Investment Rating - The report rates the thermal power sector as "Overweight" [1] Core Insights - Thermal power remains the most promising yet controversial sector, with significant market performance observed in the week of May 5-9, 2025, including Huaneng Power International up by 4% and Longyuan Power up by 6.3% [4] - Despite a significant decline in thermal power output in Q1, fixed costs per unit remained stable due to lower interest rates and enhanced cost control measures [4] - The report anticipates four new characteristics for the power industry in 2025: 1. Electricity prices exceeding expectations; 2. Coal prices exceeding expectations; 3. Fixed costs exceeding expectations; 4. State-owned enterprise reform and market capitalization management exceeding expectations [4] - China's Q1 electricity elasticity coefficient is reported at 0.46%, but it is expected to exceed 1 in 2025, indicating a potential increase in electricity demand relative to GDP growth [4] Summary by Sections Market Performance - The power sector showed strong performance in early May 2025, with notable increases in stock prices for major companies [4] Cost Dynamics - Q1 thermal power output saw a significant decline, but fixed costs per unit remained stable, attributed to lower interest rates and improved cost management [4] Future Expectations - The report outlines expectations for 2025, highlighting potential increases in electricity and coal prices, as well as fixed costs, alongside anticipated reforms in state-owned enterprises [4] Auxiliary Services - The introduction of the "Basic Rules for Power Auxiliary Service Market" is expected to enhance the value of thermal and hydropower sources, promoting a shift from policy-driven to market-driven development [4]

Investment Rating - The report maintains an "OUTPERFORM" rating for Kweichow Moutai [2][10][16] Core Views - Kweichow Moutai is expected to significantly benefit from the revaluation of Chinese assets due to economic transformation, a favorable policy environment, low valuations compared to global markets, and increased capital inflows [3][4][13][14] - The company is viewed as a core asset with enhanced attractiveness for investment, supported by strong strategic holdings from state-owned funds and increasing public fund allocations [4][14] - Kweichow Moutai demonstrates strong performance stability across economic cycles, with a compound annual growth rate (CAGR) of 14.4% for revenue and 15.2% for net profit from 2019 to 2024, alongside high dividend payouts [5][15][16] Financial Summary - Current price is Rmb1,591 with a target price of Rmb1,972, reflecting a potential upside [2][16] - Revenue projections for 2025-2027 are Rmb190,868 million, Rmb208,285 million, and Rmb228,087 million respectively, with net profit estimates of Rmb98,561 million, Rmb108,443 million, and Rmb120,373 million [2][11][15] - The company maintains a gross profit margin (GPM) of around 92% and a return on equity (ROE) of approximately 36% [5][11][15] Investment Thesis - The investment thesis highlights the company's high dividend payout ratio of 75% and a dividend yield of 3.5%, providing a solid return cushion [16] - The management's confidence is further demonstrated by share repurchases totaling Rmb3.039 billion, supporting the stock price [16] - The report adjusts the earnings forecast and target price due to a decrease in growth guidance from 15% to 9% for 2025, with a revised PE ratio of 26 times for 2025 [16]

Group 1: 2011-2014: Overseas Liquidity and Mobile Internet Wave - The Hong Kong stock market significantly outperformed the A-share market from late 2011 to mid-2014, with the Hang Seng Index achieving an excess return of 62 percentage points relative to the CSI 300 [9][10][22] - Key drivers included abundant overseas liquidity, gradual appreciation of the Renminbi, and a weak recovery in domestic fundamentals supported by government policies [10][11][22] - The mobile internet wave catalyzed the market, with hardware investments transitioning to software applications, leading to substantial gains in the technology sector [22][23] Group 2: 2016-2018: Supply-Side Reform and Capital Inflow - The Hong Kong stock market continued to outperform the A-share market from 2016 to 2018, with the Hang Seng Index outperforming the CSI 300 by 38 percentage points during this period [29][30] - The market was driven by supply-side structural reforms that improved fundamentals, alongside significant inflows of capital from mainland investors [30][36] - In 2016, the Hong Kong market was notably undervalued, with the Hang Seng Index trading at a historical low price-to-book ratio, which attracted investment [30][43] Group 3: 2019-2021: Rapid Recovery and Liquidity Expansion - From late 2019 to early 2021, the core assets of the Hong Kong stock market significantly outperformed the A-share market, with the Hang Seng Technology Index achieving a 137 percentage point excess return over the CSI 300 [60][61] - This performance was supported by a favorable overseas liquidity environment and rapid recovery of the domestic economy post-COVID-19, leading to improved corporate earnings [61][62] - The influx of Chinese concept stocks returning to Hong Kong also enhanced market liquidity and attractiveness, further driving investment [63][64]

Financial Performance - ADNOCDRI reported Q1 2025 revenue of $1.17 billion, exceeding consensus expectations of $1.11 billion[3] - Q1 2025 net income was $341 million, surpassing the consensus estimate of $332 million[3] - The EBITDA margin for Q1 2025 was 46%, slightly below the expected 47%[3] Fiscal Guidance - The company reaffirmed its FY 2025 revenue guidance of $4.6 billion to $4.8 billion[3] - Capital expenditure guidance for FY 2025 was raised to $350 million to $550 million, representing a 26% completion of the revised guidance[3] Business Segments - Onshore drilling revenue is projected to be between $1.95 billion and $2.1 billion[3] - Offshore self-elevating and island drilling revenue is expected to range from $1.35 billion to $1.45 billion[3] - Oil service revenue is forecasted to be between $1.1 billion and $1.25 billion[3] Dividend Policy - The company has a progressive dividend policy, targeting at least a 10% year-on-year increase in dividends over the next five years[4] - For FY 2025, dividends are expected to reach at least $867 million, with a current yield of approximately 4%-5%[4] Growth Strategy - The total number of owned drilling rigs is expected to increase from 142 at the end of FY 2024 to over 151 by FY 2028, and ultimately to 190 by 2030[6] - The company plans to add one island rig by the end of FY 2025 and two more in the second half of FY 2026[6] Risks - Key risks include potential slowdown in energy demand, unplanned rig maintenance, execution risks, and lack of further capacity increases[7]

Investment Rating - The report assigns an "Outperform" rating to multiple companies including Anta Sports, Pop Mart, Haidilao, and others, while Budweiser APAC is rated "Neutral" [1]. Core Insights - The report highlights the opening of a flagship store for ChaPanda, which sold over 1.5 million cups during the May Day holiday, indicating strong consumer interest [5]. - Borchid Capital sold all its shares in Pop Mart, raising approximately HKD 2.267 billion, reflecting a significant exit after 14 years of investment [5]. - Green Tea Group is set to launch an IPO, offering 168 million shares with an expected listing date of May 16 [5]. - Pop Mart's first magazine sold out in all offline bookstores, showcasing the brand's strong market presence [5]. - U.S. President Trump suggested imposing an 80% tariff on Chinese goods, which could impact the industry [5]. Weekly Performance Summary - In the F&B sector, top performers included ChaPanda (+10.2%), Guoquan (+9.0%), and Super Hi International (+7.0%), while underperformers were Xiabuxiabu (-8.0%), Bawang Chaji (-8.9%), and Naixue's Tea (-9.8%) [6]. - In the designer toys sector, Miniso showed a modest gain of +2.2%, while Pop Mart and Blokees experienced declines of -3.3% and -4.2%, respectively [6].

Investment Focus - The strategy recommendation is to wait for a pullback in tech stocks before initiating positions, with dividend stocks expected to provide support during this correction [1][8] - The Hong Kong market saw a pullback in tech stocks while dividend stocks rose, and the A-share market was led by the military sector [1][8] - The Hang Seng Index rose by 1.6% this week, but the gains continued to narrow compared to previous weeks, while the Hang Seng Tech Index fell by 1.2% [1][8] Global Trade Landscape - Global markets are experiencing stagflation with contracting volatility and increasing downside risks due to heightened uncertainty in the trade landscape [2][9] - The US trade negotiations are progressing slowly, with limited agreements reached, indicating challenges to its dominance in the global trade system [2][9] - China is actively signing trade agreements and deepening cooperation with neighboring countries, exacerbating the uncertainty in the global trade landscape [2][9] Economic Impact - The risk of a US recession remains high, with significant declines in consumer confidence, which may further aggravate internal contradictions in the US [2][10] - China's strong export data for April may be misleading, as it could be due to "selling more at lower prices" and front-loading re-exports [2][10] Trade War Risks - The trade war has led to rapid appreciation pressures on Asian currencies and has triggered geopolitical risks, such as the escalation of the India-Pakistan conflict [3][11] - The trade war may mark a significant turning point in the gradual weakening of the US dollar's hegemony [3][11] US-China Trade Tensions - Expectations for a short-term easing of US-China trade tensions are rising, but caution is needed against profit-taking after positive news is realized [4][12] - The market has largely priced in the expectation of easing US-China trade tensions, making it difficult to quickly reach a consensus [4][12] - The timeline for substantive progress in the agreement between China and the US is expected to be in the second half of the year [4][12] Market Outlook - After a continuous market rebound, the supporting forces for A-shares in May have gradually weakened, suggesting investors should wait for a second dip pullback [5][14] - The long-term logic for investment includes the gradual easing of trade disputes, positive economic policies in China, and the strength of AI as a new economic engine [5][14] - Sector allocation recommendations include internet and AI application sectors, as well as foreign trade and cross-border payment sectors benefiting from China's trade with other countries [5][14]

Market Observation - The trade agreement between the US and UK, along with the easing of trade tensions between the US and China, has positively influenced market sentiment, leading to a rebound in the Nikkei 225 index, which closed at 37,503.33, up 1.83% from the previous week, marking the first time it surpassed 37,000 points since March 28 [3][20] - The TOPIX index also saw gains, closing at 2,733.49, up 1.7%, achieving 11 consecutive trading days of increases [3][20] - The Bank of Japan (BOJ) maintained its interest rates but lowered its economic growth and price outlook for 2025, which has delayed expectations for future rate hikes [4][5] Company Specific Insights - NTT announced plans to privatize its subsidiary NTT Data Group, acquiring the remaining 42% of shares at a price of 4,000 yen per share, representing a 33% premium over the previous closing price, with an estimated total transaction value of approximately 2.37 trillion yen [6][7] - Toyota Motor Corporation projected a 1% increase in sales for the fiscal year ending March 2026, estimating sales of 48.5 trillion yen, while anticipating a decrease in operating profit by 1 trillion yen to 3.8 trillion yen due to rising costs associated with tariffs and currency fluctuations [8][9] - Toyota is also considering privatizing Toyota Industries Corporation, which holds 9% of Toyota's shares, as part of a broader strategy to improve corporate governance and streamline its asset structure [9] - Mitsubishi Corporation announced plans to acquire a 50.1% stake in Mitsubishi Foods, with an expected purchase price of 6,340 yen per share, totaling approximately 137.6 billion yen, aligning with its strategy to enhance its consumer-related business [10]

Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies involved. Core Insights - The Trump administration plans to revise or cancel export restrictions on advanced AI chips, which may lead to a more flexible "chip diplomacy" strategy, allowing for bilateral agreements to adjust export conditions [9][10] - The easing of restrictions is expected to benefit companies like NVIDIA and AMD, which have faced significant losses due to previous export limitations [10][11] - Despite potential easing in other regions, the Chinese market will continue to face restrictions, with NVIDIA incurring a $5.5 billion loss due to indefinite bans on certain chip exports to China [12][13] - Domestic substitution in China is anticipated to continue, with local companies like Huawei and Cambricon expected to dominate the server and gaming PC markets [13] Summary by Sections Policy Changes - The Trump administration's shift in policy aims to enhance innovation and address complaints from allies regarding complex export rules [10] - Middle Eastern countries may leverage investment commitments to negotiate for relaxed chip export restrictions [10][11] Market Dynamics - The report highlights a potential reallocation of chip orders from China to the Middle East and Southeast Asia, with increased demand expected in these regions [11] - Companies like NVIDIA are focusing on "Sovereign AI" strategies to tap into the growing AI infrastructure needs in the Middle East [11] Chinese Market Outlook - The Chinese market remains heavily restricted, with ongoing export bans impacting high-end chip availability [12] - There is a possibility of indirect benefits for China through third-party resales, which may alleviate some supply shortages [12][13] Domestic Substitution - The report emphasizes that domestic chip manufacturers will continue to fill the gap left by foreign companies, particularly in the server and gaming markets [13] - Specific market shares are projected for key players: Huawei (60%) and Cambricon (20%) in the server market, and Jingjiawei (40%) in the gaming PC market [13]

Investment Rating - The report does not explicitly state the investment rating for CHJ Industry Core Views - The company's net profit in Q1 2025 increased significantly by 44.4% year-on-year, driven by product innovation and structural optimization [4][11] - The gold jewelry business showed steady revenue and profit growth, with franchising being the main engine for revenue increase [2][9] - The company is actively responding to fluctuations in gold prices through product innovation and cost control measures [5][12] Revenue and Profit Analysis - In 2024, the company achieved revenues of 6.52 billion RMB, a year-on-year increase of 10.5%, while net profit attributable to the parent company was 190 million RMB, down 41.9% year-on-year due to goodwill impairment [2][9] - The revenue share of traditional gold products increased from 38.4% in 2023 to 45.3% in 2024, with a revenue growth rate of 30.2% [3][10] - In Q1 2025, the company reported revenues of 2.25 billion RMB, a 25.4% increase year-on-year, with a net profit of 189 million RMB [4][11] Product and Market Strategy - The company is focusing on high-margin products to drive profitability, with a gross profit margin improvement to 22.93% in Q1 2025 [4][11] - Management emphasizes the importance of emotional value and cultural identity in consumer purchasing decisions, aiming to enhance product IP attributes [5][12] - The retail network expanded to 1,505 stores by the end of 2024, with a focus on franchised stores and international market penetration [6][13] Dividend Policy - The company has maintained a stable dividend distribution strategy, with a proposed cash dividend of 2.5 RMB per 10 shares for 2025, resulting in a cumulative dividend ratio of 160.59% [6][14]

Investment Rating - The report suggests a positive outlook for the aerospace and defense sectors, highlighting specific companies for investment opportunities [6]. Core Insights - The report indicates that technology giants may increase capital expenditures for data centers due to tariff pressures and uncertainties [2]. - The U.S. air traffic control system is set for comprehensive modernization, which may benefit related industries [3]. - The industrial sector shows stable price indices for aircraft engines and components, with notable growth in specific areas [3][24]. - The energy sector is experiencing fluctuations in natural gas prices, with regulatory updates expected to enhance safety standards [5]. - The report emphasizes the robust recovery of the aerospace industry and increased defense spending, suggesting investment in high-performance component manufacturers [6]. Summary by Sections Global Market Review - The U.S. stock market showed strong upward momentum, with significant gains in the S&P 500 and Dow Jones indices, although some profit-taking occurred towards the end of the observation period [9][10]. Infrastructure - Data centers are seeing increased capital expenditures, with Meta raising its forecast for 2025 spending to between $64 billion and $72 billion [18]. - The New England ISO anticipates an 11% increase in annual electricity consumption due to electrification trends [20]. Energy Construction - The PJM Interconnection is accelerating the construction of 11.8 GW of power projects to enhance supply [20]. - The report notes geopolitical developments affecting energy prices, particularly in Europe [5]. Aerospace - The aerospace sector is witnessing significant developments, including a planned launch of a private astronaut mission by Axiom Space and SpaceX [22]. - The price index for aircraft engines and components remains stable, with a year-on-year increase of 2% [24][27]. Defense - NATO is enhancing its eastern flank defense capabilities, with large-scale military exercises planned in Estonia and Lithuania [33]. - The U.S. government has approved a potential sale of tactical missiles to Norway, supporting NATO allies [33]. Robotics - The industrial robotics market is projected to maintain a steady growth trajectory, with 541,302 units installed in 2023, despite a slight decline from the previous year [35]. - The automotive sector remains the largest customer for industrial robots, accounting for 25% of installations [35]. Industrial Equipment - The report highlights stable price indices for various industrial equipment, with gas turbine prices showing a year-on-year increase of 7.24% [45]. - Transformer exports from China are experiencing significant growth, with a 20.96% year-on-year increase in March 2025 [66].