Investment Rating - The report maintains a "Buy" rating for Tencent Holdings (700 HK) with a target price of HK$520.00, implying a 37% upside from the current price of HK$380.00 [1][2] Core Views - Tencent is well-positioned for sustained strong performance in 2025, driven by robust growth in its gaming and advertising segments [7] - The company's gaming revenue is expected to grow by 16% YoY in 4Q24 and 8% YoY in 2025, supported by evergreen titles and new releases like *Dungeon & Fighter Mobile* [8] - Advertising revenue is projected to grow 15% YoY in 4Q24 and 2025, with video ads and WeChat Channels gaining market share [9] - Fintech and business services revenue is forecasted to grow 5% YoY in 2025, driven by economic recovery and new tools like WeChat Mini Shops [9] Financial Performance - Tencent's adjusted operating profit margin is expected to expand to 34.7% in 4Q24 and 37.9% in 2025, supported by a shift towards higher-margin businesses [10] - The company's adjusted net profit margin is projected to rise to 30.3% in 4Q24 and 34.1% in 2025 [10] - Revenue is forecasted to grow 9% YoY in 4Q24 and 8% YoY in 2025, with net income reaching RMB 240.9 billion in 2025 [20][21] Gaming Segment - Domestic gaming revenue is expected to grow 16% YoY in 4Q24, driven by strong performance of *Dungeon & Fighter Mobile* and deferred revenue of over RMB 100 billion [8] - International gaming revenue is projected to grow 17% YoY in 4Q24, supported by the release of *Path of Exile 2* and contributions from Supercell's *Brawl Stars* [8] - Tencent's gaming pipeline includes titles like *Honor of Kings World* and *Valorant Mobile*, set for release in 2025 [17] Advertising Segment - Social advertising revenue is expected to grow 16% YoY in 4Q24, while media advertising revenue is forecasted to grow 4% YoY [9] - WeChat Channels and video ads are gaining market share, contributing to the segment's outperformance [9] Valuation - The SOTP valuation for Tencent is HK$5.4 trillion, with the gaming segment valued at HK$1.6 trillion (18x 2025E P/E) and the advertising segment at HK$1.2 trillion (18x 2025E P/E) [23][24] - The target price of HK$520.00 is based on a 19x 2025E P/E multiple [10][23] Peer Comparison - Tencent's 2025E P/E of 14.0x is lower than global gaming peers like EA (17.0x) and Take-Two (21.3x) [25] - The company's 2025E P/S of 4.7x is higher than cloud service peers like Alibaba (1.4x) and Baidu (1.5x) [25]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HK$208.22, representing a potential upside of 76% from the current price of HK$118.20 [3][4]. Core Insights - The company is advancing towards profitability by enhancing its market position and R&D capabilities, with a focus on reducing drug development costs through an internal clinical team [1][2]. - The company has a robust pipeline with significant potential, including key commercial products and a strong internal R&D pipeline consisting of 25 Phase I projects, 8 Phase II projects, and 7 Phase III projects [2][5]. - Financial performance is improving, with expectations of positive GAAP operating profit in 2025, driven by effective cost control and a reduction in reliance on CROs [2][5]. Summary by Sections Investment Rating - The company is rated as "Buy" with a target price of HK$208.22, corresponding to a 5.8x sales multiple for 2025 [3][4]. Market Position and R&D Strength - The company has established a global internal clinical development team of 3,600 members, significantly reducing reliance on CROs from 77% in 2019 to 5% in 2024 [1]. - Strategic focus areas for 2025 include consolidating leadership in hematology, accelerating internal pipeline development, and enhancing financial performance [1]. Pipeline and Product Potential - The key commercial product, Zebutini, is the first BTK inhibitor in the U.S. and shows excellent efficacy in treating blood cancers [2]. - The company’s pipeline includes high-potential early-stage candidates such as CDK4i and panKRASi, which are expected to drive future growth [2]. Financial Performance - In Q2 2024, the company achieved Non-GAAP profitability, and by Q3 2024, it recorded positive operating cash flow for the first time [2]. - The company forecasts a positive GAAP operating profit for the full year of 2025, supported by effective cost management strategies [2][5]. Key Financial Data - Projected revenues are expected to grow from US$2,459 million in 2023 to US$4,904 million in 2025, with a net profit turning positive in 2025 at US$137 million [4][12]. - The company’s gross profit is projected to increase from US$2,080 million in 2023 to US$3,857 million in 2025, indicating strong growth potential [4][12].

Investment Rating - The report maintains an optimistic outlook for the automotive market in 2025, with expected retail sales of passenger vehicles and new energy vehicles (NEVs) reaching 23.65 million and 13.10 million units, respectively, representing year-on-year growth of 3% and 20% [4]. Core Insights - The continuation of subsidy policies is expected to support sustained growth in passenger vehicle sales in 2025, with a focus on the demand for new energy vehicles [4]. - In December, retail sales of passenger vehicles reached 2.635 million units, with a year-on-year increase of 6.1%, while NEV retail sales grew by 40.8% [2]. - The penetration rate of NEVs reached 49.4% in December, with a projected annual penetration rate of 55% in 2025 [4]. Summary by Sections Passenger Vehicle Sales - In 2024, retail and wholesale sales of passenger vehicles are projected to be 22.96 million and 27.21 million units, respectively, with year-on-year growth of 6.1% and 13.7% [2]. - December saw a retail sales increase of 12.0% month-on-month and 8.7% year-on-year, with wholesale sales up by 12.3% month-on-month [2]. New Energy Vehicle Sales - In 2024, NEV retail and wholesale sales are expected to reach 10.90 million and 12.16 million units, with year-on-year growth of 40.8% and 56.8% [2]. - The cumulative penetration rate for NEVs in 2024 is projected to be 47.5%, up from 34.6% in 2023 [6]. Battery Industry - The total installed capacity of power batteries in 2024 is expected to reach 548.6 GWh, representing a year-on-year increase of 41.5% [3]. - In December, the installed capacity of power batteries was 75.4 GWh, with a month-on-month growth of 57.3% [3]. Export Performance - In December, passenger vehicle exports reached 404,000 units, a year-on-year increase of 6.0%, with total exports for the year at 4.791 million units, up 25.0% [2]. - NEV exports in December were 122,000 units, with a year-on-year growth of 24.3% for the entire year [2]. Policy Support - The subsidy policy for vehicle trade-ins will remain consistent with 2024, with total subsidy demand expected to exceed 200 billion yuan [4]. - The report highlights the importance of government policies in driving consumer demand and supporting the automotive market's growth trajectory [4].

Industry Investment Rating - The report maintains an **Overweight** rating for the Chinese healthcare sector in 2025, driven by the "Three Medicals" (medical, healthcare insurance, and pharmaceuticals) coordinated development and incremental policy benefits [4][5][6] Core Views - The Chinese healthcare sector is expected to enter a high-quality development stage in 2025, with reforms focusing on the coordinated development of medical, healthcare insurance, and pharmaceutical sectors [4][5] - The sector is anticipated to see a valuation recovery and earnings improvement, with A/H-listed healthcare companies expected to achieve revenue and profit growth of around 10% in 2025 [5][6] - Key drivers include the gradual weakening of negative factors, the release of incremental policy benefits from the "Three Medicals" coordinated development, and the recovery of industry performance from the low point in 2023-2024 [5][6] Sector Outlook and Stock Recommendations Chemical Drugs and Innovative Drugs - The Chinese pharmaceutical market is shifting towards innovation-driven growth, with **Hansoh Pharma (3692 HK, Buy, Target Price: HK$24.15)** and **Zai Lab (ZLAB US, Buy, Target Price: US$62.32)** recommended due to their strong innovative drug pipelines and partnerships [6][26] Biologics - **Chongqing Zhifei Biological Products (300601 CH, Buy, Target Price: RMB33.69)** is recommended for its competitive positioning in multi-valent and adult vaccines, as well as its innovation-driven growth potential [6][27] Traditional Chinese Medicine (TCM) - **Mayinglong Pharmaceutical (600993 CH, Buy, Target Price: RMB37.49)** and **Dong-E-E-Jiao (000423 CH, Buy, Target Price: RMB83.78)** are recommended for their strong brand power and potential to benefit from policy support and aging population demand [6][27] Internet Healthcare - **JD Health (6618 HK, Buy, Target Price: HK$42.61)** is recommended due to its strong supply chain and healthcare service capabilities, benefiting from policy support and increased penetration of online healthcare services [6][27] Medical Devices - **Mindray Medical (300760 CH, Buy, Target Price: RMB418.10)** is recommended as a leading medical device company expected to benefit from the recovery of medical system tenders and domestic infrastructure demand [6][28] Healthcare Services - **Jinxin Fertility (1951 HK, Buy, Target Price: HK$4.78)** and **Hengjian Medical (6078 HK, Buy, Target Price: HK$44.96)** are recommended for their strong positions in assisted reproductive services and oncology, respectively, benefiting from policy support and demand release [6][28] Contract Research Organizations (CROs) - **WuXi Biologics (2269 HK, Buy, Target Price: HK$26.12)** is recommended for its leading position in the CRO industry, expected to benefit from global R&D demand recovery and improved profitability in 2025 [6][28] Key Policy Impacts Medical Reforms - Medical service price adjustments are expected to benefit high-value medical technical services, particularly in oncology and assisted reproductive services [22][33] - The anti-corruption campaign in the healthcare sector is expected to promote long-term healthy development, benefiting sectors such as medical informationization, cost-effective domestic medical devices, and private medical institutions [22][52] Healthcare Insurance Reforms - Healthcare insurance payment reforms are expected to shorten reimbursement cycles, improving cash flow for medical service providers, chemical drug manufacturers, TCM companies, and medical device firms [22][81] - Commercial health insurance is expected to become a new incremental source of healthcare payments, benefiting hospitals, online/offline pharmacies, and innovative drug companies [22][94] Pharmaceutical Reforms - Pharmaceutical reforms will focus on encouraging innovation and strengthening regulation, with policies aimed at improving drug review and approval processes, pricing reforms, and supporting industry financing [22][23] Market Outlook - The Chinese healthcare sector is expected to see steady growth in both supply and demand in 2025, with private hospitals driving supply growth and public hospital reforms improving service quality [24] - The sector is expected to benefit from the optimization of both supply and demand sides, with medical reforms and the gradual weakening of negative factors providing a solid foundation for long-term development [24][25]

Investment Rating - The report assigns a **Buy** rating to WuXi Biologics (2269 HK) with a target price of HK$26.12, representing a 48% upside from the current price of HK$17.60 [1] - The DCF (WACC: 9.9%) target price of HK$26.12 corresponds to a 2025 P/E ratio of 26x [5] Core Views - WuXi Biologics demonstrates strong competitiveness in the high-end market, with 151 new projects signed in 2024, over half from the US, including 13 Phase III and commercialization projects [3] - The company's technical platforms are leading, with 8 projects generating over $200 million annually, 10 projects over $100 million, and 8 projects over $50 million [4] - WuXi Biologics has a significant global presence, with multiple centers and bases in China, the US, and Europe, capturing 70% market share in CDMO services for Chinese innovative drug overseas projects in 2024 [4] - The company expects accelerated revenue growth in 2025, driven by new project signings in research services (R), shortened delivery times in development (D), and a substantial number of PPQ projects in commercial manufacturing (M) [4] Financial Summary - Revenue is projected to grow from RMB 15,269 million in 2022 to RMB 23,611 million in 2026, with a CAGR of 12% [6] - Gross profit is expected to increase from RMB 6,724 million in 2022 to RMB 9,336 million in 2026 [6] - Net profit attributable to shareholders is forecasted to rise from RMB 4,420 million in 2022 to RMB 4,188 million in 2026, with a CAGR of 7% [6] - EPS is estimated to grow from RMB 1.01 in 2022 to RMB 0.96 in 2026 [6] Operational Highlights - WuXi Biologics completed 16 PPQ projects in 2024, with a success rate exceeding 98%, and expects to complete 24 PPQ projects in 2025 [3] - The company has significantly reduced project timelines, with monoclonal antibody projects in North America taking only 9 months from DNA to IND, and autoimmune projects delivered in 6 months, well ahead of industry standards [3] - The company's digital transformation and geopolitical dynamics are expected to further enhance operational efficiency [4]

Investment Rating - The report maintains a **Buy** rating for Xtep International (1368 HK) with a target price of HK$6.95, representing a **26% upside** from the current price of HK$5.51 [1][2] Core Views - Xtep International is expected to achieve **high single-digit revenue growth** in 2025, driven by its focus on the running segment [4] - The company's 2024 revenue and net profit are forecasted to grow by **1.5% and 21.3%** respectively, with a **7.3% revenue growth** on a like-for-like basis [5][8] - For 2025, revenue and net profit are projected to increase by **2.5% and 11.5%** respectively, with a **9.2% revenue growth** on a like-for-like basis [6][8] Financial Performance - Xtep brand revenue is expected to grow by **4.1% in 2024**, driven by high single-digit growth in retail sales and strong performance in the children's segment [5] - Saucony is projected to achieve **~50% growth in Q4 2024** and **over 60% growth for the full year 2024**, contributing to a **55% increase in the professional sports division revenue** [5] - The company plans to upgrade over **30% of its old stores** to the ninth-generation format in 2025, aiming to drive growth through improved store efficiency [6] - Saucony's new stores are achieving monthly sales of **RMB 500k**, significantly higher than the average of **RMB 300k+**, with plans for further expansion in 2025 [6] Valuation and Forecasts - The report maintains a **12x 2025 P/E** valuation for Xtep International, with a target price of HK$6.95 [7] - Revenue for 2024-2026 is forecasted to grow by **1.5%, 2.5%, and 8.8%** respectively, reaching **RMB 14.56bn, RMB 14.92bn, and RMB 16.24bn** [7][8] - Net profit for 2024-2026 is expected to grow by **21.3%, 11.5%, and 12.7%** respectively, reaching **RMB 1.25bn, RMB 1.39bn, and RMB 1.57bn** [7][8] Financial Ratios - Gross margin is expected to remain stable at **44.2% in 2024**, **44.1% in 2025**, and **44.6% in 2026** [11] - Net profit margin is projected to improve from **8.6% in 2024** to **9.3% in 2025** and **9.7% in 2026** [11] - The company's ROE is forecasted to increase from **13.0% in 2024** to **13.3% in 2025** and **13.8% in 2026** [11]

Investment Rating - The report assigns a "Buy" rating to Dong-E-E-Jiao Co Ltd (000423 CH) with a target price of RMB83 78 [2] - The target price implies a 38% upside potential from the current price of RMB60 85 [2] Core Views - The company's equity incentive plan is expected to enhance management vitality and achieve a net profit CAGR of at least 15% from 2025 to 2027 [5][9] - The company's product portfolio expansion and customer base growth are anticipated to drive revenue growth with a projected CAGR of 20% from 2023 to 2026 [6][9] - The target price of RMB83 78 is based on a DCF valuation with a WACC of 8 6% and represents a 35% premium over the industry average PE of 23x for 2025 [6] Financial Performance - Revenue is expected to grow from RMB4 042mn in 2022 to RMB8 178mn in 2026 [8] - Gross profit is projected to increase from RMB2 761mn in 2022 to RMB5 908mn in 2026 [8] - Net profit attributable to shareholders is forecasted to rise from RMB780mn in 2022 to RMB2 142mn in 2026 [8] - EPS is expected to grow from RMB1 19 in 2022 to RMB3 33 in 2026 [8] Equity Incentive Plan - The company plans to grant up to 1 2472 million restricted shares (0 19% of total shares) with an initial grant of 998k shares to 179 individuals at RMB37 22 per share [5] - The vesting period is 5 years with three vesting milestones at the end of the 2nd 3rd and 4th years [5] - Vesting conditions include achieving ROE of at least 11 5%/12 0%/12 5% in 2025/2026/2027 and maintaining a net profit CAGR of at least 15% from 2023 [5] Product and Market Strategy - The company's new product offerings such as convenient Ejiao powder fashionable Ejiao cakes and the Royal Weichang 1619 series are expected to drive short and long-term revenue growth [6] - The company's leadership in the OTC market and its strong brand recognition in the traditional Chinese medicine industry justify a valuation premium [6]

Industry Investment Rating - The report maintains a positive outlook on the Chinese healthcare services industry, recommending stocks such as **Haiya (603939CH, Buy, target price RMB44.96)**, **Jinxin Fertility (1951 HK, Buy, target price HK$4.78)**, and **Gushengtang (2273 HK, Buy, target price HK$73.95)** [2][3] Core Viewpoints - The implementation of **immediate settlement of medical insurance funds** in Anhui Province, starting from January 1, 2025, is expected to significantly alleviate the financial pressure on medical institutions by reducing the reimbursement cycle from **60 days to 1 day** [1] - Immediate settlement is anticipated to improve the **cash flow levels** of the entire industry, benefiting both medical institutions and the upstream pharmaceutical sector [2] - The reform is seen as a key driver for the **sustainable development** of medical institutions, enhancing operational efficiency and accelerating reimbursement processes [1][2] Industry Analysis - The reform shifts the settlement model from a **"post-payment system"** to an **"immediate settlement system"**, where funds are automatically collected and settled on the same day, with payments arriving the next day [1] - This change is expected to **streamline cash flow** for medical institutions, reducing their reliance on upfront payments and improving overall financial health [1][2] - The report highlights the potential for **accelerated reimbursement** and **improved operational efficiency** across the healthcare services industry, driven by the new settlement model [2] Company Recommendations - **Haiya (603939CH)**: Buy rating with a target price of RMB44.96 [2] - **Jinxin Fertility (1951 HK)**: Buy rating with a target price of HK$4.78 [2] - **Gushengtang (2273 HK)**: Buy rating with a target price of HK$73.95 [2]

Investment Rating - The report maintains a "Buy" rating for Micron Technology (MU US) with a target price of $118 00, down from the previous target of $148 00 [2][23][25] Core Views - The report highlights potential upside in 2HFY25 driven by HBM (High Bandwidth Memory) volume growth and recovery in traditional DRAM business, which could lead to revenue outperformance [8][25] - Despite near-term challenges in NAND and DRAM markets, the report expects HBM and data center revenue growth to offset some of the pressures, particularly with 12Hi HBM3E contributing to improved product mix [12][13][25] - The report notes that the current stock price already reflects the weaker-than-expected 2QFY25 revenue and gross margin guidance, particularly due to NAND weakness [8][12][22] Financial Adjustments - The report revises FY2025-2027 EPS estimates downward to $7 05, $11 27, and $10 03, respectively, reflecting a 16%, 8%, and 8% reduction from previous estimates [5][14][25] - Revenue forecasts for FY2025-2027 are also adjusted downward by 8%, 2%, and 5%, respectively, due to weaker NAND demand and pricing pressures [11][25] - Gross margin is expected to face pressure from NAND price declines, but HBM revenue growth is seen as a mitigating factor [13][19] Market and Industry Outlook - The semiconductor industry is rated as "Neutral," with expectations of relative performance within a -10% to 10% range compared to the broader market [2][4] - Micron's HBM business is expected to gain traction, with the company already shipping to a second HBM customer and preparing to ship to a third in 1Q25 [12][25] - The report anticipates a recovery in DRAM pricing and volume in 2HFY25, driven by inventory restocking in PC and mobile markets, as well as data center demand [11][12][25] Valuation and Target Price - The report uses a Sum-of-the-Parts (SOTP) valuation method, assigning a 10x P/E multiple to the DRAM business and a 5x P/E multiple to the NAND business, resulting in a total equity valuation of $128 7 billion and a target price of $118 [25][43] - The target price implies a 35% upside from the current stock price of $87 09 [16][25]

Industry Overview - The US and its allies have imposed stricter semiconductor export controls on China, targeting advanced logic processes, memory chips, and high-performance chip technologies [89][90][91] - Japan and the Netherlands have followed the US in restricting semiconductor equipment exports to China, particularly in areas like EUV lithography and etching equipment [89][95][122] - China has shifted its semiconductor equipment imports from the US and Netherlands to Japan and Singapore, with significant declines in imports of key equipment like CVD and lithography machines [102][108][111] Company Analysis - Northern Huachuang (002371 CH) - Northern Huachuang is expected to see strong revenue growth in 2025 driven by new equipment models and increased domestic substitution [33][35] - The company's ICP and CCP etching equipment, as well as CVD products, are expected to contribute significantly to revenue growth in 2025-2026 [36] - Despite being added to the US Entity List in December 2024, the impact on Northern Huachuang is expected to be limited due to its gradual shift to domestically produced components [1][35] - The company's 3Q24 gross margin reached 42.3%, up 5.89% YoY, driven by improved manufacturing efficiency and higher-margin product mix [1] - Northern Huachuang's target price was raised to RMB 491.00, with a "Buy" rating maintained [35][37] Company Analysis - AMEC (688012 CH) - AMEC's new orders in 9M24 grew 52% YoY to RMB 7.64 billion, with etching equipment orders up 54.7% to RMB 6.25 billion [56][69] - The company's LPCVD equipment achieved its first revenue of RMB 28 million in 9M24, with potential for cross-selling opportunities [56][69] - AMEC's 3Q24 gross margin was 43.7%, down 2% YoY, but is expected to improve in 2025 due to higher-margin products and domestic component substitution [70] - The target price for AMEC was raised to RMB 276.00, with a "Buy" rating maintained [70][68] Company Analysis - Kingsemi (688037 CH) - Kingsemi's 3Q24 gross margin improved to 46.2%, up 5.1% YoY, driven by cost reductions from domestic component substitution and strong performance in advanced packaging equipment [14] - However, the company's 3Q24 net profit fell 63% YoY to RMB 31 million due to higher R&D and equity incentive expenses [14] - Kingsemi's target price was lowered to RMB 95.00, with a "Hold" rating maintained [13][14] Key Risks - Downstream demand may fall short of expectations, potentially delaying semiconductor fab investments and reducing orders for equipment manufacturers [63][103] - Further US restrictions on China's semiconductor industry could impact equipment companies' operations and product shipments [22][63] - Intensifying competition in the semiconductor equipment sector, particularly from domestic manufacturers, could pressure profit margins [7][63] Investment Recommendations - AMEC is the top pick in the semiconductor equipment sector, with strong growth potential in 2025-2026 [81][101] - Northern Huachuang is recommended as a long-term beneficiary of domestic substitution trends [81][101] - Kingsemi is advised to be approached with caution due to its ongoing operational adjustments [81][101]