Tariff Reduction Overview - The recent US-China tariff reduction has decreased tariffs from 125% to 34%, with a 90-day suspension on 24% of tariffs, leaving a remaining 10% in place[2] - The overall tariff level between the US and China has dropped by 91 percentage points, with potential further negotiations on the 20% tariff related to fentanyl[3] Economic Impact - The US's total tariff on China will decrease to approximately 40%, while the global tariff will fall to 15-17% during the 90-day exemption period[5] - The reduction in tariffs is expected to lower the drag on US economic growth to 1-1.5 percentage points and may increase core inflation by 1-1.5 percentage points[7] Trade Dynamics - The short-term pressure on Chinese exports is expected to significantly decrease, potentially leading to a surge in exports during the 90-day window[8] - The global trade volume may decline by 2-4 percentage points, which is less severe than previous estimates of over 5% due to tariff impacts[5] Future Projections - The US is likely to maintain a tactical retreat on tariff issues, with the possibility of revisiting them in 1-2 quarters[14] - The trend of "de-dollarization" remains unchanged, with Asian assets, particularly those from China and Japan, expected to receive higher relative allocations[15]

Investment Rating - The investment rating for the company is maintained as "Buy" for both H-shares and A-shares [8]. Core Views - The report emphasizes that the short-term fluctuations in ASP (Average Selling Price) do not affect the long-term logic of domestic production [1]. - The company is expected to benefit from strong domestic demand, particularly in the simulation and other sectors, despite a temporary decline in ASP due to one-time operational issues [2][3]. - The report maintains target prices of HKD 63 for H-shares and RMB 119 for A-shares, reflecting a premium of 103% for A-shares over H-shares [5][28]. Summary by Sections Financial Performance - In Q1 2025, the company reported revenues of USD 2.25 billion, a 1.8% increase quarter-on-quarter, but below the previous guidance of 6%-8% [1][17]. - The ASP decreased by 9% quarter-on-quarter, attributed to one-time operational issues and equipment validation problems [2][19]. - The gross margin remained stable at 22.5% [17]. Production and Capacity - The company experienced a 15% increase in wafer shipments quarter-on-quarter, with capacity utilization rising by 4.1 percentage points to 89.6% [1][19]. - The main 8-inch and 12-inch factories are nearing full capacity, indicating robust demand for domestic production [3]. Market Outlook - The company anticipates a 4%-6% decline in revenue for Q2 2025, with a gross margin forecast of 18%-20% [21]. - The report highlights limited impact from tariffs on overall revenue, estimating the effect to be less than 1% [4]. Valuation Adjustments - Revenue forecasts for 2025, 2026, and 2027 have been adjusted downwards by 7.4%, 2.7%, and 0.2% respectively, due to the Q1 operational issues [5][22]. - The projected revenues for 2025, 2026, and 2027 are USD 9.02 billion, USD 11.20 billion, and USD 13.15 billion respectively [23]. Investment Thesis - The company is viewed as a major beneficiary of the global supply chain restructuring, with a focus on localization and opportunities in the DeepSeek sector [28]. - The report suggests that the company will continue to capture market share in the domestic semiconductor industry, driven by increasing demand [3][28].

Investment Rating - The report initiates coverage on Xuji Electric with a "Buy" rating and sets a target price of 26.41 RMB, based on a 19x PE for 2025 [1][5][7]. Core Views - Xuji Electric is a key enterprise under China Electric Equipment Group, positioned as a leading supplier of secondary equipment and converter valves in China. The company is expected to benefit from the steady growth of the new power system construction [12][13][17]. - The report anticipates the approval of 5-6 ultra-high voltage direct current (UHVDC) projects and 5-6 back-to-back projects within the year, which will significantly benefit Xuji Electric as a core supplier of converter valves and direct current control protection systems [2][12][13]. - The company is expected to achieve a compound annual growth rate (CAGR) of 23.8% in net profit from 2025 to 2027, with projected net profits of 14.12 billion, 18.21 billion, and 21.22 billion RMB for those years [5][11]. Summary by Sections Business Overview - Xuji Electric's business covers core aspects of the new power system, with a steady growth outlook aligned with the national grid's total investment, which is expected to exceed 650 billion RMB in 2025 [3][14]. - The company has seen a continuous increase in its market share for smart substation products, with bidding shares rising from 6.7% in 2022 to an expected 8.6% in 2024 [3][16]. Direct Current Transmission - Xuji Electric leads in UHVDC technology, with a market share of approximately 20% for converter valves and 40% for direct current control protection systems. The company has a strong technical foundation and project experience in flexible direct current transmission [22][30]. - The report estimates that a single conventional/flexible UHVDC project could contribute 0.66-0.99 billion RMB and 1.48-2.35 billion RMB in net profit for 2027, translating to profit elasticity of 3.1-4.7% and 7.0-11.1% respectively [4][32]. Financial Projections - The projected revenue for Xuji Electric is expected to reach 17.09 billion RMB in 2024, with a slight increase to 18.32 billion RMB in 2025, reflecting a growth rate of 7.2% [6][11]. - The net profit for 2025 is projected at 1.41 billion RMB, with a year-on-year growth of 26.4% [6][11]. Market Position - Xuji Electric's competitive position is strengthened by its ability to provide complete solutions for both UHVDC and flexible direct current transmission, making it a key player in the industry [22][26]. - The company is expected to maintain a stable market share in smart metering, with ongoing demand driven by the peak replacement cycle and international expansion [16][17].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $184.60 [6][13]. Core Insights - The company's performance has rebounded, particularly due to the updates to the "FC" series and the release of new titles like "Split Fiction" [1][2]. - The company is expected to benefit from a strong product pipeline, including the anticipated release of "Battlefield 6" and the upcoming 2026 Summer World Cup, which is expected to positively impact the "FC" series [3][4]. Financial Performance - For FY25Q4, the company reported net revenue of $1.895 billion, exceeding consensus estimates by 7.6% and showing a year-over-year increase of 6.5% [1]. - Net bookings for the same quarter reached $1.799 billion, surpassing expectations by 14.9% and reflecting an 8% year-over-year growth [1][2]. - The net profit for FY25Q4 was $254 million, exceeding expectations by 12.2%, driven by an increase in digital game sales and operational leverage [1]. Future Guidance - The company has provided guidance for FY26 net bookings to be between $7.6 billion and $8.0 billion, primarily driven by new releases and the continued recovery of the "FC" series [2]. - The expected release of "Battlefield 6" is projected for the end of FY26, with management noting significant engagement from early testing [3]. Earnings Forecast and Valuation - The report adjusts FY26 and FY27 net revenue estimates down by 9.1% and 4.3% to $7.262 billion and $8.176 billion, respectively, while introducing a FY28 forecast of $8.43 billion [4][11]. - Net profit estimates for FY26 and FY27 have been reduced by 37.7% and 13.5% to $956 million and $1.417 billion, respectively, due to increased R&D and marketing costs associated with new game releases [4][11]. - The valuation multiple has been increased to 50x PE, aligning with industry averages, reflecting a robust product pipeline and potential profit recovery post new releases [4][13].

Investment Rating - The report maintains an "Accumulate" rating for the company with a target price of HKD 137.46 [8] Core Views - The company demonstrates growth potential, stable operational capabilities, and excellent shareholder returns, supported by its extensive network and licensing advantages in emerging markets [16][19] - The restructuring of global supply chains and the rising demand for cross-border wealth management are expected to provide significant growth opportunities for the company's transaction banking and wealth management businesses [4][18] Summary by Sections Investment Highlights - The company has a strong presence in emerging markets, with over 75% of its global branches overlapping with "Belt and Road" markets, enhancing its cross-border business foundation [16][19] - The company has shifted its operational strategy since 2015, reducing loan exposure and focusing on lower-risk sectors, resulting in a robust asset quality with a local real estate exposure of less than 1% of total loans [4][19] Business Growth Drivers - The demand for cross-border asset allocation is increasing, with the company positioned to benefit from the growth of wealth management in high-growth centers like Hong Kong, Singapore, and the UAE [3][18] - The company reported a 28% year-on-year increase in wealth management income in Q1 2025, with a significant inflow of new affluent clients [3][18] Financial Projections - The forecasted net profit for the company is USD 3.83 billion in 2025, with a projected compound annual growth rate (CAGR) of double digits for wealth management income from 2025 to 2029 [5][18] - The company aims for a target price-to-book (PB) ratio of 0.85 for 2025, with a target price of HKD 137.46, reflecting its growth potential despite short-term interest margin fluctuations [5][8] Risk Management - The company has effectively managed its existing risks, with a non-performing loan ratio projected to remain stable around 2.13% in the coming years [7][19] - The company’s diversified global network is expected to mitigate the impact of tariff uncertainties on its cross-border business [17][33]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 43.0 HKD [7][8]. Core Views - The company achieved Q1 2025 revenue of 541 million USD, reflecting a year-over-year increase of 17.6% and a quarter-over-quarter increase of 0.3%, primarily driven by increased wafer shipments [16][20]. - The gross margin for Q1 2025 was 9.2%, up 2.8 percentage points year-over-year but down 2.2 percentage points quarter-over-quarter due to depreciation from new production lines [16][20]. - For Q2 2025, the company guides revenue between 550-570 million USD, with a gross margin forecast of 7-9%, mainly impacted by depreciation [21]. Summary by Sections Revenue and Profitability - Q1 2025 revenue reached 541 million USD, with wafer shipments of 1.231 million pieces, a year-over-year increase of 20.0% [16][20]. - The company expects full-year revenue growth driven by sustained capacity utilization and an increase in 12-inch capacity [16][18]. Capacity and Production - The production capacity utilization rate was 102.7% in Q1 2025, with the second 12-inch production line expected to ramp up steadily [2][21]. - The company aims to shorten ramp-up time and increase shipment volumes to stabilize gross margins [2]. Pricing and ASP - The average selling price (ASP) in Q1 2025 decreased by 0.9% quarter-over-quarter, but the company anticipates stable pricing for the year, with potential increases in 12-inch prices [3][5]. - The company believes that 2024 will be the price low point, with opportunities for price increases if supply-demand conditions tighten [3]. Segment Performance - Q1 2025 revenue from analog and power management grew by 12% quarter-over-quarter, benefiting from increased demand for power management chips [4][26]. - The 12-inch wafer revenue reached 310 million USD in Q1 2025, a year-over-year increase of 40.8% [24]. Financial Forecast - The report maintains revenue forecasts for 2025, 2026, and 2027 at 2.168 billion USD, 2.453 billion USD, and 2.739 billion USD respectively, with net profit estimates of 52.31 million USD, 82.49 million USD, and 97.02 million USD [5][18][19]. - The target price of 43.0 HKD is based on a 1.5 times price-to-book ratio for 2025 [5][29].

证券研究报告 可选消费 创新不止，百年乐高的成长密码 华泰研究 2025 年 5 月 12 日│中国内地 深度研究 乐高：创新不止，成就全球玩具龙头 乐高集团历史可追溯至 1916 年，百年来公司持续以创新驱动，从丹麦的木 工作坊逐步成长为全球玩具龙头，打造了极具特色的乐高积木玩具生态。 2024 年乐高集团营业总收入 743 亿丹麦克朗，据欧睿数据，2023 年乐高在 全球玩具市场中市占率 11.5%，在积木玩具中市占率达 72.7%，均位列市场 第一；同时受益于标准化设计+自有工厂+品牌溢价，乐高建立盈利丰厚的商 业模型，2024 年毛利率 68.3%，净利率 18.6%，盈利能力优秀。本篇报告 对乐高的发展历史进行详细梳理，并挖掘玩具品牌得以经久不衰、实现可持 续增长的成长密码，通过乐高的经验启示为国内玩具企业发展提供借鉴。 发展复盘：从木工作坊到积木帝国，百年玩具龙头的成长密码 行业走势图 (26) (16) (7) 3 13 May-24 Sep-24 Jan-25 May-25 (%) 可选消费 轻工制造 沪深300 1）1916-1950 年：创始人奥莱·柯克从木工作坊起家，后转型木质玩具公 司 ...

Investment Rating - The report maintains an "Overweight" rating for the banking sector [6] Core Insights - The expansion of Asset Investment Companies (AIC) is seen as a significant development, with the approval of new licenses for banks to establish AICs, marking a shift in the banking sector's approach to equity investment [11][12] - AICs are positioned to support technology innovation by providing long-term capital, with the potential to attract additional social funds [22][24] - The regulatory environment has been increasingly favorable, with policies expanding the scope and conditions for AIC equity investments [2][15] Summary by Sections Introduction - The report discusses the recent approval for Industrial Bank to establish an AIC, making it the first joint-stock bank to enter this space, alongside announcements from other banks like China Merchants Bank and CITIC [11][12] Historical Context - AICs were established in 2016 as part of supply-side reforms to address non-performing loans in the banking sector, evolving to include equity investment since 2020 [3][18] Business Opportunities and Challenges - AICs are expected to enhance banks' growth potential by diversifying their business models and improving profitability, although they face challenges related to liquidity management and capital consumption [4][14] - The contribution of AICs to the overall profitability of major banks remains small, with an average contribution of 1.4% to net profit and 0.3% to total assets in 2024 [4][12] Policy Developments - Recent policy changes have expanded the investment scope for AICs, allowing for a higher percentage of total assets to be allocated to equity investments, increasing from 4% to 10% [2][15] - The number of cities eligible for AIC equity investment has expanded to 18, enhancing the operational landscape for banks [2][15] Comparative Analysis - AICs are compared to Asset Management Companies (AMCs) and market-oriented private equity/venture capital firms, highlighting their unique advantages in leveraging bank resources while maintaining a cautious investment approach [26]

Investment Rating - The report maintains an "Overweight" rating for the communication industry and its sub-sectors, including communication operators [9]. Core Insights - China Mobile has initiated a centralized procurement project for ordinary optical cable products for 2025-2026, with a notable decrease in both procurement scale and price limits, indicating a downward trend in capital expenditure for traditional connections [2][3]. - The optical fiber and cable manufacturers are expected to seek new growth points in saturated markets, such as undersea cables and data center interconnect (DCI) [2][3]. - The report highlights the need to monitor the bidding progress of optical fiber and cable manufacturers and their breakthroughs in new directions [2][3]. Summary by Sections Market Overview - The communication index rose by 4.96% last week, outperforming the Shanghai Composite Index and Shenzhen Component Index, which increased by 1.92% and 2.29%, respectively [2][13]. - The procurement scale for China Mobile's current round is 0.99 billion core kilometers, down 30.98% from 2021 and 8.65% from 2023 [14]. Procurement Details - The maximum price limit for this round is set at 5.675 billion yuan, a decrease of 42.44% from 2021 and 25.57% from 2023 [14]. - The average procurement price is 57.42 yuan per core kilometer, down 16.6% from 2021 and 18.72% from 2023 [14]. Company Recommendations - The report recommends several companies for investment, including China Mobile, China Telecom, and China Unicom, with target prices and ratings indicating a bullish outlook [10]. - Specific companies highlighted for their potential include Zhongji Xuchuang, Xinyi Sheng, and Tianfu Communication, all rated as "Buy" [10]. Industry Trends - The report notes a significant shift in focus towards AI computing chains and core asset value reassessment within the communication industry [4]. - The demand for optical cables in data centers is projected to account for approximately 5% of global demand by 2025, increasing to over 11% by 2030 [18]. Competitive Landscape - The competitive environment among optical cable manufacturers is expected to intensify due to the reduced procurement scale and price limits, with a maximum share of 19.36% for winning bidders [15][18]. - Major players are expanding into international undersea communication projects, with companies like Hengtong Optic-Electric actively participating in global markets [19].

Investment Rating - The report initiates coverage on Xuji Electric with a "Buy" rating and sets a target price of 26.41 RMB, based on a 19x PE for 2025 [1][5][7]. Core Views - Xuji Electric is a key enterprise under China Electric Equipment Group, positioned as a leading supplier of secondary equipment and converter valves in China. The company is expected to benefit from the steady growth of the new power system construction [12][13][17]. - The report anticipates the approval of 5-6 ultra-high voltage direct current (UHVDC) projects and 5-6 back-to-back projects within the year, which will significantly benefit Xuji Electric as a core supplier of converter valves and direct current control protection systems [2][12][13]. - The company has a leading position in flexible direct current technology, with the value of a single conventional UHVDC/back-to-back project estimated at approximately 1.3 billion RMB/300 million RMB, while the value of flexible direct current is about three times that of traditional direct current [2][12][22]. Summary by Sections Business Growth - Xuji Electric's business covers core aspects of the new power system, and its performance is expected to grow steadily alongside the total investment from the State Grid, which is projected to exceed 650 billion RMB in 2025 [3][14][19]. - The company's market share in smart substation products is steadily increasing, with winning bids of 340 million RMB, 495 million RMB, and 533 million RMB for 2022, 2023, and 2024 respectively, indicating a growing presence in the market [16][22]. Profitability Forecast - The forecasted net profit for Xuji Electric is expected to reach 1.41 billion RMB, 1.82 billion RMB, and 2.12 billion RMB for 2025, 2026, and 2027 respectively, with a three-year CAGR of 23.8% [5][11]. - The report estimates that a single conventional/flexible UHVDC project could contribute a net profit elasticity of 3.1-4.7%/7.0-11.1% for 2027, while five back-to-back projects could yield a net profit elasticity of 2.3-4.6% for 2025-2026 [4][32][34]. Market Position - Xuji Electric holds approximately 20% and 40% market shares in the UHV converter valve and direct current control protection system markets respectively, indicating a strong competitive position [30][31]. - The company has successfully developed a complete set of core technologies for ±800kV and below flexible direct current converter valves, showcasing its technological leadership in the industry [26][30].