Market Overview - The Shanghai Composite Index fell below the 3800 mark, closing at 3765.88 points, down 1.25%, while the Shenzhen Component Index and ChiNext Index dropped 2.83% and 4.25% respectively, indicating a recent market correction after a rapid rise in August [1][8] Stock Recommendations - A total of 42 brokerages have issued stock recommendations for September, suggesting 285 stocks, with ZTE Corporation, New China Life Insurance, and Kaiying Network being the most frequently recommended, each by 5 brokerages [2][3] - In the last three months, Muyuan Foods and Oriental Fortune have been recommended 14 times, the highest among all A-shares, while Luoyang Molybdenum and Kaiying Network were recommended 11 times [2][4] Performance of Recommended Stocks - Luoyang Molybdenum has seen a nearly 40% increase since August, while ZTE Corporation and Kaiying Network were only recommended by one brokerage in August [3][5] - Among the top 10 recommended stocks, only Luoyang Molybdenum saw a slight increase of 0.65% from September 1 to September 4, while the others experienced declines, with four stocks dropping over 10% [5][6] Sector Focus - Brokerages are focusing on technology sectors such as computing power, artificial intelligence, and consumer electronics, while also recommending attention to new consumption, large finance, and domestic substitution themes [2][9] - Long-term bullish sentiment remains for the A-share market, with expectations for economic support measures and a potential rebound in the Hong Kong market [9][10] Company Insights - Luoyang Molybdenum is highlighted as a major international resource company, with copper and cobalt contributing over 70% to its profits, and is expected to benefit from rising prices of strategic metals [7] - New China Life Insurance is favored for its high investment returns from equity assets, with a significant increase in new business from its bancassurance channel [5][6] - Kaiying Network's upcoming game releases and AI applications are anticipated to drive performance growth [6]

Group 1 - The top three companies with the highest short positions as of August 29 are ZTE Corporation (00763) at 16.47%, COSCO Shipping Holdings (01919) at 13.94%, and CATL (03750) at 13.88% [1][2] - The company with the largest increase in short positions is Ganfeng Lithium (01772), which rose by 2.85% to 12.46% [2][3] - The companies with the largest decrease in short positions include Hisense Home Appliances (00921), which decreased by 3.57% to 4.72%, and WuXi AppTec (02359), which decreased by 2.44% to 11.64% [3][4] Group 2 - The latest short position data shows that the top ten companies with the highest short ratios include China Ping An (02318) at 12.58% and Zijin Mining (02899) at 11.91% [2] - The companies with the most significant increases in short positions also include Huahong Semiconductor (01347) with an increase of 2.56% to 9.73% and Meitu (01357) with an increase of 1.80% to 4.85% [2] - The companies with the most significant decreases in short positions also include Weimob (02013) with a decrease of 1.66% to 9.40% and Linklogis Technology (09959) with a decrease of 1.43% to 2.76% [3][4]

Core Insights - The report highlights significant changes in the Hong Kong Stock Connect holdings, with notable increases and decreases in ownership percentages for various companies [1][2]. Group 1: Increased Holdings - Southern Hang Seng Technology (03033) saw the largest increase in ownership percentage, rising by 2.90% to a total holding of 62.73% [2]. - Changfei Optical Fiber Cable (06869) experienced a 2.84% increase, bringing its holding to 57.84% [2]. - Shandong Gold (01787) also had a notable increase of 2.53%, resulting in a holding of 57.08% [2]. - Over the last five trading days, Shandong Gold (01787) led with a 4.70% increase, followed by SF Express (06936) at 3.13% and Changfei Optical Fiber Cable (06869) at 3.11% [3]. Group 2: Decreased Holdings - Haotian International Investment (01341) recorded the largest decrease in ownership, dropping by 2.74% to 56.11% [2]. - ZTE Corporation (00763) saw a reduction of 1.51%, with a current holding of 52.91% [2]. - Hua Hong Semiconductor (01347) experienced a decrease of 1.25%, resulting in a holding of 24.78% [2]. - In the last five trading days, Hong Kong Broadband (01310) had the most significant decline, with a drop of 9.73% to a holding of 0.27% [3]. Group 3: Notable Trends - The report indicates a trend of increasing interest in certain sectors, particularly in technology and gold mining, as evidenced by the rising holdings in Southern Hang Seng Technology and Shandong Gold [1][2]. - Conversely, there is a noticeable pullback in sectors such as telecommunications and investment, as shown by the decreased holdings in ZTE Corporation and Haotian International Investment [2][3].

Group 1: Overall Performance of Listed Companies - The total operating revenue of listed companies in Shanghai and Shenzhen reached 34.92 trillion yuan, with a net profit of 2.99 trillion yuan for the first half of 2025 [1] - Shenzhen companies achieved a total operating revenue of 10.24 trillion yuan, a year-on-year increase of 3.64%, and a net profit of 595.46 billion yuan, up 8.88% [1] - Shanghai companies reported operating revenue of 24.68 trillion yuan, a slight decrease of 1.3%, with a net profit of 2.39 trillion yuan, an increase of 1.1% [1] Group 2: Sector Performance - Emerging industries such as semiconductors, electronics, pharmaceuticals, and new energy are rapidly rising, while traditional industries like steel and machinery are seeking transformation [2] - The electronics sector in Shenzhen saw 253 companies generate 984.76 billion yuan in revenue, a 14.1% increase, and a net profit of 454.57 billion yuan, up 24.59% [3] - The computer industry in Shenzhen reported 501.25 billion yuan in revenue, a 13.74% increase, and a net profit of 122.85 billion yuan, up 26% [5] Group 3: R&D Investment - Shenzhen companies invested a total of 352.97 billion yuan in R&D, with significant contributions from companies like BYD and ZTE [9] - The R&D investment in strategic emerging industries in Shenzhen reached 92.46 billion yuan, a year-on-year increase of 22.36% [9] - Shanghai's R&D investment also hit a record high of 432.6 billion yuan, growing by 1% [9] Group 4: International Expansion - Over 830 manufacturing companies in Shanghai achieved overseas revenue of 1.1 trillion yuan, a 5% increase [11] - Shenzhen's strategic emerging industries reported overseas income of 434.66 billion yuan, a 23.59% increase, with a 29.22% share of total revenue [11] - Companies are diversifying their overseas markets, with significant growth in exports from firms like Huayou Cobalt and Quectel [12] Group 5: Dividend and Shareholder Returns - A total of 794 listed companies in Shanghai and Shenzhen announced mid-term dividends amounting to 643.81 billion yuan [12] - Shenzhen companies saw an 18.04% increase in the number of mid-term dividends declared, with a 49.51% increase in dividend amounts [12] - Companies are also increasing share buybacks, with Shenzhen firms announcing 230 buyback plans totaling 68.21 billion yuan [13]

Market Overview - On September 4, the A-share market experienced a collective pullback, with all three major indices declining. The total trading volume reached 2.58 trillion yuan, an increase of over 180 billion yuan compared to the previous trading day. Despite the overall market adjustment, more than 2,200 stocks closed higher, with 44 stocks hitting the daily limit up [1] Sector Performance - The dairy, duty-free shops, and prepared dishes sectors led the market's rise, while sectors related to national big fund holdings, packaging optics, and lithography machines saw significant declines [1] Institutional Ratings - A total of 174 buy ratings were issued by institutions, covering 160 stocks. Great Wall Motors became a market focus, receiving three buy ratings from institutions. Among the stocks with buy ratings, 64 records provided explicit target prices, with 43 stocks showing an upside potential exceeding 20% [1] High Upside Potential Stocks - ZTE Corporation has the highest upside potential, with a target price of 67.37 yuan per share, indicating a potential increase of 64.96%. Other stocks with significant upside include AVIC Optoelectronics and BYD, with potential increases of 63.44% and 54.81%, respectively [1] Industry Preferences - The power equipment industry is favored by institutions, with stocks like EVE Energy and Tianci Materials among 15 stocks receiving buy ratings. The automotive and machinery equipment industries also attracted institutional attention, with 14 and 12 stocks, respectively, receiving buy ratings [1] Northbound Capital Inflows - New Yi Sheng and Tianfu Communication received significant attention from both institutions and northbound capital. They ranked first and second in net buying amounts, with 4.01 billion yuan and 2.82 billion yuan, respectively [4] Company Announcements - BYD announced its global presence in over 112 countries and regions, leading in several overseas new energy vehicle markets. Seven of its eight roll-on/roll-off ships are now operational. Additionally, Seiyun Circuit reported mass production of its AI glasses for major overseas clients and several technological breakthroughs in the AI server field [7]

Summary of ZTE Corp (763 HK) Conference Call Company Overview - **Company**: ZTE Corp (763 HK) - **Sector**: Telecommunications - **Current Price**: HKD 36.22 (as of September 1, 2025) - **Target Price**: HKD 39.00, implying a 7.7% upside [4][22] Key Financial Highlights - **2Q25 Results**: - Revenue growth accelerated to **21% y-y** (1Q25: +7.8% y-y) - Earnings declined by **13% y-y** (1Q25: -10.5% y-y) [1][14] - **Revenue Breakdown**: - Carrier network revenue declined by **6% y-y** in 1H25 - Enterprise segment revenue grew by **110% y-y**, driven by AI server shipments [1][2] - **Gross Profit Margin (GPM)**: - GPM declined by **8.0pp y-y to 32.5%** in 1H25 and **8.1pp y-y to 30.9%** in 2Q25 [1][14] - **Cost Control**: - R&D expenses decreased by **2.7% y-y** in 1H25 and **2.5% y-y** in 2Q24, partially offsetting GPM decline [1] Revenue and Earnings Forecasts - **Revised Revenue Forecasts**: - FY25F-27F revenue forecasts raised by **8.5-10.0%** due to stronger AI server demand [1][13] - **Earnings Adjustments**: - FY25F-27F earnings forecasts cut by **4-21%** due to margin dilution [1][13] - **Future Revenue Contribution**: - Enterprise/government segment expected to contribute **34% of total revenue by 2027F** with a **43% revenue CAGR** from FY24-27F [2] Market Dynamics - **Carrier Business Challenges**: - Continued downcycle in 5G infrastructure spending in China impacting growth [2][18] - **AI Server Demand**: - Strong demand driven by accelerated AI investments from domestic tech players [2] Valuation and Risks - **Valuation Methodology**: - Target price based on **19x FY26F EPS of CNY1.88**, aligned with FY25-27F earnings CAGR [11][18] - **Risks**: - **Downside Risks**: Slower-than-expected 5G spending, US-China trade tensions - **Upside Risks**: Faster recovery in telecom demand, better margin improvements in enterprise and consumer segments [11][18] Additional Insights - **Cash Flow and Debt**: - Ending cash projected to increase from **CNY 43.9 billion in FY24** to **CNY 566.6 billion in FY27** [10] - Net debt/equity ratio expected to rise to **30.9% by FY27** [10] - **Market Capitalization**: Approximately **USD 19.45 billion** [4][8] Conclusion ZTE Corp is navigating a challenging telecom environment with a strong focus on AI server growth. Despite margin pressures, the company is expected to benefit from increased demand in the enterprise segment, leading to revised revenue forecasts. The stock maintains a Neutral rating with a target price reflecting potential upside.

Group 1 - UBS maintains a "Buy" rating for Innovent Biologics, raising the target price to HKD 137.4, citing the promising product line and significant global R&D potential for IBI363 [1] - CMB (Hong Kong) maintains a "Buy" rating for China Life, increasing the target price to HKD 29, with a projected 7% YoY net profit growth in H1 2025 and a 20.3% increase in new business value [1] - CMB (Hong Kong) maintains a "Buy" rating for ZTE Corporation, raising the target price to HKD 42, with a 15% YoY revenue growth expected in H1 2025, driven by strong enterprise business performance [2] Group 2 - DBS reaffirms a "Buy" rating for China Merchants Bank, lowering the target price to HKD 53.5, with a projected CAGR of 2.5% for earnings from 2025 to 2027 [3] - Huatai Securities maintains a "Buy" rating for Li Auto, reducing the H-share target price to HKD 105.43, optimistic about the sales performance of the new i6 model [4] - CMB (Hong Kong) maintains an "Outperform" rating for Cha Bai Dao, with a target price of HKD 12, reporting a 4.3% YoY revenue growth and a 37.5% increase in net profit for H1 2025 [5] Group 3 - CMB (Hong Kong) maintains an "Outperform" rating for Chaoyun Group, setting a target price of HKD 3.65, with a 7.2% YoY revenue growth and a 101.4% increase in pet business revenue [6] - CMB (Hong Kong) maintains an "Outperform" rating for He Yu-B, raising the target price to HKD 20, highlighting the approval of a key clinical trial and strong financial position [7] - UBS gives a "Buy" rating to CanSino Biologics, setting a target price of HKD 224.3, anticipating updates on key data and potential collaborations [8]

Group 1 - The core viewpoint of the report is that ZTE Corporation has shown strong mid-term performance, with a revenue growth of 15%, driven by robust demand in the government and enterprise sector as well as consumer business [1] - Revenue from the government and enterprise segment increased by 110%, while consumer business revenue grew by 8% [1] - The gross margin narrowed by 8.1 percentage points year-on-year to 30.9%, attributed to a higher proportion of lower-margin server sales in the government business and an increase in AI server shipments [1] Group 2 - The report anticipates that the computing demand from domestic internet service providers will remain strong for the remainder of the year [1] - ZTE's component inventory is expected to support its continued strong growth [1] - The forecast for ZTE's government business revenue is a year-on-year increase of 104% for the current year, with a projected growth of 14% for the next year [1] Group 3 - The report indicates that while the gross margin may continue to be under pressure this year, it is believed that it will not deteriorate further [1] - The rating for ZTE Corporation is maintained at "outperform," with the target price raised from HKD 33 to HKD 40 [1]

Core Viewpoint - ZTE Corporation reported strong mid-term performance with a revenue growth of 15%, driven by robust demand in the government and enterprise sector as well as consumer business [1] Revenue Performance - Revenue from the government and enterprise business increased by 110%, while consumer business revenue grew by 8% [1] - The overall revenue growth is attributed to favorable demand in the domestic internet service provider sector [1] Profitability Metrics - Gross margin narrowed by 8.1 percentage points year-on-year to 30.9%, primarily due to a higher proportion of lower-margin server sales in the government business and an increase in AI server shipments [1] Future Outlook - The company is expected to maintain strong growth in the remaining part of the year, with a forecasted annual revenue growth of 104% for the government business and 14% for the following year [1] - Although gross margin may continue to be under pressure throughout the year, it is believed that further deterioration is unlikely [1] Analyst Rating - The firm maintains a "Outperform" rating for ZTE Corporation, raising the target price from HKD 33 to HKD 40 [1]

Investment Rating - The investment rating for the company is "Buy" with a target of outperforming the industry index by over 15% in the next six months [5][18]. Core Views - The company is fully committed to AI, which has driven stable revenue growth in the first half of 2025. The revenue for the first half of 2025 reached 71.553 billion yuan, a year-on-year increase of 14.51%, while the net profit attributable to shareholders was 5.058 billion yuan, a decrease of 11.77% [2][4]. - The company is focusing on expanding its capabilities in the AI and computing infrastructure sectors, which has led to significant growth in its second curve revenue, particularly in server and storage products, which saw a year-on-year increase of over 200% [2][3]. Financial Summary - Revenue projections for the company are as follows: 2023A at 124.251 billion yuan, 2024A at 121.299 billion yuan, 2025E at 137.068 billion yuan, 2026E at 150.774 billion yuan, and 2027E at 165.098 billion yuan, with growth rates of 1.1%, -2.4%, 13.0%, 10.0%, and 9.5% respectively [1][10]. - The net profit attributable to shareholders is projected to be 9.326 billion yuan in 2023A, 8.425 billion yuan in 2024A, 8.561 billion yuan in 2025E, 9.208 billion yuan in 2026E, and 9.987 billion yuan in 2027E, with growth rates of 15.4%, -9.7%, 1.6%, 7.6%, and 8.5% respectively [1][10]. - The company's return on equity (ROE) is expected to decline slightly from 13.5% in 2023A to 10.7% in 2027E [1][10]. Business Strategy - The company is enhancing its product technology in the connectivity and computing fields, focusing on 5G core networks and AI-driven large-scale computing clusters. It has established over 450 project cases globally in data center products [3][4]. - The company has launched innovative AI terminal products in the first half of 2025, including the Nubia Z70S Ultra and Nubia Flip 2, maintaining a leading position in the mobile internet market [3].