Inflation Data - The core CPI inflation rate in the U.S. rose from 0.13% in May to 0.23% in June, but remained below the market expectation of 0.3%[1] - Overall CPI increased from 0.08% in May to 0.29% in June, meeting market expectations[1] - Year-on-year, the overall CPI inflation rate increased by 0.3 percentage points to 2.7%, while the core CPI rose by 0.1 percentage points to 2.9%[1] Employment Data - Non-farm payrolls increased by 147,000 in June, significantly above the market expectation of 106,000[1] - The unemployment rate unexpectedly fell from 4.244% in May to 4.112% in June[1] - Labor force participation rate declined to 62.3% in June from 62.4% in May, indicating a weakening labor market[1] Tariff Impact - Core commodity prices saw a month-on-month increase from -0.04% in May to 0.2% in June, suggesting the impact of tariffs is beginning to manifest[2] - The inflation rate for clothing rebounded to 0.43% in June from -0.42% in May, likely due to seasonal changes[2] - The anticipated impact of tariffs on inflation is expected to be more pronounced in the July-August data, with core commodity CPI likely to continue rising[3] Federal Reserve Outlook - The June inflation and employment data, combined with renewed tariff concerns, largely eliminate the possibility of a rate cut in July[6] - The Federal Reserve is expected to maintain the current policy rate and continue its wait-and-see approach, with potential rate cuts anticipated in September[6] - If new tariffs are implemented post-August 1, the Fed may delay its rate cut decisions further, but may need to adopt a more aggressive rate-cutting path next year due to the impact on inflation and economic growth[6]

Investment Rating - The report maintains a "Buy" rating for the company with a target price adjusted to HKD 146 / USD 38, indicating a potential upside of 19% for the Hong Kong stock and 23% for the US stock [1][2][5]. Core Insights - The company is expected to achieve a revenue growth of 14.1% year-on-year in Q2, driven by government subsidies and the "618" promotional event, with core e-commerce revenue showing strong growth momentum [1]. - The report anticipates an adjusted net profit of RMB 56 billion for Q2, reflecting the impact of significant investments in the food delivery market, which is expected to lead to short-term profit pressures but also long-term business synergies [2][3]. - The company’s retail revenue is projected to grow by 15% year-on-year in Q2, with growth in the electronics category expected to outpace that of daily necessities [1][2]. Financial Projections - Revenue forecasts for the company are as follows: - FY23: RMB 1,084,662 million - FY24: RMB 1,158,819 million - FY25E: RMB 1,281,189 million - FY26E: RMB 1,352,876 million - FY27E: RMB 1,423,794 million [3][8]. - Adjusted net profit projections are: - FY23: RMB 35,200 million - FY24: RMB 47,827 million - FY25E: RMB 23,596 million - FY26E: RMB 39,823 million - FY27E: RMB 51,251 million [3][8]. Market Performance - The current stock price is HKD 122.4, with a 52-week price range of HKD 94.65 to HKD 192.3, and a total market capitalization of HKD 355,476 million [3][5]. - The average daily trading volume over the past three months is HKD 2,066 million [3]. Valuation Metrics - The company is currently valued at 7.3x P/E, which is considered low compared to the adjusted target P/E of 10.0x for FY26E [2][3].

Economic Growth - China's GDP growth in Q2 was 5.2%, slightly above market expectations of 5.1%[2] - The nominal GDP growth rate decreased by 0.7 percentage points to 3.9% due to low inflation[2] - The economic growth forecast for the second half of the year is maintained at around 4%[10] Domestic Demand - June data showed a significant decline in domestic demand, with retail sales growth dropping from 6.4% in May to 4.8% in June, below the expected 5.3%[3] - Fixed asset investment growth fell by 0.9 percentage points to 2.8%, significantly lower than the market expectation of 3.6%[5] - Real estate sales and prices continued to decline, with property sales down 5.5% in June compared to May's 3.8%[7] Industrial Production and Exports - Industrial production growth increased by 1 percentage point to 6.8%, exceeding market expectations of 5.6%[5] - Exports maintained a robust growth rate, with a trade surplus growth of 24.5% year-on-year in Q2, although lower than Q1's 49%[9] Inflation and Employment - The CPI turned positive in June at 0.1%, ending four months of negative readings, while the core CPI rose slightly to 0.7%[8] - The urban unemployment rate remained stable at 5.0% in June, consistent with expectations[5] Policy Outlook - The upcoming political bureau economic meeting is unlikely to introduce significant new policies, but attention will be on potential real estate support measures and "anti-involution" strategies[11] - Fiscal policy may see an acceleration in government bond issuance, with 2.3 trillion yuan of local government special bonds remaining for the second half of the year[12]

Group 1 - The core viewpoint of the report indicates that the sentiment index for the Hong Kong stock market is at a level of 0.67, which is 1.5 standard deviations above its one-year moving average, reflecting an optimistic sentiment [2][5] - The sentiment index has shown volatility due to geopolitical tensions in the Middle East, which caused a temporary decline to -0.18, but it has since recovered following a ceasefire agreement [2][5] - The report highlights that nine out of thirteen indicators contributing to the sentiment index have shown strong improvement, including increased main board trading volume and a shift from net outflow to net inflow of foreign capital [2][5][6] Group 2 - The report suggests a short-term investment strategy focusing on technology sectors, as previous high-performing sectors like new consumption and innovative pharmaceuticals may face profit-taking pressure [2][5] - It emphasizes the importance of maintaining a barbell strategy, increasing allocation to technology stocks that benefit from AI development while also ensuring stable cash flow from dividend-paying stocks [2][5] - The report notes that the forward P/E ratio of the Hang Seng Index is currently at 10.3 times, indicating a potential for further valuation recovery, although new catalysts are needed for significant upward movement [2][5]

Group 1: Federal Reserve Actions and Economic Projections - The Federal Reserve decided to pause interest rate cuts in June, aligning with market expectations[1] - The GDP growth forecast for 2025 was lowered to 1.4% from 1.7%, indicating a potential rise in stagflation risk[2] - The unemployment rate forecast for 2025 was raised to 4.5%, while the core PCE inflation rate expectation was increased to 3.1%[2] Group 2: Market Reactions and Future Expectations - The number of Federal Reserve members predicting no rate cuts this year increased from 4 to 7, indicating growing internal disagreement on rate cuts[3] - The Federal Reserve is expected to maintain a 50 basis point cut forecast for this year, with potential adjustments in future meetings[3] - The impact of tariffs on inflation is anticipated to become evident in the inflation data from July-August[3] Group 3: Trade Negotiations and Economic Implications - Following the June talks, the U.S. plans to maintain an average tariff of 55% on Chinese goods, while China will ease rare earth export controls[4] - There is uncertainty regarding the permanence of these trade commitments, as no clear trade agreement has been established[4] - The potential for a comprehensive implementation of personalized tariffs poses a downside risk to the U.S. economy[5]

Economic Performance - In May, the retail sales of consumer goods increased by 6.4% year-on-year, up from 5.1% in April, significantly exceeding the market expectation of 4.9%[2] - The growth rate of fixed asset investment fell to 3.7% year-on-year, slightly below the market expectation and April's figure of 4.0%[3] - Industrial production growth declined to 5.8% in May from 6.1% in April, also below the expected 6.0%[7] Consumer Trends - The sales growth of communication equipment surged to 33.0% in May, up from 19.9% in April, while home appliance sales jumped to 53.0% from 38.8%[2] - Restaurant consumption growth rose to 5.9%, an increase of 0.7 percentage points from April[2] - The consumer price index (CPI) remained negative at -0.1% for the fourth consecutive month, indicating low inflation[8] Investment and Housing Market - Real estate development investment fell by 10.7% year-on-year in May, worsening from the previous month's decline of 10.3%[3] - The average price of new homes in 70 major cities decreased by 0.22% month-on-month in May, compared to a decline of 0.12% in April[6] - The sales area of commercial housing in early June dropped by 9.4% year-on-year, reflecting ongoing weakness in the housing market[8] Policy Outlook - The government is expected to introduce fiscal support of 0.5-1.0 trillion yuan (approximately 0.35%-0.7% of GDP) by September, given the current economic conditions[1] - A potential reduction in the reserve requirement ratio (RRR) by 50 basis points and interest rate cuts of 10-20 basis points are anticipated in the second half of the year[1]

Inflation Data - The U.S. May CPI inflation rate unexpectedly fell to 2.4%, up 0.1 percentage points year-on-year due to a low base effect[1] - Core CPI inflation rate remained unchanged at 2.8% year-on-year[1] - Month-on-month, core CPI inflation slowed from 0.24% in April to 0.13% in May, below the market expectation of 0.3%[1] - Overall CPI growth rate decreased from 0.22% in April to 0.08% in May, also below the market expectation of 0.2%[1] Employment Data - Non-farm payrolls increased by 139,000 in May, exceeding market expectations of 126,000[1] - The unemployment rate rose slightly from 4.187% in April to 4.244% in May[1] - Labor force participation rate decreased from 62.6% in April to 62.4% in May[1] Core Goods and Services - Core goods prices fell month-on-month from 0.06% in April to -0.04% in May, with clothing seeing the largest decline at -0.42%[2] - Super core services CPI growth slowed to 0.06% in May from 0.23% in April, influenced by declines in transportation and healthcare prices[2] - Owner's equivalent rent inflation rate decreased to 0.27% in May from 0.36% in April, indicating a potential end to previously high rental inflation[2] Federal Reserve Outlook - The Federal Reserve is expected to maintain a wait-and-see approach in June and July, with a potential rate cut delayed until at least September[4] - The Fed may consider a total of two rate cuts this year, each by 25 basis points, unless labor market data deteriorates significantly[4] - If tariffs are fully implemented, the Fed may need to adjust its stance, potentially leading to larger rate cuts of 75-100 basis points[5]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 95, representing a potential upside of 17% from the current price of HKD 81.1 [2][9][10] Core Insights - The report highlights positive data updates for IBI363 (PD-1/IL-2) in lung squamous cell carcinoma (sq-NSCLC), with median progression-free survival (mPFS) extended to 9.3 months, enhancing confidence in its development [1][7] - IBI343 (CLDN18.2 ADC) also showed promising data in pancreatic cancer, with mPFS consistent with previous reports [1][7] - The company is expected to initiate Phase 3 clinical trials for IBI363 in third-line sq-NSCLC, with the 3mg/kg dose likely to be used [7] Financial Projections - Revenue projections for the company are as follows: - 2023: RMB 6,206 million - 2024: RMB 9,422 million - 2025E: RMB 11,691 million - 2026E: RMB 13,159 million - 2027E: RMB 15,805 million - The projected growth rates are 36.2% for 2023, 51.8% for 2024, and 24.1% for 2025 [9][10] - The adjusted net profit is expected to turn positive by 2025, reaching RMB 433 million, and further increasing to RMB 1,893 million by 2027 [9][10] Market Expectations - The report indicates that IBI363 has the potential to achieve peak sales of approximately RMB 2.5 billion in China, while IBI343 could reach around RMB 1.5 billion [9][10] - The report emphasizes the importance of IBI363 as a potential solution for PD-1 resistance, which could significantly impact its market performance [9][10]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 95, representing a potential upside of 17% from the current price of HKD 81.1 [2][9][10] Core Insights - The report highlights positive updates on IBI363 and IBI343, with IBI363 showing an extended median progression-free survival (mPFS) of 9.3 months in the 3 mg/kg dose group for IO-treated squamous non-small cell lung cancer (sq-NSCLC), enhancing confidence in its development for lung squamous carcinoma [1][7][10] - The company is expected to initiate Phase 3 registration clinical trials for IBI363 in the 3L+ sq-NSCLC setting, with the 3 mg/kg dose likely to be used [7][10] - Financial projections indicate a significant increase in revenue and net profit over the next few years, with expected revenues of RMB 11.7 billion in 2025 and a net profit of RMB 433 million [9][10] Financial Projections - Revenue is projected to grow from RMB 6.2 billion in 2023 to RMB 15.8 billion by 2027, with a compound annual growth rate (CAGR) of 36.2% [9][10] - The adjusted net profit is expected to turn positive in 2025, reaching RMB 1.03 billion by 2025 and RMB 2.66 billion by 2027 [9][10] - The report anticipates peak sales for IBI363 in China to reach approximately RMB 2.5 billion and for IBI343 to reach around RMB 1.5 billion, both on a risk-adjusted basis [10]

Group 1 - The core viewpoint of the report indicates that the penetration rate of new energy vehicles (NEVs) in China is expected to reach 53.3% by the end of 2025, with sales projected to hit 15.25 million units, reflecting a year-on-year growth of 24% [5][34][33] - The report highlights that the penetration rate of NEVs has rapidly increased from 6.1% in 2020 to an estimated 44.6% in 2024, with significant growth expected to continue in 2025 [5][34][33] - The report emphasizes the strong growth momentum in the NEV sector, with first-quarter sales in 2025 reaching 2.9 million units, a 46% year-on-year increase, and April sales showing a 42% increase compared to the previous year [8][9][12] Group 2 - The report notes that the market for smart assisted driving is expanding, with the penetration rate of Level 2++ smart driving features in vehicles priced below 100,000 yuan achieving a breakthrough in early 2025 [5][33] - The report anticipates that the supply of high-quality NEV models will continue to increase, with companies like Xiaomi, Xpeng, NIO, and Li Auto expected to perform well in the market [5][34][35] - The report discusses the impact of government policies, such as the "Two New" policy, which aims to stimulate demand for NEVs through subsidies, contributing to the overall growth of the sector [30][31][32] Group 3 - The report indicates that the competitive landscape remains intense, with various new energy vehicle manufacturers continuously launching competitive products, which raises the bar for all players in the market [34][35] - The report highlights that the cost of key components, such as lithium carbonate, has stabilized below 100,000 yuan per ton, which is expected to help reduce overall vehicle costs [35][20] - The report projects that the penetration rate of pure electric vehicles is on the rise, with their market share increasing to 65.5% in April 2025, compared to 54.2% in July 2024 [9][21][26]