Market Performance - Hong Kong stock market recorded its best single-day performance since early May, driven by interest subsidy policies, improving geopolitical conditions, and rising risk appetite ahead of tech giants' earnings season [1][2] - The Hang Seng Index saw a significant increase despite net outflows of $1 billion from southbound funds, indicating growing local market risk sentiment [1] Sector Performance - Healthcare, technology, and consumer sectors led the gains, with notable stock price increases following the Chinese government's announcement of interest subsidies for eligible personal consumption loans [2] - Key performers included Innovent Biologics (+9%), WuXi AppTec (+6.2%), and Hansoh Pharmaceutical (+5.4%) in the healthcare sector, while Tencent Music (+15.6%) and Alibaba (+6.1%) excelled in technology [2] Tencent Financial Results - Tencent reported a 15% year-on-year revenue growth in Q2, exceeding expectations, with operating profit up 18% [3] - Game revenue increased by 22%, and advertising revenue rose by 20%, both surpassing forecasts [3] - Gross margin improved to 57%, reflecting strong performance in high-margin business areas despite previous concerns over AI-related capital expenditures [3] Goldman Sachs Ratings - Goldman Sachs initiated a "Buy" rating for Damai Entertainment, setting a 12-month target price of HK$1.38, citing its leading position in live event ticketing and IP licensing in China [4] - The company is expected to benefit from the growing demand for live entertainment, with projections indicating a sixfold growth in the sector over the next five years [4] Baidu's Business Outlook - Baidu is undergoing a significant transformation in its search business, with expectations of declining advertising revenue due to shifts in user behavior towards AI and social media [8][11] - The cloud business is anticipated to grow by 25% year-on-year in 2025, driven by strong demand for AI training and subscription models [8][11] Tencent Music Highlights - Tencent Music's Q2 revenue reached 4.4 billion RMB, a year-on-year increase of 18%, driven by strong online music service performance [12][13] - The number of SVIP users surpassed 15 million, contributing to an increase in average revenue per user (ARPU) [12][13] - Non-GAAP operating profit margin expanded to 33.5%, supported by effective cost control [12][13] Yonghui Superstores and Baoshan International - Yonghui Superstores reported a 13% year-on-year increase in net profit for Q2, driven by non-operating income and lower tax expenses [18] - Baoshan International's Q2 revenue declined by 12%, with same-store sales showing a significant drop, although gross margin exceeded expectations [19][20]

Investment Rating - The investment rating for the company is "Accumulate" [6] Core Views - The manufacturing business showed steady revenue growth in Q2, with an improved gross margin compared to Q1. However, visibility for orders in H2 is limited, although gross margins are expected to be better than H1. The retail business faced pressure in Q2 due to a competitive domestic promotional environment, and it is anticipated to continue facing challenges in H2 [2][10] Financial Summary - Total revenue for 2023 is projected at $7.89 billion, with a decrease of 12.0% year-on-year. Revenue is expected to grow by 3.7% in 2024, followed by a slight decline of 2.0% in 2025, and then recover with growth rates of 5.7% and 5.2% in 2026 and 2027 respectively [4] - Gross profit for 2023 is estimated at $1.93 billion, with a year-on-year decrease of 7.3%. The net profit attributable to the parent company is projected at $275 million for 2023, with a significant increase of 42.8% in 2024, followed by a decrease of 9.6% in 2025 [4] - The company maintains a PE ratio of 6.49 for 2023, which is expected to rise to 9.15 in 2024 before declining to 7.63 in 2025 [4] Manufacturing Business - In H1 2025, the manufacturing business generated revenue of $2.61 billion, reflecting an 8.3% year-on-year increase. The shipment volume reached 127 million pairs, up 5.0% year-on-year, with an average selling price (ASP) of $20.61, a 3.2% increase [10] - The gross margin for H1 2025 was 17.7%, down 1.4 percentage points year-on-year, primarily due to uneven capacity utilization across factories and rising costs from increased labor and wages [10] Retail Business - The retail business reported revenue of $1.26 billion in H1 2025, a decline of 8.6% year-on-year. The gross margin for H1 was 33.5%, down 0.7 percentage points year-on-year, mainly due to increased discounting in a competitive promotional environment [10] H2 Outlook - For H2, the manufacturing side's order visibility remains uncertain, but gross margins are expected to improve compared to H1. The retail side may continue to face pressure from domestic discount promotions, although the company remains confident in its leading brands and plans to expand its product offerings [10]

Investment Rating - The report maintains a "Buy" rating for the company [3][25]. Core Insights - The company reported a mid-year performance for 2025 that met expectations, with a revenue of USD 4.06 billion, reflecting a year-on-year growth of 1.1%, and a net profit attributable to shareholders of USD 171 million, down 7.2% year-on-year [7][9]. - The manufacturing segment showed steady growth in orders, with revenue reaching USD 2.8 billion, a 6.2% increase year-on-year, driven by a robust demand in the footwear market [7]. - The retail segment faced short-term pressure, with revenue declining by 8.3% year-on-year to RMB 9.16 billion, primarily due to weak domestic consumption and store adjustments [7]. Financial Data and Profit Forecast - Revenue projections for the company are as follows: - 2023: USD 7.89 billion - 2024: USD 8.18 billion - 2025E: USD 8.27 billion - 2026E: USD 8.60 billion - 2027E: USD 8.97 billion - The net profit attributable to shareholders is forecasted as: - 2023: USD 275 million - 2024: USD 392 million - 2025E: USD 361 million - 2026E: USD 411 million - 2027E: USD 439 million [7][16]. Manufacturing Business Performance - The manufacturing business achieved a capacity utilization rate of 93%, with a year-on-year increase of 3 percentage points [7]. - The average selling price per pair of shoes rose to USD 20.61, a 3.2% increase year-on-year, driven by a favorable order mix [7]. - The gross margin for the manufacturing segment decreased by 1.4 percentage points to 17.7%, attributed to rising labor costs and uneven capacity loading [7]. Retail Business Performance - The retail business saw a significant decline in net profit, down 44% year-on-year to RMB 1.88 billion, impacted by weak consumer demand [7]. - The number of direct-operated stores decreased by 40 to 3,408, with offline sales revenue dropping by 14% year-on-year [7]. - Online sales through all channels grew by 16% year-on-year, with live-streaming sales doubling [7]. Inventory and Cost Management - The manufacturing segment maintained stable inventory turnover days at 51 days, while the retail segment saw an increase to 146 days [7]. - The manufacturing business effectively controlled expenses, with selling and administrative expenses accounting for 10.3% of revenue, a decrease of 0.3 percentage points year-on-year [7]. Valuation and Market Position - The company is the largest sports shoe manufacturer globally and the second-largest sports goods retailer in China, with a strong presence in the global sports industry [7]. - The profit forecast for 2025-2027 has been revised downwards, with expected net profits of USD 360 million, USD 410 million, and USD 440 million respectively [7]. - The target price is based on a price-to-earnings ratio of 10 times for 2025, indicating over 20% upside potential from the current price [7].

Investment Rating - The report maintains a "Buy-A" rating for the company [2][7]. Core Views - The company's manufacturing business shows stable growth in demand for footwear products, with a revenue increase of 6.2% year-on-year in H1 2025, despite a slight decline in net profit [3][5]. - Retail business faces challenges with an 8.3% year-on-year decline in revenue, attributed to reduced foot traffic in physical stores and a net decrease in direct stores [4][5]. - The company is implementing organizational restructuring and cost-reduction plans to enhance efficiency and digital manufacturing management [3][5]. Summary by Sections Financial Performance - In H1 2025, the company achieved a revenue of $40.60 billion, a 1.1% increase year-on-year, and a net profit of $1.71 billion, down 7.2% year-on-year [2][3]. - Manufacturing business revenue reached $27.98 billion, with a gross margin of 17.7%, down 1.4 percentage points year-on-year [3][5]. - Retail business revenue was 91.59 billion yuan, with a gross margin of 33.5%, down 0.7 percentage points year-on-year [4][5]. Future Outlook - The company expects a conservative growth in manufacturing business footwear shipments in the second half of 2025 due to high base effects and tariff impacts [5][7]. - The forecast for revenue from 2025 to 2027 is $81.35 billion, $85.88 billion, and $90.51 billion, with corresponding net profits of $3.53 billion, $3.80 billion, and $4.11 billion [7][9]. Valuation Metrics - The report indicates that the company's price-to-earnings (P/E) ratios for 2025-2027 are projected to be 7.2, 6.7, and 6.2 times, respectively [7][9].

Core Viewpoint - Daiwa's report indicates that Yue Yuen Industrial Holdings Limited (00551) experienced a 6.5% year-on-year growth in OEM revenue, driven by a 2% increase in average selling price and a 4.7% rise in shipment volume [1] Group 1: Financial Performance - The company's capacity utilization rate improved to 95% in the second quarter, but gross margin declined by 0.2 percentage points to 17.8% due to uneven production scheduling and rising labor costs [1] - Daiwa maintains a "Buy" rating for Yue Yuen, slightly lowering the target price from HKD 17 to HKD 16.5, while expressing caution regarding order volume for the second half of the year [1] - Earnings per share forecasts for 2025 to 2027 have been reduced by 3% to 7%, based on adjustments to shipment volume and gross margin expectations [1] Group 2: Future Outlook - Management has a conservative outlook for third-quarter orders, citing cautious ordering behavior from downstream customers due to unclear tariffs and weak demand [1] - A high single-digit year-on-year decline in shipment volume is anticipated for the third quarter, along with a projected decrease in gross margin [1] - Despite short-term uncertainties, the company emphasizes its commitment to expanding production in multiple regions and maintaining stable dividend distributions due to a robust balance sheet [1]

智通财经APP获悉，大和发布研报称，裕元集团(00551)中期代工(OEM)收入同比增长6.5%，主要受平均 售价同比升2%及出货量同比升4.7%带动。虽然产能利用率在次季进一步提升至95%，但因各厂区生产 调度不均及薪酬上升，毛利率同比跌0.2个百分点至17.8%。该行重申对裕元的"买入"评级，并将目标价 由17港元微降至16.5港元，对下半年订单量谨慎，同时将2025至27年每股盈利预测下调3%至7%，基于 出货量及毛利率预测下调。 展望第三季，裕元管理层对订单持保守态度，主因下游客户在关税不明朗及需求疲弱下审慎下单。管理 层预期第三季出货量将有高单位数同比跌幅，毛利率亦同比下跌。虽然面临短期不确定性，集团强调将 持续于多个地区扩产，并凭借其稳健的资产负债表维持稳定股息分派。 ...

Core Viewpoint - Morgan Stanley's report indicates that Yue Yuen Industrial Holdings Limited (00551) maintains a cautious outlook for the second half of the year due to macroeconomic uncertainties, but believes that its commitment to shareholder returns will provide downside support for the stock price [1] Group 1: Financial Outlook - The target price for Yue Yuen has been raised from HKD 12.5 to HKD 13.5, while maintaining a "Market Perform" rating [1] - Management expects a high single-digit year-on-year decline in manufacturing orders for Q3 due to a high base effect, with gross margins also expected to decline year-on-year for the same reason [1] - For Q4, an increase in shipment volume is anticipated, which is expected to be the highest level for the year [1] Group 2: Customer and Market Dynamics - Shoe manufacturing clients are cautious in their order arrangements, waiting for clearer visibility on the impact of tariffs on end markets [1] - Four clients, accounting for approximately 50% of manufacturing sales, have requested to share the burden of tariffs [1] Group 3: Sales Performance - The average selling price of the manufacturing business is expected to increase year-on-year due to product mix improvements, with an overall expected low single-digit year-on-year growth in average selling price for the year [1] - Retail business continues to face discount pressure due to weak consumer demand in China, with sales performance in July and August being weak [1]

Core Viewpoint - Morgan Stanley's report indicates that Yue Yuen Industrial Holdings Limited (00551) maintains a cautious outlook for the second half of the year due to macroeconomic uncertainties, but believes that its commitment to shareholder returns will provide downside support for the stock price. The target price has been raised from HKD 12.5 to HKD 13.5, while maintaining a "Market Perform" rating [1]. Group 1: Company Performance - The management of Yue Yuen stated during an analyst briefing that footwear manufacturing clients are cautious in their order arrangements, waiting for clearer visibility on the impact of tariffs on the end market. Four clients, accounting for approximately 50% of manufacturing sales, have requested to share the tariff burden [1]. - The company expects a year-on-year decline in manufacturing orders in the third quarter due to a high base effect, with gross margins also anticipated to decline year-on-year. However, a quarter-on-quarter increase in shipment volume is expected in the fourth quarter, which will be the highest level for the year [1]. Group 2: Sales and Pricing - For the second half of the year, the report cites management's comments that due to an improved product mix, the average selling price of the manufacturing business is still expected to increase year-on-year, with an overall average selling price projected to grow in the low single digits year-on-year [1]. - The retail business continues to face discount pressure due to weak consumer demand in China, with sales performance in July and August being sluggish [1].

Core Viewpoint - Morgan Stanley's report indicates that Yue Yuen Industrial Holdings maintains a cautious outlook for the second half of the year due to macroeconomic uncertainties, but believes its commitment to shareholder returns will provide downside support for the stock price. The target price has been raised from HKD 12.5 to HKD 13.5, while maintaining a "Market Perform" rating [1]. Group 1 - The management of Yue Yuen stated during an analyst briefing that footwear manufacturing clients are cautious in their order arrangements, awaiting clearer visibility on the impact of tariffs on the end market [1]. - Four clients, accounting for approximately 50% of the manufacturing business's sales, have requested to share the burden of tariff costs [1]. - The company expects a year-on-year decline in manufacturing orders in the third quarter due to a high base, and a year-on-year decrease in gross margin is also anticipated for the same reason [1]. Group 2 - However, it is expected that the shipment volume in the fourth quarter will increase quarter-on-quarter, reaching the highest level for the year [1].

Summary of Yue Yuen (0551.HK) and Pou Sheng (3813.HK) Earnings Call Company Overview - **Companies Involved**: Yue Yuen Industrial Holdings Limited (0551.HK) and Pou Sheng International Holdings Limited (3813.HK) [1][2] Key Industry Insights - **OEM Business Outlook**: The OEM business outlook for 2H25 remains cautious due to shorter order visibility from brands and conservative procurement practices. Management expects Q3 volume to decline by high single digits (HSD%) compared to a high base last year, with a wider year-over-year (yoy) decline in gross profit margin (GPM) than in 1H25 [1][12] - **Retail Demand**: Pou Sheng is experiencing uncertainty in sales recovery for 2H25, with inventory levels under control due to self-help efforts and brand support. The company anticipates a positive growth in average selling price (ASP) for 2H25, contributing to a low single-digit (LSD%) growth in full-year ASP yoy [1][12] Financial Performance - **Pou Sheng Sales Decline**: Pou Sheng reported a -12% yoy decline in sales for 2Q25, followed by a -9% yoy decline in July. Management expects continued pressure in August due to seasonal factors [13] - **Inventory Management**: Inventory levels rose by 4.6% yoy in 1H25, with aging inventory below 9%. The company plans to implement proactive measures to manage inventory in response to demand softness [14] Margin and Cost Insights - **Margin Pressure**: 2Q25 margins faced headwinds from subcontracting costs, uneven production levels, and rising labor costs. The company expects GPM in 3Q25 to decline more than in 1H25, but overall GPM for 2H25 is projected to be higher than in 1H25 [12][14] - **Tariff Implications**: Four brand customers, accounting for approximately 50% of sales, have requested the company to share low single-digit percentage points (LSDpp) of the elevated US tariff. There is no significant increase in tariff-sharing requirements following the reciprocal tariff for ASEAN countries rising to approximately 20% from 10% [9][12] Capital Expenditure and Strategic Focus - **Capex Plans**: The company expects to invest over US$300 million in capex for 2025, focusing on diversifying manufacturing capacity in key countries like Indonesia and India, which is set to start production in 1Q27 [10] Valuation and Price Targets - **Price Target for Yue Yuen**: The target price remains unchanged at HK$14.00, based on an 8x/9x 2025E P/E valuation for Pou Sheng and Yue Yuen's OEM business, respectively [3][20] - **Price Target for Pou Sheng**: The target price is adjusted to HK$0.60 from HK$0.70, reflecting a conservative outlook on sales and margins [3][19] Risks and Considerations - **Key Risks for Yue Yuen**: Potential risks include tariff hikes impacting demand, weaker-than-expected orders from key accounts, and lower-than-expected margin recovery [20] - **Key Risks for Pou Sheng**: Risks include slower recovery of Nike/adidas growth in China and higher discounts leading to operating deleverage [19] Conclusion - The overall sentiment towards Yue Yuen's OEM business appears to be improving, reflected in a 6% increase in share price, driven by settled tariff rates, lower expectations, better ASP, and disciplined operating expense control [2]