Investment Rating - The report maintains a "Hold" rating for the company with a target price of HKD 47.31, reflecting a price-to-earnings ratio of 25.9 times FY25E earnings [8]. Core Insights - The company is expected to benefit from a high-end upgrade cycle driven by AI smartphones, ADAS mixed lenses, and AR Glass opportunities, indicating a positive outlook for growth [2][8]. - The management has raised global and China smartphone shipment forecasts for 2024 by 1.7% and 1.1%, respectively, suggesting a recovery in the smartphone market [2]. - The automotive segment is projected to maintain a gross profit margin (GPM) of over 40%, driven by growth in automotive modules [2]. - The XR business is anticipated to see diffraction waveguides become mainstream, positioning AR Glass as the next computing platform [2]. Financial Summary - Revenue is projected to increase from RMB 31,681 million in FY23A to RMB 36,545 million in FY24E, representing a year-over-year growth of 15.4% [6]. - Net profit is expected to recover from RMB 1,099.4 million in FY23A to RMB 1,351.2 million in FY24E, with a year-over-year growth of 22.9% [6]. - The company's earnings per share (EPS) is forecasted to rise from RMB 1.01 in FY23A to RMB 1.24 in FY24E [6]. - The price-to-earnings (P/E) ratio is projected to decrease from 43.9x in FY23A to 35.7x in FY24E [6]. Market Position and Valuation - The company holds a leading position in the camera module (CCM) market in China, with a target P/E of 18x reflecting its advanced technology capabilities [8]. - The automotive lens business is assigned a P/E of 35x due to its high profitability and growth potential, with a CAGR of 25% from FY20 to FY23E [8]. - The smartphone lens segment is valued at a P/E of 25x, indicating confidence in its growth trajectory amid ongoing upgrades [8].

Investment Rating - The report maintains a "BUY" rating for FIT Hon Teng with the target price currently under review [2][9][10]. Core Insights - The company is expected to benefit from multiple growth drivers in FY24/25, including AI server connectors, AirPods production ramp-up, and new opportunities in the electric vehicle (EV) sector [2][9]. - Management has indicated that revenue and gross profit margin (GPM) guidance for Q2 2024 is on track, with potential upside in the smartphone and networking segments [2][9]. - The report highlights a positive outlook for the iPhone replacement cycle and potential order wins in AI server connectivity, which could significantly enhance revenue in the networking segment [2][9]. Revenue and Profit Forecasts - Revenue is projected to grow from US$4,196 million in FY23 to US$4,715 million in FY24, representing a year-over-year growth of 12.4% [3][12]. - Net profit is expected to increase from US$132 million in FY23 to US$200 million in FY24, reflecting a growth rate of 51.5% [3][12]. - The earnings per share (EPS) is forecasted to rise from 2.81 cents in FY23 to 3.73 cents in FY24 [3][12]. Growth Drivers - Key growth drivers identified for 2025 include AirPods, AI server connectors/cables, and the auto business, particularly through a new joint venture in the EV charger market [2][9]. - The company is expected to ramp up production in Vietnam and India for AirPods, with management anticipating six additional production lines in India by 2025 [2][9]. Valuation Metrics - The company is trading at a price-to-earnings (P/E) ratio of 14.3x for FY24 and 10.8x for FY25, which is considered attractive given the expected EPS growth of 51% and 33% for FY24 and FY25, respectively [2][9][10]. - The report notes that the valuation remains appealing compared to the anticipated recovery in the AI server and smartphone markets [2][9].

Investment Rating - The report maintains a HOLD rating for Sunny Optical with a target price of HK$47.31, implying a potential downside of 0.5% from the current price of HK$47.55 [3][13]. Core Insights - The report highlights positive expectations for Sunny Optical driven by high-end upgrades in the smartphone market, advancements in AI phone technology, and growth in automotive and XR (extended reality) segments [2][3]. - Management has raised the global and China smartphone shipment forecasts for 2024, indicating a recovery in the smartphone market [2]. - The automotive segment is expected to maintain a gross profit margin (GPM) of over 40% in 2024, with growth in auto modules contributing to profitability [2]. - The XR business is positioned to capitalize on the emerging AR glass market, which is anticipated to become the next computing platform [2]. Financial Summary - Revenue is projected to grow from RMB 31,681 million in FY23A to RMB 36,545 million in FY24E, reflecting a year-on-year growth of 15.4% [11][12]. - Net profit is expected to increase from RMB 1,099.4 million in FY23A to RMB 1,351.2 million in FY24E, representing a year-on-year growth of 22.9% [11][12]. - The report indicates a recovery in gross profit margin from 14.5% in FY23A to 14.1% in FY24E, with further improvements expected in subsequent years [12][20]. Segment Performance - In the smartphone segment, management anticipates an ASP (average selling price) and GPM recovery in 2024 due to high-end specification upgrades and improved product mix [2]. - The automotive segment is projected to see stable GPM at approximately 40% in 2024, with a focus on high-margin auto modules [2]. - The XR segment is expected to see significant investment in technologies such as diffractive waveguides, positioning Sunny Optical favorably in the AR/VR market [2].

Market Overview - The Hang Seng Index closed flat at 18,028, with a year-to-date increase of 5.75%[19] - The Hang Seng Technology Index fell by 0.65%, with a year-to-date decline of 2.31%[19] Sector Performance - Consumer stocks such as pork, food, and beer saw gains, with WH Group (288 HK) up 2.96% and Budweiser APAC (1876 HK) up 3.19%[1] - Home appliance and sports goods stocks also performed well, with Haier Smart Home (6690 HK) rising 1.81%[1] - Real estate stocks showed mixed results, with China Evergrande (3333 HK) down 3.61% while Midea Real Estate (3990 HK) surged by 69.87%[1] Notable Stock Movements - Semiconductor stocks continued to decline, with China Electric Power (0085 HK) down 6.72% and SMIC (981 HK) down 3.44%[1] - Pharmaceutical stocks, including medical beauty and traditional Chinese medicine, faced downward pressure, with Giant Biogene (2367 HK) down 5.45%[1] Investment Ratings - Ideal Auto (LI US) rated "Buy" with a target price of 26.00, indicating a potential upside of 45%[4] - Geely Auto (175 HK) rated "Buy" with a target price of 14.00, suggesting a 60% upside[4] - Midea Real Estate (3990 HK) rated "Buy" with a target price of 27.60, reflecting a significant upside potential[4] Capital Flow - Northbound trading saw a net inflow of 2.49 billion RMB from the Shanghai-Hong Kong Stock Connect and 0.99 billion RMB from the Shenzhen-Hong Kong Stock Connect[10]

Investment Rating - The report maintains a BUY rating for Kuaishou with an unchanged target price (TP) of HK$97 [2][4]. Core Insights - Kuaishou's shelf-based ecommerce performed strongly during the 618 promotion, with orders and paying users increasing by 65% and 57% year-on-year (YoY) respectively [2]. - The company is expected to achieve ecommerce growth of 25% YoY in GMV and 24% YoY in other services revenue for Q2 2024 [2]. - Kuaishou's self-developed video generation model, "Kling," was launched, showcasing advancements in AI technology [2]. Financial Performance - Revenue for FY22 was RMB 94,183 million, with a YoY growth of 16.2%, and is projected to reach RMB 125,544 million in FY24E, reflecting a growth of 10.6% [3][7]. - Adjusted net profit is expected to improve significantly from RMB 10,271 million in FY23A to RMB 17,247 million in FY24E, marking a growth of 67.9% [3][8]. - The diluted EPS is forecasted to increase from RMB 2.31 in FY23A to RMB 3.74 in FY24E, indicating a growth of 61.8% [3][8]. Market Position and Growth - Kuaishou's GMV share from pan shelf-based ecommerce is estimated to exceed 25%, indicating a strong market position [2]. - Active merchants grew by 26% YoY, with small and medium enterprises (SMEs) increasing by 28% YoY during the 618 promotion [2]. - The consumer electronics and furniture categories saw GMV surges of over 83% YoY, with brand pan shelf-based GMV increasing by over 177% YoY [2].

Investment Rating - The report assigns a "Buy" rating for the pharmaceutical industry, indicating a positive outlook for the sector over the next 12 months [16]. Core Insights - The pharmaceutical industry is currently undervalued, with the MSCI China Healthcare Index down 26.5% year-to-date, underperforming the MSCI China Index by 33.7%. The dynamic P/E ratio for the industry stands at 24.0x, below the 12-year historical average [2]. - Anticipation of policy support for medical device upgrades is expected to stimulate demand, with a projected 25% increase in investment in medical equipment by 2027 compared to 2023 levels [3]. - The report highlights strong sales performance in new consumer pharmaceuticals, with significant growth in online sales for brands like 可复美 and 可丽金 during the "618" shopping festival [2]. Summary by Sections Industry Overview - The report emphasizes the attractiveness of the pharmaceutical industry's valuation and the expected recovery in performance due to supportive policies and regulatory normalization [2][3]. Market Dynamics - The report notes that the National Healthcare Security Administration has initiated actions to regulate drug prices, which will increase price transparency and potentially impact retail pharmacies [3]. - The upcoming medical device upgrade policies are expected to lead to a resurgence in hospital procurement, benefiting leading domestic companies like 迈瑞医疗 and 联影医疗 [3]. Investment Opportunities - The report continues to favor innovative drug and device leaders, as well as high-growth medical consumer stocks, citing the potential for significant market rebounds driven by policy support and international market expansion [3].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 60.83, indicating a potential upside of 32.5% from the current price of HKD 45.90 [3][27]. Core Insights - The company has demonstrated strong online sales growth during the "618" shopping festival, with its brand "可复美" achieving over 60% year-on-year growth in GMV, while "可丽金" saw over 100% growth [1][11]. - The report highlights the successful performance of key products, particularly the collagen sticks and new focus cream, which have significantly contributed to the overall growth of the brand [1][11]. - The company is expected to continue its growth trajectory, especially with the anticipated approval of injectable collagen products within the year [1][27]. Financial Performance Summary - Sales revenue is projected to grow from RMB 4,636 million in FY24 to RMB 7,682 million in FY26, reflecting a compound annual growth rate (CAGR) of approximately 30% [2][27]. - The net profit is expected to increase from RMB 1,738 million in FY24 to RMB 2,791 million in FY26, indicating a strong profitability outlook [2][27]. - The gross margin is forecasted to remain stable around 83% over the next few years, showcasing the company's strong pricing power and cost management [2][27]. Market Positioning - The company ranks 11th in the Tmall fast-moving consumer goods sales ranking and 9th in the Douyin beauty list during the "618" festival, indicating a strong market presence among domestic brands [1][9][10]. - The report notes that the company's core products have maintained top positions in their respective categories on major e-commerce platforms, further solidifying its competitive advantage [1][11]. Valuation Metrics - The target price corresponds to a 23.2x adjusted P/E ratio for FY24 and an 18.8x adjusted P/E ratio for FY25, suggesting that the stock is attractively valued relative to its growth prospects [1][27]. - The DCF analysis indicates a fair value of HKD 60.83 per share, based on a WACC of 10.6% and a perpetual growth rate of 3.0% [24][27].

Investment Rating - The report maintains a "HOLD" rating for the company with a target price of HKD 47.31, reflecting a potential downside of 9% from the current price of HKD 52.00 [4][14]. Core Insights - The company is expected to see a recovery in smartphone shipments and an acceleration in high-end upgrades in the second half of 2024, driven by the resurgence of smartphone demand and upgrades to high-end models [2][3]. - The company holds a leading position in the global market for smartphone camera modules and automotive lenses, with significant opportunities in the high-end ADAS/LiDAR/HUD markets [2][3]. - The management is optimistic about long-term growth driven by edge AI applications, which are expected to enhance traditional hardware capabilities across various sectors including smartphones, automotive, AR/VR, and robotics [3]. Financial Summary - Revenue is projected to increase from RMB 31,681 million in FY23A to RMB 36,545 million in FY24E, representing a year-on-year growth of 15.4% [1][19]. - Net profit is expected to recover from RMB 1,099.4 million in FY23A to RMB 1,351.2 million in FY24E, with a year-on-year growth of 22.9% [1][19]. - The company's gross profit margin (GPM) is anticipated to improve from 14.5% in FY23A to 14.1% in FY24E, with further increases expected in subsequent years [1][19]. Valuation - The target price of HKD 47.31 is derived from a sum-of-the-parts (SOTP) valuation method, reflecting the company's diversified business segments and growth visibility in various markets [14][15]. - The company is assigned a price-to-earnings (P/E) ratio of 18x for its camera module business, 35x for its automotive lens business, and 25x for its smartphone lens segment, indicating strong growth potential in these areas [14][15].

Economic Overview - The US economy is experiencing a moderate slowdown, with May retail sales showing a rebound but below market expectations, and previous months' growth rates significantly revised downwards[13] - The Congressional Budget Office (CBO) has raised the fiscal deficit forecast for this year by 27% to $1.92 trillion, indicating ongoing fiscal expansion as a key support for economic growth and US Treasury yields[13] Market Performance - The Hang Seng Index closed at 18,430, up 2.87% for the day and 8.11% year-to-date[14] - The Hang Seng Technology Index rose by 3.65% for the day, with a year-to-date increase of 1.81%[14] Sector Insights - The financial sector index increased by 2.51% yesterday, with a year-to-date rise of 7.84%[5] - The industrial sector index saw a 3.20% increase, with a year-to-date performance of 10.69%[5] - The real estate sector index, however, declined by 2.37% yesterday and is down 14.59% year-to-date[5] Stock Recommendations - Sunny Optical (2382 HK) is rated as a "Buy" with a target price of HKD 47.31, reflecting a P/E ratio of 25.9 times FY25E earnings[13] - Ideal Auto (LI US) is rated "Buy" with a target price of $26.00, indicating a potential upside of 42%[16] - Geely Auto (175 HK) is also rated "Buy" with a target price of HKD 14.00, suggesting a 52% upside[16] Capital Flows - The southbound trading under the Shanghai-Hong Kong Stock Connect recorded a net inflow of RMB 25.71 billion, while the Shenzhen-Hong Kong Stock Connect saw a net inflow of RMB 26.50 billion[7]

招银国际环球市场 | 宏观研究 | 宏观视角 资料来源：Wind，招银国际环球市场 (10) (5) 0 5 10 15 201920202021202220232024 零售名义增速 零售实际增速 同比(%, 2021/2022年为2/3年平均，3M MA) 1 温和放缓 叶丙南, Ph.D (852) 3761 8967 yebingnan@cmbi.com.hk 刘泽晖 (852) 3761 8957 frankliu@cmbi.com.hk 资料来源：Wind，招银国际环球市场 | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |--------------------------------------|---------|--------|--------|-------|-------------------------------|-------|-------|-------|-------|-------|-----------| | 总 计 | 占比(%) | 2022年 | 2023年 | ...