Investment Rating - The report maintains a **Buy** rating for CIMC Enric (3899 HK) with a target price of **HKD 8.45**, representing a potential upside of **24.1%** [6] Core Views - CIMC Enric's Q3 2024 revenue increased by **10% YoY to RMB 6.49 billion**, driven by strong growth in the clean energy segment, which saw a **28% YoY increase to RMB 4.72 billion** [1] - The company's total revenue for the first nine months of 2024 grew by **8% YoY**, with the clean energy segment contributing a **26% YoY increase** [1] - The clean energy segment's growth was primarily fueled by the delivery of **3 vessels (1 LNG bunkering vessel + 2 LEG carriers)** in Q3, bringing the total deliveries to **7 vessels** by the end of October 2024 [1] - Despite a **14% YoY decline in hydrogen product revenue** in Q3, the clean energy segment's backlog increased by **43% YoY**, although the growth rate slowed compared to the **70-71% YoY increase** in Q1-Q2 2024 [1] Segment Performance Clean Energy - Q3 2024 clean energy revenue reached **RMB 4.72 billion**, up **28% YoY**, with offshore clean energy revenue surging **74.6% YoY** [1] - Hydrogen product revenue declined by **14% YoY** in Q3, with the backlog for hydrogen products dropping **24% YoY to RMB 320 million** [1] - The clean energy backlog stood at **RMB 15.51 billion** in Q3, up **43% YoY** [1] Chemical & Liquid Food - Chemical equipment revenue in Q3 2024 fell **25% YoY**, with new orders growing **31% QoQ** but still down **26% YoY** [2] - Liquid food equipment revenue declined **13% YoY** in Q3, with the backlog down **14% YoY** [2] - Management cited cautious capital expenditure from overseas clients and uncertain global consumption growth as key challenges for these segments [2] Order Backlog - Total backlog at the end of Q3 2024 was **RMB 27.7 billion**, up **25% YoY** but down **6% QoQ** [1] - Clean energy equipment backlog reached **RMB 15.51 billion**, while chemical and liquid food equipment backlogs stood at **RMB 1.44 billion** and **RMB 5.21 billion**, respectively [4] Management Guidance - Management maintained its 2024 full-year revenue growth guidance of **>10% YoY** and core profit growth in the **single-digit range** [2] - The hydrogen product revenue target for 2024 remains unchanged at **RMB 900 million** [2] - A delayed South American liquid food project is expected to be delivered in **2025** [2]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 65.10 [2][8]. Core Insights - The company's Q3 operational data aligns with expectations, with retail gas sales volume increasing by 5.5% year-on-year, driven by residential and commercial sales growth of 4.6% and 6.2% respectively [1]. - The management anticipates that the overall sales volume for retail gas will grow by 5% and segment gross profit will increase by 10% for the full year of 2024 [1]. - The diversified energy segment is expected to achieve a year-on-year growth of 20% for the full year, supported by new projects transitioning to operations and additional management services contributing to revenue [2]. Summary by Relevant Sections Retail Gas Sales - Q3 retail gas sales volume reached 5,793 million cubic meters, with residential sales at 714 million cubic meters and commercial sales at 4,973 million cubic meters [4]. - The gross margin for gas sales was reported at RMB 0.54 per cubic meter, consistent with the annual guidance [1][5]. Capital Expenditure and Financials - Capital expenditure for the first three quarters was RMB 4.6 billion, significantly below the annual guidance of RMB 8 billion, with management prioritizing debt repayment over additional buybacks or dividends [2]. - The LNG trading segment reported a pre-tax profit of RMB 280 million for the first three quarters, within the guidance range of RMB 200-300 million [2]. Future Guidance - The company has set ambitious targets for 2024, including a 20-30% growth in energy usage scale and a 20-30% increase in smart home business gross profit [4]. - The annual target for new commercial users is set at 1,200 to 1,400 million cubic meters per day, with residential user additions expected to be between 140,000 to 160,000 households [4].

Investment Rating - The report maintains a "Buy" rating for TAL Education Group (TAL US) with a target price of $13.80, indicating a potential upside of 31.4% from the current price of $10.50 [1][3][6]. Core Insights - TAL Education's revenue for Q2 FY2025 reached $619 million, representing a 50% year-over-year increase, surpassing both the report's and Bloomberg's consensus estimates of 45% and 46% respectively. This growth was primarily driven by strong demand for quality education training and sales of learning machines [1]. - The adjusted operating profit for the same quarter was $65 million, with an operating margin of 10%, which is a decline of approximately 2 percentage points year-over-year but still better than expectations [1]. - The report highlights that the learning services segment saw an estimated revenue growth of around 80% year-over-year, driven by strong demand and an increase in enrollment due to the expansion of teaching points [1]. - The sales of learning machines also maintained high growth, with estimated sales of 100,000 to 150,000 units in Q2, supported by the launch of new products [1]. - Marketing expenses as a percentage of revenue increased by nearly 6 percentage points to 29%, while management expenses decreased by 9 percentage points to 19%, indicating ongoing operational efficiency improvements [1]. Financial Projections - For Q3 FY2025, which is typically a slower season for the education industry, revenue is expected to grow by 39% year-over-year to $520 million, supported by the performance of small class training and new product sales [1]. - The report projects an adjusted operating profit margin of -3.5% for Q3, compared to -2.7% in the same period last year [1]. - The financial outlook for FY2025 estimates total revenue of $2.103 billion, with a year-over-year growth rate of 41.1% [2][5][8]. Valuation - The report adjusts the FY2025 operating profit estimate to $48 million, reflecting better-than-expected performance in the current quarter, with a profit margin of 2% [1]. - For FY2026 and FY2027, the operating profit margins are expected to stabilize at approximately 6% and 10%, with absolute profit values of $146 million and $274 million respectively [1]. - The valuation methodology includes a 20x price-to-earnings ratio for the education business and a 1x price-to-sales ratio for learning machines, supporting the target price of $13.80 [1].

Investment Rating - The report assigns a "Buy" rating for the company, iQIYI (IQ US), with a target price of USD 3.80, indicating a potential upside of 57.7% from the current closing price of USD 2.41 [1][10]. Core Insights - The report anticipates a challenging third quarter for iQIYI, with membership and brand advertising under pressure, but expects foreign exchange gains to boost profits beyond previous expectations. The adjusted net profit forecast for Q3 is raised to RMB 450 million, significantly higher than the Bloomberg consensus of RMB 120 million, reflecting an adjusted net profit margin of 6% [1][2]. - iQIYI's content strategy is evolving to focus on high-quality short dramas and a diverse content offering to attract and retain members. The company has launched new content formats, including "Short Theater" and "Micro Theater," to cater to varied viewing preferences [2]. - The financial outlook for iQIYI shows a projected revenue decline of 10% year-on-year for Q3, with total revenue expected to be RMB 7.241 billion. The advertising revenue is forecasted to drop by 21% year-on-year to RMB 1.325 billion, primarily due to budget cuts in the FMCG sector [1][7]. Financial Summary - For the fiscal year ending December 31, 2023, iQIYI's revenue is projected at RMB 31.873 billion, with a year-on-year growth of 9.9%. However, a decline of 5.6% is expected in 2024, with revenue forecasted at RMB 30.093 billion [3][11]. - The net profit for 2023 is estimated at RMB 2.838 billion, with a significant increase of 94% compared to 2022. The adjusted net profit for 2024 is projected to be RMB 1.881 billion, reflecting a decrease of 33.9% [3][11]. - The report highlights a decrease in the number of paying members, with a forecast of 4.368 million for Q3 2024, down 13% year-on-year [7][11]. Market Position - iQIYI holds a 37% share of the top 20 drama viewership in Q3, showing improvement from earlier in the year. However, it has dropped to third place in variety show viewership, maintaining a stable share compared to the first half of the year [1][5]. - The company is focusing on enhancing its content ecosystem and marketing strategies to improve member engagement and advertising revenue, particularly in light of upcoming e-commerce promotions expected to drive ad revenue growth in Q4 [2][7].

Group 1: Market Overview - The Hong Kong stock market has experienced significant volatility, with a notable fluctuation on October 8, 2024, prompting a cautious outlook for future trends[1] - The report emphasizes the need to analyze the market through the lens of stock holdings, categorizing them into foreign brokers, southbound funds, local Chinese brokers, and internet brokers[1] Group 2: Investment Trends - Since late September, the market value proportion of several sample groups has been rising, indicating that both Chinese and foreign investors are actively buying into the market, with foreign investment slightly more pronounced[2] - Both Chinese and foreign investors are adjusting their portfolios to reduce deviations from benchmark indices, with Chinese investors over-allocating to financial sectors while under-allocating to consumer discretionary sectors, and vice versa for foreign investors[3] Group 3: Sector Analysis - The financial and consumer discretionary sectors are expected to remain key battlegrounds for capital allocation, with short-selling ratios in these sectors dropping to their lowest levels since 2023, aligning with the trend of reducing benchmark deviations[3] - The report highlights that the adjustment in allocations is contributing significantly to trading volumes, indicating a crowded trade environment that is increasing market volatility[3] Group 4: Future Outlook - The report anticipates further adjustments in holdings as upcoming policy announcements are expected to influence market dynamics, particularly in the financial and consumer sectors[4] - Key upcoming meetings, including a press conference on October 12, 2024, are expected to provide insights into fiscal policy directions that could impact market sentiment and sector performance[4]

Investment Rating - The report maintains a "Buy" rating for New World Development (17 HK) with a target price of HKD 11.44, indicating a potential upside of 21.9% from the current closing price of HKD 9.39 [1][7]. Core Insights - New World Development reported a core profit decline of 47.5% year-on-year to HKD 1.377 billion, primarily due to a decrease in the number of deliverable projects in Hong Kong. The company's revenue for FY2024 fell by 34% to HKD 35.782 billion [2][6]. - Rental income showed resilience, with K11 and overall rental income increasing by 11.9% and 9.3% year-on-year, respectively. The occupancy rates for K11 MUSEA and K11 Art Mall remained high at 97% and 99% [2][6]. - The company plans to reduce leverage, targeting the disposal of HKD 13 billion in non-core assets by FY2025, which is expected to help save interest costs and restore profitability [2][6]. Financial Summary - For FY2024, total revenue is projected at HKD 35.782 billion, down from HKD 54.566 billion in FY2023, reflecting a year-on-year decline of 34.4% [5][8]. - Core profit is expected to be HKD 1.377 billion for FY2024, a decrease of 47.5% compared to HKD 2.620 billion in FY2023 [5][8]. - The company plans to pay a total dividend of HKD 0.2 per share for FY2024, significantly lower than HKD 0.76 per share in FY2023 [5][8]. Market Performance - The stock has a 52-week high of HKD 14.23 and a low of HKD 6.28, with a market capitalization of HKD 23.631 billion and an average daily trading volume of 49.55 million shares [4][6]. - Year-to-date performance shows a decline of 22.52% [4][6]. Future Projections - Revenue is expected to recover slightly in FY2025 to HKD 42.999 billion, with a projected year-on-year growth of 20.2% [5][8]. - Core earnings per share are forecasted to increase gradually from HKD 0.55 in FY2024 to HKD 0.79 by FY2027 [5][8].

Industry Rating - The report assigns a "Leading" investment rating to the industry, indicating an attractive outlook compared to the benchmark index [1]. Core Insights - The report highlights that the biopharmaceutical sector is experiencing improved investment sentiment due to the delay of the Biodefense Act and the initiation of interest rate cuts by the Federal Reserve. This has led to a marginal recovery in order volumes within the industry [2]. - The report emphasizes the importance of upcoming catalysts and the potential for valuation recovery, particularly for leading CXO companies, although further visibility on earnings recovery is needed for sustained improvement [2]. - Key recommendations include companies such as Xiansheng Pharmaceutical, Hutchison China MediTech, Legend Biotech, and CanSino Biologics, which are expected to benefit from rich short-term catalysts and high growth potential [2]. Summary by Sections Market Performance - The Hang Seng Index rose by 8.3% during the week of September 17-25, 2024, while the Hang Seng Healthcare Index increased by 4.3%, ranking 10th among 12 industry indices [2]. - Sub-sectors showed varied performance, with Healthcare Technology (+18.5%), Life Sciences Tools and Services (+7.4%), and Healthcare Services (+7.1%) leading the gains, while Biotech (+1.8%) lagged behind [2]. Legislative Developments - The Biodefense Act was not included in the NDAA, indicating a likely delay in its legislative process, which could impact companies mentioned in the report [2]. - A significant number of national procurement selected drug price adjustments have been initiated across several provinces, affecting numerous drugs and companies [2]. Company Updates - CanSino Biologics initiated a Phase III clinical trial for its PD-L1 monoclonal antibody, AK104, targeting advanced non-small cell lung cancer [5]. - The approval of CanSino's dual-target antibody, AK137, for clinical trials marks a significant milestone in the treatment of advanced malignancies [5]. - The report notes that the FDA granted fast-track designation to Elevation Oncology's EO-3021 for treating Claudin 18.2 expressing cancers, developed by a company mentioned in the report [6][7]. Valuation Overview - The report provides a valuation summary for various companies, with notable price targets and potential upside percentages. For instance, Legend Biotech has a target price of 76.00, representing a potential upside of 67.9% from its current price of 45.26 [3][21]. - The average TTM P/E ratios for the pharmaceutical sector are reported at 11.0x, with variations across sub-sectors such as Life Sciences Tools and Services at 12.0x and Biotech at 18.1x [13].

Asset Performance Post-Fed Rate Cut - Since 1990, after the Fed's first rate cut, gold and bonds have shown relatively high success rates, while stocks and commodities have varied in performance[1] - In the current year, gold has led with a 24% positive return, followed by global stocks at 17%, with developed markets outperforming emerging markets[3] Stock Market Insights - U.S. stocks may have limited short-term upside due to high valuations and uncertain economic conditions, maintaining a neutral outlook[2] - Hong Kong stocks are expected to see a phase of upward momentum due to improved liquidity and low historical valuations, with high-beta and growth styles likely to outperform[2] Bond Market Analysis - The bond market typically shows stable positive returns post-rate cuts, with high-yield bonds being more sensitive to economic cycles[2] - Current U.S. Treasury yields have already priced in optimistic rate cut expectations, limiting further declines in long-term yields[2] Commodity and Currency Trends - Commodities generally perform poorly post-rate cuts, but gold stands out as a strong performer, especially in uncertain economic conditions[2] - The dollar tends to decline after rate cuts, while non-U.S. currencies like the yen and euro often appreciate[2] Historical Performance Metrics - Over the past 100 days following the Fed's first rate cut, global stocks have averaged a return of -1.7%, with developed markets down 6.7% and emerging markets down 1.1%[7] - In the first three months post-rate cut, global stocks typically show a positive response, with an average return of 2.2% for global government bonds and 2.8% for gold[10] Sector Performance Variability - Different sectors exhibit varied performance post-rate cuts, with defensive sectors like utilities and consumer staples generally faring better than cyclical sectors[27] - In the first three months, essential consumer goods and healthcare sectors have shown strong returns, while energy and materials have struggled[35] Emerging Market Dynamics - Emerging market stocks have historically shown greater resilience compared to developed markets following rate cuts, indicating potential for higher returns[2] - The Hong Kong market has demonstrated significant short-term gains in past rate cut cycles, suggesting a favorable outlook for future performance[41]

Investment Rating - The report maintains a positive outlook on the financial sector, with specific buy recommendations for various companies within the insurance, securities, and banking sub-sectors [2][16]. Core Insights - Recent policy measures from the central bank and regulatory authorities are expected to significantly enhance stock market liquidity and improve asset quality in risk areas, thereby promoting high-quality development in the financial industry [2]. - The insurance sector is anticipated to benefit from new monetary policy tools, which will improve stock market liquidity and enhance investment returns for insurance companies [2]. - The securities sector is expected to see increased activity due to improved market liquidity and favorable conditions from the Federal Reserve's interest rate cuts [2]. - The banking sector is likely to experience enhanced profitability due to adjustments in mortgage rates and capital increases for major banks, which will support their ability to lend to the real economy [2]. Summary by Sections Insurance Sector - The introduction of new monetary policy tools is expected to improve stock market liquidity, leading to a recovery in stock valuations and enhanced investment returns for insurance companies [2]. - The expected recovery in profitability for insurance companies is supported by a low earnings base in the second half of the year [2]. - Recommended stocks include China Ping An, China Pacific Insurance, China Life Insurance, and New China Life Insurance [2][16]. Securities Sector - New monetary policy tools are anticipated to boost stock market liquidity and trading activity, benefiting the securities industry [2]. - The recent regulatory changes are expected to create more opportunities for brokerage firms in mergers and acquisitions [2]. - Recommended stocks include CITIC Securities, Huatai Securities, and CICC [2][16]. Banking Sector - Adjustments to mortgage rates and the reduction of reserve requirements are expected to stabilize interest margins and enhance profitability for banks [2]. - The increase in core Tier 1 capital for major banks will improve their capacity to support the real economy and increase investments in technology sectors [2]. - Recommended stocks include major state-owned banks and China Merchants Bank [2][16].

Industry Investment Rating - The industry rating has been upgraded to "Leading" due to improved liquidity in the stock market and attractive valuations for securities firms [1][14][16]. Core Insights - The net profit of 43 listed securities firms in the first half of 2024 decreased by 22.2% year-on-year, with a narrowing decline compared to the first quarter [1][3]. - The asset management business showed stable performance, while the investment banking and brokerage revenues faced significant declines [3][6]. - The overall asset scale of listed securities firms slightly decreased by 1.1% as of June 2024, with changes in the structure of proprietary investments [8][9]. - The introduction of new monetary policy tools by the central bank is expected to enhance market liquidity and trading activity, benefiting the securities industry [14][16]. Summary by Sections Performance Overview - In the second quarter of 2024, the decline in profits for listed securities firms narrowed, with a year-on-year decrease of 11.4% [1][3]. - The core revenue of listed firms fell by 16.9%, primarily due to declines in investment banking fees, proprietary investment income, and brokerage revenues [3][5]. Asset Management and Investment Structure - The asset management scale stabilized, with a 9% increase compared to the beginning of the year [3][6]. - The structure of proprietary investments shifted, with an increase in bond holdings and a decrease in equity investments [8][9]. Financial Metrics - The average return on equity (ROE) for listed securities firms was 2.13%, down 0.92 percentage points year-on-year [5]. - The net interest income for listed firms decreased by 29.7%, primarily due to lower margin financing rates [12][13]. Market Outlook - The current valuation of the securities sector is attractive, with the industry index trading at a price-to-book ratio of 1.03, below the historical average [16]. - Mergers and acquisitions among securities firms are anticipated to act as a catalyst for improving sector performance [1][16]. Recommendations - The report maintains a "Buy" rating for Huatai Securities and CITIC Securities, citing their balanced business structures and stable profit performance [18][19].