Investment Rating - The report maintains a BUY rating for Wingtech with a target price (TP) unchanged at RMB52, indicating a potential upside of 54.6% from the current price of RMB33.64 [1][3]. Core Insights - Wingtech's 1Q25 earnings showed a revenue decline of 19.4% YoY to RMB13.1 billion, while net profit surged by 82.3% YoY to RMB261 million. The gross profit margin (GPM) improved to 14.0% [1]. - The company is undergoing a transformation phase following the divestment of its ODM business, focusing solely on the semiconductor segment, which is expected to be the core growth driver due to strong demand in AI servers, recovering consumer and industrial markets, and increasing penetration of electric vehicles (EVs) [1][8]. - The semiconductor segment delivered resilient growth with revenue up 8.4% YoY to RMB3.7 billion in 1Q25, benefiting from a surge in shipment volumes [8]. Financial Summary - Revenue for FY25E is projected at RMB25.643 billion, a significant decline of 65.2% YoY, while net profit is expected to rebound to RMB2.437 billion [2][11]. - The gross margin is forecasted to improve to 26.3% in FY25E, with net profit margin (NPM) expected to be 9.5% [9][11]. - The ODM business recorded a revenue of RMB9.4 billion, down 24% YoY, and incurred a net loss of RMB164 million, which will no longer impact the company's financials post spin-off [8]. Market Position and Performance - Wingtech's market capitalization stands at RMB41.8 billion, with an average turnover of RMB624.1 million over the past three months [3]. - The share performance over the past month shows a slight increase of 0.8%, while the six-month performance reflects a decline of 15.5% [5]. - The company is expected to benefit from the market re-rating on a pure-play semiconductor basis following the divestiture of its low-margin business [8].

Investment Rating - The report maintains a "Buy" rating for Baidu with a target price of $146.70, representing a potential upside of 61.7% from the current price of $90.74 [2][3]. Core Insights - Baidu is actively promoting its business transformation by integrating more generative AI-related search results to enhance user experience and engagement. Although the monetization of these search results has not yet begun, it is expected to start by the end of Q2, which should help boost advertising revenue growth and operating profit margins [9]. - The company has introduced several AI applications, including the Wenxin large model 4.5 Turbo and X1 Turbo, which feature multi-modal capabilities, strong reasoning, and reduced costs. The input price for the 4.5 Turbo model is only 0.8 RMB per million tokens, and the output price is 3.2 RMB, marking an 80% price reduction compared to its predecessor [1]. - Baidu's cloud business is anticipated to maintain strong revenue growth driven by increasing demand for digitalization and AI solutions, supporting overall revenue growth for the group [9]. Financial Summary - The financial forecast for Baidu shows expected sales revenue of 137,622 million RMB in FY25, with a projected growth rate of 3.4%. The adjusted net profit is estimated at 26,943.5 million RMB, reflecting a slight decrease of 0.2% [10]. - The company’s sales revenue for FY23A was 134,598 million RMB, with a year-on-year growth of 8.8%. However, FY24A is projected to see a decline of 1.1% in sales revenue [11]. - The adjusted net profit margin is expected to stabilize around 19.6% by FY27E, with a return on equity projected at 7.6% [12].

Investment Rating - Maintain BUY rating for Alphabet with a target price of US$218.00, down from the previous target of US$234.00, reflecting a 33.0% upside from the current price of US$163.85 [3][8]. Core Insights - Alphabet reported 1Q25 total revenues of US$90.2 billion, a 12% year-over-year increase, and operating income of US$30.6 billion, up 20% year-over-year, exceeding consensus estimates due to effective cost control in selling and marketing expenses [1][2]. - The company anticipates continued pressure on earnings growth in FY25 due to increased capital expenditures and accelerated depreciation [1][5]. - Alphabet's advertising business remains strong, with Google Search and other revenues growing by 10% year-over-year to US$50.7 billion in 1Q25, driven by sectors like financial services and retail [5][6]. - Google Cloud revenue grew by 28% year-over-year to US$12.3 billion in 1Q25, with operating profit margin improving to 17.8% [5][6]. Financial Summary - Revenue projections for FY25E are set at US$390.7 billion, with net profit expected to reach US$120.2 billion, reflecting an 8.5% increase from previous estimates [6][10]. - The company plans to maintain its FY25 capital expenditure guidance at US$75 billion, with a focus on key investment areas to drive long-term growth [1][5]. - Alphabet's operating margin improved to 33.9% in 1Q25, with a notable decrease in selling and marketing expenses [5][10]. Valuation - The target price of US$218.00 is based on a 22x FY25E P/E ratio, which is a premium to the sector average of 20x, reflecting Alphabet's leadership in the global advertising market and its potential to leverage AI [8][9].

Investment Rating - The report maintains a "Buy" rating for Baidu with a target price of $146.70, representing a potential upside of 61.7% from the current price of $90.74 [2][9]. Core Insights - Baidu is actively promoting its business transformation by integrating more generative AI-related search results to enhance user experience and engagement. Although the monetization of these search results has not yet begun, it is expected to start by the end of Q2, which should help boost advertising revenue growth and operating profit margins [9]. - The company has introduced several AI applications, including the Wenxin large model 4.5 Turbo and X1 Turbo, which feature multi-modal capabilities, strong reasoning, and reduced costs. The input price for the Wenxin 4.5 Turbo is only 0.8 RMB per million tokens, and the output price is 3.2 RMB, marking an 80% price reduction compared to its predecessor [9]. - Baidu's cloud business is anticipated to maintain strong revenue growth driven by increasing demand for digitalization and AI solutions, supporting overall revenue growth for the group [9]. Financial Summary - The financial forecast for Baidu shows expected sales revenue of 137,622 million RMB in FY25, with a projected growth rate of 3.4%. The adjusted net profit is expected to be 26,943.5 million RMB, reflecting a slight decrease of 0.2% [10][11]. - The company’s operating profit is projected to be 21,430 million RMB in FY25, with a slight increase in operating margin to 15.6% [11]. - Baidu's total assets are expected to grow from 427,780 million RMB in FY24 to 457,698 million RMB in FY25, indicating a healthy balance sheet [11].

Investment Rating - Maintain BUY rating for the company, indicating a potential return of over 15% over the next 12 months [1][3][16] Core Views - The company's 1Q25 earnings are on track, demonstrating high earnings quality despite ongoing vehicle model transitions. Sales volume and gross margin are expected to meet full-year forecasts [1][9] - New models such as Han L, Tang L, and Titanium 3 are anticipated to boost sales from 2Q25. The company may engage in a price war in 2H25 to maintain market share, but its earnings quality is expected to keep net profit per vehicle above RMB10,000 [1][9] - The company’s overseas sales volume reached 0.2 million units in 1Q25, exceeding prior expectations [9] Financial Summary - Revenue projections for FY25E are RMB 970,122 million, with a year-on-year growth of 24.8% [2][11] - Net profit for FY25E is estimated at RMB 57,457 million, reflecting a year-on-year growth of 42.7% [2][11] - The gross margin for FY25E is forecasted at 19.7%, with operating profit expected to be RMB 71,663 million [11][12] - The company’s earnings per share (EPS) for FY25E is projected at RMB 19.09, with a price-to-earnings (P/E) ratio of 19.5x [2][11] Price Target - The target price for the company's H shares is set at HK$470.00, representing an upside of 18.4% from the current price of HK$397.00 [3][9] Quarterly Performance - In 1Q25, the company achieved a net profit of RMB 9.2 billion, with a gross margin of 20.1% [9][10] - Sales volume in 1Q25 was 1,000,804 units, a 59.8% increase year-on-year [10]

Investment Rating - The report maintains a "BUY" rating for Thermo Fisher, indicating a potential return of over 15% over the next 12 months [15]. Core Insights - Thermo Fisher reported a revenue increase of 0.2% year-over-year to US$10.4 billion in 1Q25, with adjusted EPS rising 0.8% year-over-year to US$5.15, both exceeding Bloomberg consensus estimates [1]. - The company has revised its full-year revenue guidance to project growth between 1.0% and 3.1% for 2025, while adjusting its EPS guidance downward, expecting a range from a 0.6% decline to 4.4% growth due to macroeconomic factors [1][7]. - Management anticipates a US$500 million reduction in revenue guidance due to US policy changes affecting equipment sales, alongside a projected US$400 million revenue reduction from elevated tariffs between the US and China [7]. Financial Summary - For FY25E, revenue is estimated at US$43.806 billion, reflecting a 2.2% year-over-year growth, with adjusted net profit expected to be US$8.461 billion, a 2.5% increase [2][12]. - The adjusted EPS for FY25E is projected at US$22.42, with a P/E ratio of 19.3x [2][12]. - The company plans to invest US$2 billion over the next four years to expand its US manufacturing and R&D facilities, aiming to support long-term growth and market share expansion [7]. Valuation - The target price for Thermo Fisher has been revised down from US$690.00 to US$526.00, representing a 21.9% upside from the current price of US$431.64 [3]. - The DCF valuation indicates a total present value of US$226 billion, with an equity value of US$198.5 billion, leading to a price per share of US$526.00 [10].

Core Insights - The report highlights a significant rebound in global markets, particularly in Hong Kong stocks, driven by consumer discretionary, information technology, and financial sectors, while raw materials and telecommunications services faced declines [3] - The report indicates that the U.S. market experienced volatility, with early gains reversing due to comments from Treasury Secretary suggesting no immediate tariff reductions on China, impacting market sentiment [3] - The report emphasizes the ongoing impact of tariff shocks on the U.S. economy, predicting risks of stagflation in the short term and recession in the long term due to rising import costs and declining demand [3] Company Analysis - New Oriental (EDU US) reported a 2% year-on-year decline in net revenue to $1.18 billion, with a forecasted growth of 10%-13% in the next quarter, reflecting pressures from its overseas business [4] - ZTE Corporation (763 HK) showed an 8% year-on-year revenue growth to RMB 33 billion, driven by strong performance in its enterprise business, although net profit fell by 11% due to declining gross margins [4] - The report provides a list of focus stocks with target prices and potential upside, including Geely Automobile (175 HK) with a target price of HKD 23.00, indicating a 43% upside [5] Market Performance - The Hang Seng Index closed at 22,073, up 2.37% for the day and 29.48% year-to-date, while the Hang Seng Tech Index rose by 3.07% [1] - The report notes that European markets rebounded, particularly Germany's DAX, which increased by 3.14%, reflecting a recovery from tariff impacts [3] - The report highlights the performance of various sectors within the Hong Kong market, with the Hang Seng Financial Index up 2.15% and the Hang Seng Industrial Index up 2.68% [2]

Investment Rating - The report maintains a "BUY" rating on Innolight, indicating a potential return of over 15% over the next 12 months [1][18]. Core Insights - Innolight reported a strong 1Q25 performance with revenue increasing by 38% year-over-year (YoY) to RMB6.7 billion, driven by global cloud capital expenditures and demand for 400G/800G optical transceivers [1]. - The net profit (NP) rose by 57% YoY to RMB1.6 billion, attributed to growth in orders and improved margins, with a gross profit margin (GPM) of 36.7%, significantly above the Bloomberg consensus of 31.9% [1]. - The target price (TP) has been revised to RMB151 based on a 21.5x 2025E P/E, reflecting rising geopolitical uncertainties and lower sector sentiment [1][3]. Financial Performance - Revenue projections for FY25E are set at RMB35,008 million, representing a 46.7% YoY growth, following a 122.6% growth in FY24A [2][8]. - The gross margin is expected to improve to 35.3% in FY25E, with net profit projected at RMB7,721.8 million, a 49.3% increase YoY [2][8]. - The company's earnings per share (EPS) for FY25E is estimated at RMB7.02, with a P/E ratio of 11.6x [2][8]. Market Position and Outlook - Innolight is positioned as a key beneficiary of AI infrastructure investments, with expectations of solid demand for 400G/800G products from both domestic and overseas cloud service providers [7]. - The management anticipates a recovery in 400G shipments supported by rising domestic cloud capital expenditures, despite a temporary decline [7]. - The company has mitigated tariff risks through its offshore manufacturing capacity in Thailand, which benefits from zero-tariff treatment under current trade rules [7].

Core Insights - The report highlights a positive market sentiment driven by comments from former President Trump regarding trade tensions and the Federal Reserve, which has led to a rebound in U.S. stocks and increased risk appetite among investors [3][4] - The MSCI China Index has seen a recent decline, with an implied earnings downgrade of 4%-6%, while the current index PE stands at 11.4 times and a dividend yield of 2.8%, indicating relatively low valuations [3][4] - European markets are experiencing a rebound, but luxury goods companies are facing pressure due to tariff impacts and a strong euro, which may weaken overseas earnings [3][4] Company Analysis - Zhongji Xuchuang (300308 CH) reported a strong Q1 2025 performance with a revenue increase of 38% year-on-year, reaching RMB 6.7 billion, driven by growth in global cloud vendor capital expenditures and demand for 400G/800G optical modules [4] - The net profit for Zhongji Xuchuang increased by 57% year-on-year to RMB 1.6 billion, with a gross margin improvement to 36.7%, significantly above Bloomberg consensus expectations of 31.9% [4] - The management attributes the profit margin outperformance to product mix optimization, operational efficiency improvements, and better margins from overseas factories [4] Sector Performance - The Hang Seng Financial Index rose by 0.81% with a year-to-date increase of 23.67%, while the Hang Seng Real Estate Index saw a decline of 14.75% year-to-date [2] - The report indicates that sectors such as healthcare, materials, and integrated enterprises led the gains in the Hong Kong market, while telecommunications and discretionary consumption sectors faced declines [3] - In the U.S. market, financials, discretionary consumption, and communication services sectors outperformed, while staples, industrials, and healthcare lagged [3] Investment Recommendations - The report maintains a "Buy" rating for Zhongji Xuchuang with a target price adjusted to RMB 151, based on a 21.5 times expected PE for 2025, reflecting geopolitical uncertainties and weaker sector sentiment [4] - Other recommended stocks include Geely Automobile (175 HK) with a target price of HKD 23.00, XPeng Motors (XPEV US) with a target price of USD 28.00, and Anta Sports (2020 HK) with a target price of HKD 119.08, all rated as "Buy" [5]

Macro Economic Overview - The US retail sales rebounded in March due to preemptive purchases driven by tariff concerns, particularly in durable goods like automobiles and appliances, while home improvement and online shopping saw declines, indicating persistent high interest rates and inflation expectations suppressing housing demand and discretionary spending [2] - Federal Reserve Chairman Powell's hawkish remarks acknowledged the dilemma posed by stagflation risks, denying the existence of a Fed Put, and placing the responsibility for stabilizing financial markets on the White House [2] - The White House has adjusted its strategy in response to market volatility, delaying "reciprocal tariffs" on trade partners outside of China and initiating negotiations with allies, aiming to balance market stability and tariff agendas [2] Company Analysis SANY Heavy Industry (600031 CH) - Projected net profit for 2024 is RMB 5.97 billion, a 32% year-on-year increase, aligning with expectations, with a proposed dividend payout ratio of 51%, the highest since 2017 [5] - Focus on emerging markets in Asia-Pacific, Africa, the Middle East, and Latin America, while maintaining caution towards the US and European markets due to geopolitical factors [5] - Target price raised to RMB 22 based on a 24x target P/E ratio, reflecting the upward profit cycle [5] Zhejiang Dingli (603338 CH) - Expected net profit for 2024 is RMB 1.63 billion, a 13% decline year-on-year, significantly below expectations due to preemptive inventory movements to avoid tariff impacts and increased costs from acquisitions [5] - The company anticipates sufficient inventory to meet US demand until September, but remains cautious about unpredictable US tariff policies affecting demand [5] - Target price lowered to RMB 44 based on a 12x 2025 P/E ratio, reflecting a slowdown in earnings [5] Xtep (1368 HK) - Retail sales growth in Q1 2025 met expectations, with a cautious outlook for Q2, influenced by potential impacts from the US-China trade war and expected benefits from consumer downgrading [6][7] - Strong performance in e-commerce sales, exceeding 20% growth, while offline sales showed low single-digit growth [7] - Target price maintained at HKD 7.20, with a buy rating, as the company is expected to benefit from policy support in the sportswear sector [8] iQIYI (IQ US) - Anticipated total revenue for Q1 2025 is RMB 7.08 billion, an 11% year-on-year decline but a 7% quarter-on-quarter increase, aligning with consensus expectations [9] - Operating profit is expected to grow 6% quarter-on-quarter to RMB 430 million, though below consensus due to increased investments in micro-drama content [9] - Target price adjusted to USD 2.60 based on a 13x FY25 P/E ratio, maintaining a buy rating [9] Boss Zhipin (BZ US) - Recognized as China's largest online recruitment platform, with a projected 10% CAGR in total revenue from FY25-27 driven by online penetration and recovery in white-collar recruitment [9] - Expected adjusted operating profit CAGR of 20% over the same period, initiating coverage with a buy rating and a target price of USD 19.5 based on a 20x FY25E P/E [9] InnoScience (2577 HK) - Leading player in the GaN power semiconductor industry with a 33.7% market share in 2023, focusing on design, development, and manufacturing of GaN products [9] - Projected revenue CAGR of 55.2% from 2024-27, with expectations of breakeven in gross and net margins by 2025 and 2027 respectively [9] - Initiating coverage with a buy rating and a target price of HKD 49 based on a 30x 2030 P/E [9]