Macro Overview - China's economy is significantly slowing down, with GDP growth expected to drop from 5.2% in the first three quarters to 4.6% in the fourth quarter, resulting in an annual growth of 5% [10] - The PMI for October fell to its lowest level since 2008, indicating weakening demand and supply pressures [10] - High-frequency economic activity indices show a slight increase but remain at low levels, suggesting a challenging economic environment [10] - Industrial profits are showing signs of recovery, with a year-on-year growth rate rebounding to 3.2% in September [11] Technology Sector - The technology sector remains optimistic, with significant growth in AI computing and demand for edge devices [2] - The semiconductor index has outperformed major indices, with a cumulative increase of 51% from early 2025 to late October [2] - Key investment opportunities include companies involved in AI applications, semiconductor localization, and high-dividend assets [2][9] Semiconductor Industry - The semiconductor sector has seen strong performance, with major indices showing significant gains compared to broader market indices [2] - The industry is expected to maintain a volatile pattern as investors shift focus towards 2026 [2] - Key investment themes include the comprehensive development of the AI industry chain and the deepening localization of semiconductors [2] Internet Sector - The internet sector is focusing on companies with solid fundamentals and growth potential, particularly those benefiting from AI trends [3] - Recommendations include Tencent, Alibaba, and Kuaishou, which are expected to see growth driven by AI applications [3][6] Automotive Industry - The automotive sector is experiencing a slight recovery, with expectations of increased demand due to year-end purchasing incentives [7] - Key companies to watch include Geely and Leap Motor, which are anticipated to report better-than-expected earnings [7] Real Estate and Property Management - The real estate market remains weak, with significant declines in contract sales for major developers [7] - Despite the challenges, there are expectations for policy easing to support the sector [7] - Recommended stocks include Longfor Group and Beike, which are positioned to benefit from market recovery [7] Insurance Sector - The insurance sector has shown strong performance in Q3, with significant year-on-year profit growth for major companies [8] - Key players like China Life and Ping An are expected to benefit from improved investment returns and new business value growth [8] Consumer Sector - The consumer sector is facing challenges, with a general trend towards cautious spending among consumers [4] - Recommendations focus on low-cost, high-emotion products and sectors benefiting from domestic brand substitution [4][5] - Companies like Luckin Coffee and Farmer's Spring are highlighted as potential investment opportunities [6][9]

Economic Indicators - The US services PMI rose to 52.4 in October, up from 50 in September, indicating economic expansion and surpassing market expectations of 50.8[2] - The services PMI corresponds to an annualized GDP growth rate of 1.2%[2] - The manufacturing PMI decreased to 48.7 in October from 49.1 in September, below the expected 49.5, indicating contraction[2] Employment and Inflation - ADP private sector employment increased by 42,000 in October, recovering from a loss of 29,000 in September, suggesting a slowdown in job losses[1] - The price index for services rose to 70, the highest since 2022, indicating persistent inflation pressures in the services sector[2] - Core inflation is beginning to stabilize due to tariff transmission and reduced labor supply[1] Federal Reserve Outlook - The Federal Reserve is expected to implement two rate cuts this year, with a potential pause in December, targeting a year-end federal funds rate around 3.8% (target range 3.75%-4%) [1] - Further rate cuts may occur next year, with a target federal funds rate of 3.25%-3.5% by year-end as economic growth stabilizes and inflation recedes[1]

Global Market Overview - The Hang Seng Index closed at 25,935, down 0.07% for the day but up 29.29% year-to-date [1] - The US markets showed a rebound with the Dow Jones up 0.48% and the S&P 500 up 0.37%, while the Nasdaq increased by 0.65% [1] - European markets also rose, with the DAX up 0.42% and the CAC up 0.08%, reflecting a positive economic outlook despite some regional challenges [1] Hong Kong Stock Performance - The Hang Seng Financial Index decreased by 0.12% while the Hang Seng Industrial Index fell by 0.05%, but the Hang Seng Utilities Index rose by 0.59% [2] - Southbound capital saw a net inflow of HKD 10.373 billion, with notable purchases in Southbound Hang Seng Technology, Alibaba, and Xiaomi [3] Industry Insights - The internet sector in the US saw leading companies like Microsoft, Google, and Amazon report strong demand, leading to a 25.7% year-on-year revenue growth in Q3 2025 [4] - Capital expenditures for cloud service providers surged to USD 93.1 billion, a 71% increase year-on-year, indicating robust investment in infrastructure [4] - AI investments are showing a mixed impact on profit margins, with cloud-related capital expenditures affecting profitability but still supporting steady profit growth [4] Economic Indicators - The Eurozone's composite PMI rose to 52.5, the highest in 29 months, indicating a strong recovery in the services sector, particularly in Germany [3] - In the US, the ISM services PMI exceeded expectations, reaching an 8-month high, while the ADP employment data showed an increase of 42,000 jobs, suggesting stabilization in the job market [3]

Investment Rating - The report maintains a "Buy" rating for OmniVision Technologies (豪威集团) due to its advantageous position in mobile terminals, automotive, and emerging markets, with expectations of further market share growth through new product introductions by 2025 [2]. Core Insights - The global CMOS image sensor market is expected to rebound in 2024, achieving a market size of $23 billion, reflecting a year-on-year growth of 6.4%. This recovery indicates a new phase of structural differentiation and sustained growth in the industry [2][4]. - The growth drivers for the industry are shifting from mobile terminals, which still contribute over 60% of revenue, to automotive applications driven by the acceleration of ADAS penetration and the emergence of new applications such as smart glasses and machine vision [2][3]. - The competitive landscape is characterized by strategic differentiation and consolidation, with technology leaders like Sony pushing performance boundaries through large pixels and advanced stacking processes, while scale manufacturers like Samsung and agile Chinese competitors drive high-resolution revolutions with cost-effective solutions [2][3]. Market Dynamics - The mobile terminal CMOS image sensor market is stabilizing, with growth primarily driven by an increase in average selling prices as consumers shift towards high-end models and generative AI smartphones. Despite a moderate growth forecast for device shipments, the average number of cameras per device is expected to remain stable [3][12]. - The automotive CMOS image sensor market is projected to maintain double-digit growth from 2025 to 2027, driven by increased camera penetration per vehicle due to ADAS, in-cabin monitoring, and ongoing resolution upgrades [3][25]. - Emerging applications such as smart glasses and machine vision are opening new growth avenues, requiring specialized sensors with ultra-low power consumption, miniaturization, and global shutter technology, providing high-value growth directions for technology-leading companies [3][31]. Competitive Landscape - Sony leads the market with nearly 50% share, further increasing its share by 1 percentage point in 2024, showcasing its technological advantages in mobile terminal CMOS image sensors and growth in the automotive sector [7][11]. - Samsung holds the second position, leveraging its IDM model and focusing on high-resolution, small pixel technology, while also re-entering the Apple supply chain, marking a significant strategic breakthrough [11][30]. - OmniVision ranks third with an 11% market share, experiencing a 23.5% year-on-year revenue growth in 2024 across all business lines, particularly in mobile terminals and automotive applications [11][30]. - Other notable competitors include GalaxyCore and SmartSens, with significant growth in their respective markets, driven by competitive pricing and technological advancements [6][11].

Report Industry Investment Rating - No information provided Core View of the Report - Maintain buy on VEDLN 9.475 07/24/30 due to its all-time high first half recurring EBITDA [3][7] Summary by Relevant Sections Trading Desk Comments - Yesterday, recent USD MEITUA 31 - 35s widened 2 - 4bps with RM selling; TW lifers SHIKON/FUBON/NSINTWs widened 2 - 5bps; BBLTB sub curve was 1 - 4bps wider; JP bank FRNs held up well, JP AT1s dropped by 0.3pt; JP insurance hybrids were marked lower; Yankee AT1s were down by 0.4pt then stabilized; NWDEVL Perps lowered 0.7 - 2.0pts, NWDEVL 27 - 31s were down by 0.6 - 1.3pts; LASUDE 26 was 1.4pts lower; MTRC perps lost up to 0.2pt; VNKRLE 27 - 29 recovered 2.7 - 2.9pts; GRNCH 28 fell by up to 0.5pt; Macau gaming stocks had mixed performance; HYNMTRs/HYUELEs traded 1 - 3bps wider; NTT curve was 1 - 3bps wider; PETMK curve was 2 - 4bps wider on the long end; SMCGL Perps/GARUDA 31 were down by 0.1 - 0.2pt; VEDLN 28 - 33s were 0.3 - 1.1pts lower; onshore AAA - guaranteed LGFV papers were sought after [2] - This morning, new CDBFLC 35 widened 2bps, new QBEAU 37 tightened 3bps, new STANLN PerpNC10 was 0.2pt higher; JP insurance bonds and MTRC Perps were down by 0.1 - 0.3pt; NUFAU 30 rose 0.9pt, SOFTBK 61/65s and NWDEVL 30 were 0.6 - 0.7pt lower; TW lifers widened 2 - 4bps [3] Top Performers and Underperformers - Top performers include VNKRLE 3.975 11/09/27 (price 60.3, change 2.9), VNKRLE 3 1/2 11/12/29 (price 52.0, change 2.7), etc. - Top underperformers include NWDEVL 6 1/4 PERP (price 42.3, change - 2.0), NWDEVL 5 1/4 PERP (price 44.0, change - 1.9), etc. [4] Macro News Recap - On Tuesday, S&P (-1.17%), Dow (-0.53%) and Nasdaq (-2.04%) were lower; UST yield was lower, with 2/5/10/30 year yield at 3.58%/3.69%/4.10%/4.67% [6] Desk Analyst Comments on VEDLN - VEDLN's 2QFY26 recurring EBITDA reached INR116.1bn, up 12% yoy; 1HFY26 EBITDA rose to INR223.6bn, 42% of full - year target of USD6bn; prefer VEDLN 9.475 07/24/30 with YTW of 9.0% and 106bps yield pickup over NICAU 9 09/30/30 [7] - VEDLN's average borrowing cost declined to c9.0% in 1HFY26 from c9.7% in 1QFY26, expected to fall below 8% near - term; PAT dropped 26% yoy to INR79.4bn due to one - off losses [10] - 1HFY26 operating cash flow decreased 12% yoy to INR162.3bn; spent INR102.6bn in capex, 61 - 68% of FY26 target; estimated 1HFY26 FCF was INR59.7bn [11] - As of Sep'25, cash and equivalents increased to INR218.6bn; total debt/LTM EBITDA and net debt/LTM EBITDA rose slightly to 1.9x and 1.4x; aims to bring net leverage down to 1.0x near - term [12] - Deleveraging may face headwinds from JPA acquisition; demerger hearing postponed to 12 Nov'25, seen as moderately credit positive [13] Offshore Asia New Issues - Priced issues include Alinma Sukuk Limited (USD500mn, 10NC5, 5.792%, T + 210), China Development Bank Financial Leasing (USD500mn, 10NC5, 4.6%, T + 93), etc. - Pipeline issues include Gaoxin International Investment (unrated, 3yr, 5.0%), Korea Electric Power Corporation (Aa2/AA/-, 3yr/SOFR + 95, 5yr/T + 80), etc. [17][18] News and Market Color - 99 credit bonds issued yesterday onshore with RMB106bn; MTD, 206 credit bonds issued with RMB190bn, 19.2% yoy increase [20] - Adani Enterprises 1HFY26 EBITDA fell 11% yoy to INR76.9bn, plans to raise INR250bn via rights issue [20] - Adani Ports 1HFY26 EBITDA rose 20% yoy to INR110.5bn, Fitch changed outlook to stable and affirmed BBB - rating [20] - China to boost subsidies for Alibaba, Tencent to cut data center energy bills [20] - Moody's upgraded Bharti Airtel to Baa2 from Baa3, outlook to stable [20] - GLP China repurchased USD205mn of GLPCHI 2.95 03/29/26, USD495mn outstanding [20] - Nickel Industries to hold non - deal roadshow on 19 Nov'25 [20] - Petron 9M25 revenue fell 10% yoy to PHP594.9bn [20] - Pertamina Geothermal targets 6.1% revenue increase for FY26 [20] - SK Telecom plans full - scale AI infrastructure expansion [20]

Investment Rating - The report maintains a "Buy" rating for Microsoft (MSFT US), Amazon (AMZN US), Google (GOOG US), and Meta (META US) [7][12][13] Core Insights - Strong demand and easing supply constraints are driving accelerated revenue growth for cloud service providers, with a combined revenue growth rate of 25.7% year-on-year in Q3 2025 [6][21] - Capital expenditures (Capex) for cloud companies increased significantly to $93.1 billion, reflecting a 71% year-on-year growth, indicating robust investment to meet demand [6][9] - AI investments are impacting profit margins differently across sectors, with cloud-related Capex showing better-than-expected results, while advertising sectors may face longer return cycles [6][16] Summary by Sections Q3 2025 Performance - The revenue growth for major U.S. internet companies in Q3 2025 showed an increase to 25.7% year-on-year, up from 23.1% in Q2 2025 [6][21] - Cloud service providers' operating profit grew by 24.1% year-on-year, indicating strong profitability despite increased Capex [6][9] AI Commercialization Progress - AI is driving rapid revenue growth in cloud computing and advertising sectors, with significant advancements in AI cloud infrastructure [16][17] - The return on investment for AI in advertising is slower compared to cloud services, leading to short-term profit margin pressures for companies like Meta [16][17] Company-Specific Analysis - **Microsoft**: Cloud revenue growth remains strong, with a 28.2% increase in Q3 2025, supported by robust demand and effective AI monetization strategies [12][21] - **Amazon**: Cloud revenue growth accelerated, benefiting from improved power supply conditions and increased order backlogs [12][13] - **Google**: AI is enhancing both cloud and core search business growth, with cloud revenue increasing by 34% year-on-year [12][13] - **Meta**: Increased AI investments are putting short-term pressure on profit growth, despite long-term revenue potential from AI-driven advertising [12][13] Capital Expenditure Trends - Total Capex for Microsoft, Google, Amazon, and Meta reached $112.4 billion in Q3 2025, reflecting a 77% year-on-year increase [9][25] - Approximately 50% of Capex is allocated to short-term assets, indicating a focus on immediate demand fulfillment [9][25]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 93, indicating a potential upside of 85.1% from the current price of HKD 50.25 [1][3]. Core Insights - The inclusion of the company in the Hang Seng Semiconductor Industry Theme Index is expected to enhance investor attention and liquidity, benefiting from potential passive fund inflows [1][6]. - The company is undergoing strategic adjustments to its distributor network, reducing reliance on its largest overseas customer while expanding domestic partnerships, which is anticipated to strengthen long-term supply chain resilience [6]. - The company plans to implement a price increase of approximately 10% in Q4 2025, which is expected to improve overall profit margins [6]. - The report highlights the company's robust profitability during previous industry downturns, showcasing its unique business model and operational excellence [6]. Financial Summary - For FY23A, the company reported sales revenue of RMB 464 million, with a year-on-year growth of 31.6%. Projections for FY24A and FY25E are RMB 579 million and RMB 672 million, respectively, with growth rates of 24.8% and 16.1% [2][14]. - The gross margin is expected to stabilize around 52.4% from FY25E onwards, while operating profit is projected to grow from RMB 113.4 million in FY23A to RMB 212.9 million in FY25E [2][14]. - Net profit is forecasted to increase from RMB 109.2 million in FY23A to RMB 201.9 million in FY25E, reflecting a growth rate of 21.2% [2][14]. - The company's price-to-earnings ratio is projected to decrease from 19.0 in FY23A to 14.4 in FY25E, indicating an attractive valuation compared to peers [2][14]. Shareholder Structure - The major shareholders include Asian Equity Special Opportunities with 10.0% and 惠理集团 with 9.5% [4]. Stock Performance - The company's stock has shown a mixed performance, with a 1-month return of -0.3% and a 3-month return of -8.7% [4]. Market Position - The company is positioned favorably within the semiconductor sector, benefiting from the strategic reclassification of the Hang Seng Index, which aims to enhance the investability and thematic clarity of semiconductor companies listed in Hong Kong [6].

Market Overview - Global markets experienced a decline, with the Hang Seng Index falling by 0.79% and the S&P 500 down by 1.17% [1][3] - The A-share market is in a correction phase since October 2, with a potential drop of 15%-20% expected [3] - Defensive sectors are seeing capital inflows, while materials, healthcare, and consumer discretionary sectors are leading declines in Hong Kong stocks [3] Sector Performance - The Hang Seng Financial Index rose by 0.26%, while the Hang Seng Industrial and Commercial Index fell by 1.44% [2] - High-dividend sectors such as telecommunications and utilities are performing well amidst market volatility [3] Company Insights - Luxshare Precision (002475 CH) has its target price raised to 75.55 RMB, reflecting strong synergy from the Apple upgrade cycle and ODM integration [5] - The expected compound annual growth rate for Luxshare's earnings from FY25-27 is projected at 27%, driven by growth in consumer electronics, automotive, and communication sectors [5] Economic Indicators - The UK government is focusing on reducing inflation and managing national debt, hinting at potential tax increases in the upcoming budget [3] - The U.S. job vacancies have dropped to the lowest level since April 2021, indicating a tightening labor market [4]

整、四季度定价能力提升；重申 纳入恒生半导体指数、进行分销商战略性调整、四 "买入"评级 季度定价能力提升；重申"买入"评级 恒生指数正式将"恒生资讯科技业指数"更名为"恒生半导体行业主题指数"，并将 贝克微（2149 HK）纳入成份股，自 2025 年 11 月 7 日起生效。我们认为这将为 贝克微带来结构性利好，公司将有望受益于潜在被动资金流入提升市场流动性的 同时，吸引主动管理型基金的关注。重申"买入"评级；目标价维持 93 港元不变， 基于 26.6 倍 2025 年预测市盈率。 | (截至 12 月 31 日) | FY23A | FY24A | FY25E | FY26E | FY27E | | --- | --- | --- | --- | --- | --- | | 销售收入 (百万人民币) | 464 | 579 | 672 | 841 | 1,046 | | 同比增长 (%) | 31.6 | 24.8 | 16.1 | 25.1 | 24.4 | | 毛利率 (%) | 55.4 | 53.0 | 52.4 | 52.4 | 52.4 | | 运营利润 (百万人民币) | 113.4 | ...

Investment Rating - The report maintains a "Buy" rating for the company, with a target price raised to 591 RMB, reflecting a potential upside of 23.1% from the current price of 480 RMB [1][3][8]. Core Insights - The company's quarterly performance reached a new high, with Q3 revenue of 10.2 billion RMB, representing year-on-year and quarter-on-quarter growth of 57% and 26%, respectively. The gross margin significantly increased to 42.8%, up 9.2 and 1.3 percentage points from the same period last year and the previous quarter [1][8]. - Net profit surged to 3.1 billion RMB, marking a historical peak with year-on-year and quarter-on-quarter growth of 125% and 30%. The net profit margin improved to 30.7%, compared to 21.4% and 29.7% in the same period last year and the previous quarter [1][8]. - The demand for 800G optical modules and the increased adoption of silicon photonics solutions contributed to the scale effect and improved profitability. The management expects continued growth in 800G optical module demand and anticipates large-scale production of 1.6T silicon photonics products to begin in early 2026 [1][8]. Financial Summary - For FY23A, the company reported sales revenue of 10.7 billion RMB, with a year-on-year growth of 11.2%. Projections for FY24A, FY25E, FY26E, and FY27E are 23.9 billion RMB, 37.9 billion RMB, 73.4 billion RMB, and 105.7 billion RMB, respectively, with significant growth rates of 122.6%, 59.0%, 93.5%, and 44.0% [2][15]. - The gross margin is expected to improve from 33.0% in FY23A to 41.6% in FY25E, peaking at 44.3% in FY26E before slightly declining to 43.5% in FY27E [2][15]. - Net profit is projected to grow from 2.2 billion RMB in FY23A to 5.2 billion RMB in FY24A, reaching 10.8 billion RMB in FY25E, and further increasing to 23.2 billion RMB and 33.4 billion RMB in FY26E and FY27E, respectively [2][15]. Market Position and Outlook - The company is positioned as a leader in the optical module market, which is expected to mitigate supply chain risks. The management has secured long-term capacity with key suppliers to address potential supply chain challenges [1][8]. - The expansion of capital expenditures by major cloud service providers for AI infrastructure is anticipated to drive further sales growth for the company. Notable increases in capital expenditure forecasts from companies like Google, Meta, and Microsoft reinforce this positive outlook [1][8].