Core Insights - Goldman Sachs' chief China equity strategist Liu Jinjun released a report titled "The Return of Chinese Private Enterprises: The Tide Has Turned," indicating an improvement in the mid-term investment outlook for Chinese private enterprises driven by various macro, policy, and micro factors [1] - The report highlights a strong recovery in Chinese private enterprises, with profits and ROE rebounding by 22% and 1.2 percentage points, respectively, from their 2022 lows, and further recovery expected as profit margins normalize during industry consolidation [1] Group 1: Investment Opportunities - Goldman Sachs identified ten major Chinese private companies, referred to as the "Ten Giants," which include Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hansoh Pharmaceutical, Ctrip, and Anta. These companies are expected to expand their dominance in the Chinese stock market, similar to the "Seven Giants" in the U.S. stock market [1][2] - The "Ten Giants" have shown significant advantages in market capitalization, trading volume, profit growth potential, and valuation, making them attractive to investors. They span high-growth sectors such as technology, consumer goods, and automotive, representing China's "new momentum" in AI, self-innovation, globalization, service, and new consumption [2] Group 2: Market Trends and Performance - Since the end of 2022, the stocks of these ten companies have risen by an average of 54%, outperforming the MSCI China Index by 33 percentage points and showing a 24% increase this year, surpassing the index by 8 percentage points [2] - Goldman Sachs estimates that 86% of global mutual funds are underweight in Chinese stocks, suggesting a potential inflow of up to $44 billion if these funds adopt equal-weight exposure to Chinese equities, with large private enterprises benefiting the most due to their size, liquidity, and index weight [3] Group 3: Broader Market Context - The report notes a significant increase in global funds returning to China and the ongoing growth of domestic "patient" and passive capital, which is expected to disproportionately benefit index-weighted stocks [3] - Recent trends indicate that Hong Kong stocks are outperforming A-shares, driven by fundamental recovery and inflows from southbound capital, with technology companies in Hong Kong showing superior performance in application areas [3]

Group 1 - Goldman Sachs introduced the concept of "Chinese Prominent 10," identifying ten leading private enterprises in China, including Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hansoh Pharmaceutical, Ctrip, and Anta [3][6] - The "Chinese Prominent 10" spans multiple sectors such as interactive media, retail, technology hardware, automotive, dining, entertainment, consumer goods, pharmaceuticals, hospitality, and textiles, contrasting with the tech-focused "Magnificent 7" in the US [6] - Goldman Sachs forecasts a compound annual growth rate (CAGR) of 13% for these companies' earnings over the next two years, with a median of 12%, and notes that their average price-to-earnings (P/E) ratio is 16 times, making them more attractive compared to the US counterparts' P/E of 28.5 times [6] Group 2 - Notable companies such as JD.com, Baidu, CATL, and SMIC were excluded from the "Chinese Prominent 10," despite JD.com ranking first in revenue among private enterprises in 2024 [3][6][8] - JD.com operates primarily on a direct sales model, differing from Alibaba's e-commerce approach, and has recently entered the food delivery market, showing strong growth [6][8] - NetEase's revenue for 2024 is projected at 105.3 billion yuan, with a year-on-year growth of 1.74%, while its music service revenue is significantly lower than Tencent's music revenue [8][9] Group 3 - The report emphasizes that investing in private enterprises does not exclude state-owned enterprises, as Goldman Sachs still favors "high-quality" state-owned enterprises and shareholder return combinations [10]

Core Viewpoint - The Hong Kong 300 Growth Index has shown positive performance, with a year-to-date increase of 17.18% and a recent one-month rise of 4.36% [1] Group 1: Index Performance - The Hong Kong 300 Growth Index (HK300G) reported at 2293.61 points, reflecting a 4.36% increase over the past month, a 0.89% increase over the past three months, and a 17.18% increase year-to-date [1] - The index is part of a series that includes the Hong Kong 300 Growth Index, Value Index, Relative Growth Index, and Relative Value Index, designed to reflect the performance of different style securities based on the Hong Kong 300 Index sample [1] Group 2: Index Holdings - The top ten holdings in the Hong Kong 300 Growth Index include Tencent Holdings (9.86%), AIA Group (9.72%), Meituan-W (9.38%), BYD Company (6.36%), JD.com-SW (5.5%), NetEase-S (5.39%), CNOOC (4.42%), Trip.com Group-S (4.31%), Pop Mart (2.95%), and Kuaishou-W (2.4%) [1] - The index's holdings are entirely composed of stocks listed on the Hong Kong Stock Exchange, with a 100% allocation [1] Group 3: Sector Allocation - The sector allocation of the index shows that Consumer Discretionary accounts for 44.02%, Communication Services 18.63%, Financials 10.28%, Healthcare 8.47%, Energy 7.13%, Materials 4.01%, Consumer Staples 1.94%, Utilities 1.80%, Industrials 1.65%, Information Technology 1.33%, and Real Estate 0.74% [2] - The index samples are adjusted biannually, with adjustments occurring on the next trading day after the second Friday of June and December [2]

Core Viewpoint - Goldman Sachs' newly selected list of "Top 10 Private Enterprises in China" has garnered significant market attention, highlighting the vitality of China's private economy and reflecting five core trends in industrial development: technological innovation, domestic demand-driven growth, globalization, consumption upgrades, and corporate governance optimization [1] Group 1: Company Overview - The selected 10 companies include Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui Medicine, Ctrip, and Anta, representing a complete ecosystem of China's new economy [3] - Tencent and Alibaba dominate the digital economy, with Tencent's fintech and enterprise services accounting for 34% of its revenue, while Alibaba's cloud computing business has achieved profitability for eight consecutive quarters [3] - BYD and Xiaomi serve as the dual engines of China's intelligent manufacturing, with BYD surpassing Tesla in electric vehicle sales and Xiaomi holding a 14.1% global market share in smartphones [3] Group 2: Financial Performance - The average compound annual growth rate of revenue for these 10 companies over the past five years is 19.8%, significantly outpacing other constituents of the MSCI China Index [5] - Meituan's takeout business shows stable growth, with new business losses narrowing to 4.8 billion yuan, while NetEase's overseas gaming revenue exceeds 35%, showcasing its strong cross-cultural operational capabilities [5] - The average R&D intensity of the top 10 companies is 8.2% of revenue, with Hengrui Medicine's R&D investment reaching 28%, indicating a strong commitment to future growth [5] Group 3: Valuation Insights - The average price-to-earnings ratio of these companies is 16 times, representing a 20% discount compared to their historical average [7] - Midea Group's dividend yield has risen to 4.5%, while Anta Sports' operating cash flow increased by 32% year-on-year, and Ctrip's total bookings have recovered to 1.3 times the level of 2019 [7] - Compared to U.S. tech giants, the PEG ratio of China's top 10 shows significant advantages, particularly in the commercialization of AI, with Alibaba's Tongyi Qianwen and Tencent's Hunyuan large model entering large-scale application phases [7] Group 4: Policy Environment - The top 10 companies benefit from favorable national policies, including the introduction of digital economy promotion regulations, continued tax exemptions for new energy vehicle purchases until 2027, and the expansion of green channels for innovative drug and medical device approvals [9] - The expansion of the Hong Kong Stock Connect and the reform of the A-share registration system have improved the financing environment for private enterprises, with estimated annual incremental capital inflows exceeding 80 billion yuan through these channels [9] Group 5: Future Outlook - These leading enterprises are expected to continue driving industrial transformation, with Tencent exploring virtual and real integration, Alibaba repositioning in the AI large model era, BYD's intelligent transformation, and Meituan's commercialization of drone delivery [11] - As the demand for wealth management among Chinese residents surges, these quality assets are poised to become key targets for both domestic and foreign capital allocation [11] Group 6: Notable Exclusion - Notably, Huawei is absent from Goldman Sachs' list of "Top 10 Private Enterprises in China" as it is not a publicly listed company, which is a criterion for inclusion [13]

Company News - Midea Group plans to repurchase shares worth between 5 billion to 10 billion yuan [10] - CITIC Securities announced the issuance of technology innovation bonds not exceeding 6 billion yuan, receiving administrative approval from the People's Bank of China [11] - Yunlu Co., Ltd. announced that its chairman and general manager has been detained [12] - *ST Jiuyou received a decision for stock delisting [12] - Jiangbolong announced a memorandum of cooperation with SanDisk [13] - Wuzhou Xinchun plans to raise no more than 1 billion yuan through a private placement for the development of intelligent robots and key components for automotive intelligent driving [14] - Feitian Chengxin plans to reduce its holdings by no more than 4 million shares [15] - Zhongman Petroleum noted that geopolitical conflicts in the Middle East have led to a short-term rise in international oil prices [16] - Lakala is planning to list on the Hong Kong Stock Exchange to accelerate the application of digital currency in cross-border scenarios [16] - Three squirrels announced the termination of the acquisition of Hunan Ailing Technology's controlling stake [17] - Jinchengzi announced that revenue from 3D printing equipment products will account for less than 2% of the company's total revenue in 2024 [17] - Shanshui Technology plans to invest 6 billion yuan in a new chemical materials project [18] - Xinxunda plans to sell all shares of Huali Technology at an opportune time [19] - *ST Yazhen announced the completion of stock trading suspension review and resumption of trading [19] - Dianguang Media stated on the interactive platform that its subsidiary is selling products related to Pop Mart [19] - Yiwei Lithium Energy plans to extend the reduction of its holdings in Simor International by 3.5% [20] Industry News - A new round of insurance product interest rate adjustments has begun, with the new products from Tongfang Global Life Insurance lowering the preset interest rate from the current market cap of 2% to 1.5% [6] - The Ministry of Finance announced that Dalian and Hubei provinces will implement a tax refund policy for overseas travelers' shopping starting from July 1, 2025 [7] - The Hangzhou Municipal Bureau of Commerce is drafting implementation details for "Enjoy Immediate Purchase and Refund" to create an international consumption city, offering subsidies for new tax refund outlets [7] - The National Medical Products Administration is soliciting opinions on optimizing the review and approval of clinical trials for innovative drugs, aiming to complete reviews within 30 working days for eligible applications [6] - The liquid cooling technology is becoming a necessary option for new data centers due to increasing power density and energy consumption challenges [28] - The 3D printing industry in China is experiencing rapid growth, with production and export volumes significantly increasing [25] - Major companies like Walmart and Amazon are exploring the issuance of their own stablecoins, indicating a growing trend in the financial market [29]

Group 1 - Trip.com Group Limited has entered into a share repurchase agreement with MakeMyTrip Limited to sell a portion of its Class B ordinary shares for cancellation, aiming to optimize its investment portfolio and enhance shareholder returns [1] - After the proposed repurchase, Trip.com Group will remain the largest minority shareholder of MakeMyTrip and continue to support its growth [1] - To fund the repurchase, MakeMyTrip has launched an offering of convertible senior notes and a concurrent underwritten public offering of ordinary shares, with Trip.com Group agreeing to a 180-day lock-up period [1] Group 2 - Trip.com Group Limited is a leading global one-stop travel platform, offering a comprehensive suite of travel products and services [2] - The company operates under various brands, including Ctrip, Qunar, Trip.com, and Skyscanner, and aims to provide travelers with informed and cost-effective travel bookings [2] - Founded in 1999, Trip.com Group was listed on Nasdaq in 2003 and on HKEX in 2021, with a mission to pursue the perfect trip for a better world [2]

Core Viewpoint - Goldman Sachs' chief China equity strategist Liu Jinjun indicates that the mid-term investment outlook for China's private enterprises is improving due to various macro, policy, and micro factors [1]. Group 1: Market Concentration - Goldman Sachs is optimistic about large private enterprises at the industry forefront, believing that market concentration in the private sector will increase [2]. - China has the lowest market concentration among major global stock markets, with the top ten companies (including state-owned enterprises) accounting for only 17% of total market capitalization, compared to 33% in the U.S. and 30% in other emerging markets [2]. - The recent transparency in China's antitrust and merger frameworks is seen as a positive sign for organic and acquisition-driven growth of private enterprises [2]. - Existing industry leaders are expected to further increase their market share and profitability [2]. - Some leading companies dominate their respective industry's profit pools, capital expenditures, and R&D, which are positively correlated with future returns and industry leadership [2]. - Many large private enterprises are key players in artificial intelligence, which is anticipated to have a transformative impact in the future [2]. - Global expansion is expected to enhance revenue growth and profitability for private enterprises [2]. - The average P/E ratio of China's top ten private listed companies is 13.9, representing a 22% premium over the overall market, compared to a 74% premium in 2021 and a 43% premium for the U.S. "Magnificent Seven" [2]. Group 2: China's "Ten Giants" - Goldman Sachs has identified a list of ten prominent private companies in China, referred to as the "Ten Giants," which includes Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui Medicine, Ctrip, and Anta [4]. - The total market capitalization of these ten companies reaches $1.6 trillion, accounting for 42% of the MSCI China Index weight, with a daily trading volume of $11 billion [4]. - Earnings for the "Ten Giants" are projected to grow by 13% (CAGR) over the next two years, with a P/E ratio of 16 times [4]. - These companies are expected to reflect the latest economic themes in China, including AI/technology development, international expansion, new consumption, and enhanced shareholder returns [4].

Core Viewpoint - Goldman Sachs has introduced the concept of "Chinese Prominent 10," which includes ten major private enterprises in China, aiming to identify core assets with long-term dominance potential in the Chinese stock market, similar to the "Magnificent 7" in the US [2][3]. Group 1: Overview of the "Chinese Prominent 10" - The "Chinese Prominent 10" includes Tencent (market cap $601 billion), Alibaba ($289 billion), Xiaomi ($146 billion), BYD ($121 billion), Meituan ($102 billion), NetEase ($86 billion), Midea ($78 billion), Hengrui Medicine ($51 billion), Trip.com ($43 billion), and Anta ($35 billion) [4]. - These companies span various sectors such as technology, consumer goods, and automotive, representing new economic drivers in China, including AI, self-sufficiency, globalization, and service consumption upgrades [2][5]. Group 2: Financial Performance and Valuation - The expected compound annual growth rate (CAGR) for the earnings of these companies over the next two years is projected to be 13%, with a median of 12% [6]. - The average price-to-earnings (P/E) ratio for these stocks is 16 times, with a forward price-to-earnings growth (fPEG) ratio of 1.1, making them more attractive compared to the US "Magnificent 7," which has a P/E of 28.5 and an fPEG of 1.8 [6]. Group 3: Market Trends and Recovery - Since the low point at the end of 2022, the average increase in these ten stocks has been 54%, with a year-to-date rise of 24%, outperforming the MSCI China Index by 33 and 8 percentage points, respectively [7]. - Private enterprises in China are showing strong recovery signs after a significant market value loss of nearly $4 trillion since the end of 2020 [8]. Group 4: Policy and Technological Drivers - The Chinese government has increased its focus on private enterprises, with significant policy events boosting confidence among private business owners [10]. - Rapid advancements in AI technology, particularly with the emergence of models like DeepSeek-R1, have enhanced market optimism towards technology-driven private enterprises [11]. Group 5: Market Concentration and Growth Potential - The concentration of the Chinese stock market is relatively low, with the top ten companies accounting for only 17% of the total market value, compared to 33% in the US [13]. - As leading companies expand their dominance, market concentration is expected to increase in the coming years [14]. Group 6: Global Expansion and Profitability - Private enterprises are leading the "going out" strategy, with overseas sales increasing from 10% in 2017 to an estimated 17% in 2024 [19]. - Companies with strong balance sheets and cash flows are better positioned to benefit from overseas expansion, with some, like BYD, achieving significantly higher gross margins abroad [19]. Group 7: Valuation and Investment Opportunities - Despite improving fundamentals, the valuation of the "Chinese Prominent 10" remains at historical lows, with an average trading valuation of 13.9 times the expected P/E ratio, only 22% higher than the MSCI China Index [20]. - If these private enterprises achieve similar valuation premiums as their US counterparts, their market concentration could increase, adding $313 billion in market value [21].

Group 1 - Goldman Sachs' chief China equity strategist Liu Jinjun's team has released a series of reports indicating that the mid-term investment value of Chinese private enterprises has improved due to macroeconomic, policy, and micro factors [1] - The research team has identified the "Top Ten Private Enterprises" in China, which includes Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hansoh Pharmaceutical, Ctrip, and Anta, similar to the "Big Seven" in the US stock market [1] - Goldman Sachs expects these "Top Ten Private Enterprises" to expand their dominance in the Chinese stock market, with all stocks rated as "Buy" by analysts [1] Group 2 - The total market capitalization of the "Top Ten Private Enterprises" is estimated at $1.6 trillion, accounting for 42% of the MSCI China Index weight, with an average daily trading volume of $11 billion [1] - The projected compound annual growth rate (CAGR) for earnings per share (EPS) over the next two years is 13%, indicating high market influence and investment appeal [1] - These enterprises demonstrate significant advantages in market capitalization, trading volume, profit growth potential, and valuation, making them worthy of investor attention [1] Group 3 - In the equity market, there are 5,121 listed private enterprises, with 3,771 listed on the A-share market and 1,350 on offshore markets, totaling a market capitalization of $9 trillion, which is 71% of the total MSCI China Index market capitalization [2] - The earnings weight of these private enterprises accounts for 31% of the index [2]

Core Viewpoint - The mid-term investment outlook for Chinese private enterprises is improving due to various macro, policy, and micro factors, as highlighted in a recent report by Goldman Sachs' chief China equity strategist Liu Jinjun [1] Group 1: Investment Opportunities - Goldman Sachs has identified a list of ten favored Chinese private listed companies, referred to as the "Ten Giants," which include Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui Medicine, Ctrip, and Anta [1] - The total market capitalization of these ten companies is approximately $1.6 trillion, accounting for 42% of the MSCI China Index weight, with a daily trading volume of $11 billion [1] - Analysts at Goldman Sachs project a 13% growth in earnings (compound annual growth rate) for the "Ten Giants" over the next two years, with a price-to-earnings ratio of 16 times [1] Group 2: Economic Themes - The "Ten Giants" are expected to reflect the latest economic themes in China, including advancements in artificial intelligence/technology, international expansion, new consumption trends, and enhanced shareholder returns [1] - Goldman Sachs emphasizes that investing in private enterprises does not exclude the preference for high-quality state-owned enterprises and shareholder return combinations [1]