracted agencies and streamers [2]. Growth Drivers - The commercialization of Kuaishou's AI, particularly the Keling AI, is expected to drive revenue growth, with Q1 2025 revenue from Keling AI exceeding RMB 150 million [2]. - Local life services revenue doubled year-on-year, and overseas revenue reached RMB 1.3 billion, a 33% increase year-on-year [2]. - User engagement metrics showed a 6% year-on-year increase in total usage time, with daily active users (DAU) at 410 million [2]. Profit Forecast and Valuation - The report slightly raises the adjusted net profit forecasts for 2025-2027 to RMB 20.13 billion, RMB 24.18 billion, and RMB 27.70 billion, respectively [2][3]. - The report emphasizes the potential valuation increment from Kuaishou's AI developments, with a target price of HKD 68.8 based on robust fundamentals [2].