Group 1 - The report from CMB International indicates that trade uncertainties have eased, leading to a rebound in global stock markets, with US stocks, A-shares, and Hong Kong stocks continuing their upward trend [1] - Apple Inc. launched iOS 26 at WWDC25, enhancing the user experience of its product line, which aligns with market expectations [1] - TSMC reported a 40% year-on-year increase in revenue for May, driven by sustained demand for AI, with projected revenue of NT$320.5 billion for May 2025, reflecting a 40% year-on-year growth despite an 8% quarter-on-quarter decline [1] Group 2 - The report highlights that AI remains a critical technological change for the foreseeable future, with market focus expected to shift back to system construction progress and application monetization as key industry chain companies complete product upgrades in the second half of the year [2] - Investors are advised to pay attention to the domestic substitution process within the technology supply chain, particularly in semiconductor design, equipment, and manufacturing sectors [2] - There is an anticipated marginal improvement in end-user demand in the automotive and industrial sectors, suggesting investment opportunities within these industry chains [2]

Core Viewpoint - The report from CMB International indicates that the mainland real estate sector is showing signs of stabilization after a decline, with new residential property sales expected to reach between 8 trillion to 8.5 trillion yuan in 2025 [1] Group 1: Mainland Real Estate Market - In the first four months of 2025, the national new residential property sales reached 27,035 billion yuan, with a year-on-year decline narrowing to 3.2% [1] - Despite localized supply-demand imbalances, the residential market is anticipated to stabilize in 2025 [1] - Policy measures may include continued stockpiling, revitalizing existing land, supporting current housing sales, adjusting housing finance policies, and promoting the rental market [1] Group 2: Investment Recommendations - The report prioritizes investment in state-owned developers with low valuations, followed by private sector leaders with land reserves in first and second-tier cities, while other private developers are ranked last [1] Group 3: Hong Kong Real Estate Market - The Hong Kong real estate market faces macroeconomic uncertainties, but key positive factors are emerging, such as population recovery and a significant drop in HIBOR, which are expected to stabilize the residential market [1] - Residential prices in Hong Kong are projected to grow by 3%, 5%, and 5% in the second half of 2025 and through 2027 [1] - The retail sector is under pressure due to changes in local and tourist consumption habits, but the trend of consumption from mainland China is alleviating rental pressures, leading to a moderate overall adjustment [1] Group 4: Office Market Outlook - The office market in Hong Kong is facing limited rebound potential due to high vacancy rates and the completion of new projects, necessitating a cautious outlook [1] Group 5: Preference Ranking in Hong Kong Real Estate - The preferred ranking for the Hong Kong real estate sector is: retail REITs > low-debt residential developers > retail property holders > REITs/developers with high office business exposure, with Link REIT being the top choice [1]

Group 1 - The core viewpoint of the report is that Baidu's search advertising revenue is expected to remain under pressure due to AI impacts, with a projected year-on-year decline of 9% to 66 billion RMB for the entire year [1] - The report anticipates a year-on-year decline of 11% and 12% in search advertising revenue for the second and third quarters, respectively, with a slight easing in the decline expected in the fourth quarter [1] - Baidu's operating profit margin for its core business is projected to drop to 14.8% in the second quarter, with an overall annual operating profit margin forecasted to decrease by 1.4 percentage points to 17.8% [1] Group 2 - The report maintains a target price of 96 HKD for Baidu Group based on SOTP valuation [1] - The company is seen as leading in cloud and autonomous driving sectors, which may provide opportunities to reverse the group's valuation [1] - The report suggests monitoring the sustainability of cloud revenue growth and the global promotion of Robotaxi [1]

Group 1: Hong Kong Real Estate Market - The Hong Kong real estate market has not shown significant improvement in the first half of the year, but key factors are beginning to turn around [1] - A rebound in population and a significant drop in interest rates, including HIBOR, are expected to restore market confidence, with property prices projected to rise by 3% in the second half of the year and by 5% in both 2026 and 2027 [1] - The decline in HIBOR directly reduces mortgage rates, alleviating payment pressure and providing a good opportunity for first-time buyers and motivating upgrade purchases in the secondary market [1] Group 2: Residential Rental Market - The trend of divergence in residential prices and rental markets has continued into 2023, driven by population inflow and government talent introduction plans, which will increase housing demand and push short-term rental growth [1] - Rental prices are expected to rise by approximately 2% to 3% this year, with areas close to major business districts and key universities projected to see rental increases of at least 5% year-on-year [1] Group 3: Retail Market - Despite changes in tourist consumption habits and average spending levels, an increase in tourist numbers and a slowdown in consumption trends from mainland China are expected to benefit the dining and grocery sectors [2] - High-end shopping centers and core shopping areas are anticipated to remain stable through 2025, although non-tourist and core retail areas may face more significant pressure due to e-commerce challenges [2] Group 4: Office Market - The office market remains cautious, with vacancy rates slightly decreasing from a high of 13.7% in July 2024 to 13.5% in March 2025, but still at elevated levels [2] - Major projects set to complete between 2025 and 2026 will limit the rebound potential of the office market, with Grade A office rents expected to decline by 3% to 5% year-on-year until economic conditions improve [2]

Core Viewpoint - The report from CMB International raises the target price for NetEase Cloud Music (09899.HK) to HKD 240, maintaining a "Buy" rating due to faster-than-expected cost optimization and growth potential in long-term membership revenue [1] Financial Performance - Adjusted net profit forecasts for 2025 and 2026 have been increased by 6% and 9% respectively [1] - The gross profit margin for the first quarter of this year increased by 3.7 percentage points year-on-year to 36.7%, surpassing both the bank's and market expectations [1] Revenue Drivers - The growth in membership subscription revenue, increased income from various professional services, and optimization of live streaming revenue sharing are key contributors to the improved financial performance [1] Market Outlook - There is significant operational space for the paid wall and ARPPU (Average Revenue Per Paying User), indicating a positive long-term outlook for membership income growth [1]

Core Viewpoint - The report from CMB International maintains a target price of HKD 64 for Kuaishou (01024.HK), with Q1 2025 performance meeting expectations, showing a year-on-year revenue increase of 11% and adjusted net profit growth of 4% [1] Financial Performance - Kuaishou's total revenue and adjusted net profit for Q1 2025 increased by 11% and 4% year-on-year, respectively, aligning with expectations [1] - The adjusted net profit margin stands at 14% [1] - E-commerce GMV (Gross Merchandise Volume) grew by 15% year-on-year, also meeting expectations [1] Future Projections - For Q2 2025, e-commerce GMV is projected to increase by 14%, with influencer distribution potentially leading to a slight improvement in commission rates [1] - Advertising revenue is expected to see double-digit year-on-year growth, driven by improved infrastructure and local consumption [1] - The company anticipates that Kuaishou's revenue will exceed USD 100 million for the year [1] Valuation and Rating - CMB International maintains a profit forecast of RMB 20.3 billion for 2025 [1] - Given Kuaishou's advanced video generation capabilities and commercialization potential, a valuation premium is applied, resulting in a target price based on a 13x P/E ratio for 2025 [1] - The rating remains "Buy" with a target price of HKD 64 [1]

Core Viewpoint - The report from CMB International indicates a downward adjustment of Baidu's target price to HKD 96, while maintaining a "Buy" rating, due to the anticipated time required for AI monetization [1] Financial Performance - Baidu's Q1 performance exceeded expectations, with strong results from its cloud business [1] - The company is expected to see a decline in advertising revenue by 11% and 12% year-on-year in Q2 and Q3 respectively, with an overall decrease of 9% to RMB 66 billion for the full year of 2025 [1] Business Segments - The report highlights a projected revenue growth rate of 30% for Baidu's cloud business by 2025 [1] - The AI search content coverage is expected to rapidly advance to over 50% due to cost optimization [1] Strategic Developments - Baidu's Robotaxi initiative is anticipated to accelerate its global expansion, with the number of vehicles expected to exceed 1,000 [1]

Core Viewpoint - The report from CMB International raises the target price for Tencent Holdings to HKD 604, citing stable performance and the development of its AI ecosystem as key factors for this adjustment [1] Group 1: Financial Performance - Tencent's first-quarter performance exceeded expectations, with profit growth continuing to outpace revenue growth [1] - The company is expected to see a 10% increase in total revenue for the second quarter, reaching RMB 1,778 billion, and a 9.6% increase for the full year, totaling RMB 7,235 billion [1] Group 2: AI Investment Impact - The report highlights that Tencent's investments in AI are beginning to show results, contributing to growth across various business ecosystems [1] - Increased capital expenditure and AI investments are anticipated to narrow the gap between operating profit and revenue, with profit growth still expected to outpace revenue growth [1] Group 3: Gaming Sector Outlook - The introduction of new games is expected to alleviate market concerns regarding high comparatives in the gaming sector for the second half of the year [1]

Summary of the Conference Call Transcript Industry Overview - The focus is on the Hong Kong stock market (港股) and its recovery following recent changes in global tariff policies, particularly between the US and China [1][5][34]. Key Points and Arguments 1. **Tariff Policy Changes**: - The US has suspended a 24% "reciprocal tariff" on China and canceled all tariffs effective after April 8, 2025. This has reduced the US tariff level on China from a peak of 145% to 30%, while China's tariffs on the US have decreased from 125% to 10% [1][5][34]. - This development has significantly improved global risk sentiment, leading to a recovery in major stock indices, including the MSCI Global Index and the Hang Seng Index [1][20]. 2. **Market Recovery**: - The Hong Kong stock market has shown a continuous recovery since the announcement of the tariff changes, surpassing levels prior to the tariff announcement and exceeding the high point of October 2024 [1][6][34]. - The recovery is attributed mainly to a significant decline in risk premiums, while risk-free rates and corporate earnings expectations have remained relatively stable [15][34]. 3. **Sector Performance**: - Most sectors in the Hong Kong market have fully recovered in terms of price and valuation since the tariff announcement. Notably, sectors such as information technology, semiconductors, and consumer goods have shown strong performance [2][34]. - Defensive sectors like utilities and materials have also surpassed previous highs, indicating robust demand driven by domestic consumption [2][34]. 4. **Earnings Expectations**: - Overall, corporate earnings expectations have been minimally impacted by tariff policies, with most sectors maintaining stable earnings forecasts. Some cyclical sectors have seen slight downgrades, but the majority remain positive [2][42][34]. 5. **Investment Recommendations**: - The report suggests focusing on three main investment themes: - **Technology Innovation**: Emphasizing sectors like semiconductors and internet technology, which are expected to benefit from policy support and demand growth [3][58]. - **High Dividend Stocks**: In a low-interest environment, high dividend-paying stocks in banking, utilities, and telecommunications are recommended [3][58]. - **Policy Benefits**: Financial services firms like brokerages and insurance companies are expected to benefit from increased market activity and consumer support policies [3][58]. 6. **Market Sentiment and Risks**: - Despite the positive developments, investor sentiment remains cautious due to ongoing uncertainties regarding future tariff policies and the potential impact of US economic policies [26][51]. - The report highlights the need to monitor the market's response to these uncertainties, particularly in relation to retail investor sentiment and credit risk in the US [26][30]. Additional Important Content - The report emphasizes the importance of ongoing monitoring of global economic conditions and their potential impact on the Hong Kong market, particularly in light of the recent tariff negotiations and domestic policy measures aimed at boosting consumption and investment [51][52]. - The analysis includes various charts and data points illustrating the recovery of different sectors and the overall market sentiment, providing a comprehensive view of the current investment landscape in Hong Kong [37][39][57].

Core Viewpoint - The current wait-and-see approach of the Federal Reserve is deemed reasonable due to the potential impacts of tariffs and the uncertainty surrounding the economic outlook [1][4]. Economic Outlook - The Federal Reserve decided to maintain the federal funds rate target range at 4.25%-4.5%, marking the third consecutive meeting without changes [2]. - Economic indicators show a divergence, with the first quarter of 2025 experiencing a contraction in GDP for the first time in three years, primarily due to businesses rushing to import goods to avoid tariffs [2]. - The unemployment rate remains low at 4.2%, indicating a resilient labor market that has yet to reflect the impacts of tariffs [2]. Inflation Concerns - Although CPI and PCE data have not yet shown upward trends, soft indicators such as consumer inflation expectations and price indices in manufacturing and services have significantly increased, indicating future inflation risks [3]. - The large-scale "reciprocal tariffs" announced by Trump have been paused for 90 days, but the outlook remains unclear, negatively affecting business and consumer confidence [3]. Federal Reserve's Strategy - Jerome Powell emphasized a "wait and see" approach, stating that the cost of waiting is currently the lowest, and highlighted the challenges posed by tariffs to the Fed's dual mandate of maximum employment and a 2% inflation target [3][4]. - The Fed's independence is under threat, with external pressures from the Trump administration potentially impacting the credibility of the dollar [4]. - Market expectations for the timing of the first rate cut have shifted from June to July, with projections for a total of three rate cuts remaining intact for the year [4].