Investment Rating - The report maintains a Buy rating on Hengli Hydraulic with a target price of Rmb85.0, indicating an expected share price return of 26.1% and a total return of 27.2% [6][15]. Core Insights - Hengli Hydraulic aims for over 10% year-on-year growth in both revenue and earnings in 2025, primarily driven by a 20% increase in excavator component revenue despite flat non-excavator business [1]. - The Mexico plant is set to ramp up in June 2025, expected to contribute Rmb200m-300m to revenue in 2025, which would represent approximately 50% of Hengli's US revenue [4]. - The impact of US tariffs on demand has been limited, as major US customers can source Hengli's products from non-US plants [1]. Summary by Sections Excavator Business - Revenue from excavator pumps and valves is projected to grow by 30% year-on-year in 2025, while cylinder revenue is expected to increase by 10% year-on-year, driven by market share gains in China [2]. - Monthly production has been at full utilization from March to May 2025, but a decline is anticipated in June due to seasonal factors [2]. Non-Excavator Business - Revenue in the non-excavator segment is expected to remain flat in 2025, primarily due to weaker demand for Aerial Work Platforms (AWP), which accounted for about 10% of total revenue in 2024 [3]. - Non-excavator cylinders are projected to decline by a single digit year-on-year, while pump and valve revenues may still see a year-on-year increase [3]. Mexico Plant - The Mexico plant's revenue contribution is expected to double to Rmb600m-700m in 2026 and potentially reach Rmb3.0bn in the future [4]. Ball Screw and Linear Guide Business - Combined revenue from ball screws, linear guides, and electric actuators is anticipated to reach Rmb250m in 2025, with expectations to double to Rmb500m-600m in 2026, achieving gross and net profit margins of 30% and 10% respectively [5].

Investment Rating - The investment rating for WuXi AppTec is "Buy" with a target price of HK$95.00, indicating an expected share price return of 43.2% and an expected total return of 46.0% [5]. Core Insights - WuXi AppTec's CFO maintained the 2025 revenue guidance of Rmb41.5-43.0 billion, reflecting a year-over-year growth of 10-15% for continuing business, with faster bottom line growth than topline [1]. - The company expects TIDES revenue to grow over 60% year-over-year in 2025, with involvement in key GLP-1 projects such as tirzepatide, orforglipron, and retatrutide [2]. - WuXi AppTec currently has the world's largest peptide capacity of 41,000L, aiming to expand to 100,000L by the end of 2025 [2]. - The Testing and Biology businesses are anticipated to recover in the second half of 2025, with management noting that over 50% of Testing revenue comes from Chinese clients [3]. - The CDMO business is viewed as a cornerstone, with over 90% retention of projects in the Chemistry business for Phase 2/3/CMO projects [4]. Summary by Sections Financial Performance - Revenue guidance for 2025 is set at Rmb41.5-43.0 billion, with a projected growth rate of 10-15% year-over-year for continuing business [1]. - The expected share price return is 43.2%, with a total expected return of 46.0% [5]. Business Segments - TIDES revenue is expected to grow over 60% year-over-year in 2025, with significant involvement in GLP-1 projects [2]. - The company is confident in adding approximately 10 commercial projects to its pipeline annually [4]. - The Testing and Biology segments are expected to show double-digit growth in volume, with a recovery anticipated in the second half of 2025 [3]. Capacity and Expansion - WuXi AppTec currently operates with a peptide capacity of 41,000L, the largest globally, and aims to increase this to 100,000L by the end of 2025 [2]. - The company retains over 90% of projects in the Chemistry business for Phase 2/3/CMO projects, indicating strong project management capabilities [4].

Investment Rating - The report does not explicitly state an investment rating for the semiconductor industry but highlights significant growth potential driven by advancements in AI technology and architecture changes in portable devices. Core Insights - The emergence of portable AI servers is expected to revolutionize the semiconductor market, with a projected increase in demand for on-device AI capabilities across various form factors such as smartphones, laptops, and robots [22][35][36]. - AI distillation technology, particularly innovations from DeepSeek, is anticipated to lower the cost and complexity of AI model training, thereby accelerating the adoption of on-device AI solutions [24][68]. - The report identifies three major architectural shifts in on-device AI products, emphasizing the integration of AI modules into existing architectures and the development of new memory technologies to enhance performance [28][33][69]. Summary by Sections AI Hardware Shift - The report discusses the transition from centralized AI computing to personal on-device AI servers, predicting that consumers will eventually carry portable AI servers as easily as smartphones [22][36]. - It highlights the historical context of computing evolution, suggesting a return to distributed computing models as personalized AI devices become mainstream [23][37]. AI Model Efficiency - DeepSeek's distilled AI models are noted for their lower training costs and comparable performance to traditional models, which could significantly enhance on-device AI capabilities [24][50]. - The report outlines the algorithmic innovations of DeepSeek, including Mixture-of-Experts architecture and Knowledge Distillation, which improve model efficiency and reduce hardware dependency [62][68]. On-Device AI Technology - The report identifies three architectural directions for on-device AI: adding AI kits to conventional architectures, utilizing near memory technologies, and placing low-power DRAM adjacent to processing units [28][33][69]. - It anticipates broader adoption of heterogeneous integration and mobile DRAM technologies, with LPDDR6 and LPW DRAM expected to become mainstream by 2028 [4][34]. Market Growth Projections - The report forecasts substantial growth in AI smartphone shipments at a CAGR of 78% from 2023 to 2028, with AI PC shipments projected to grow at 28% CAGR from 2024 to 2029 [5][107]. - Overall AI DRAM demand is expected to grow at a CAGR of 75%, reaching 331 billion pieces by 2028, driven by the increasing adoption of next-gen memory solutions [5][68]. Key Beneficiaries - Potential beneficiaries of the shift towards portable AI servers include major semiconductor and technology companies such as Hynix, Samsung, TSMC, Micron, Nvidia, and Mediatek, among others [6][68].

Investment Ratings - The report rates Amphenol shares as Buy, indicating a positive outlook based on its leading position in the connector market and expected growth in AI infrastructure spending [16][10] - Dell Technologies shares are also rated as Buy, supported by anticipated growth in AI server revenues and a cyclical recovery in tech hardware [23][11] Core Insights - The improving demand outlook for AI, coupled with the expansion of NVIDIA's NVLink technology, is expected to benefit connector manufacturers, particularly Amphenol, which holds a significant market share in high-speed, low-latency connectors [5][10] - Dell is projected to achieve at least 50% year-over-year growth in AI server revenues for CY25, driven by improvements in GB200 NVL72 ramp noted by Wistron, a key ODM supplier [5][11] - The report highlights advancements in Direct Liquid Cooling (DLC) solutions as critical for AI hardware integration, indicating a positive trend for AI infrastructure providers [7] Company Summaries Amphenol Corp - Amphenol is the second-largest global connector manufacturer, with approximately 14% of worldwide connector shipments in 2023, and operates across various end markets including industrial, automotive, and IT data communications [15] - The company is expected to resume above-market sales and earnings as technology hardware spending increases, particularly in AI infrastructure [16] - The target price for Amphenol is set at $100, based on a 33x PE multiple applied to FY26E EPS, reflecting its growth potential [17] Dell Technologies - Dell is a leading provider of technology hardware, operating through segments including Infrastructure Solutions Group and Client Solutions Group [22] - The company is expected to benefit from a cyclical recovery in tech hardware and its strong position in commercial PCs and AI offerings [23] - The target price for Dell is set at $128, based on a 12.5x P/E multiple applied to N24M EPS estimates [24] Super Micro Computer, Inc. - Supermicro designs and manufactures high-performance server and storage systems, with a focus on AI-driven infrastructure [28] - The company is rated Neutral/High Risk due to competitive pressures in the AI server landscape, despite its significant market share [30] - The target price for Supermicro is set at $37, based on a 9-9.5x P/E multiple applied to FY27 estimates [32]

Investment Rating - The overall investment rating for the global power grid equipment sector is "Buy" for several companies, indicating a positive outlook for expected total returns [19]. Core Insights - Demand for transformers in the US remains strong, driven by data centers, renewable projects, and nuclear power plants, despite the impact of tariffs [2]. - European transformer demand is projected to grow at a 12% CAGR from 2025 to 2030, primarily due to renewable energy projects and data centers [5]. - The Middle East shows significant growth potential for tap changers, with demand expected to rise from 3,700 units annually to 5,500 units by 2030 [10]. - Major global manufacturers are expanding production capacity in Europe to meet rising demand, particularly from Turkey [8]. Summary by Sections US Market - US tariffs significantly affect transformer costs, with 30% of units produced locally and 70% imported [2]. - MR's US factory can meet 95% of local tap changer demand with limited tariff impact [3]. - MR plans to increase tap changer capacity by 1,000 units by the end of 2026, driven by aging infrastructure replacement [4]. European Market - European transformer demand is expected to grow at a 12% CAGR from 2025 to 2030, slowing to around 5% per annum after 2030 [5]. - Increased transformer imports from Turkey are noted, with major manufacturers like Hitachi and Siemens expanding their European production [8]. Global Demand - China leads in transformer demand, followed by Europe, India, and the Middle East [9]. - The Middle East's demand for tap changers is projected to grow significantly, with local production requirements emerging in Saudi Arabia [10]. Delivery and Competition - Delivery times for tap changers vary by region, with the US taking 3-4 months and China 2-3 months [12]. - MR faces competition in India but maintains a strong market position due to quality concerns regarding local suppliers [13].

Investment Rating - The report rates Xiaomi shares as a Buy with a target price of HK$73.5, indicating an expected return of 42.6% [4][31][32] Core Insights - Xiaomi's 1Q25 results exceeded expectations, driven by strong margins in IoT and EV segments, with gross margins of 25.2% and 23.2% respectively [1][2] - The company anticipates a fine-tuning of its smartphone shipment target from 180 million to 175 million due to a soft global smartphone market, while maintaining a focus on improving product mix [1][12] - Upcoming catalysts include an investor day on June 3, the official launch of the YU7 model, and the introduction of AI smart glasses, which are expected to positively impact share price [1][22] Financial Performance - Revenue for 1Q25 was reported at RMB 111.3 billion, reflecting a 2% quarter-over-quarter increase and a 47% year-over-year increase [2][13] - Gross margin improved to 22.8%, surpassing expectations, with significant contributions from IoT and EV segments [2][13] - Adjusted net income reached RMB 10.7 billion, marking a 28% increase quarter-over-quarter and a 64% increase year-over-year [2][13] Segment Performance - The smartphone segment maintained a gross margin of 12.4%, while IoT gross margin was notably higher at 25.2% [2][12] - The EV segment showed a gross margin of 23.2%, attributed to cost optimization and improved operational efficiency [12][14] - Management expressed confidence in the large home appliance business, which saw a revenue increase of 114% and shipment growth of 65% [12][14] Earnings Estimates - The report raises the adjusted EPS estimates for 2025, 2026, and 2027 by 4%, 3%, and 2% respectively, with 2025 EPS now projected at RMB 1.82 [11][14] - The forecast for adjusted net income in 2025 is set to grow by 74% year-over-year to RMB 47.4 billion, exceeding consensus estimates by 23% [14][16] Valuation - The target price of HK$73.5 is based on a sum-of-the-parts (SOTP) valuation, applying a 25.5x P/E for core business earnings and 1.5x P/S for the smart EV business [17][32] - The valuation reflects a strong growth outlook, supported by a projected 40%+ three-year adjusted EPS CAGR [11][17]

Investment Rating - The report rates PDD Holdings Inc as Buy/High Risk with a target price of US$152, down from US$165, indicating a potential upside of 51.2% from the current price of US$100.51 [6][38]. Core Insights - The report highlights a significant deceleration in transaction services revenue growth to 6% year-over-year in Q1 2025, compared to 33% in Q4 2024, attributed to a shift from a fully managed to a semi-managed model for Temu [1][2]. - PDD's management views its merchant support initiatives as long-term investments, which are currently impacting short-term profitability due to a mismatch between investment and return cycles [2][15]. - The company is implementing a RMB 100 billion subsidy program to support merchants, which is expected to enhance the ecosystem but may weigh on short-term profits [3][16]. Summary by Sections Financial Performance - In Q1 2025, PDD reported total revenues of RMB 95.7 billion, reflecting a 10% year-over-year increase, but falling short of estimates [11]. - Non-GAAP net profit for Q1 2025 was RMB 16.9 billion, down 45% year-over-year, significantly below expectations [12]. - The company anticipates total revenues for FY 2025 to grow by 7% year-over-year to RMB 421 billion, with a non-GAAP net profit of RMB 84.5 billion, representing a margin of 20% [24]. Investment and Growth Strategy - PDD is focusing on expanding into new product categories and exploring new business models to enhance its platform ecosystem [2][14]. - The company is committed to helping local merchants grow and fulfill more orders from local warehouses, which is expected to improve operational efficiency [2][20]. - Management emphasized the importance of supporting merchants to ensure the platform's long-term success, especially in a competitive and rapidly changing market [20][21]. Market Dynamics - The report notes that external challenges, such as tariffs, have prompted PDD to take proactive measures while maintaining regulatory compliance [13]. - The company is enhancing its marketing strategies, including additional coupons and direct discounts, to attract consumers and remain competitive [4][19]. - PDD's management acknowledges the limitations of its third-party marketplace model in competing with first-party platforms, leading to the launch of a dedicated National Subsidies Program channel [21].

Investment Rating - The report maintains a "Buy" rating for Kuaishou with a target price of HK$66, representing an expected return of 35.4% from the current price of HK$48.75 [6][10][22]. Core Insights - Kuaishou's advertising growth is expected to accelerate in the second half of 2025, driven by easier comparisons for non-ecommerce ads and ongoing monetization efforts in various verticals [1][2]. - The company has seen a positive trend in monetization from its Kling platform, with plans to introduce more cost-effective versions to enhance user engagement and revenue [4][22]. - Despite challenges in the live streaming segment due to regulatory pressures, Kuaishou's overall revenue growth remains robust, with a projected 12% revenue growth in 2Q25E [2][12]. Revenue Outlook - Kuaishou's total revenue for 1Q25 was Rmb32.6 billion, reflecting a year-on-year increase of 10.9%, with live streaming revenues up 14.4% and advertising revenues increasing by 8.0% [12][13]. - The company anticipates a GMV growth of 14% year-on-year for 2Q25E, supported by traffic boosts for merchants during the upcoming 618 shopping festival [2][12]. - The full-year revenue growth estimate is maintained at 13% year-on-year, with expectations for continued growth in ecommerce and advertising segments [2][12]. Margin Outlook - Kuaishou's operating profit margin (OPM) is expected to expand year-on-year in 2025, although this may be offset by a higher effective tax rate, leading to a flat net profit margin (NPM) [3][12]. - The adjusted earnings estimates for 2025 are maintained at Rmb20 billion, with a focus on improving margins through higher-margin advertising revenues [3][12]. Updates on Kling - Kling generated Rmb150 million in revenue in 1Q25, with a rapid increase in both individual and enterprise users, indicating strong growth potential [4][12]. - The rollout of Kling AI 2.0 is expected to further enhance monetization efforts, catering to diverse user demands [4][12]. Financial Summary - Kuaishou's financial performance shows a significant increase in net profit from Rmb10.3 billion in 2023 to an estimated Rmb20.1 billion in 2025, with a diluted EPS growth of 15% [5][10]. - The company is projected to maintain a strong return on equity (ROE) of 27.9% in 2025, reflecting effective capital utilization [5][10].

Investment Rating - The report maintains a "Buy" rating for Meituan with a target price adjusted to HK$192 from HK$204, indicating an expected return of 48.4% from the current price of HK$129.40 [6][13]. Core Insights - Meituan's 1Q25 results exceeded expectations, with total revenues of RMB86.6 billion, reflecting an 18.1% year-over-year growth [15]. - Management anticipates a deceleration in core local commerce revenue growth for 2Q25 due to increased competition and counter-revenue subsidies [3][25]. - The company is expanding its Keeta brand into Brazil with a US$1 billion investment over five years, capitalizing on the strong partnership between China and Brazil [5][42]. Summary by Sections Financial Performance - In 1Q25, core local commerce revenue grew 17.8% year-over-year to RMB64.3 billion, with an operating profit of RMB13.5 billion, achieving a margin of 21.0% [19]. - The new initiatives segment reported revenues of RMB22.2 billion, with an operating loss of RMB2.3 billion, improving from a loss of RMB2.8 billion in 1Q24 [19]. Competitive Landscape - Management acknowledges the current irrational competition characterized by high subsidies, which is not sustainable long-term [18][25]. - Meituan's management is committed to defending market share through increased investments while adhering to fair competition principles [3][25]. Growth Strategies - Meituan Instashopping has seen significant growth, with transacting users exceeding 500 million in 1Q25, particularly in non-food categories [4][29]. - The company plans to enhance its service offerings and expand product categories to meet diverse consumer needs, especially targeting younger consumers [27][34]. Expansion Plans - The launch of Keeta in Brazil is expected to leverage the country's vibrant economy and large population, with management confident in the growth potential of global food delivery [5][42]. - Meituan is also focusing on enhancing its AI capabilities to improve operational efficiency and support merchants in their digital transformation [44][46]. Future Outlook - Management expects short-term volatility in financial results due to ongoing high subsidy ratios from competitors, but remains confident in solidifying market leadership [25][49]. - The company has revised its revenue and profit estimates for 2025-2027, reflecting anticipated challenges in core local commerce revenue growth [53][54].

Investment Rating - The investment rating for Apple, Inc. is "Buy" with a target price of $240, representing an expected return of 19.2% from the current price of $201.36 [2][4]. Core Insights - The report highlights potential impacts of proposed tariffs by President Trump, estimating a 130 basis points incremental gross margin impact and a 4% incremental EPS impact in FY26 if a 25% tariff is imposed on iPhones not made in the US [1]. - The valuation of Apple is based on a P/E ratio of 28x on the FY2027 EPS estimate, which is an 8% premium to its historical level, justified by expanding gross margins, a growing services sales mix, and strong balance sheet [4]. Summary by Sections - **Tariff Impact Analysis**: The report discusses a bear case scenario where a 25% tariff on iPhones could significantly affect Apple's gross margins and earnings per share [1]. - **Valuation Methodology**: The target price of $240 is derived from a P/E ratio of 28x, reflecting a premium due to various growth factors [4]. - **Market Capitalization**: Apple's market capitalization is reported at approximately $3,007.5 billion [2].