Market Overview - The Hong Kong stock market is expected to test the level of 18,671 points, with the government setting a GDP growth target of around 5% for 2025, aligning with market expectations [1] - The Chinese government is implementing more proactive fiscal policies and moderate monetary easing to boost the real estate and stock markets, as well as to enhance technological innovation and consumer spending [1] - The U.S. has announced a 10% minimum baseline tariff on trade partners, impacting global trade activities, with new tariffs on Chinese imports reaching 34%, exceeding expectations [1] Sector Outlook - High-yield stocks are favored in the current volatile market as investors seek safe-haven assets amid rising expectations for interest rate cuts [2] Economic Indicators - Key economic indicators to watch include China's March CPI and PPI, as well as the U.S. March CPI and core CPI [3] Macro Focus - The U.S. has temporarily suspended new tariffs on certain countries for 90 days while increasing tariffs on Chinese imports to 125% [4] - The Federal Reserve's meeting minutes indicate that tariffs may raise inflation, leading to a more resilient inflation outlook [4] - The WTO estimates that trade tensions between the U.S. and China could reduce bilateral trade by up to 80% [8] - China has raised tariffs on U.S. imports from 34% to 84% in response to U.S. tariff actions [8] - China has placed 12 U.S. entities on an export control list, restricting their ability to engage in trade with China [9] Company News - JD Group is expanding its online retail presence in Europe with a trial launch in London [4] - Huatai Securities and China Galaxy have issued positive earnings forecasts [4] - Prada's acquisition of Versace is reportedly facing negotiation risks [4] External Market Outlook - The U.S. Federal Reserve is expected to maintain interest rates, with two rate cuts anticipated this year totaling 50 basis points [4] - The U.S. stock market rebounded sharply following the announcement of tariff suspensions, with significant gains in major indices [6]

Market Overview - The Hong Kong stock market is expected to test the level of 18,671 points, with the government setting a GDP growth target of around 5% for 2025, aligning with market expectations [2] - The Chinese government aims to implement more proactive fiscal policies and moderate monetary easing to boost investor confidence in economic growth for 2025 [2] - The introduction of a "AI+" initiative and the launch of the DeepSeek domestic high-performance model are expected to lower reasoning costs and accelerate AI applications, which may positively impact corporate revenues and profit growth [2] Corporate News - BYD Company Limited (1211) has issued a profit warning, anticipating a profit increase of over 86% for the first quarter [4] - The three major oil companies are expected to increase their holdings in A and H shares, involving nearly 13 billion RMB [4] Macro Focus - The U.S. Federal Reserve maintained interest rates in March and is expected to reduce rates twice this year, with a total reduction of 50 basis points [5] - The U.S. has announced a minimum benchmark tariff of 10% on trade partners, which is expected to impact global trade activities [3][9] - The U.S. is considering raising tariffs on Chinese imports to 34%, which exceeds market expectations, and China is preparing retaliatory measures [3][9] Stock Market Performance - The Hang Seng Index closed at 20,128, up 1.51% year-to-date, while the Hang Seng Tech Index rose by 3.79% [6] - The U.S. stock market experienced declines, with major indices falling between 0.8% and 2.2% [7] Government and Regulatory Actions - The Central Huijin Investment Company has increased its holdings in exchange-traded funds (ETFs) to stabilize the capital market amid global stock market turmoil [10] - The State-owned Assets Supervision and Administration Commission (SASAC) supports state-owned enterprises in increasing share buybacks to enhance shareholder value [10] - The National Social Security Fund has actively increased its domestic stock holdings and plans to continue doing so [10]

Market Overview - The Hong Kong stock market is expected to test the low of 18,671 points as the government sets the 2025 GDP growth target at around 5%, aligning with market expectations [1] - The Chinese government is implementing more proactive fiscal policies and moderate monetary easing to boost investor confidence in economic growth for 2025 [1] - The trade war with the US is intensifying, with new tariffs imposed on Chinese imports, which could negatively impact investment sentiment and corporate earnings [1][2] Sector Outlook - High-yield stocks are favored in the current volatile market as investors seek safe havens amid rising expectations for interest rate cuts [2] - The US Federal Reserve is expected to maintain interest rates but may reduce them twice this year, reflecting increased inflation risks and economic uncertainty [2] Company News - China Railway (1766) anticipates a significant increase in net profit for the first quarter, expected to rise over 1.8 times compared to the previous year [5][8] - China Aluminum (2600) also expects a profit increase of over 53% for the first quarter [5][8] - COSCO Shipping Holdings (1919) forecasts a 73% increase in net profit for the first quarter [5][8] Economic Policies - The Chinese government is discussing preemptive economic stimulus measures in response to the US tariffs, focusing on consumption and export support [6][7] - The National Financial Regulatory Administration has raised the upper limit for insurance fund equity asset allocation to support the capital market and real economy [7] Trade Relations - The US is threatening to impose a 50% tariff on Chinese goods unless retaliatory tariffs are lifted, which could escalate trade tensions further [6] - The EU plans to impose tariffs on US imports starting April 15, responding to US tariffs on steel and aluminum [6] Investment Trends - The global AI investment is projected to reach $315.8 billion in 2024, with a compound annual growth rate (CAGR) of 32.9% expected until 2028 [7] - Major Chinese state-owned enterprises are increasing their investments in stocks and ETFs to stabilize the market [7][8]

Market Overview - The Hong Kong stock market is expected to test the 20,000 point level as the government sets a GDP growth target of around 5% for 2025, aligning with market expectations. The Prime Minister emphasized the implementation of more proactive fiscal policies and moderate monetary easing to boost investor confidence in economic growth for 2025 [2] - The introduction of a 34% tariff on Chinese imports by the US has negatively impacted investment sentiment and corporate earnings, leading to a forecasted decline in the Hang Seng Index [2][5] Sector Focus - High-yield stocks are favored in the current volatile market as investors seek safe havens amid rising expectations for interest rate cuts [3] - The service sector in China showed improvement with the Caixin Services PMI rising to 51.9 in March, exceeding expectations, indicating a faster expansion pace [8] Company News - Dongpeng Beverage has submitted an application for an H-share listing in Hong Kong, reporting a revenue of 15.83 billion yuan for the previous year, a year-on-year increase of 40.62% [9] - Sany Heavy Industry's board has approved the issuance of H-shares to enhance its global strategy and connect with overseas capital markets [9] - Lalamove's parent company has applied for a mainboard listing in Hong Kong, reporting a 27% year-on-year profit increase [9] - Meituan has initiated a pilot program for rider pension insurance, expanding coverage to 17 provinces and cities [9] Economic Indicators - The US Federal Reserve maintained interest rates, with expectations of two rate cuts this year, reflecting a cautious approach to inflation uncertainty [3] - China's foreign exchange reserves and macroeconomic indicators are being closely monitored as tariffs and trade tensions escalate [6][8] Trade Relations - The US has implemented a 34% tariff on all imports from China, effective April 10, 2025, which has prompted strong opposition from China, emphasizing the negative impact of trade wars [7][8] - Japan has announced export controls on semiconductor-related items, which China has condemned as harmful to global supply chains [8]

Market Overview - The Hong Kong stock market is expected to test the support level at 22,436 points, with the government setting a GDP growth target of around 5% for 2025, aligning with market expectations [2] - The Chinese government is implementing more proactive fiscal policies and moderate monetary easing to boost investor confidence in economic growth for 2025 [2][3] - The introduction of a "10% minimum baseline tariff" by the US on trade partners, with a specific tariff of 34% on Chinese imports, is expected to negatively impact global trade activities and investor sentiment [2][7] Sector Outlook - The AI sector is viewed positively, with the government promoting the "Artificial Intelligence +" initiative to support the widespread application of large models [3] - Chinese consumer stocks are anticipated to benefit from new policies aimed at stabilizing domestic demand [3] Corporate News - Xiaomi (1810) is facing scrutiny over the battery suppliers for its SU7 model following a serious accident, with investigations ongoing [4][8] - Tencent (0700) has repurchased shares worth 17.1 billion HKD in Q1, exceeding the previous year's level [4][8] - WuXi AppTec (2359) sold 50.8 million shares of WuXi AppTec Holdings (2268) for 2.178 billion HKD, indicating a strategic move to enhance its integrated CRDMO business model [4][8] Economic Indicators - The US ADP reported a private sector job growth of 155,000 in March, surpassing expectations [7] - China's March PMI data indicates a slight improvement in manufacturing and services sectors, with the manufacturing PMI at 50.5 and services PMI at 51.2 [9] - The first quarter of 2025 saw a significant increase in wholesale sales of new energy vehicles in China, with a year-on-year growth of 37% [8] Investment Trends - The report highlights a trend of increased investment in AI technologies, with major Chinese companies like Tencent and Alibaba ordering significant quantities of AI server chips from Nvidia [8] - The IPO market in Hong Kong raised 18.2 billion HKD in Q1 2025, with expectations of around 130 to 150 billion HKD in total fundraising for the year [8]

Market Indices - Hang Seng Index closed at 23,344, down 624 points, a decrease of 2.6%[1] - H-Shares Index closed at 8,614, down 265 points, a decrease of 2.98%[1] - Hang Seng TECH Index closed at 5,499, down 258 points, a decrease of 4.48%[1] - MSCI China A50 Index (USD) closed at 2,144, up 23.6 points, an increase of 1.11%[1] Currency Exchange Rates - USD/CNH at 7.2451, with a slight increase of 0.0003, or 0.00%[1] - EUR/CNH at 7.8042, with an increase of 0.0108, or 0.14%[1] - JPY/CNH at 4.8787, with a decrease of 0.005, or -0.11%[1] - AUD/CNH at 4.6147, with an increase of 0.0096, or 0.21%[1] Metal Prices - Mini Aluminum at 2,623, down 39, a decrease of 1.47%[2] - Mini Zinc at 2,916.5, up 12.5, an increase of 0.43%[2] - Mini Copper at 9,842, down 76, a decrease of 0.77%[2] - Mini Tin at 15,898, down 230, a decrease of 1.43%[2] - Mini Lead at 34,444, down 854, a decrease of 2.42%[2] - Mini Nickel at 2,006, down 39.5, a decrease of 1.93%[2] Upcoming Economic Data - U.S. Core Durable Goods Orders MoM (February) expected at 0.2%[3] - U.S. GDP Annual Rate (Q4) confirmed at 2.3%[3] - U.S. Core Personal Consumption Expenditures Price Index QoQ (Q4) confirmed at 2.7%[3] - Japan's Tokyo Consumer Price Index YoY (March) at 2.9%[3] - China's Official Manufacturing PMI (March) at 50.2[3] - China's Caixin Manufacturing PMI (March) at 50.8[3] - U.S. ISM Manufacturing PMI (March) at 50.3[3]

Investment Rating - The report maintains a "BUY" rating for TK Group (Holdings) Limited with a target price of HK$2.48, indicating an upside potential of 28.6% from the current price of HK$1.93 [1]. Core Insights - TK Group expects a net profit growth of over 20% year-on-year for FY24E, with preliminary results aligning closely with estimates at approximately HK$260 million [2]. - The growth is attributed to a rebound in overseas business, significant revenue growth from domestic operations, and over 20% year-on-year growth in the plastic components segment, particularly from mobile phones and wearable devices [2]. - The company has a stable order book of approximately HK$900-1,000 million, supported by demand from mobile phones, wearables, and other sectors, which accounted for over 60% of the total order book in 1H24 [4]. - TK Group's client diversification is progressing well, with new orders from leading brands in the headset and professional audio sectors [5]. Financial Performance and Projections - The financial position remains strong, with net operating cash inflow of approximately HK$150 million and a net cash position of around HK$1.06 billion, representing about 65% of the market cap [6]. - FY24E capital expenditures are expected to be similar to FY23, around HK$70-80 million, with a planned increase in FY25E for capacity expansion [7]. - Revenue and net profit are projected to grow at a compound annual growth rate (CAGR) of 12.8% and 15.9% respectively from FY23 to FY26E [11]. - The report anticipates a dip in free cash flow in FY25E due to increased capital expenditures, but expects normalization in FY26E/27E [12]. Market Position and Valuation - TK Group is positioned as a leading total plastics solutions provider in China, with a strong client base including major global brands [9]. - The valuation remains undemanding, with a FY25E price-to-earnings ratio of 6.0x, which is approximately 50% lower than Hong Kong and international peers [11]. - The report highlights that TK Group's dividend payout ratio is expected to remain above 40%, translating to a dividend yield of 13.4% in FY24E [12].

Investment Rating - The report maintains a "BUY" rating for Nameson Holdings with a target price of HKD 1.01, indicating an upside potential of 24.7% from the current price of HKD 0.81 [1]. Core Insights - Nameson's 1HFY25 results were largely in line with expectations, with sales and adjusted net profit growing by 2.2% and 3.3% year-on-year, respectively, reaching HKD 2,726 million and HKD 299 million [1][6]. - The blended gross margin improved by 1.6 percentage points year-on-year to 19.9%, attributed to lower raw material prices and enhanced operational efficiency at the Vietnam plant [1][6]. - The company experienced a normalization in order volumes for whole garments, which temporarily affected total sales volume, while traditional knitwear and cashmere products provided volume support [1][6]. - Sales volume for Nameson reached 18 million pieces in 1HFY25, a decrease of 5.7% year-on-year, with cashmere sales volume increasing significantly by 74% year-on-year to 1.6 million pieces [1][6]. Summary by Sections Financial Performance - Nameson's 1HFY25 average selling price (ASP) remained stable year-on-year at approximately US$18, with cashmere sales enjoying a higher ASP of around US$40, while traditional knitwear maintained an ASP of US$13-14 [1][6]. - The company expects FY25E sales to decline by approximately 1% year-on-year, primarily due to lower whole garment sales volume, offset by a stable blended ASP due to a better product mix [1][6]. Market Dynamics - Sales in Europe and Southeast Asia outperformed, growing by 23.1% and 37.7% year-on-year, respectively, driven by favorable weather and clients' overseas expansion [1][6]. - Conversely, sales in Japan and China faced challenges, declining by 23% and 3.9% year-on-year, respectively, due to late winter and macroeconomic headwinds [1][6]. Operational Insights - Nameson manufactured 70% of its total sweaters in Vietnam during 1HFY25, with plans to continue expanding capacity in Central Vietnam [3]. - The company has ramped up its cashmere yarn production, achieving over 550 tons in 1HFY25, with a significant increase in revenue from its branded cashmere yarn, M.oro, which rose by 26.8% to approximately HKD 419 million [4][5]. Valuation and Outlook - Nameson is trading at an undemanding FY25E/26E PE of 4.4x/4.0x, which is approximately a 46% discount to peers' average [7]. - The company maintains a healthy balance sheet with a low net gearing ratio of 14.3% in 1HFY25, allowing for a sustainable payout ratio of around 75% [8].

Investment Rating - **Rating**: BUY (Maintained) [2] - **Target Price**: HKD 70.09 (Up from HK$49.37) [2] - **Current Price**: HKD 46.65 (Upside: +50.3%) [2] Core Viewpoints - **1H24 Results**: Sunny Optical's 1H24 revenue and net income were RMB14,279mn and RMB1,079mn respectively, beating market consensus by 12.4% and 14.3% [2] - **Key Drivers**: Recovery in smartphone demand, especially flagship models, drove volume, ASP, and GM improvements [2] - **Gross Margin (GM)**: Blended GM improved to 17.2% (vs. 14.9% in 1H23), driven by HLS and optoelectronics margin improvements [2] - **High-End Products**: High-end handset product shipments (6P+ lens, periscopes, large image size modules) grew 23.2% YoY, contributing 25.6% of total shipments [4] - **XR Segment**: XR revenue surged 110% YoY to ~RMB1bn, accounting for 5.3% of total revenue [8] - **Automotive Products**: Vehicle-related sales rose 16.4% YoY to RMB2,877mn, with VLS shipment guidance raised to 10-15% YoY [8] Financial Performance - **Revenue Growth**: 1H24 revenue grew 32.1% YoY to RMB14,279mn [2] - **Net Income Growth**: Net income surged 147% YoY to RMB1,079mn, reaching 60% of FY24E estimates [2] - **Gross Margin**: Optical components' GM rebounded 5.8ppts YoY to 31.8%, while optoelectronics' GM improved 1.3ppts to 8.2% [3] - **R&D Expense**: R&D expense accounted for 7.8% of total revenue, with FY24E CAPEX maintained at ~RMB3.0bn [9] Market Position and Strategy - **Market Share**: Sunny Optical dominates the China handset market with ~50% market share, focusing on domestic OEMs like Huawei, Vivo, Oppo, and Xiaomi [6] - **Diversification Strategy**: Non-smartphone revenue contribution (auto + XR) increased to >30% of total revenue in 1H24, up from 15.5% in FY20 [9] - **Product Mix**: Management continues to focus on improving product mix to benefit ASP and GM, with HLS shipment guidance raised to 10-15% YoY [5] Future Outlook - **Smartphone Market Recovery**: Global smartphone shipments are expected to gradually pick up in FY24E, driven by top-tier clients' flagship models [5] - **Automotive Growth**: Sunny's automotive CCM order book reached RMB10bn, supporting mid-long term revenue growth [8] - **XR and AI**: AI technology and foldables are expected to drive high-end smartphone growth and promote a new replacement cycle [7] Valuation and Earnings Forecast - **Valuation**: Sunny Optical is trading at FY24E/25E 19.5x/16.0x PE, below its 10-year average [10] - **Earnings Forecast**: FY24E-26E net profit estimates raised by 35.8%/34.0%/31.7%, driven by higher sales and GM forecasts [9] - **Sales Growth**: FY24E-26E sales and net profit growth expected to accelerate to 10.7%/20.3% CAGR [10]

Investment Rating - The report upgrades the investment rating of AAC Technologies from NEUTRAL to BUY with a target price of HK$ 37.24, representing an upside of 19.2% from the current price of HK$ 31.25 [1]. Core Insights - AAC Technologies reported a net profit of RMB 537 million for 1H24, a significant increase of 257% year-on-year, driven by a recovery in gross margin across all segments [1][2]. - The company achieved a blended gross margin of 20% for the first time since 1H21, with expectations of continued growth in automotive-related business and optics segments [1][2]. - Management expressed a more optimistic outlook for business segments compared to FY23, indicating a clearer vision for mid-term growth [1][2]. Revenue Breakdown - **Acoustics Segment**: Contributed approximately 31% of 1H24 revenue, with sales rising 4.1% year-on-year to RMB 3,466 million and gross margin increasing to 29.9% [1][2]. - **Haptics and Precision Mechanics**: Accounted for around 33% of 1H24 revenue, with a revenue growth of 1.1% year-on-year to RMB 3,660 million and gross margin rising to 22.9% [2]. - **Optics Segment**: Represented about 20% of 1H24 revenue, with a 25% year-on-year increase in revenue to RMB 2,210 million and a gross margin improvement to 4.7% [4][5]. Future Projections - The report anticipates a compound annual growth rate (CAGR) of 10.5% for sales and 17.0% for net profit from FY24E to FY26E, supported by higher sales forecasts and improved gross margins [5][6]. - Management expects optics segment revenue to grow by 20% and shipment by 40% in FY24E, indicating a positive trend in product demand and pricing [5][6]. Strategic Positioning - AAC Technologies is positioned to benefit from the automotive acoustics market through its acquisition of PSS, which has a market share of 15-20% in the global automotive speaker market [1][2]. - The company is leveraging its expertise in acoustic solutions to meet the growing demand for intelligent cockpit systems in vehicles, indicating a strategic expansion into new market niches [1][2].