Employment Data - In July, the U.S. added 73,000 non-farm jobs, below the market expectation of 104,000[5] - The non-farm employment figures for May and June were revised down by 258,000 to 19,000 and 14,000 respectively, resulting in a 3-month moving average of 35,000, the lowest since the pandemic[5] - Private sector job growth increased from 3,000 to 83,000 in July, while goods-producing jobs decreased by 13,000, with manufacturing jobs experiencing three consecutive months of negative growth[5] Unemployment and Labor Participation - The unemployment rate rose from 4.1% to 4.2%, marking a new high since 2021 but still at historical lows[5] - The labor participation rate fell to 62.2%, the lowest since 2022, indicating a contraction in labor supply[5] - The household survey showed a decrease of 260,000 in employment and an increase of 220,000 in unemployment in July[5] Federal Reserve's Dilemma - Fed Chair Powell indicated that even if job growth drops to zero, a stable unemployment rate would suggest a robust labor market due to simultaneous declines in supply and demand[5] - The Fed faces a dilemma as tariffs may drive inflation up, complicating the balance between expanding employment and reducing inflation[5] - It is anticipated that the Fed will likely keep interest rates unchanged in September, followed by rate cuts in October and December[5]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints - LGFVs continued to consolidate, and investors turned to USD issues for higher absolute yields as lower-yielding CNH issues lacked catalysts to tighten further [2] - China's PMI indicates waning economic momentum, and the policy easing window may not open until Q4 2025. China may have stronger motivation to advance economic rebalancing after a potential trade deal with the US [3][11] - Moody's changed the rating outlook of SK Hynix to positive from stable and affirmed its Baa2 rating, and SK Hynix is favored for its strong global market position and solid operating cash flow [7][9] Summary by Relevant Catalogs Trading Desk Comments - VNKRLE obtained up to RMB869mn loans from SZ Metro, and YLLGSP further bought back YLLGSP 5 1/8 05/20/26. VNKRLE 27 - 29 were 0.4 - 0.5pts lower, and YLLGSP 26 was 0.1pt higher [1] - In China IG, MEITUA/WB/XIAOMI 30s ended with 1 bp tighter to 1bp wider. New CB 3 - tranche CNH issues dropped 0.2 - 0.375pts from RO, and there was better buying on the 30yr papers [1] - In HK, HYSAN/NANFUN were unchanged to 0.5pt higher, whilst MTRC perps remained unchanged [1] - For TW lifers, CATLIF 34/39 were 1bp tighter to 2bps wider amid PB selling, NSINTW was unchanged, and SHIKON widened 1bp amid two - way flows [1] - For Thailand banks, BBLTB sub curve tightened 2 - 4bps and KBANK tightened 2bps [1] - In KR, DAESEC 26/29 widened 1bp and NHSECS 28 - 30 was 2bps tighter to 1bp wider. LGENSO curve retraced 2 - 4bps while HYNMTR/HYUELE tightened 1 - 4bps amid PB/AM buying [1] - FRN space is in good demand across Asia and EU bank papers. Investors in the region remained better buyers of Japanese and Yankee AT1s while there were selling flows from London [1] Morning Market Update - The new UBS 6.6 Perp was unchanged from RO at par, the new UBS 7 Perp was 0.1pt higher from RO at par. HAOHUA widened 1 - 2bps. DAESEC tightened 1 - 2bps. STANLN/MIZUHO/SUMIBK FRNs tightened 1 - 2bps. ANZ/CBAAU T2 widened 1 - 2bps [3] Macro News Recap - S&P (-0.37%), Dow (-0.74%) and Nasdaq (-0.03%) were lower on Thursday. US latest initial jobless claims was +218k, lower than the market expectation of +222k. US Jun'25 Core PCE price index was +2.8% yoy, higher than the market expectation of +2.7%. UST yield was largely unchanged on Thursday, 2/5/10/30 yield at 3.94%/3.96%/4.37%/4.89% [6] Desk Analyst Comments - Moody's changed the rating outlook of SK Hynix to positive from stable and affirmed its Baa2 rating, expecting its adjusted EBITDA to increase and adjusted debt/EBITDA to improve in FY25 - 26 [7] - SK Hynix overtook Samsung to become the world's leading memory chipmaker by revenue in Q2 2025, driven by higher demand for AI chips [8] China Economy Analysis - Manufacturing PMI further contracted with fading export front - loading. New order and export order indexes dropped, production moderated, and deflation pressure eased [11][12] - Non - manufacturing PMI softened as both service and construction activities moderated. Service PMI edged down, and construction PMI dipped [11][13] Offshore Asia New Issues - Offshore Asia New Issues (Priced): Chengdu & Europe Industrial Zone issued 156 USD mn in 3 - year bonds with a 6.95% coupon and unrated [17] - Offshore Asia New Issues (Pipeline): No new issues pipeline today [18] News and Market Color - There were 66 credit bonds issued onshore yesterday with an amount of RMB35bn. Month - to - date, 2,097 credit bonds were issued with a total amount of RMB2,143bn raised, representing a 12.7% yoy increase [19] - China new home sales fell 24% yoy in Jul'25 as stimulus impact faded [19] - Various company financial results and events were reported, such as Adani Enterprises' 1QFY26 EBITDA fall, MGM China's 2Q25 net revenue rise, etc. [19]

Macro Economic Overview - The Federal Reserve maintained a hawkish stance, with the economic description shifting from "steady expansion" to "slowing" [2] - The market's expectation for interest rate cuts in 2023 has decreased from 46 basis points to 36 basis points [5] - The U.S. PCE inflation rebounded in June, with core PCE prices rising 2.8% year-on-year, marking a four-month high [4] Industry Insights - The technology sector is seeing mixed performance, with high-end models showing strong demand while overall industry demand remains weak [6] - Companies focusing on high-end flagship models and component upgrades are expected to benefit from anticipated strong demand in the second half of 2025 [6] Company Analysis - China National Pharmaceutical Group (1177 HK) is undergoing a significant transformation with a focus on innovative drug development, particularly in oncology and metabolic diseases, with a target price of HKD 9.40 [7][10] - Meta Platforms (META US) reported a 22% year-on-year revenue increase to USD 47.5 billion, driven by AI-enhanced advertising, with a target price raised to USD 860 [10] - Microsoft (MSFT US) exceeded expectations with a revenue of USD 76.4 billion for FY25, growing 18.1% year-on-year, and raised its target price to USD 601.5 [11] - Luckin Coffee (LKNCY US) showed strong sales growth of 47% year-on-year, with a target price of USD 44.95, despite rising costs [12][14]

Economic Outlook - The Federal Reserve maintained its policy interest rate at 5.25%-5.5%, marking a shift in economic description from "moderate expansion" to "slowing" [2] - The meeting saw two dissenting votes for the first time since 1993, indicating increased division among policymakers [2] - Market expectations for rate cuts in 2023 decreased from 46 basis points to 36 basis points following Powell's comments [1] Inflation and Employment - Powell highlighted that tariffs have been overlooked in their impact on inflation, suggesting that the costs will gradually be passed to consumers [1] - The labor market remains robust, with unemployment rates at historical lows, but a gradual weakening is expected in Q4 [1] - CPI growth is anticipated to rebound slightly in Q3 due to tariff impacts, but may decline again in Q4 as demand slows [1] Future Rate Cuts - The Fed is expected to keep rates unchanged in Q3, with potential cuts in October and December, bringing the year-end policy rate to approximately 3.83% [1] - The anticipated cuts are driven by rising unemployment and the economic impact of tariffs [2] Market Implications - Long-term U.S. Treasury yields are expected to rise initially before declining, with year-end projections at around 4.2% [2] - The U.S. dollar index may rise in Q3 due to inflation rebounds, but could decline in Q4 as inflation falls and rate cuts are implemented [2]

Investment Rating - The report initiates coverage with a "Buy" rating and sets a target price of HKD 9.40, indicating a potential upside of 24.9% from the current price of HKD 7.52 [1][3][23]. Core Insights - The report highlights the significant achievements of the company in its transformation from generic to innovative pharmaceuticals, focusing on key therapeutic areas such as oncology, liver disease/metabolism, respiratory, and surgical/pain management [1][9][26]. - The company has increased its R&D investment, with R&D expenses projected to reach RMB 5.09 billion in 2024, accounting for 17.6% of revenue, up from 9.9% in 2019 [10][40]. - The innovative product pipeline has expanded significantly, with 17 approved innovative drugs by the end of 2024, and the revenue contribution from innovative products is expected to reach 50% by 2025 and 60% by 2027 [10][47]. Financial Summary - For FY23A, the company reported sales revenue of RMB 26.199 billion, with a projected growth of 10.2% in FY24A [2]. - Adjusted net profit for FY23A was RMB 2.589 billion, with an expected increase of 33.5% in FY24A [2]. - The adjusted earnings per share (EPS) is forecasted to grow from RMB 0.14 in FY23A to RMB 0.19 in FY24A [2]. Market Performance - The company's market capitalization is approximately HKD 141.08 billion, with an average trading volume of HKD 860.8 million in March [3]. - The stock has shown strong performance, with a 166.7% increase over the past six months [5]. Product Pipeline and Innovation - The company has a robust pipeline with multiple products showing potential for overseas licensing, including TQC3721, 罗伐昔替尼, and TQB2102 [12][27]. - The oncology segment is highlighted as a key growth area, with 安罗替尼 being a cornerstone product that has received multiple indications and is expected to generate significant sales [13][14]. Business Strategy - The company is focusing on enhancing its supply chain and production efficiency, achieving a procurement coverage rate of 95% by 2024 [28]. - A strategic shift towards a more specialized sales structure has been implemented to improve marketing effectiveness and operational efficiency [33]. Growth Projections - Revenue is expected to grow at a compound annual growth rate (CAGR) of 10.5% from 2024 to 2027, driven by innovative product sales and a strong pipeline [23][24]. - Adjusted net profit is projected to increase at a CAGR of 11.4% during the same period [24].

Report Industry Investment Rating - Not provided in the given content. Core Viewpoints of the Report - Despite a 25 - 30pt increase in VNKRLEs year - to - date, the valuation is still undemanding with upside potential due to SZ Metro's support and Vanke's manageable offshore debt maturities, so the buy recommendation on VNKRLEs is maintained [8]. - The recommendation on YLLGSP is changed to neutral from buy because of its unappealing valuation, although Yanlord is still considered a survivor in the sector [10]. - China's macro - policy is shifting towards economic rebalancing, focusing on boosting household consumption and addressing supply - side competition. The policy implementation window may open in 4Q25, and it may positively impact bond yields, RMB exchange rates, and Chinese stocks [14]. Summary by Relevant Catalogs Trading Desk Comments - Yesterday, in KR, LGENSO 26 - 35s tightened 6 - 12bps after LG Energy signed a USD4.3bn battery supply contract with Tesla. In Chinese IGs, CNOOC/JD 39 - 50s long - end was 0.4 - 0.7pt lower. ZHOSHK 28 tightened 8bps. In financials, MIZUHO/SUMIBK Float 30 - 31s tightened 1bp. In insurance, NSINTW 34 and SHIKON 35 widened. Some AT1s and perpetual bonds rose. In HK, new bonds like LIFUNG 29 and LASUDE/LIHHK 26 increased. In Chinese properties, Yanlord repurchased USD46.65mn of YLLGSP, VNKRLE 27 - 29s decreased, and Vanke got a new loan from SZ Metro [1]. - This morning, LGENSO 27 - 35s widened 2 - 3bps, ZHOSHK 28 tightened 1bp, BBLTB 34 - 40s tightened 2 - 5bps. New CNH CB 30/35/55 were 0.1 - 0.3pt lower. VNKRLE 27 - 29s were 0.3 - 0.4pt lower [2]. Outside Properties - EHICAR 26/27 were up 0.4 - 1.2pts, 1.7 - 2.8pts higher week - to - date. In SE Asia, ADSEZ 27 - 31s were up 0.1 - 0.2pt, and other Adani complex bonds had a 0.1pt decrease to 0.2pt increase. VLLPM 29 lowered 0.8pt [3]. CNH Space - New CNH CCAMCL 29/30 were 0.2 - 0.6pts lower. New CNH TEMASE 30/35/55 and CHMEDA 30/35 closed 0.1 - 0.6pt lower. KCGZIG priced a 3yr CNH1.4bn bond at par. There were two - way interests in some CNH and USD new issues. SPICPD Perp was up 0.1pt [4]. Last Trading Day's Top Movers - Top performers included GWFOOD 3.258 10/29/30 with a 2.5pt increase and EHICAR 7 09/21/26 with a 1.2pt increase. Top underperformers included JMUDIV 6.9 05/30/27 with a 1.3pt decrease and MTRC 5 1/4 04/01/55 with a 1.0pt decrease [5]. Macro News Recap - On Wednesday, S&P was down 0.12%, Dow was down 0.38%, and Nasdaq was up 0.15%. The US Fed kept the benchmark interest rate unchanged. US Jul '25 ADP Non - farm employment was + 104k, higher than expected. US 2Q25 GDP was + 3.0% qoq, higher than expected. Trump mentioned a possible tariff on India, and UST yield was higher [6]. Desk Analyst Comments - Vanke obtained a secured loan of up to RMB869mn from SZ Metro with a 2.34% funding cost. Cumulatively, SZ Metro has provided RMB22.7bn in loans, about 59% unsecured. VNKRLE 3.975 11/09/27 and VNKRLE 3 1/2 11/12/29 are trading at YTM of 13.8% and 11.6% respectively [8]. - Yanlord further repurchased USD46.65mn of YLLGSP 5 1/8 05/20/26, reducing the outstanding amount to USD379.66mn. It had previous repurchases in Apr '25 and early Jul '25. YLLGSP is trading at a YTM of 5.2% [10]. China Policy - The Politburo meeting signals a shift towards economic rebalancing, focusing on boosting consumption and reducing supply - side competition. China may boost consumption through multiple measures and address supply - side issues by eliminating local protectionism, etc. The policy implementation window may open in 4Q25 [14]. Offshore Asia New Issues - No new offshore Asia issues were priced today. There is a pipeline issue from Chengdu & Europe Industrial Zone with a 3 - year tenor, a 7.3% pricing, and an unrated status [22][23]. News and Market Color - Yesterday, 66 credit bonds were issued in onshore primary issuances with an amount of RMB38bn. Month - to - date, 2,033 credit bonds were issued, raising RMB2,110bn, a 12.8% yoy increase [25]. - There are various corporate news, such as Moody's outlook revision for AAC Technologies, HSBC's subsidiary NPL change, JD's acquisition plan, etc. [25].

Industry Insights - The Chinese stock market is experiencing a pullback, with sectors such as consumer discretionary, information technology, and finance leading the decline, while energy, consumer staples, and telecommunications sectors with high dividend yields are rising [2] - The political bureau meeting has set the tone for the second half of the year, focusing on boosting consumption and addressing internal competition, signaling a shift towards economic rebalancing [2][3] - The global AI glasses market is expected to grow significantly, with Ray-Ban Meta showing strong sales performance and Xiaomi setting ambitious shipment targets, indicating a robust growth trajectory for the AI glasses supply chain [3] Company Insights - New Oriental reported a 19% year-on-year increase in net revenue for Q4 FY25, reaching $1.09 billion, exceeding company guidance, while non-GAAP net profit grew by 59% to $98 million, driven by cost optimization measures [4] - For FY26, New Oriental anticipates total revenue growth of 5%-10%, reaching between $5.15 billion and $5.39 billion, which is below consensus expectations due to macroeconomic uncertainties and increased competition [4] - The target price for New Oriental has been adjusted down to $70 from a previous $76, maintaining a "Buy" rating despite the downward revision in revenue forecasts [4]

Report Industry Investment Rating - The report maintains a neutral rating on the Adani complex [11] Core Viewpoints - The expectations of further tender offers from Adani Ports should support the near - term performance of ADSEZs, but the gradual resumption of funding access and potential for more tender offers are fairly priced, so a neutral stance is maintained on the Adani complex [10][11] Summary by Relevant Sections Trading Desk Comments - In KR, HYNMTR/LGENSO Float 30s were 1 - 3bps tighter; in Chinese IGs, BABA 31/MEITUA 30 widened 1bp, BABA 47 - 61s were 1.0 - 1.5pts higher [1] - In financials, MIZUHO/SUMIBK Float 30 - 31s were unchanged to 1bps tighter, HSBC/STANLN Float 30 - 31s were under small selling and closed unchanged to 1bp wider [1] - In insurance, SHIKON/NSINTW 34 - 35s were 1 - 2bps tighter on PB buying, CATLIF 34 widened 1bp on small selling [1] - In HK, DAHSIN 33/SHCMBK 33/BNKEA 34 were 5 - 11bps tighter, LASUDE 26 was 1.8pts higher; REGH 6.5/HYSAN 7.2 Perps lowered 0.6 - 0.9pt [1] - In Chinese properties, VNKRLE 27 - 29s and ROADKG 28 - 30s were 0.1 - 0.6pt lower, ROADKD Perps were 0.1 - 0.2pt higher [1] - In SE Asia, VLLPM 29 rebounded 2.1pts, closed 0.9pt higher WTD [1] Morning Updates - ZHOSHK 28 tightened another 8bps; LGENSO 27 - 35s tightened 8 - 11bps after media reported LG Energy's contract with Tesla [2] - SHIKON/NSINTW 34 - 35s widened 1 - 2bps [2] - ADSEZ: USD438mn validly tendered as of the early tender deadline, ADSEZ 27 - 41s up 0.2 - 0.6pts [2][3] - LIFUNG priced 3.5NC2 USD300mn bond at 98.89 to yield 8.75%, LIFUNG 29 was 0.5pt higher from RO at 98.89 [2] CNH Space - New CNH CCAMCL 2.35 29/CCAMCL 2.43 30 were 0.2 - 0.6pts lower from ROs at par; new CNH TEMASE 30/35/55 and CHMEDA 30/35 were under better selling and closed 0.1 - 0.6pt lower [4] - KCGZIG priced 3yr CNH1.4bn bond at par to yield 2.65% (IPT at 3.3% area); there were two - way interests on CNH names LUOYNG 7 26s/QHCTJS 7 28s and USD new issues BINHCO 4.95 28s/DAZAKI 7 28s [4] - SPICPD Perp was up 0.1pt [4] Last Trading Day's Top Movers - Top Performers: VLLPM 9 3/8 07/29/29 up 2.1pts, LASUDE 5 07/28/26 up 1.8pts, BABA 5 5/8 11/26/54 up 1.5pts [5] - Top Underperformers: REGH 6 1/2 PERP down 0.9pt, ROADKG 6 03/04/29 down 0.6pt, ROADKG 5.9 09/05/28 down 0.6pt [5] Macro News Recap - S&P (-0.30%), Dow (-0.46%) and Nasdaq (-0.38%) were lower on Tuesday; US and China will continue talks on tariff truce extension [6] - US Jul'25 CB Consumer Confidence was 97.2, higher than the market expectation of 95.9; US Jun'25 JOLTS Job Openings was 7.437mn, lower than the market expectation of 7.510mn [6] - UST yield was lower on Tuesday, 2/5/10/30 yield at 3.86%/3.90%/4.34%/4.86% [6] Desk Analyst Comments - Adani Ports announced early tender offer results as of the early deadline; ADSEZ 4 07/30/27 was oversubscribed and no more validly tendered bonds after the early deadline will be accepted [7] - The tender offers will expire on 13 Aug'25 5pm EDT [7] Offshore Asia New Issues - Priced: Chengdu Xisheng Investment Group issued 92.5mn USD 3 - yr bond at 4.95%; China CITIC Bank London Branch issued 300mn USD 3 - yr bond at SOFR + 50; Li & Fung issued 300mn USD 3.5NC2 bond at 8.75% [14] - Pipeline: No new issues pipeline today [15] News and Market Color - 93 credit bonds were issued onshore yesterday with an amount of RMB51bn; month - to - date, 1,971 credit bonds were issued with RMB2,075bn raised, a 13.8% yoy increase [16] - Adani Green's 2,200MW pumped hydro - storage power projects were scrapped at its request; Alibaba inks AI strategic partnership with Standard Chartered Bank [16] Company - Specific News - SK Hynix raises capex for high - bandwidth memory facility by 32% to KRW29tn (cUSD21bn) [19] - MIND ID 1Q25 revenue rises 74.6% yoy to IDR44.2tn (cUSD2.7bn) [19] - Lai Sun Development seeks to sell 50% stake in CCB Tower in Hong Kong [19] - LG Innotek to acquire stake in US tech firm Aeva for AI strategic collaboration [19] - Logan considers proposing a deeper haircut under offshore debt restructuring [19] - Nissan to consolidate Mexico production in one plant [19] - South Korean president blasts POSCO unit over fatal workplace accidents [19] - SK On plans to raise KRW2tn (cUSD1.4bn) through stock price return swap [19] - San Miguel Corp completed the redemption of SMCPM 5.5 Perp [19] - SoftBank - backed eyewear chain filed for up to USD923mn India IPO [19] - Tata Motors nears USD4.5bn acquisition of Iveco [19] - Vedanta may not get PCF providers' consent to prepay facility on 8 Aug'25 [19]

Core Insights - The report highlights the mixed performance of the Chinese stock market, with A-shares showing potential for greater rebound compared to Hong Kong stocks due to economic rebalancing policies [2] - The report emphasizes the strong growth in the CDMO sector driven by robust demand for commercial production in the pharmaceutical market post-COVID-19 [4] - The report indicates that WuXi AppTec (药明康德) has shown impressive revenue growth despite macroeconomic uncertainties, with a 20.6% year-on-year increase in revenue for the first half of 2025 [3][4] Industry Analysis - The WAIC conference showcased trends in technology innovation, with companies like Tencent and JD.com accelerating their AI applications and open-source ecosystems [3] - The report notes that the demand for AI applications, particularly in the fields of robotics and autonomous driving, is expected to support the growth of cloud services in the internet sector [3] - The semiconductor industry is highlighted with Samsung's significant investment in the U.S. for advanced chip packaging, which could challenge TSMC's dominance [2] Company Analysis - WuXi AppTec's TIDES revenue surged by 141.6% year-on-year, prompting management to raise the full-year revenue growth forecast from 60% to 80% [4][5] - The company has seen a 37.2% year-on-year increase in its order backlog, particularly in the TIDES business, indicating strong future demand [5] - WuXi AppTec's management has adjusted its full-year guidance, expecting a 13-17% growth in continuous operating revenue, reflecting strong business execution [3][6]

Investment Rating - The industry investment rating is "Outperform the Market," indicating that the industry is expected to perform better than the market benchmark over the next 12 months [56]. Core Insights - The WAIC conference highlighted key trends in technology innovation, emphasizing the acceleration of intelligent agent applications by companies like Tencent and JD.com, the rapid development of open-source ecosystems supporting AI, and the focus on world models and embodied intelligence [5][4]. - The report recommends companies with strong technological capabilities and broad application scenarios, including Alibaba, Tencent, Kuaishou, Baidu, Horizon Robotics, Li Auto, and Xpeng, as they are expected to benefit from the increasing demand for large model applications [5][4]. Summary by Sections AI Development and Applications - Tencent has launched over 10 intelligent agents across various verticals, while JD.com has open-sourced its JoyAgent intelligent agent [5][4]. - Alibaba's Tongyi Qianwen has surpassed 400 million downloads, with over 140,000 derivative models created [5][4]. - The report notes that Tencent's mixed 3D world model 1.0 significantly simplifies the 3D scene construction process, enhancing efficiency in game development and digital content creation [9][4]. Autonomous Driving - The report identifies a dual inflection point in the autonomous driving sector, with improved regulatory environments and the introduction of Tesla's advanced Full Self-Driving (FSD) technology in China expected to boost competition [4][5]. - The penetration rate of L2+ autonomous driving vehicles in China is estimated to be around 30-35%, with projections indicating it could exceed 50% by 2026 [4][5]. Company Recommendations - The report recommends investing in companies with robust technological foundations and diverse application scenarios, specifically highlighting Alibaba, Tencent, Kuaishou, Baidu, Horizon Robotics, Li Auto, and Xpeng [5][4]. - The anticipated growth in cloud business driven by the increasing demand for large model applications is expected to support the stock performance of these companies [5][4].