Investment Rating - The industry rating is "Buy" for the retail sector [2]. Core Insights - The report highlights a recovery at the bottom and a need for transformation in the retail sector, with specific recommendations across various sub-sectors such as beauty, jewelry, cross-border e-commerce, retail, tourism, hotels, duty-free, dining, and education [2][8]. Summary by Sections Beauty - The report recommends focusing on four main lines for 2025: building a large product system, excellent organizational structure, cost-effectiveness and domestic substitution, and brands at valuation and market cap bottoms [2][8]. - Specific companies to watch include Runben Co., Juzhibio, Marubi, Proya, and others [2]. Jewelry - The rapid rise in gold prices has suppressed consumer demand, leading to weaker sales [2]. - The report suggests focusing on lightweight and fixed-price gold products, as well as the high-end trend in gold jewelry, with recommendations for leading companies like Lao Feng Xiang and Chow Tai Fook [2][8]. Cross-Border E-Commerce - The e-commerce platforms have shifted from a "low-price king" strategy to focusing on GMV, enhancing overall consumer experience [2]. - The report suggests monitoring Alibaba as consumer sentiment improves and e-commerce performance exceeds expectations [2]. Retail - Retail leaders are initiating self-reforms to reshape their supply chains and brand images, with examples like Yonghui Supermarket learning from competitors [2]. - Companies such as Miniso and Chongqing Department Store are recommended for their stable domestic operations and overseas growth strategies [2]. Tourism - The tourism sector is supported by various policies, showing strong demand resilience, particularly in long-distance and inbound tourism [2]. - Companies like Changbai Mountain and Zhongxin Tourism are highlighted for their growth potential [2]. Hotels - The hotel industry is expected to stabilize as it enters a low base period, with recommendations for Jinjiang Hotels and Huazhu Group [2]. Duty-Free - The report anticipates a recovery in duty-free sales as consumer demand rebounds, with a focus on companies like China Duty Free Group [2]. Dining - The dining sector remains under pressure, but strong brands are performing relatively well, with recommendations for Haidilao and Yum China [2]. Education - The report emphasizes the long-term value in the education sector, particularly in vocational education, with recommendations for Xueda Education and other leading companies [2].

Investment Rating - The report assigns a "Buy" rating for the insurance industry [2]. Core Viewpoints - The life insurance sector is expected to continue its upward trend in 2025, supported by favorable policies, product structure adjustments, and improvements in value rates [2][21]. - The non-life insurance sector is projected to experience premium growth across cycles, benefiting from stable growth in vehicle ownership and recovery in policy-related business [2][21]. - The asset side is anticipated to see a shift towards equity allocation, with high dividend and long-term stock investments becoming the focus for future asset allocation [2][21]. Summary by Sections Life Insurance: Policy Support and Demand Release - The life insurance industry has shown a significant upward trend in liabilities since the second half of 2022, with a notable increase in new business value [21]. - Policies have been implemented to support the industry's stable growth, including adjustments to product structures and a shift towards dividend insurance, which is expected to lower rigid liability costs [23][30]. - The value rate is projected to continue improving, contributing to value growth in 2025 [21][30]. Non-Life Insurance: Premium Growth Across Cycles - The non-life insurance sector is expected to achieve a 6%-8% growth in vehicle insurance premiums due to stable vehicle ownership and recovery in non-vehicle insurance driven by economic growth [21]. - Cost management and pricing optimization are anticipated to improve profitability, particularly in the context of new energy vehicle insurance [21]. Asset Side: Stable Growth Policies and Increased Equity Allocation - Policies aimed at stabilizing growth are expected to alleviate asset shortages, with a shift towards increased equity allocation in the insurance sector [21]. - The report highlights a significant increase in investment returns for listed insurance companies, indicating a favorable outlook for equity investments [21]. Valuation: Reflecting Pessimistic Expectations - Current valuations suggest that the market has low expectations for future investment returns for major insurance companies, with implied investment return rates for companies like China Life and Ping An being notably low [21]. - The report estimates a reasonable valuation of 0.74X based on sensitivity analysis, indicating that current valuations are significantly undervalued [21]. Investment Recommendations - The report recommends several companies for investment, including China Pacific Insurance, China Life, China Taiping, Ping An, China Property & Casualty, New China Life, and AIA [2][21].

Investment Rating - The industry rating for the agriculture, forestry, animal husbandry, and fishery sector is "Buy" [2]. Core Insights - The average price of live pigs in November 2024 is 16.5 CNY/kg, a decrease of 6.2% month-on-month but an increase of 10.3% year-on-year. The price is expected to rebound as the winter consumption season approaches [28][29]. - The report highlights that the breeding industry is experiencing a cautious expansion, with a slight increase in the number of breeding sows. The overall industry outlook remains optimistic due to low historical valuations and potential recovery in pig prices [28][29]. - In the poultry sector, the prices of broiler chickens and chicks have increased by 2.6% and 3.2% respectively, indicating a potential recovery trend [28][29]. - The feed and animal health sectors are seeing stable demand, with a slight increase in feed requirements due to rising livestock numbers. The report suggests that leading companies in these sectors are well-positioned for growth [28][29]. Summary by Sections Market Review - In November 2024, the agriculture, forestry, animal husbandry, and fishery sector underperformed the CSI 300 index by 0.9 percentage points, with a decline of 0.3% in the sector compared to a 0.7% increase in the index [17]. Livestock Breeding - The average profit from self-breeding pigs in November is approximately 204.9 CNY per head, a decrease of 101.4 CNY from the previous month but an increase of 439.7 CNY year-on-year. The average loss from purchasing piglets is 42.7 CNY per head, reflecting a significant decline [28][29]. - The report notes that the number of breeding sows has increased by 0.3% month-on-month, indicating a gradual recovery in production capacity [28]. Raw Materials - The prices of major raw materials such as corn and soybean meal have shown slight fluctuations, with corn prices decreasing by 1.3% month-on-month and soybean meal prices increasing by 0.3% [28]. Animal Health - The recovery in pig breeding is expected to boost demand for animal health products, with leading companies actively expanding into pet healthcare, opening new growth opportunities [28]. Pet Food - The total sales of pet food during the Double 11 shopping festival in 2024 reached 5.9 billion CNY, marking a year-on-year growth of 23%. Domestic brands are rapidly gaining market share, with a focus on overseas export growth [28].

Investment Rating - The report maintains a "Buy" rating for Zhihu (ZH) with a target price of $4.87 per ADS [5][17] Core Views - Zhihu achieved significant loss reduction in 24Q3, with the lowest quarterly loss since its IPO [2][3] - The company's community ecosystem has been optimized, with core user health metrics steadily improving [3] - Zhihu's 24Q3 gross margin reached 63.9%, a YoY increase of 10.26 percentage points [3] - The company has implemented cost-saving measures across sales, R&D, and management expenses [3] - Zhihu's average MAU recovered to 81.1 million in 24Q3, showing a QoQ growth of 0.6% [3] Financial Performance Revenue and Profit - 24Q1-Q3 revenue reached RMB 2.74 billion, a YoY decrease of 10.48% [2] - 24Q3 revenue was RMB 845 million, a YoY decrease of 17.33% [2] - 24Q3 net loss attributable to shareholders was RMB 10 million, a significant reduction from the previous year [2] - Adjusted net loss for 24Q3 was RMB 13 million, showing a substantial improvement [2] Business Segments - Marketing services revenue in 24Q3 was RMB 257 million, a YoY decrease of 32.99% [3] - Paid membership revenue reached RMB 459 million in 24Q3, with monthly paying members increasing to 16.5 million [3] - Vocational training revenue was RMB 105 million in 24Q3, with self-operated courses showing growth [3] Cash Position - As of 24Q3, Zhihu held cash and cash equivalents of RMB 5.048 billion [3] - The company completed a share repurchase program, buying back 33.02 million Class A ordinary shares [3] Future Projections - Revenue for 2024-2026 is projected to be RMB 3.555 billion, RMB 3.055 billion, and RMB 3.229 billion respectively [3][12] - Net loss is expected to decrease from RMB 272 million in 2024 to RMB 23 million in 2026 [3] - Average MAU is forecasted to be 830 million, 830 million, and 850 million for 2024-2026 [11] - Marketing service revenue is projected to be RMB 1.233 billion, RMB 1.048 billion, and RMB 1.079 billion for 2024-2026 [11] - Paid membership revenue is expected to reach RMB 1.740 billion, RMB 1.589 billion, and RMB 1.724 billion in 2024-2026 [11] Valuation - The report values Zhihu at 1x PS for 2025, resulting in a fair value estimate of $4.87 per ADS [17] - The current PS ratio is 0.68x for 2024, 0.79x for 2025, and 0.75x for 2026 [17]

Industry Investment Rating - The industry rating for the transportation sector is **Buy** [4] Core Views - The transportation sector in 2024 experienced a weak reality, with most sub-sectors seeing a decline in ROE due to economic cyclicality [1] - The market remains sensitive to marginal changes in fundamentals, with most transportation assets priced at historically low valuations, below the 50th percentile of the 2015-2024 range [1] - For 2025, the report highlights three key investment themes: 1. **Strong expectation diffusion**: Sectors like aviation, chemical logistics, and integrated logistics are expected to see valuation recovery, especially those with lower valuation percentiles and improving fundamentals [1] 2. **Weak reality improvement**: Sectors with supply-side improvements, such as integrated logistics and dry bulk shipping, are more likely to be accepted by the market [1] 3. **Foreign trade risk management**: Structural opportunities exist in export-related sectors, including potential export rush opportunities in Q1-Q2 2025 and the "Belt and Road" initiative [1] Sector Summaries Logistics - **Fundamentals**: The logistics sector in 2024 showed resilience, with volume growth but price declines in competitive segments like express delivery and domestic chemical shipping [91] - **Valuation**: Most logistics companies are undervalued, reflecting weak market expectations, with some sectors like chemical logistics and integrated logistics showing potential for recovery [111] - **Investment Strategy**: Focus on sectors with strong expectation diffusion and structural opportunities in foreign trade, particularly in chemical logistics and integrated logistics [114] Aviation and Airports - **Fundamentals**: Aviation demand remained resilient in 2024, with domestic passenger traffic recovering to 111.4% of 2019 levels, while international traffic recovered to 86.1% [123] - **Valuation**: Large airlines are leading the valuation recovery, with PB valuations above the 70th percentile, while smaller airlines and airports remain undervalued [156] - **Investment Strategy**: Prefer large airlines for cyclical recovery and smaller airlines for valuation repair and growth realization, while monitoring airport non-aviation business recovery [158] Shipping - **Fundamentals**: Shipping sectors like dry bulk and oil tankers face supply-side constraints, with demand-side improvements still uncertain [1] - **Valuation**: Shipping valuations are at historical lows, with potential for recovery in sectors like chemical shipping and dry bulk [1] - **Investment Strategy**: Focus on sectors with supply-side improvements and structural opportunities in foreign trade, particularly in chemical shipping and dry bulk [1] Infrastructure - **Fundamentals**: Infrastructure sectors like highways and ports are experiencing volume-price divergence, with demand-side recovery still pending [1] - **Valuation**: Infrastructure assets are undervalued, with defensive attributes becoming more prominent [1] - **Investment Strategy**: Invest in high-quality infrastructure assets and monitor value recovery in individual stocks [1] Key Companies - **Haitong Development (603162.SH)**: Rated as **Overweight** with a target price of CNY 10.12 [9] - **China Merchants Energy Shipping (601872.SH)**: Rated as **Overweight** with a target price of CNY 8.30 [9] - **Spring Airlines (601021.SH)**: Rated as **Overweight** with a target price of CNY 71.43 [9] - **China Southern Airlines (600029.SH)**: Rated as **Overweight** with a target price of CNY 9.68 [9] - **China Eastern Airlines (600115.SH)**: Rated as **Overweight** with a target price of CNY 4.62 [9]

Investment Rating - The report maintains a "Buy" rating for Nanshan Zhishang (300918 SZ) with a target price of 16 39 RMB per share based on a 20x PE multiple for 2025 [1][5] Core Views - Nanshan Zhishang is a leading domestic fine wool fabric company with rapid development in new functional chemical fiber products [1] - The company has established a dual-chain synergy system integrating wool textile apparel and new materials including a 3600-ton ultra-high molecular weight polyethylene fiber project and an 80 000-ton high-performance differentiated nylon filament project [1] - Traditional business (fine wool fabric apparel) is expected to maintain steady revenue growth with improving profitability through technical upgrades and product structure optimization [1] - The ultra-high fiber business benefits from favorable policies and expanding downstream demand with potential for increased profitability as capacity ramps up [1] - The high-performance differentiated nylon filament business is expected to contribute significantly to performance with rapid capacity release and strong downstream demand [1] Financial Projections - Revenue is projected to grow from 1 747 million RMB in 2024E to 3 452 million RMB in 2026E representing a CAGR of 30% [3] - Net profit attributable to shareholders is expected to increase from 209 million RMB in 2024E to 402 million RMB in 2026E with a CAGR of 36 3% [3] - EPS is forecasted to rise from 0 58 RMB per share in 2024E to 1 12 RMB per share in 2026E [3] Traditional Business (Wool Textile Apparel) - The company has a complete wool textile apparel industry chain with significant integrated collaboration advantages [1] - Revenue from fine wool fabric business is expected to grow steadily with profitability improving through technical upgrades and product structure optimization [1] - The export proportion to the US is small making the business less affected by trade friction risks [1] Ultra-High Fiber Business - The 3600-ton ultra-high molecular weight polyethylene fiber project is fully operational as of 2024H1 with expanding application areas [1] - Favorable policies such as the "Military Equipment Support Regulations" and export policy clarity are expected to boost sales [1] - Profitability is expected to improve as capacity ramps up and costs decrease with the Yulong Petrochemical project [1] High-Performance Differentiated Nylon Filament Business - The PA6 production line is gradually starting trial production with the PA66 line expected to begin trial production in late November 2024 [1] - The company expects annual production of 48 000 tons 64 000 tons and 80 000 tons in the first three years of operation with 30 000 tons of intentional orders covering over 60% of first-year capacity [1] Financial Performance - Revenue from fine wool fabric business reached 410 million RMB in 2024H1 accounting for 52 5% of total revenue [92] - Revenue from apparel business was 280 million RMB in 2024H1 accounting for 35 5% of total revenue [92] - New materials revenue grew significantly to 90 million RMB in 2024H1 accounting for 11 1% of total revenue [92] Regional Revenue - Domestic revenue accounted for 72 3% of total revenue in 2024H1 while international revenue accounted for 27 8% [102] - The company's export exposure to the US is minimal reducing the impact of trade friction risks [102]

Investment Rating - The report assigns a "Buy" rating for the media industry, indicating an expectation of stock performance exceeding the market by more than 10% over the next 12 months [60]. Core Insights - Since 2023, the launch of AI hardware has become a significant focus in the market, with AI toys gaining attention for their dual role in education and companionship, presenting a high-potential, high-engagement market segment. The global AI toy market was valued at $12.143 billion in 2022 and is projected to reach $36.377 billion by 2030 [3][29]. - The overseas AI toy market has seen rapid development since 2020, expanding functionalities from simple dialogue to personalized interactions, leveraging technologies such as facial recognition and natural language processing [3][31]. - Domestic AI toys have evolved to handle complex scenarios, with monetization strategies including B2B, B2C, and model functionality payments. Companies like FoloToy and ByteDance have successfully integrated AI capabilities into their products [4][34]. Summary by Sections AI Toys: Application Scenarios - The report highlights the increasing focus on AI hardware since 2023, with major tech companies launching various AI devices. The AI toy segment is identified as a promising area due to its educational and emotional support capabilities [24][29]. Domestic and International AI Toy Products - The report details the growth of the international AI toy market, which has surpassed $10 billion, with a reported growth of 18% from 2022 to 2023. Notable products include AI toys that can engage in storytelling and personalized interactions [31][32]. Representative Listed Companies in AI Toy Sector - Companies such as Shifeng Culture, Tom Cat, and Aofei Entertainment are actively developing AI toys. Shifeng Culture has launched the original IP "Feifei Rabbit" smart toy, while Tom Cat plans to release its AI robot by the upcoming Spring Festival [42][48]. Investment Recommendations - The report emphasizes the potential of the AI toy market, recommending a focus on companies like Shifeng Culture, Tom Cat, Aofei Entertainment, and Shanghai Film, which have established IP reserves and strategic partnerships in the AI toy space [5][53].

Investment Rating - The report rates the defense and military industry as "Buy" for 2025, maintaining the previous rating of "Buy" [2]. Core Viewpoints - The report emphasizes the importance of the sector's beta, highlighting the increasing certainty of the product, capacity, and inventory cycles. It notes that the military sector has shown stable growth in ROE since 2019, positively impacting PB valuation [2][56]. - The report suggests that the military sector's ROE is expected to improve, with a focus on selecting core assets with upward trends in ROE. The market's attention to ROE trends and stability is anticipated to increase due to new policies and market conditions [2][56]. Summary by Sections 1. Emphasis on Sector Beta: Increasing Certainty of Three Cycles - The core of the military investment framework is to grasp the interplay of product, capacity, and inventory cycles. The report identifies the need to find high-prosperity tracks and quality leaders within these cycles [56][57]. - The product cycle is the driving force behind growth, influenced by the rhythm of core equipment development and production. The report indicates that geopolitical discussions are significant for long-term product cycle curves but have limited mid-term implications [56]. - The capacity cycle reflects demand and is crucial for understanding profit elasticity. The military sector's planned nature of demand and government procurement leads to a high degree of planning in capacity investments [56]. - The inventory cycle is a lagging reflection of the capacity cycle, representing the internal cash flow turnover before revenue realization [56]. 2. Confirmation of Bottom: PB-ROE Model Analysis - The report analyzes the military sector's elasticity for 2025 through the PB-ROE model, indicating a strong correlation between ROE trends and PB valuation. It highlights that many key stocks are currently at relative low points in terms of PB and ROE [2][56]. 3. Core Stock Selection: Focus on ROE Uptrend - The report advocates for selecting military core assets with upward trends in ROE, emphasizing the importance of stable growth in net profit margins and turnover rates. It suggests a focus on sectors such as military trade, aviation engines, and large aircraft maintenance [2][56]. 4. Stock Selection Strategy: Optimized PB-ROE Approach - The report outlines four investment strategies for the military sector in 2025, including emphasizing stable growth in ROE, identifying potential reversals in ROE cycles, focusing on macro narratives, and considering the potential of state-owned enterprise reforms [2][56].

Investment Rating - The report rates the automotive industry as "Buy" [2]. Core Viewpoints - The heavy truck industry showed a month-on-month improvement in October, with exports maintaining a good year-on-year growth rate [2]. - In October, wholesale heavy truck sales decreased by 18.2% year-on-year, while terminal sales fell by 19.4%. However, exports increased by 17.1% year-on-year [2][19]. - The total inventory in the heavy truck industry is at a healthy level, with a decrease in total inventory both year-on-year and month-on-month [2][11]. - Logistics demand has shown recovery since the beginning of the year, with a cumulative year-on-year growth rate of 3.2% in road freight turnover from January to October [2][11]. - Market share for major heavy truck manufacturers has increased, with significant gains for companies like Sinotruk and Shaanxi Heavy Truck [2][11]. Summary by Sections Sales - In October, heavy truck wholesale sales were 66,000 units, down 18.2% year-on-year but up 15.0% month-on-month. Cumulative wholesale sales from January to October reached 749,000 units, down 4.9% year-on-year [19][21]. - Terminal sales in October were 45,000 units, down 19.4% year-on-year but up 2.8% month-on-month, with cumulative terminal sales of 476,000 units, down 9.8% year-on-year [21][22]. Inventory - As of the end of October, total inventory in the heavy truck industry was 128,000 units, with a year-on-year decrease of 27,000 units and a month-on-month decrease of 600 units. The dynamic inventory-to-sales ratio was 2.4, indicating a reasonable level [2][11]. Demand - The logistics demand has been recovering, with a cumulative year-on-year growth rate of 3.2% in road freight turnover from January to October, and a monthly growth rate of 3.9% in October [2][11]. Market Share - From January to October, the market share of Sinotruk and Shaanxi Heavy Truck increased by 0.8 percentage points and 0.3 percentage points, reaching 27.4% and 16.6%, respectively [2][11].

Investment Rating - The report maintains a "Buy" rating for Huazhu Group-S (01179 HK) and Huazhu (HTHT O) with a target price of HKD 36 01 per share for the Hong Kong-listed stock and USD 46 28 per ADS for the US-listed stock [5] Core Views - Huazhu Group reported Q3 2024 revenue of RMB 6 44 billion (+2 4% YoY) at the lower end of the guidance range Net profit attributable to shareholders was RMB 1 27 billion (-4 8% YoY) while adjusted net profit was RMB 1 37 billion (-10 8% YoY) [1] - For the first three quarters of 2024 the company achieved revenue of RMB 17 87 billion (+9 6% YoY) and net profit attributable to shareholders of RMB 3 00 billion (-10 3% YoY) Adjusted net profit for the period was RMB 3 40 billion (+13 4% YoY) [1] - Domestic RevPAR ADR and occupancy rates in Q3 2024 were RMB 256 (-8 1% YoY) RMB 301 (-7 0% YoY) and 84 9% (-1 0 pct YoY) respectively International RevPAR ADR and occupancy rates were EUR 82 (+3 7% YoY) EUR 117 (+2 5% YoY) and 69 8% (+0 8 pct YoY) respectively [1] - The company accelerated its domestic hotel openings with 774 new hotels in Q3 2024 (a record high) and a net increase of 557 hotels bringing the total domestic hotel count to 10 707 By the end of Q3 2024 the company had opened 1 910 hotels domestically achieving 87% of its annual target of 2 200+ hotels [1] Financial Performance - Operating costs increased to 59 0% (+1 5 pct YoY) in Q3 2024 mainly due to rising labor costs (21 3% +2 4 pct YoY) Sales expenses were 4 7% (+0 1 pct YoY) and management expenses were 10 4% (+1 9 pct YoY) Net profit margin attributable to shareholders was 19 8% (-1 5 pct YoY) while adjusted net profit margin was 21 3% (-3 2 pct YoY) [2] - Revenue growth guidance for Q4 2024 is 1%-5% (regardless of DH inclusion) The report forecasts net profit attributable to shareholders of RMB 3 7 billion RMB 4 5 billion and RMB 5 0 billion for 2024 2025 and 2026 respectively [2] Growth and Profitability - Revenue growth is projected at 7 9% 6 7% and 5 8% for 2024 2025 and 2026 respectively [3] - Net profit attributable to shareholders is expected to grow by 21 6% and 12 2% in 2025 and 2026 respectively [3] - ROE is forecasted at 23 1% 21 8% and 19 5% for 2024 2025 and 2026 respectively [3] Valuation - The report values Huazhu Group at 24x PE for 2025 corresponding to a fair value of HKD 36 01 per share for the Hong Kong-listed stock and USD 46 28 per ADS for the US-listed stock [2]