Inflation Data - The core CPI inflation rate in the U.S. for August remained stable at 3.1%, while the overall CPI increased by 0.2 percentage points to 2.9% due to a lower base effect[1] - Month-on-month, the core CPI rose from 0.32% in July to 0.35% in August, slightly above the market expectation of 0.3%[1] - The overall CPI month-on-month growth rebounded from 0.20% in July to 0.38% in August, exceeding market expectations[1] Labor Market Trends - Non-farm payrolls added only 22,000 jobs in August, down from 79,000 in July and significantly below the market expectation of 75,000[1] - The unemployment rate increased from 4.248% in July to 4.324% in August[1] - The average hourly wage growth showed a slight decline both month-on-month and year-on-year[1] Core Components Analysis - Housing CPI showed a significant increase, rising by 0.2 percentage points to 0.44% in August, primarily due to seasonal factors affecting lodging prices[2] - Super core service prices decreased by 0.33 percentage points to 0.22%, with transportation services being the only strong segment driven by rising airfare prices[2] - Core goods prices increased slightly by 0.07 percentage points to 0.28%, with clothing prices rising significantly due to seasonal changes[2] Federal Reserve Outlook - The expectation is for a 25 basis point rate cut in the upcoming Federal Reserve meeting, supported by the recent economic data[4] - The labor market's continued weakness and stable inflation data provide a basis for the anticipated rate cut[4] - Risks remain regarding the impact of tariffs on inflation and the potential for further rate cuts if labor market conditions deteriorate[4]

Investment Rating - The report gives an "Overweight" rating for the intelligent driving chip industry and a "Buy" rating for Horizon Robotics-W (9660.HK) and Black Sesame Intelligence (2533.HK) [3][7][9]. Core Insights - The intelligent driving chip market is expected to expand significantly, with the global ADAS SoC market projected to reach RMB 92.5 billion by 2028 [7]. - The penetration rate of ADAS functions in China's new energy passenger vehicles reached 82.6% in the first half of 2025, indicating a strong demand for intelligent driving capabilities [8][55]. - Domestic intelligent driving chip suppliers are gaining market share due to their cost-effective products and production experience, benefiting from the trend of domestic substitution [9]. Summary by Sections Industry Background - The automotive electronic architecture is evolving, with SoC becoming the mainstream choice for control chips in intelligent electric vehicles [13][14]. - The intelligent driving chip is a core component for achieving advanced driver-assistance systems (ADAS) and autonomous driving functions [19]. Current Industry Status - The intelligent driving process is still in its early stages, with high-level ADAS function penetration remaining low [39]. - The global electric vehicle market is expected to exceed 20 million units in 2025, with a penetration rate of over 25% [39]. Development Trends - The intelligent driving chip market is rapidly expanding, driven by the increasing complexity of software and hardware requirements for ADAS functions [7][19]. - The market for automotive-grade SoC is projected to grow from RMB 57.9 billion in 2023 to RMB 205.3 billion by 2028, with a compound annual growth rate of 29% [19]. Competitive Landscape - Domestic manufacturers are expected to capture a larger market share as they improve their production capabilities and experience [9]. - The competition in the intelligent driving chip market is intensifying, with various players entering the field [9]. Investment Value - The report is optimistic about the upgrade of ADAS capabilities and the domestic substitution trend, indicating potential long-term growth in the robotics sector [9][10]. - The intelligent driving chip market is expected to see a simultaneous increase in both volume and price due to advancements in algorithms and hardware requirements [9]. Company Coverage - Horizon Robotics-W (9660.HK) is positioned as a leading player in the domestic intelligent driving chip market, with a target price of HKD 12.0, representing a potential upside of 22% [11]. - Black Sesame Intelligence (2533.HK) is also highlighted as a key player, with a target price of HKD 21.4, indicating a potential upside of 16% [11].

Group 1 - The core narrative of the report indicates that the strategy of Chinese companies going overseas and high dividend strategies are expected to continue in the medium term, despite short-term pressures on overseas expansion [1][4][39] - The earnings resilience of Hong Kong stocks in Q2 2025 is stronger than that of A-shares, with the MSCI China Index showing a year-on-year earnings increase of 8.8% [4][5] - The healthcare sector shows significant earnings growth, with the strongest year-on-year growth in the MSCI China Index being in healthcare, materials, and telecommunications services [5][19] Group 2 - The report highlights that the overseas revenue of A-share companies has slightly decreased, totaling 4.69 trillion yuan, which is a 2% year-on-year decline, while the proportion of overseas revenue remains stable at 13.7% [39][40] - High dividend sectors such as finance and energy continue to show improving earnings, with leading companies in these sectors maintaining high dividend payouts [1][46] - The report notes that the A-share market is expected to see stronger earnings growth in the second half of the year compared to Hong Kong and NASDAQ-listed companies, with a focus on healthcare, information technology, and materials sectors [6][29] Group 3 - The report identifies specific companies with outstanding earnings growth, including Ganfeng Lithium, BeiGene, and others, which have shown significant year-on-year earnings increases [25][26] - The report emphasizes that the international expansion of certain sectors, particularly optional consumer goods, pharmaceuticals, and financial services, is accelerating, indicating strong growth potential [40][42] - The cash dividend overview shows that traditional high dividend sectors like banking and energy have maintained the highest total dividend payouts in 2025 [46][47]

Investment Rating - The report maintains a "Buy" rating for BYD, indicating a positive outlook for the company's performance moving forward [8]. Core Views - The report suggests that BYD has passed its most challenging period this year, with expectations of a stabilizing trend in the second and third quarters [8]. - Strong overseas vehicle sales are anticipated to contribute significantly to profit growth [8]. - The company is effectively controlling costs, which is reflected in its financial metrics [8]. Financial Projections - Revenue is projected to grow from RMB 602,315 million in 2023 to RMB 1,092,599 million by 2027, with a compound annual growth rate (CAGR) of 13% [3]. - Net profit is expected to increase from RMB 30,041 million in 2023 to RMB 46,205 million in 2027, with a notable growth rate of 81% in 2023 [3]. - The gross margin is forecasted to decline slightly from 20.2% in 2023 to 17.0% in 2027, indicating potential pressure on profitability [3]. Valuation - The target price for BYD shares is set at HKD 121.0 for the Hong Kong stock and RMB 124.5 for the A-share, representing potential upside of 15% and 16% respectively [4][5]. - The valuation employs a sum-of-the-parts approach, assigning price-to-earnings ratios of 32.0x for the electric vehicle segment, 21.3x for mobile and electronic businesses, and 10.0x for other segments [12]. Performance Review - In Q2 2025, BYD's revenue reached RMB 200,921 million, a 14% increase year-on-year, while net profit was RMB 6,356 million, reflecting a 30% decline compared to the previous year [10]. - The company sold 1,145,150 vehicles in Q2 2025, marking a 16% increase year-on-year, although the average profit per vehicle decreased significantly [10]. Adjustments to Forecasts - The revenue and profit forecasts for 2025 and 2026 have been adjusted downward, with expected revenues of RMB 836,877 million and RMB 969,073 million respectively, reflecting a 6% and 8% reduction from previous estimates [11]. - The new projections indicate a decrease in net profit expectations for 2025 to RMB 35,927 million, down 28% from earlier forecasts [11].

Investment Trends - Infrastructure investment growth has declined significantly, with a drop of 2.6 percentage points compared to the recent peak in March, and a broader decline of 4.2 percentage points in general infrastructure investment growth[1] - Fixed asset investment growth fell to 1.6% in July, the lowest since October 2020, while infrastructure investment growth decreased to 3.2%[2] Government Support - Despite the decline in investment growth, government funding support for infrastructure has increased, with local governments issuing 3.5 trillion yuan in new special bonds and ultra-long-term treasury bonds in the first seven months, compared to 2.2 trillion yuan in the same period last year[1] - A funding gap of 616.8 billion yuan is expected in the remaining government bond issuance from August to December compared to last year, prompting predictions of additional fiscal support of 0.5 to 1.0 trillion yuan by the end of September[1][21] Sector Performance - The rapid slowdown in investment growth in public facilities management and ecological environment sectors is a major factor in the overall decline, with public facilities management dropping from 4.9% in April to 0.5% in July, and ecological environment investment falling from 8.5% to -5.4%[4] - Transportation, storage, and postal services showed relatively stable investment growth, with a slight decline in July attributed to extreme weather conditions[6] Future Outlook - Infrastructure investment growth is expected to rebound to 4.5% for the year, up from 3.2% in the first seven months, aided by the low base effect from the previous year and ongoing major projects[29] - The anticipated increase in government bond issuance and new policy financial tools are expected to support infrastructure investment in the latter half of the year[21][29]

Investment Rating - The report maintains a "Hold" rating for the company, with an increased target price of HKD 65 for the Hong Kong stock and RMB 85 for the A-share [1][10]. Core Insights - The company is expected to achieve a significant reduction in losses, with an estimated 50% year-over-year decrease in losses for the full year [2][10]. - Revenue for Q2 2025 was approximately RMB 566 million, representing a 38.3% year-over-year increase, driven primarily by the sales of core products RC18 and RC48 [2][3]. - The gross margin improved to 85.5%, up 9.3 percentage points year-over-year, indicating better-than-expected performance [2][10]. Financial Performance - The company reported a net loss of RMB 195 million for Q2 2025, which is a 54.7% reduction year-over-year [2]. - Research and development expenses decreased by 33.0% year-over-year to RMB 318 million, contributing to the improved financial performance [2][10]. - The company’s cash position improved significantly, reaching RMB 1.271 billion as of June 30, 2025, following an HKD 800 million placement [4][10]. Product Development and Commercialization - The commercialization progress of two core products, TaiTasi and VidiXimab, is in line with expectations, with sales of RMB 650 million and RMB 440 million respectively for the first half of the year [3][10]. - The company plans to enhance its early-stage research and development efforts, anticipating a significant increase in IND submissions next year [4][10]. Future Catalysts - Key upcoming catalysts include data readouts for various clinical trials, including the long-term data for TaiTasi in MG expected in October 2025 and the data for other indications in late 2025 and early 2026 [10].

Investment Rating - The report maintains a "Buy" rating for Alibaba, with a target price adjusted to HKD 166 / USD 170, corresponding to a FY26E P/E of 20x [4][24]. Core Insights - The company reported FY26Q1 revenue of RMB 247.7 billion, a 2% year-on-year increase, which was below market expectations. Excluding certain segments, revenue growth was 10% year-on-year. Adjusted net profit was RMB 33.5 billion, down 18% year-on-year, primarily due to investments in the Taobao flash sale business [2][3]. - Alibaba has restructured its business segments into four main divisions: Alibaba China E-commerce Group, Alibaba International Digital Commerce Group, Cloud Intelligence Group, and Others [2]. - The CMR (Customer Management Revenue) is expected to maintain high growth rates, with a 10% year-on-year increase in FY26Q1, driven by an increase in take rates and improved penetration of software services [3]. - The cloud business is on an upward trajectory, with cloud revenue growing 26% year-on-year to RMB 33.4 billion, driven by strong demand for public cloud services. AI-related revenue has also seen triple-digit year-on-year growth for eight consecutive quarters, now accounting for 20% of external commercial revenue [4]. Summary by Sections Financial Performance - FY26Q1 revenue was RMB 247.7 billion, with a 2% year-on-year growth, and adjusted net profit was RMB 33.5 billion, down 18% year-on-year. The adjusted net profit margin decreased to 13.5% from 16.7% in the same period last year [2]. - The company expects revenue for FY26E to be RMB 1,021.9 billion, with adjusted net profit projected at RMB 147.7 billion [6]. Business Segments - The Chinese e-commerce revenue grew 10% year-on-year to RMB 140.1 billion, with CMR also increasing by 10%. Instant retail revenue rose 12% year-on-year, significantly benefiting from the launch of Taobao flash sales [3]. - International business revenue increased by 19% year-on-year to RMB 34.7 billion, with substantial reduction in losses, nearing breakeven [3]. Market Outlook - The report anticipates that instant retail will contribute an additional RMB 1 trillion in transaction volume over the next three years. The cloud business is expected to continue its growth trajectory, supported by strong demand and AI integration [4][19].

Investment Rating - The report maintains a "Buy" rating for the company and raises the target price for A-shares to RMB 27.20 and for H-shares to HKD 20.00 [3][5][13]. Core Insights - The company's revenue in 1H25 has rebounded, with domestic procurement products showing stable growth and overseas business continuing to maintain a robust growth rate. Despite a decline in gross margin due to procurement impacts, significant reductions in three major expense ratios have driven a rapid increase in net profit [3][13]. - The company reported a revenue of RMB 4.9 billion in 1H25, representing a year-on-year growth of 28%. Domestic procurement products contributed approximately 60% of revenue, while overseas revenue also grew by over 30% year-on-year [3][13]. - The company has received approvals for multiple new products, expanding its product pipeline in various segments, including orthopedics and dental fields [13]. Financial Summary - Revenue Forecast: - 2023: RMB 1,209 million - 2024: RMB 806 million - 2025E: RMB 1,085 million - 2026E: RMB 1,330 million - 2027E: RMB 1,598 million - Year-on-year growth rates: 0.6%, -33.3%, 34.7%, 22.5%, 20.2% [4][15]. - Net Profit Forecast: - 2023: RMB 278 million - 2024: RMB 125 million - 2025E: RMB 261 million - 2026E: RMB 329 million - 2027E: RMB 420 million - Year-on-year growth rates: -9.7%, -55.0%, 109.0%, 26.1%, 27.4% [4][15]. - Valuation Ratios: - PE (A-shares): 31.9 (2023), 70.0 (2024), 33.9 (2025E), 26.9 (2026E), 21.1 (2027E) - PE (H-shares): 20.7 (2023), 45.3 (2024), 22.0 (2025E), 17.4 (2026E), 13.7 (2027E) [4][15].

Investment Rating - The report maintains a "Buy" rating for Meituan, with a target price adjusted to HKD 120, indicating a potential upside of 17% from the current price of HKD 102.7 [4][7][20]. Core Views - The report highlights that Meituan's revenue for Q2 2025 grew by 11.7% year-on-year to RMB 91.8 billion, which was below market expectations by 2.0%. The gross margin decreased by 8.1 percentage points to 33.1% due to increased rider subsidies and overseas business costs [2][3]. - The competitive landscape in the food delivery industry remains intense, with expectations of increased losses in Q3 2025. The core local business revenue grew by 7.7% year-on-year, significantly lower than market expectations, and operating profit dropped by 76% to RMB 3.7 billion [3]. - Meituan is focusing on enhancing its user experience (UE) and operational efficiency, which is expected to strengthen its competitive position despite the ongoing market challenges. The report anticipates that losses will improve in Q4 2025 as industry subsidies decrease [3][4]. Financial Summary - For FY25E, the report projects revenue of RMB 368.1 billion and a net profit loss of RMB 12.8 billion. The adjusted net profit is expected to be RMB -7.2 billion, with a significant recovery anticipated in FY26E [6][11]. - The report provides a detailed financial forecast, indicating a revenue increase to RMB 469.7 billion by FY27E, with a gradual recovery in operating profit and net profit margins over the forecast period [6][11]. Business Strategy - Meituan is strategically shifting its focus from underperforming segments like Meituan Youxuan to other new retail businesses, while also expanding its international presence through Keeta, which has shown strong growth in order volume and transaction value [4][3]. - The report emphasizes the importance of maintaining competitive pricing and high-quality product offerings to cater to diverse consumer needs, which is crucial for sustaining market share in a highly competitive environment [3][4].

Investment Rating - The report maintains a "Buy" rating for the company, Li Auto (LI.US/2015.HK), with a target price of $26.4, representing a potential upside of 17% for the US stock and a target price of HKD 102.6, representing a potential upside of 16% for the HK stock [2][4][6]. Core Insights - The report highlights that while there are fluctuations in the sales guidance for the third quarter, the gross margin is expected to remain stable. The company is actively adjusting its sales strategies to enhance sales performance, and the upcoming launch of the i6 model is anticipated to boost sales in the fourth quarter [8][29]. - The second quarter gross margin was stable at 20.1%, with total revenue reaching RMB 30.2 billion, a year-on-year decrease of 5% but a quarter-on-quarter increase of 17% [11][12]. - The report indicates a significant adjustment in revenue and profit forecasts for 2025 and 2026 due to expected declines in sales and operating profit [12][29]. Financial Projections - Revenue projections for 2023 to 2027 are as follows: - 2023: RMB 123,851 million - 2024: RMB 144,460 million - 2025E: RMB 121,217 million (down 16%) - 2026E: RMB 135,335 million (up 12%) - 2027E: RMB 151,527 million (up 12%) [3][9]. - Gross margin is projected to be around 20.2% in 2025, with net profit expected to decline significantly in 2025 before recovering in subsequent years [12][29]. Market Expectations - The report notes that the demand for new energy vehicles in China, particularly in the high-end segment, is expected to drive sales growth for Li Auto. The positive market response to pure electric models is anticipated to enhance average selling prices and gross margins [29][36]. - The company is also expected to invest approximately RMB 6 billion in artificial intelligence this year, which is projected to provide a long-term competitive advantage [8][29].