Report Industry Investment Rating - Not provided Core View of the Report - Longfor has shown good debt maturity management and debt reduction ability despite weak 1H25 results The growing contribution from investment properties and property management partly offsets the impact of weak property sales and margin pressure The current valuation of LNGFORs offers good carry plays, so the buy rating on LNGFORs is maintained [7] Summaries by Relevant Catalogs Trading Desk Comments - Last Friday, HYUELE 28 - 30s tightened 2 - 3bps, SHIKON 35 tightened another 10bps, CATLIFs/NSINTW 34 tightened 4 - 8bps, and FUBON 35 was 5bps tighter Japan - related bonds like KYUSEL 35/NOMURA 35 etc were 3 - 5bps tighter Some PERP bonds increased in price MEITUA curve was under pressure, while FOSUNI 28 - 29s saw buying and the new FOSUNI 29s firmed slightly Macau gaming bonds had price changes ranging from 0.1pt lower to 0.3pt higher MTRC PERPs were 0.3pt higher and LIHHK 4.8 06/18/26 was down 0.8pt LNGFOR 27 - 32s climbed 0.5 - 0.9pt BBLTB subs in Southeast Asia were 3 - 5bps tighter Renew Energy complex bonds like RPVIN 28/RNW 26/INCLEN 27 were 0.1 - 0.2pt higher RILIN 45 - 62s rose 1.6pts and VLLPM 9 3/8 07/29/29 dropped 1.9pts [2] - This morning (8 Sep 2025), HYUELE 4.25 28/4.375 30 widened 1 - 2bps, TW lifers CATLIFs/FUBON/NSINTW/SHIKON were 1 - 2bps wider, ZHOSHK 28 widened 5bps Asia Perps were 0.3 - 0.5pt higher with better institutional buying LNGFOR 28 was 0.1pt lower and others were unchanged SHUION 26 was 0.4pt higher as Shui On plans to issue USD bonds for refinancing [3] Top Performers and Underperformers - Top Performers include CHGDNU 4.8 09/11/48 with a price of 91.5 and a change of 1.9, TAISEM 3 1/4 10/25/51 with a price of 76.6 and a change of 1.7 etc [4] - Top Underperformers include VLLPM 9 3/8 07/29/29 with a price of 62.6 and a change of -1.9, LIHHK 4.8 06/18/26 with a price of 93.6 and a change of -0.8 etc [4] Macro News Recap - Last Friday, S&P (-0.32%), Dow (-0.48%) and Nasdaq (-0.03%) were lower US Aug'25 nonfarm payrolls was +22k, lower than the market expectation of +75k, and the unemployment rate was 4.3% as expected UST yield was lower, with 2/5/10/30 - year yields at 3.51%/3.59%/4.10%/4.78% [6] Desk Analyst Comments - LNGFOR has passed through the repayment hump, and the buy rating on LNGFORs is maintained [7] Offshore Asia New Issues - No new offshore Asia issues were priced today [10] - Pipeline issues include Petron Corp with PerpNC3 tenor at 7.35% (unrated), Shaoxing Shangyu State - owned Capital with 3 - year tenor at 4.8% (unrated), and Westpac with 5 - year tenor at T + 85 (A1/AA - /A +) [11] News and Market Color - Yesterday, 83 credit bonds were issued onshore with an amount of RMB54bn Month - to - date, 278 credit bonds were issued with a total amount of RMB207bn, a 17.2% yoy decrease [15] - Shenzhen eased home purchasing rules Moody's withdrew the Baa2 rating of AVIC Industry - Finance Alibaba reduced its stake in Singapore Post, cashing out SGD65mn (cUSD50.4mn) Central Huijin became China Cinda's largest shareholder with 58% stake Wanda Group plans to raise up to USD200mn in private debt Emperor International will sell Macau properties for HKD90mn (cUSD11.5mn) LG Electronics aims to double European sales in five years Fitch revised Meituan's outlook to stable from positive S&P revised Zhongsheng's outlook to negative from stable [15]

Investment Rating - The industry is rated as "Outperform" indicating that the sector is expected to perform better than the market benchmark over the next 12 months [57]. Core Insights - The overall performance of the pharmaceutical industry in China remains weak, with average revenue growth of 1.6% and average net profit declining by 3.2% in the first half of 2025. This is a deterioration compared to the full year of 2024, where revenue growth was 3.2% and net profit declined by 1.4% [5][6]. - The innovative drug sector (Biotech) continues to show strong performance, with an average revenue growth of 35% in 1H25, supported by favorable medical insurance payment policies and successful overseas licensing deals [4][9]. - The pharmaceutical sector (Pharma) shows stable performance with an average revenue growth of 0.8% and net profit growth of 3.4% in 1H25, benefiting from a rich pipeline of innovative drugs [4][9]. - The CXO sector has seen significant recovery, with average revenue growth of 15.5% and net profit growth of 32.7% in 1H25, driven by strong demand for commercial production [37]. - The medical device sector is experiencing mixed performance, particularly the IVD segment, which saw a revenue decline of 14% in 1H25 due to policy impacts and price competition [14][8]. Summary by Sections Pharmaceutical Industry Performance - The average revenue growth for A-share and Hong Kong-listed pharmaceutical companies was 1.6% in 1H25, with net profit declining by 3.2% compared to 2024 [5][6]. - The innovative drug segment remains robust, with a 35% revenue increase, while the traditional generic drug business is under pressure [4][9]. CXO Sector - The CXO sector's revenue grew by 15.5% and net profit by 32.7% in 1H25, largely due to low base effects and strong demand for commercial production services [37]. Medical Devices - The IVD segment faced significant challenges, with a 14% revenue decline in 1H25, attributed to policy changes and competitive pricing pressures [14][8]. - Despite some recovery in medical device tenders, the overall market remains under pressure due to ongoing inventory clearance and competitive dynamics [14]. Future Outlook - The pharmaceutical industry is expected to benefit from the optimization of domestic procurement policies and the continued growth of innovative drug exports, although caution is advised regarding stock price increases [38]. - The report recommends buying shares in companies such as Sangamo Therapeutics (1530 HK), Junshi Biosciences (2367 HK), WuXi AppTec (2268 HK), and others due to their strong growth potential [38].

Group 1: Market Overview - Global markets showed mixed performance, with the Hang Seng Index rising by 1.43% and the S&P 500 declining by 0.32% year-to-date [1][3] - The Chinese stock market saw significant gains, particularly in sectors like materials, healthcare, and industrials, with net inflows of 56.23 billion HKD from southbound funds [3][4] - The U.S. labor market showed signs of weakness, with non-farm payrolls increasing by only 22,000 in August, leading to heightened expectations for interest rate cuts by the Federal Reserve [4][5] Group 2: Industry Insights - The pharmaceutical industry experienced overall weak growth, with average revenue growth of 1.6% and net profit declining by 3.2% in the first half of 2025 [6][8] - The innovative drug sector performed well, with an average revenue growth of 35%, driven by favorable healthcare payment environments and international licensing agreements [6][8] - The CXO sector saw a revenue increase of 15.5% and net profit growth of 32.7%, primarily due to strong demand for GLP-1 products [7][8] Group 3: Company Analysis - Broadcom reported a revenue of 16 billion USD for Q3 2025, exceeding market expectations, with a year-on-year growth of 22% driven by AI semiconductor and VMware business [9][10] - Black Sesame Technologies achieved a revenue of 253 million HKD in the first half of 2025, a 40% increase, although gross margins were under pressure due to unfavorable product mix [11] - The report recommends buying shares in companies like 三生制药 (Sangfor Technologies) and 百济神州 (BeiGene), highlighting their potential for growth in the pharmaceutical sector [12]

Employment Data - In August, the U.S. added only 22,000 non-farm jobs, significantly below the market expectation of 75,000[6] - The June data was revised down from 14,000 to -13,000, ending a streak of 53 consecutive months of job growth[6] - The three-month moving average of job growth has dropped to 29,000, the lowest since the pandemic began, compared to an average of 180,000 in 2018-2019[6] Labor Market Trends - The unemployment rate rose to 4.3% in August, the highest since 2021, primarily due to an increase in the labor participation rate from 62.2% to 63.3%[6] - Full-time employment decreased by 357,000, while part-time jobs increased by 597,000, indicating a cooling labor market[6] - Private sector job growth fell from 77,000 in July to 38,000 in August, with goods-producing sectors losing 25,000 jobs[6] Federal Reserve Outlook - The Federal Reserve is expected to begin cutting interest rates in September, as the risk of job market deterioration outweighs inflation concerns[6] - Core inflation remains high, which may lead the Fed to pause rate cuts in October before resuming in December, with the year-end federal funds rate projected around 3.83%[6] - Further rate cuts are anticipated next year as economic growth stabilizes and inflation declines[6]

Economic Indicators - The ISM Services PMI increased from 50.1 in July to 52 in August, exceeding market expectations of 51, indicating economic expansion[2] - The Services PMI corresponds to an annualized GDP growth rate of 1.1%[2] - The Manufacturing PMI rose slightly from 48 in July to 48.7 in August, but remained below the market expectation of 49, indicating a continued contraction[2] Employment and Inflation - The employment index in the services sector slightly improved from 46.4 to 46.5, indicating ongoing weakness in the job market[2] - The price index for services decreased marginally from 69.9 to 69.2, but remains significantly high compared to the post-pandemic average[2] - If August's non-farm payrolls are below 50,000 and the unemployment rate rises to 4.3%, the Federal Reserve may consider rate cuts in September or October[1] Market Outlook - The new orders index in manufacturing surged from 47.1 to 51.4, marking the highest expansion rate since the beginning of the year[2] - The Federal Reserve's focus has shifted from inflation risks to a more balanced assessment due to recent labor market data adjustments[2] - Further rate cuts are anticipated in December and potentially two more in the following year as economic growth stabilizes and inflation decreases[1]

Market Overview - The global stock markets showed mixed performance, with the Hang Seng Index closing at 25,059, down 1.12% for the day but up 24.92% year-to-date [1] - The US markets, including the Dow Jones and S&P 500, experienced gains of 0.77% and 0.83% respectively, while the Nasdaq rose by 0.98% [1] - Chinese stock markets faced declines, particularly in hardware technology, with the Shenzhen Composite Index down 2.05% [1][3] Sector Performance - In the Hong Kong market, the Hang Seng Financial Index decreased by 0.42%, while the Hang Seng Industrial Index fell by 1.58% [2] - The hardware technology sector in China led the declines, while sectors such as retail and food saw gains [3] - The US market saw a rise in consumer discretionary, banking, and solar sectors, while utilities and AI-related stocks lagged [3] Company Analysis - Salesforce reported a 10% year-on-year revenue growth to $10.2 billion for Q2 FY26, with non-GAAP net profit increasing by 12% to $2.8 billion, aligning with Bloomberg consensus [4] - The company’s cRPO grew by 11% to $29.4 billion, driven by strong orders from small and medium-sized enterprises [4] - Salesforce's AI and data cloud business saw an impressive annual recurring revenue growth of approximately 120% [4] Investment Recommendations - The report maintains a "Buy" rating for several companies, including Geely Automobile, Li Auto, and Tencent, with target prices indicating significant upside potential [5] - Geely Automobile is rated "Buy" with a target price of 25.00 HKD, representing a 37% upside from its current price of 18.24 HKD [5] - Tencent is also rated "Buy" with a target price of 705.00 HKD, suggesting an 18% upside from its current price of 599.50 HKD [5]

Market Overview - Global markets showed mixed performance, with the Hang Seng Index closing at 25,343, down 0.60% for the day but up 26.34% year-to-date [1] - The Shanghai Composite Index fell by 1.16% to 3,814, while the Shenzhen Composite Index decreased by 1.41% to 2,380 [1] - In the US, the Dow Jones Industrial Average decreased slightly by 0.05% to 45,271, while the S&P 500 rose by 0.51% to 6,448 [1] Sector Performance - The Hang Seng Financial Index fell by 0.72% to 44,195, while the Hang Seng Real Estate Index dropped by 1.23% to 18,116 [2] - The healthcare sector showed resilience, with medical devices and innovative drugs performing well [3] Company Analysis: VILIZHIBO (9887 HK) - VILIZHIBO focuses on developing next-generation immuno-oncology therapies, with a broad product pipeline including immune checkpoint inhibitors and T-cell engagers [4] - The company has established proprietary platforms for drug innovation, including the LeadsBody platform for CD3 T-cell engagers and the X-body platform for 4-1BB agonists [4] - LBL-024, targeting PD-L1/4-1BB, is in the registration clinical stage and shows promising clinical data, with an overall response rate (ORR) of 33.3% in specific cancer patients [5] Company Analysis: China Life (2628 HK) - China Life reported a net profit increase of 7% to 40.9 billion RMB for the first half of 2025, despite a 31% decline in Q2 due to rising insurance service costs [7] - The new business value grew by 20.3% to 28.5 billion RMB, driven by significant growth in bancassurance channels [8] - The company’s core equity assets increased, benefiting from realized capital gains and dividend income [8] Company Analysis: JS Global (1691 HK) - JS Global's SharkNinja brand continues to see high growth in the Asia-Pacific region, with market share in Australia and New Zealand increasing significantly [10] - The company is shifting focus from scale to profitability, with expectations of improved gross and net margins due to product upgrades and SKU optimization [11] - Despite a slight decline in sales, the company anticipates a recovery in overseas sales and improved profitability in the coming years [12]

Report Industry Investment Rating - Not provided Core Viewpoints - The secondary IG market in Japan faced pressure due to heavy supply, with new issues widening and perpetuals under pressure. Chinese IG also widened, while some Chinese property and Macau gaming bonds showed mixed performance. Fosun's new bond issuance and tender offer are part of its debt management, and its credit profile is improving [2][8][11] Summary by Relevant Catalogs Trading Desk Comments - Yesterday, there were 6 Japanese and 1 Indian bond in the IG new issuance pipeline, pressuring the Japanese secondary IG market. New issues like JERA/HOKKEL/MITSCO widened 2 - 4bps, and perpetuals were pressured by the bear - steepening USD yield curve. Japanese insurance hybrids/AT1s and Yankee AT1s/insurance hybrids declined. China IG widened 2 - 4bps, with better selling on TMT names. Some bonds like FOSUNI 26 - 28s and DALWAN 11 02/13/26 rose. In Chinese properties and Macau gaming, bonds had mixed performance. TW lifers tightened, Korea IG widened, and SEA space had various movements [2] - This morning, new bonds like MUFG 31 - 36/MUFG 6.35 Perp had different price changes. FOSUNI 6.8 09/09/29 was 0.3pt higher, and ADANEM 30 - 31s were 0.2 - 0.5pt higher [3] - In the LGFV space, there was a mixed two - way session with more selling, and bonds repriced 30 - 50bps wider from YTD tights [4] - The top performers included BIMLVN 7 3/8 05/07/26 with a 1.3 price increase, while top underperformers like GLPSP 4 1/2 PERP dropped 2.3 [5] Macro News Recap - On Tuesday, S&P (-0.69%), Dow (-0.55%), and Nasdaq (-0.82%) were lower. US Aug'25 S&P Global Manufacturing PMI was 53.0 (lower than expected), and ISM Manufacturing PMI/Prices were 48.7/63.7 (lower than expected). UST yield was higher, with 2/5/10/30 - year yields at 3.66%/3.74%/4.28%/4.97% [7] Desk Analyst Comments - Analysts are neutral on the new FOSUNI 6.8 09/09/29. Fosun priced the bond at 6.8% (vs IPT of 7.2%), with an issue size capped at USD400mn on an order book over USD2.5bn. The bond has a 4 - year tenor with a 2.5 - year non - call period. Analysts view its valuation as fair, and for Chinese HY, they prefer BTSDF 9.125 07/24/28 and EHICARs [8] - Fosun announced a tender offer for USD500mn FOSUNI 5 05/18/26, to be financed by the new bond issue and/or internal resources. The offer expires on 10 Sep'25 4pm (GMT) and will be settled around 16 Sep'25. Participation in the tender offer doesn't provide priority allocation for the new bond [9] - The new issuance and tender offer are part of Fosun's debt maturity management. In 2025, Fosun has repurchased bonds via tender offers and called the remaining amount. As of Jun'25, it held RMB16bn cash and RMB89.2bn total debt at holdco level, with a plan to deleverage further [10] - Fosun's credit profile is improving due to asset disposals, debt maturity management, and better access to funding channels onshore and offshore. It has issued bonds and raised loans in 2024 - 2025 [11] Offshore Asia New Issues (Priced) - Multiple issuers including Arab National Bank, Ares Capital, Credit Agricole, etc., have priced new bonds with different sizes, tenors, coupons, and issue ratings [12] Offshore Asia New Issues (Pipeline) - Fubon Life, PTT Global Chemical, and Sumitomo Life Insurance have bonds in the issuance pipeline with specified tenors, pricing, and issue ratings [13] News and Market Color - Yesterday, 37 onshore credit bonds were issued with an amount of RMB25bn. Month - to - date, 99 credit bonds were issued, raising RMB68bn, a 10.8% yoy decrease. NIO's 2Q25 revenue rose 9% yoy to RMB19bn. India regulator approved SMBC's acquisition of 20% shareholding in YES Bank, and the US revoked TSMC waiver for shipping chipmaking tools to China [14]

Core Insights - The report highlights a mixed performance in global markets, with notable declines in major indices such as the Hang Seng Index and the S&P 500, while some sectors like energy and healthcare showed resilience [1][3]. - The report indicates a significant increase in private equity research visits in August, particularly in sectors like healthcare and electronics, suggesting growing investor interest [3]. - The report emphasizes the competitive landscape for NIO, projecting a potential net loss of 7.8 billion yuan in 2026 despite a 45% increase in sales, indicating high operational challenges [6]. Company Analysis NIO Inc. (NIO US/9866 HK) - NIO's Q2 2025 revenue grew by 58% to 19 billion yuan, exceeding expectations due to higher average selling prices and R&D service contributions [4]. - The company is expected to narrow its net loss significantly in Q4 2025, with a projected non-GAAP net loss of 1 billion yuan, contingent on achieving a sales volume of 150,000 units and maintaining a gross margin of 16-17% [5]. - Despite optimistic sales forecasts, the report expresses skepticism about NIO's ability to achieve a 20% gross margin due to aggressive pricing strategies [5][6]. ZTE Corporation (763 HK/000063 CH) - ZTE reported a 15% year-on-year revenue increase to 71.6 billion yuan in H1 2025, driven by strong sales in AI infrastructure [6]. - The company’s operating segments showed varied performance, with the enterprise business growing by 110%, primarily due to a surge in server and storage sales [7]. - The report maintains a "Buy" rating for ZTE, raising the target price to 42 HKD, reflecting confidence in its growth trajectory amid the AI investment cycle [6]. Market Observations - The report notes a general decline in major stock indices, with the Hang Seng Index down 0.47% and the S&P 500 down 0.69%, indicating a cautious market sentiment [1]. - The report highlights the impact of geopolitical factors, such as the depreciation of the Japanese yen and political uncertainties in Japan, which may affect investor confidence [3]. - The report also mentions the rising U.S. Treasury yields, driven by concerns over high government debt levels, which could influence market dynamics and investor behavior [3].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 173 RMB, down from the previous target of 176 RMB, indicating a potential upside of 19.1% from the current price of 145.20 RMB [1][2][17]. Core Insights - The company reported a robust performance in the first half of 2025, with revenue increasing by 15% year-on-year to 14 billion RMB, driven by double-digit growth in simulation solutions (+21%) and distribution business (+42%) [1]. - Gross margin remained stable at 30.5%, up 1.3 percentage points year-on-year, while net profit surged by 48% to 2 billion RMB, leading to a net profit margin increase to 14.5% from 11.3% in the same period last year [1]. - The core business, CIS (image sensors), achieved record sales of 10.3 billion RMB, growing 11% year-on-year, with significant growth in automotive (+30%), security (+17%), emerging IoT (+249%), and medical CIS (+68%), offsetting a decline in mobile CIS (-19%) [1][6]. - The company is expected to maintain a favorable position in the CIS market, particularly in automotive and medical sectors, with projected revenue growth of 18% and 25% for FY25 and FY26, respectively, and net profit growth of 24% and 50% [1][6]. Financial Summary - The company’s market capitalization is approximately 172.79 billion RMB, with an average trading volume of 2.1 million RMB [2]. - The financial outlook includes projected sales revenue of 30.3 billion RMB for FY25, with a year-on-year growth of 17.8%, and net profit expected to reach 4.13 billion RMB, reflecting a 24.3% increase [7][11]. - The report indicates a decrease in profit forecasts for FY25 and FY26 by 19% and 15%, respectively, due to slower growth in mobile CIS and pressure on gross margins [6][11].