Investment Rating - Industry Rating: Recommended [4] Core Insights - The report emphasizes the importance of information communication as a critical infrastructure for the new round of technological upgrades, focusing on three major infrastructure networks: AI computing power infrastructure, integrated space-ground communication networks, and high-speed data circulation infrastructure [1][34] - The report highlights the rapid development of satellite internet and low-altitude economy, with a focus on the integration of satellite communication networks and the establishment of low-altitude economic networks [3][19] - The data element construction is crucial for building high-speed interconnected data circulation infrastructure, with significant growth expected in the data industry [24][27] - AI empowerment is seen as a key driver for industrial upgrades, with applications in various sectors including advanced manufacturing and smart manufacturing [29][30] Summary by Sections 1. Investment in Computing Power Infrastructure - Significant capital expenditure growth in computing power infrastructure, with major telecom operators increasing their investments [12][14] - Key beneficiaries include companies involved in AI chips, optical communication, and data center services [2][14][15] 2. Satellite and Low-Altitude Communication Infrastructure - The rapid deployment of satellite internet and the establishment of low-altitude economic networks are highlighted, with various companies benefiting from this trend [16][19][21] - Key beneficiaries include companies involved in satellite communication and low-altitude network equipment [6][23] 3. Data Element Construction - The data industry is projected to grow significantly, with a focus on building a robust data infrastructure to support data circulation [24][25][26] - Key beneficiaries include telecom operators and companies providing data platforms and security solutions [27][28] 4. AI Empowerment for Industrial Upgrades - AI is driving the transformation of traditional manufacturing into smart manufacturing, with a focus on enhancing productivity and efficiency [29][30][31] - Key beneficiaries include companies involved in AI applications across various sectors [35][36]

Core Insights - The data center industry is experiencing robust growth driven by emerging technologies such as 5G, cloud computing, and artificial intelligence, with the market size reaching 507.83 billion yuan in 2023 [6]. Policy Support - The development of the data center industry is supported by various policies at both national and local levels, focusing on layout optimization, green development, technology upgrades, and financing channels [4]. - Key policies include the "2030 Carbon Peak Action Plan" aimed at promoting energy-saving and carbon reduction in data centers [5], and the "New Type Data Center Development Three-Year Action Plan (2021-2023)" which outlines six key tasks for quality upgrades [5]. Market Structure - The competitive landscape of the data center industry is diverse, with major players including Alibaba Cloud, Tencent Cloud, and Huawei Cloud in the first tier, and third-party service providers like GDS Services, Century Internet, and DataPort in the second tier [8]. - The industry is characterized by a multi-tier structure, with significant contributions from both cloud service providers and telecommunications operators [8]. Industry Growth - The data center market is projected to continue its growth trajectory, supported by the increasing demand for digital services and the ongoing digital transformation across various sectors [6]. - The industry is moving towards a more integrated, large-scale, green, and intelligent development model [4]. Company Strategies - Major companies are expanding their data center footprints across key regions, with Century Internet and GDS Services actively developing data centers in first-tier cities and strategic locations [10]. - Companies like Alibaba Cloud and Tencent Cloud are establishing large-scale data centers in multiple regions, enhancing their service capabilities [10].

Core Insights - The three major telecom operators in China have officially launched eSIM mobile services, marking a significant advancement in the eSIM technology for smartphones and creating new growth opportunities for the eSIM industry chain [1] Industry Overview - The global eSIM chip shipment reached 446 million in 2023, with predictions of 1 billion eSIM smartphone connections by the end of 2025 and 6.9 billion by 2030, accounting for three-quarters of total smartphone connections [1][6] - The eUICC chip is central to eSIM technology, enabling remote SIM configuration and management, which enhances user experience and positions the industry chain for growth [2] Market Dynamics - The demand for eUICC chips is expected to surge due to the commercial launch of eSIM services by telecom operators, with 3.62 million eSIM users in China as of 2023, predominantly in smartwatches [3] - The eSIM technology is anticipated to drive supply chain optimization within the telecommunications industry [1] Company Developments - New Henghui, a semiconductor packaging and testing company, has the capability to adapt its existing IoT eSIM packaging technology for smartphones and other devices, indicating a broad application potential [1][5] - Huada Electronics has developed an eSIM operating system in collaboration with a global eSIM service provider, achieving GSMA eUICC Security Assurance certification, which enhances its market position [2] Technical Advancements - The etching lead frame is a critical material for eSIM chip packaging, with significant potential for domestic substitution as eSIM applications accelerate [4] - The WLCSP (Wafer-Level Chip Scale Package) technology is crucial for miniaturizing eSIM chips and is already adopted by major international manufacturers like Apple and Samsung [5] Future Outlook - Companies that proactively invest in technology development and establish strong ties with terminal manufacturers and telecom operators are likely to gain competitive advantages in the evolving eSIM industry [6]

Core Viewpoint - The Tianhong CSI Hong Kong Stock Connect Central State-Owned Enterprises Dividend ETF (159281) experienced a decline of 1.29% in its closing price on October 17, with a trading volume of 53.86 million yuan [1] Group 1: Fund Overview - The Tianhong CSI Hong Kong Stock Connect Central State-Owned Enterprises Dividend ETF was established on August 20, 2025, with an annual management fee of 0.50% and a custody fee of 0.10% [1] - As of October 16, the fund had a total of 320 million shares and a total size of 324 million yuan [1] - The fund's performance benchmark is the adjusted return of the CSI Hong Kong Stock Connect Central State-Owned Enterprises Dividend Index [1] Group 2: Liquidity and Trading Activity - Over the last 20 trading days, the ETF recorded a cumulative trading amount of 1.048 billion yuan, with an average daily trading amount of 52.41 million yuan [1] Group 3: Fund Management - The current fund manager is He Yuxuan, who has managed the fund since its inception, with a return of -0.15% during the management period [1] Group 4: Top Holdings - The ETF's top holdings include: - COSCO Shipping Holdings (0.85% holding, 218,000 shares, market value of 2.9175 million yuan) - Orient Overseas International (0.40% holding, 10,500 shares, market value of 1.3717 million yuan) - China Foreign Transport (0.33% holding, 270,000 shares, market value of 1.1396 million yuan) - China Petroleum (0.32% holding, 162,000 shares, market value of 1.0973 million yuan) - CITIC Bank (0.32% holding, 175,000 shares, market value of 1.1136 million yuan) - CNOOC (0.29% holding, 58,000 shares, market value of 1.0041 million yuan) - China Shenhua Energy (0.29% holding, 30,500 shares, market value of 982,600 yuan) - China Pacific Insurance (0.29% holding, 164,000 shares, market value of 1.0107 million yuan) - China Unicom (0.28% holding, 104,000 shares, market value of 952,800 yuan) - Agricultural Bank of China (0.27% holding, 189,000 shares, market value of 933,900 yuan) [2]

Group 1: Event Overview - The 2025 World VR Industry Conference will be held on October 19-20 in Nanchang, organized by the Jiangxi Provincial Government and other local authorities, focusing on the rapid application of VR technology [1] - The theme of the conference is "VR+AI Opens the Intelligent Future," aiming to create a high-end platform for deep integration of technology and industry [1] - The conference will feature five specialized matchmaking sessions and four corporate ecosystem forums, including topics like "AI+VR Integration Innovation" and "Huawei Ecosystem Forum" [2] Group 2: Industry Development in Jiangxi - Jiangxi Province has rapidly developed its VR industry, with a projected revenue of 110 billion yuan in 2024, marking a 9.34% year-on-year growth and a 26-fold increase since 2018 [3] - The province hosts over 400 VR companies, including major players like Huawei, Alibaba, and Lenovo, contributing to a robust industrial ecosystem [3] - The National Virtual Reality Innovation Center has made significant technological breakthroughs since its establishment in 2022, enhancing capabilities in key areas such as 3D reconstruction and gesture tracking [3] Group 3: Stock Market Performance - VR-related stocks in the A-share market have seen an average increase of over 28%, with companies like Changying Precision and Kehua Data doubling their stock prices this year [4] - Four VR concept stocks have released third-quarter earnings forecasts, all indicating significant profit increases, with Shuo Beid expecting a net profit growth of 1258.39% to 1313.24% [5] - Northbound capital has significantly increased its holdings in VR concept stocks, with 18 stocks seeing over 10% increases in shareholding during the third quarter [6]

Core Insights - The launch of eSIM services by China's three major telecom operators marks a significant breakthrough in domestic communication technology, positioning China among the leaders globally in this field [1] - The adoption of eSIM technology is expected to reshape user habits and the competitive landscape of the telecom market, simplifying processes like number portability and enhancing device security [3][4] Group 1: eSIM Technology Overview - eSIM technology allows for the embedding of SIM functionality directly into device chips, eliminating the need for physical SIM cards, which enhances device design and user experience [1][2] - The global market for eSIM-enabled smartphones is projected to reach approximately 1 billion by the end of this year, with an expected growth to 6.9 billion by 2030, indicating a significant market opportunity for telecom operators [2] Group 2: Competitive Landscape - The strategic decision by Apple to exclusively offer eSIM versions of its iPhone Air globally, without a physical SIM card option for the Chinese market, has pressured Chinese telecom operators to accelerate their eSIM rollout [2] - The introduction of eSIM is anticipated to simplify the process of switching carriers, potentially transforming the market competition that has traditionally focused on package pricing [3] Group 3: User Experience and Market Implications - While many users currently prefer physical SIM cards for perceived security, the convenience of eSIM is expected to shift user preferences over time, similar to the transition from traditional banking to mobile banking [3] - eSIM technology integrates most functionalities into the device chip, enhancing security features such as anti-theft tracking and enabling users to manage multiple accounts easily [3][4]

Core Viewpoint - The launch of eSIM services by China's three major telecom operators marks a significant breakthrough in domestic communication technology, positioning China among the leaders globally in this field [1][2]. Group 1: eSIM Technology Overview - eSIM technology allows for the embedding of SIM cards directly into device chips, eliminating the need for physical SIM cards, which enhances convenience and security [1][2]. - The advantages of eSIM include space-saving, improved security, increased freedom in switching operators, and support for IoT infrastructure, driving mobile devices towards being lighter, smarter, and offering better user experiences [2][3]. - According to GSMA, approximately 1 billion eSIM smartphones are expected to be connected globally by the end of this year, with projections of growth to 6.9 billion by 2030 [2]. Group 2: Market Dynamics and Competition - The strategic decision by Apple to exclusively offer eSIM versions of the iPhone Air globally, without a physical SIM card option for the Chinese market, has pressured Chinese telecom operators to accelerate their eSIM commercialization efforts [2]. - The shift towards eSIM is expected to reshape user habits and the competitive landscape, simplifying the process of switching operators and potentially altering the focus from package pricing to service quality [3][4]. Group 3: Challenges and Considerations - While eSIM offers numerous benefits, concerns remain regarding potential high fees for switching numbers and the implications of losing the exclusivity of relationships with operators, which could affect service quality [4]. - The transition to eSIM is anticipated to face challenges, but ongoing market competition and technological advancements are expected to address these issues over time [4].

Core Viewpoint - Morgan Stanley expresses optimism about three major telecom operators due to attractive shareholder returns, healthy profit growth, and potential cloud service revenue growth driven by AI [1] Group 1: Company Recommendations - The top pick is China Telecom (00728) due to its largest exposure to cloud business and resilient traditional mobile and broadband services, with a target price of HKD 7.5 [1] - China Mobile (00941) and China Unicom (00762) have target prices of HKD 110 and HKD 12 respectively, both rated as "Overweight" [1] Group 2: Market Performance - Over the past three months, the stock prices of the three major telecom operators, including China Mobile, China Telecom, and China Unicom, have underperformed the Hang Seng Index [1] - The current dividend yields for China Mobile, China Telecom, and China Unicom are projected to be 6.3%, 5.4%, and 5.6% respectively, making them attractive [1] Group 3: Revenue Trends - The growth of traditional telecom service revenue in the third quarter has slowed compared to the second quarter, which is reflected in the recent weakness of stock prices [1] - Investors are advised to take advantage of the lagging stock prices for potential buying opportunities [1]

Core Viewpoint - Morgan Stanley's research report indicates that the stock prices of China's three major telecom operators—China Mobile, China Telecom, and China Unicom—have underperformed the Hang Seng Index over the past three months, suggesting a buying opportunity due to attractive dividend yields [1] Group 1: Stock Performance and Dividend Yields - The stock prices of China Mobile, China Telecom, and China Unicom have lagged behind the Hang Seng Index [1] - The expected dividend yields for the three telecom operators are 6.3% for China Mobile, 5.4% for China Telecom, and 5.6% for China Unicom, making them attractive for investors [1] Group 2: Revenue Growth and Investment Recommendations - Traditional telecom service revenue growth has slowed in the third quarter compared to the second quarter, which is reflected in the recent weakness of their stock prices [1] - Investors are advised to take advantage of the current stock price lag to accumulate shares [1] Group 3: Future Outlook and Preferred Stocks - The report is optimistic about the three telecom operators due to attractive shareholder returns, healthy profit growth, and potential revenue growth from AI-driven cloud services [1] - China Telecom is favored as it has the largest exposure to cloud business, with a target price of HKD 7.5; China Mobile and China Unicom have target prices of HKD 110 and HKD 12, respectively, both rated as "overweight" [1]

Core Insights - eSIM technology is gaining traction as it allows users to activate mobile services without a physical SIM card, making devices lighter and providing more internal space [4] Group 1: eSIM Overview - eSIM replaces physical SIM cards with electronic data files, enabling mobile network services without the need for a physical card slot [4] - The approval of eSIM for mobile phones marks a new commercial phase in the industry, following its previous applications in IoT and smart wearables [4] Group 2: Activation Process - Users can activate eSIM services by visiting the physical stores of major telecom operators like China Telecom and China Mobile with their ID and eSIM-compatible devices [5] - China Mobile will start processing eSIM activations from the release date of the iPhone Air, while China Unicom requires online reservations for eSIM activation [5] Group 3: Supported Devices - Current eSIM-compatible devices include models from Apple, Huawei, and OPPO, which will be available for sale soon [6] Group 4: Usage of Original SIM Cards - Once eSIM is activated on devices like the iPhone Air, the original physical SIM card will no longer be usable unless a new number is written into the eSIM [7] Group 5: Pricing Structure - As of now, there are no clear fee structures for eSIM services, but initial activations are reported to be free at the stores [8] - China Unicom offers two types of eSIM services: a dual-terminal service for smart devices at a monthly fee of 10 yuan, and an independent eSIM number service with varying costs based on device type [9]