Group 1: Economic Indicators - The US January Services PMI fell to 52.8 from 54.1 in December, below the expected 54, indicating a slowdown in service sector growth but still in expansion territory[1] - The Manufacturing PMI rose to 50.9 from 49.3 in December, marking the first expansion in 10 months, with a corresponding GDP growth rate of approximately 2.4%[2] - The New Orders Index for manufacturing increased to 55.1, the highest in nearly three years, driven by pre-tariff rush effects[2] Group 2: Inflation and Employment - The Services Price Index decreased from 64.4 to 60.4, indicating a continued trend of easing inflation in the service sector[1] - The Employment Index in the services sector rose from 51.4 to 52.3, suggesting strong non-farm payrolls for the month[1] - The Manufacturing Employment Index improved from 45.3 to 50.3, with a decrease in the proportion of companies laying off workers[2] Group 3: Market Reactions and Future Outlook - PMI data has alleviated some investor concerns about inflation rebound, with US Treasury Secretary reaffirming a focus on oil prices to control inflation[3] - The financial conditions in the US have tightened due to rising dollar rates and increased market volatility, influenced by uncertainties surrounding Trump’s policies[3] - Economic growth and inflation are expected to moderate over the next two quarters, with the Fed likely to pause rate cuts in March and May, and potentially cut rates by 25 basis points in June and September[4]

Macro - Trump's tariff policy may accelerate inflation in the US, delaying Fed rate cuts and impacting the stock market negatively[1] - China's economy is expected to continue its recovery, with housing and durable goods sales indicating improved consumer demand[1] - Long-term economic pressures include trade wars and diminishing effects of policy stimulus, but counter-cyclical policies may adapt to circumstances[1] Technology - The technology sector is expected to outperform the market due to recovering global demand for mobile devices and AI integration[2] - Key investment themes include the promotion of AI terminals and high growth in AI server demand, with specific companies recommended for investment[2] - Catalysts for growth include domestic subsidies and advancements in AI technology[2] Semiconductor - Optimism remains for the semiconductor sector, focusing on AI and self-sufficiency in the supply chain as primary investment themes[3] - Short-term pressures on AI semiconductor stocks due to cost-effective models, but long-term demand for computing power is expected to rise significantly[3] - Recommended stocks include Zhongji Xuchuang and Beifang Huachuang, with a new focus on mergers and acquisitions in the semiconductor industry[3] Internet - Stock price movements in the internet sector are currently driven by market sentiment, influenced by AI developments and trade tensions[4] - Key investment themes include mature businesses with growth potential and sectors benefiting from consumer recovery[4] - Recommended stocks include Tencent, NetEase, Alibaba, and Meituan, focusing on those with strong fundamentals[4] Pharmaceuticals - The pharmaceutical sector is expected to outperform due to improved macro conditions and overseas interest rate cuts[6] - Innovative drugs may benefit from commercial insurance coverage, enhancing payment conditions[6] - Recommended stocks include WuXi AppTec and BeiGene, focusing on companies with strong growth potential[6] Consumer Goods - Defensive sectors like food and beverage are expected to maintain valuations and performance amid a weak environment[7] - The beer industry is projected to grow by 12% year-on-year by December 2024, driven by mid-to-high-end products[7] - Recommended stocks include Nongfu Spring and China Resources Beverage, focusing on companies with strong market positions[8] Automotive - New energy vehicle sales saw a 41% month-on-month decline in January, but a 40% year-on-year increase[10] - The "old-for-new" policy is expected to boost sales, with specific companies like Geely and XPeng recommended for investment[10] - Performance differentiation among automakers is anticipated, with some companies showing resilience in earnings[10] Real Estate - The top 10 property developers saw a 1.5% year-on-year decline in January sales, with some companies showing significant growth[11] - New housing sales are projected to decline by 11% in 2025, while second-hand housing transactions are expected to increase by 5%[11] - Recommended stocks include China Resources Land and Longfor Group, focusing on companies with strong operational capabilities[12] Insurance - The insurance sector is expected to see strong growth in new business value, driven by favorable market conditions[13] - Life insurance companies are projected to experience double-digit growth in new business value in 2024[13] - Recommended stocks include China Pacific Insurance and Ping An Insurance, focusing on companies with robust growth prospects[15]

Macroeconomic Insights - The US services PMI showed a moderate decline but remains in expansion, indicating economic resilience despite slowing demand and easing inflation[1] - Manufacturing PMI returned above the threshold for the first time in 10 months, with significant rebounds in demand, production, and employment, potentially due to real estate recovery and supply chain improvements[1] - Market concerns about inflation have eased slightly, supported by the US Treasury Secretary's commitment to controlling inflation and non-intervention in the Federal Reserve's policies[1] Company Analysis - Yum China - For Q4 FY24, Yum China's sales and net profit grew by 4% and 10% respectively, aligning with market expectations, driven primarily by a 14% increase in delivery sales[2] - Same-store sales declined by 1% in Q4, an improvement from a 3% drop in Q3, with customer traffic growth for KFC and Pizza Hut contributing positively[2] - Management projects system sales growth in FY25 to be in the mid-single digits, with a slight decline in raw material prices and a modest increase in labor costs[4] Company Analysis - Thermo Fisher - Thermo Fisher reported a 4.7% increase in revenue and a 7.6% rise in adjusted EPS for Q4 FY24, exceeding consensus estimates[7] - The company anticipates revenue growth of 1.4-2.6% and adjusted EPS growth of 5.7-7.5% for FY25, supported by strong demand in the pharmaceutical sector[7] - Capital expenditures are expected to rise to $1.4-1.7 billion in FY25, marking an 11% increase, indicating confidence in future growth[8] Strategic Market Insights - The Chinese market for Thermo Fisher showed low single-digit growth in FY24, with a positive trend observed throughout the year, indicating stabilization[9] - Management highlighted that China's equipment upgrade stimulus policies have begun to yield revenue, suggesting a potential recovery in this strategic market[9]

Investment Rating - The report maintains a "BUY" rating for Thermo Fisher, with a target price raised from US$670 to US$690, indicating an upside potential of 18.5% from the current price of US$582.38 [3][7]. Core Insights - Thermo Fisher delivered a strong performance in 4Q24, with revenue growth of 4.7% YoY and adjusted EPS growth of 7.6%, surpassing consensus estimates [1][7]. - The company anticipates revenue growth of 1.4-2.6% YoY and adjusted EPS growth of 5.7-7.5% YoY for 2025, reflecting a positive outlook [1][7]. - A robust demand outlook is expected to continue, driven by pharmaceutical innovation and a favorable biotech funding environment, with management projecting long-term industry growth of 4-6% and organic growth for Thermo Fisher of 7-9% [7][8]. - The company plans to invest US$1.4-1.7 billion in capital expenditures in 2025, marking an 11% YoY increase, the first such growth since 2021 [7]. Financial Summary - For FY24, Thermo Fisher reported revenue of US$42,879 million, with a slight YoY growth of 0.1%. The forecast for FY25 is US$44,129 million, representing a growth of 2.9% YoY [2][15]. - Adjusted net profit for FY24 was US$8,380 million, with an expected increase to US$8,852 million in FY25, reflecting a growth of 5.6% YoY [2][15]. - The adjusted EPS for FY24 was US$21.94, projected to rise to US$23.38 in FY25, indicating a growth of 6.6% [2][15]. Segment Performance - In 4Q24, all business segments showed sequential improvements, with Life Science growing by 5.5% YoY, Analytical Instruments by 7.3% YoY, and Laboratory Products and Biopharma Services by 3.8% YoY [7][8]. - The clinical CRO business experienced low single-digit growth in 2024, while the demand from China showed signs of recovery, with low single-digit growth in revenue [7][8]. Market Position - Thermo Fisher's market capitalization stands at approximately US$222.47 billion, with significant institutional ownership from Vanguard (8.6%) and BlackRock (7.6%) [3][4]. - The stock has shown a 1-month performance of 8.4% and a 3-month performance of 4.1%, indicating positive market sentiment [5][6].

Economic Indicators - The ISM Services PMI decreased from 54.1 in December to 52.8 in January, indicating a slowdown in service sector growth but remaining in expansion territory[2] - The Manufacturing PMI rose from 49.3 in December to 50.9 in January, marking the first expansion in nearly 10 months, with a corresponding GDP growth rate of approximately 2.4%[2] Employment and Inflation - The employment index in the services sector increased from 51.4 to 52.3, suggesting strong non-farm payrolls for the month[2] - The prices index for services fell from 64.4 to 60.4, indicating a continued trend of slowing inflation in the service sector[2] Market Reactions and Future Outlook - PMI data alleviated some investor concerns regarding inflation rebound, with U.S. Treasury Secretary reiterating a commitment to lower inflation without interfering with Federal Reserve decisions[1] - Due to uncertainties surrounding Trump's policies, the Federal Reserve is expected to pause interest rate cuts in March and May, with potential cuts of 25 basis points in June and September[1][2]

Investment Rating - The report maintains a "BUY" rating for Alphabet, with a target price adjusted to US$234.00, reflecting a potential upside of 21.1% from the current price of US$193.30 [1][2]. Core Insights - Alphabet's 4Q24 results showed net revenue growth of 13% YoY to US$81.6 billion and net income growth of 28% YoY to US$26.5 billion, aligning with consensus estimates [1]. - For FY24, net income increased by 36% YoY to US$100.1 billion, driven by improved operating efficiency and cost savings from office space optimization [1]. - Management anticipates a significant increase in capital expenditures to approximately US$75 billion in FY25E, a 43% YoY increase, primarily for AI and cloud investments, which may pressure margins [1][6]. - The report indicates a slight reduction in FY25-26E net income forecasts by 1-2% due to higher-than-expected AI investments [1]. Financial Performance Summary - FY23A revenue was US$307.4 billion, projected to grow to US$350.0 billion in FY24A and further to US$392.3 billion in FY25E [2][11]. - Net profit for FY23A was US$73.8 billion, expected to rise to US$100.1 billion in FY24A and US$110.7 billion in FY25E [2][11]. - The consensus EPS is projected to increase from US$5.84 in FY23A to US$8.13 in FY24A and US$9.14 in FY25E [2]. Advertising and Cloud Revenue Insights - Google Advertising maintained solid growth, with Google Search & other revenue increasing by 12.5% YoY to US$54.0 billion in 4Q24, driven by ad spending in financial services and retail [6]. - YouTube ad revenue grew by 13.8% YoY to US$10.5 billion, significantly boosted by increased ad spending during the US elections [6]. - Google Cloud revenue grew by 30% YoY to US$12.0 billion in 4Q24, although growth decelerated due to supply constraints [6]. AI Investment and Future Outlook - Alphabet plans to enhance AI investments to unlock growth potential, with a focus on increasing AI capacity to meet rising demand [6][9]. - The operating profit margin improved by 4.6 percentage points YoY to 32.1% in 4Q24, attributed to operational efficiencies [6]. - Management expects variability in cloud revenue growth rates in 2025, depending on the timing of new capacity deployment [6].

Investment Rating - The report maintains a BUY rating on Innolight with a target price of RMB186.00, indicating a potential upside of 45.0% from the current price of RMB128.25 [2][6]. Core Insights - Innolight is expected to see a significant increase in net profit (NP) for FY24, projected to rise by 111.6%-166.9% to RMB4.6 billion - RMB5.8 billion, with a midpoint of RMB5.2 billion reflecting a 139.2% year-over-year growth [1][6]. - The company is positioned as a key beneficiary in the ongoing AI infrastructure investment cycle, driven by strong global demand for computing power [1][6]. - Recent developments in AI spending, including substantial investments from major companies, indicate a robust outlook for AI-related products, particularly optical transceivers [1][6]. Financial Summary - Revenue is projected to grow from RMB10,718 million in FY23 to RMB24,269 million in FY24, representing a year-over-year growth of 126.4% [7][9]. - Net profit is expected to increase from RMB2,174 million in FY23 to RMB5,276 million in FY24, marking a 142.8% growth [7][9]. - The gross margin is anticipated to remain stable at around 33.3% in FY24, slightly decreasing to 32.3% in FY25 [7][9]. Share Performance - The stock has experienced a 1-month decline of 2.6% and a 3-month decline of 18.4%, indicating recent volatility [4]. - The 52-week high and low for the stock are RMB185.83 and RMB72.29, respectively, reflecting significant price fluctuations [2][4]. Growth Drivers - The main growth driver for Innolight in 2025 is expected to be the 800G product line, with a gradual ramp-up of 1.6T products anticipated in subsequent years [6][9]. - The company has seen strong demand for its 400/800G products, with a favorable product mix expected to shift towards higher sales of 800G products in 2025 [6][9]. Market Context - The report highlights that the fear surrounding the mainstream adoption of CPO solutions is overstated, as there are still technical challenges to overcome [1][6]. - Major AI spending initiatives, such as Meta's planned $60-65 billion capex for 2025 and ByteDance's $12 billion consideration for AI investments, underscore the ongoing demand for AI computing power [1][6].

Investment Rating - The report maintains a "BUY" rating for Microsoft, indicating a potential return of over 15% over the next 12 months [26]. Core Insights - Microsoft reported 2QFY25 results with revenue of US$69.6 billion, up 12% YoY, and net profit of US$24.1 billion, up 10% YoY, both exceeding consensus estimates [1][2]. - The growth in cloud revenue, particularly from AI-related services, is a key focus, with Azure AI services revenue generation exceeding expectations [1][2]. - The target price is set at US$503.1, reflecting a slight increase from the previous target price of US$501.9, translating to a 32x FY26E PE [2][18]. Financial Performance - Revenue growth for the Intelligent Cloud (IC) segment was 19% YoY, contributing significantly to overall revenue, while Azure and other cloud services saw a 31% YoY increase [1][9]. - The Productivity and Business Processes (PBP) segment reported revenue of US$29.4 billion, up 14% YoY, with operating profit margin expanding to 57.4% [1][9]. - Capital expenditures for 2QFY25 were US$22.6 billion, a 97% increase YoY, indicating strong investment to meet demand [1][9]. Forecast and Valuation Changes - Revenue and net profit forecasts for FY25E were slightly revised down by 1.7% and 2.4% respectively, due to adjustments in cloud revenue growth expectations [16][17]. - The overall operating profit margin is expected to improve, with projections of 44.9% for FY25E [16][17]. - The report highlights a strong outlook for AI-related monetization as a critical driver for stock price in the next 6-12 months [1][2].

Investment Rating - The report maintains a "BUY" rating for Meta, with a target price raised to US$835, reflecting a potential upside of 21.2% from the current price of US$689.18 [1][2][9]. Core Insights - Meta reported solid 4Q24 results, with total revenue increasing by 21% year-over-year to US$48.4 billion, exceeding Bloomberg consensus estimates by 3%. Net income rose by 49% year-over-year to US$20.8 billion, 18% above consensus, largely due to favorable legal accrual reductions and lower restructuring costs [1][2]. - For FY24, total revenue and net income grew by 22% and 59% year-over-year, reaching US$164.5 billion and US$62.4 billion, respectively. Management anticipates revenue growth of 8-15% year-over-year for 1Q25, with total revenue projected between US$39.5 billion and US$41.8 billion [1][2][11]. - The company is significantly increasing investments in AI, with total expenses expected to grow by 20-25% year-over-year to US$114-119 billion, and capital expenditures projected to rise by 53-66% year-over-year to US$60-65 billion [1][2][11]. Financial Performance - In 4Q24, the Family of Apps ad revenue grew by 21% year-over-year to US$47.3 billion, driven by a 6% increase in ad impressions and a 14% rise in average price per ad, aided by AI optimizations [6][11]. - The annual revenue run-rate for Advantage+ shopping campaigns surpassed US$20 billion in 4Q24, marking a 70% year-over-year increase, with over 4 million advertisers utilizing Meta's generative AI ad creative tools [6][11]. - The report outlines a forecast for FY25E total revenue of US$187.7 billion, with net profit expected to reach US$65.9 billion, reflecting a 2.1% increase from previous estimates [7][8][11]. Valuation Metrics - The target price of US$835 is based on a 32x FY25E P/E ratio, which is a premium to the sector average of 24x, indicating confidence in Meta's long-term growth potential [9][10]. - The report highlights that Meta's P/E ratio is projected to decrease from 28.0 in FY24 to 26.4 in FY25, suggesting a favorable valuation compared to peers [11].

Investment Rating - The report maintains a "BUY" rating for ServiceNow, indicating a potential return of over 15% over the next 12 months [18]. Core Insights - ServiceNow reported 4Q24 results with total revenue increasing by 21% YoY to US$2.96 billion, and non-GAAP operating profit growing by 22% YoY to US$872 million, both in line with consensus estimates [1]. - For FY25, management guides subscription revenue to increase by 19.5-20% YoY on a constant currency basis, slightly below the consensus estimate of 20.5% YoY [1]. - The target price has been raised to US$1,220 based on a 55x FY25E EV/EBITDA, up from a previous target of US$1,075 at 48x FY25 EV/EBITDA [1][11]. Financial Performance - FY24 total revenue was up by 22% YoY to US$10.98 billion, with non-GAAP operating profit margin (OPM) increasing by 1.9 percentage points YoY to 29.6% [1]. - The adjusted net profit for FY24 was US$2.90 billion, reflecting a YoY growth of 31% [2]. - The forecast for FY25E total revenue is US$13.04 billion, with a projected YoY growth of 21.1% [2]. Market Position and Growth Drivers - ServiceNow is expected to benefit from growing enterprise demand for digitalization and agentic AI, with significant growth in large deals [1]. - The number of customers generating over US$1 million and US$20 million in annual contract value grew by 12% and 35% YoY, respectively, in 4Q24 [8]. - Management reported a 150% QoQ growth in Now Assist deals, indicating strong momentum in AI adoption [8]. Valuation Metrics - The current market capitalization of ServiceNow is approximately US$211.82 billion [3]. - The stock is currently trading at a price of US$1,018.38, with an upside potential of 19.8% to the target price of US$1,220 [3]. - The P/E ratio for FY25E is projected at 120.8x, which is a premium compared to the sector average [2][11].