Industry Investment Rating - The report maintains an **Overweight** rating for the Chinese healthcare sector in 2025, driven by the "Three Medicals" (medical, healthcare insurance, and pharmaceuticals) coordinated development and incremental policy benefits [4][5][6] Core Views - The Chinese healthcare sector is expected to enter a high-quality development stage in 2025, with reforms focusing on the coordinated development of medical, healthcare insurance, and pharmaceutical sectors [4][5] - The sector is anticipated to see a valuation recovery and earnings improvement, with A/H-listed healthcare companies expected to achieve revenue and profit growth of around 10% in 2025 [5][6] - Key drivers include the gradual weakening of negative factors, the release of incremental policy benefits from the "Three Medicals" coordinated development, and the recovery of industry performance from the low point in 2023-2024 [5][6] Sector Outlook and Stock Recommendations Chemical Drugs and Innovative Drugs - The Chinese pharmaceutical market is shifting towards innovation-driven growth, with **Hansoh Pharma (3692 HK, Buy, Target Price: HK$24.15)** and **Zai Lab (ZLAB US, Buy, Target Price: US$62.32)** recommended due to their strong innovative drug pipelines and partnerships [6][26] Biologics - **Chongqing Zhifei Biological Products (300601 CH, Buy, Target Price: RMB33.69)** is recommended for its competitive positioning in multi-valent and adult vaccines, as well as its innovation-driven growth potential [6][27] Traditional Chinese Medicine (TCM) - **Mayinglong Pharmaceutical (600993 CH, Buy, Target Price: RMB37.49)** and **Dong-E-E-Jiao (000423 CH, Buy, Target Price: RMB83.78)** are recommended for their strong brand power and potential to benefit from policy support and aging population demand [6][27] Internet Healthcare - **JD Health (6618 HK, Buy, Target Price: HK$42.61)** is recommended due to its strong supply chain and healthcare service capabilities, benefiting from policy support and increased penetration of online healthcare services [6][27] Medical Devices - **Mindray Medical (300760 CH, Buy, Target Price: RMB418.10)** is recommended as a leading medical device company expected to benefit from the recovery of medical system tenders and domestic infrastructure demand [6][28] Healthcare Services - **Jinxin Fertility (1951 HK, Buy, Target Price: HK$4.78)** and **Hengjian Medical (6078 HK, Buy, Target Price: HK$44.96)** are recommended for their strong positions in assisted reproductive services and oncology, respectively, benefiting from policy support and demand release [6][28] Contract Research Organizations (CROs) - **WuXi Biologics (2269 HK, Buy, Target Price: HK$26.12)** is recommended for its leading position in the CRO industry, expected to benefit from global R&D demand recovery and improved profitability in 2025 [6][28] Key Policy Impacts Medical Reforms - Medical service price adjustments are expected to benefit high-value medical technical services, particularly in oncology and assisted reproductive services [22][33] - The anti-corruption campaign in the healthcare sector is expected to promote long-term healthy development, benefiting sectors such as medical informationization, cost-effective domestic medical devices, and private medical institutions [22][52] Healthcare Insurance Reforms - Healthcare insurance payment reforms are expected to shorten reimbursement cycles, improving cash flow for medical service providers, chemical drug manufacturers, TCM companies, and medical device firms [22][81] - Commercial health insurance is expected to become a new incremental source of healthcare payments, benefiting hospitals, online/offline pharmacies, and innovative drug companies [22][94] Pharmaceutical Reforms - Pharmaceutical reforms will focus on encouraging innovation and strengthening regulation, with policies aimed at improving drug review and approval processes, pricing reforms, and supporting industry financing [22][23] Market Outlook - The Chinese healthcare sector is expected to see steady growth in both supply and demand in 2025, with private hospitals driving supply growth and public hospital reforms improving service quality [24] - The sector is expected to benefit from the optimization of both supply and demand sides, with medical reforms and the gradual weakening of negative factors providing a solid foundation for long-term development [24][25]

Investment Rating - The report assigns a **Buy** rating to WuXi Biologics (2269 HK) with a target price of HK$26.12, representing a 48% upside from the current price of HK$17.60 [1] - The DCF (WACC: 9.9%) target price of HK$26.12 corresponds to a 2025 P/E ratio of 26x [5] Core Views - WuXi Biologics demonstrates strong competitiveness in the high-end market, with 151 new projects signed in 2024, over half from the US, including 13 Phase III and commercialization projects [3] - The company's technical platforms are leading, with 8 projects generating over $200 million annually, 10 projects over $100 million, and 8 projects over $50 million [4] - WuXi Biologics has a significant global presence, with multiple centers and bases in China, the US, and Europe, capturing 70% market share in CDMO services for Chinese innovative drug overseas projects in 2024 [4] - The company expects accelerated revenue growth in 2025, driven by new project signings in research services (R), shortened delivery times in development (D), and a substantial number of PPQ projects in commercial manufacturing (M) [4] Financial Summary - Revenue is projected to grow from RMB 15,269 million in 2022 to RMB 23,611 million in 2026, with a CAGR of 12% [6] - Gross profit is expected to increase from RMB 6,724 million in 2022 to RMB 9,336 million in 2026 [6] - Net profit attributable to shareholders is forecasted to rise from RMB 4,420 million in 2022 to RMB 4,188 million in 2026, with a CAGR of 7% [6] - EPS is estimated to grow from RMB 1.01 in 2022 to RMB 0.96 in 2026 [6] Operational Highlights - WuXi Biologics completed 16 PPQ projects in 2024, with a success rate exceeding 98%, and expects to complete 24 PPQ projects in 2025 [3] - The company has significantly reduced project timelines, with monoclonal antibody projects in North America taking only 9 months from DNA to IND, and autoimmune projects delivered in 6 months, well ahead of industry standards [3] - The company's digital transformation and geopolitical dynamics are expected to further enhance operational efficiency [4]

Investment Rating - The report maintains a **Buy** rating for Xtep International (1368 HK) with a target price of HK$6.95, representing a **26% upside** from the current price of HK$5.51 [1][2] Core Views - Xtep International is expected to achieve **high single-digit revenue growth** in 2025, driven by its focus on the running segment [4] - The company's 2024 revenue and net profit are forecasted to grow by **1.5% and 21.3%** respectively, with a **7.3% revenue growth** on a like-for-like basis [5][8] - For 2025, revenue and net profit are projected to increase by **2.5% and 11.5%** respectively, with a **9.2% revenue growth** on a like-for-like basis [6][8] Financial Performance - Xtep brand revenue is expected to grow by **4.1% in 2024**, driven by high single-digit growth in retail sales and strong performance in the children's segment [5] - Saucony is projected to achieve **~50% growth in Q4 2024** and **over 60% growth for the full year 2024**, contributing to a **55% increase in the professional sports division revenue** [5] - The company plans to upgrade over **30% of its old stores** to the ninth-generation format in 2025, aiming to drive growth through improved store efficiency [6] - Saucony's new stores are achieving monthly sales of **RMB 500k**, significantly higher than the average of **RMB 300k+**, with plans for further expansion in 2025 [6] Valuation and Forecasts - The report maintains a **12x 2025 P/E** valuation for Xtep International, with a target price of HK$6.95 [7] - Revenue for 2024-2026 is forecasted to grow by **1.5%, 2.5%, and 8.8%** respectively, reaching **RMB 14.56bn, RMB 14.92bn, and RMB 16.24bn** [7][8] - Net profit for 2024-2026 is expected to grow by **21.3%, 11.5%, and 12.7%** respectively, reaching **RMB 1.25bn, RMB 1.39bn, and RMB 1.57bn** [7][8] Financial Ratios - Gross margin is expected to remain stable at **44.2% in 2024**, **44.1% in 2025**, and **44.6% in 2026** [11] - Net profit margin is projected to improve from **8.6% in 2024** to **9.3% in 2025** and **9.7% in 2026** [11] - The company's ROE is forecasted to increase from **13.0% in 2024** to **13.3% in 2025** and **13.8% in 2026** [11]

Investment Rating - The report assigns a "Buy" rating to Dong-E-E-Jiao Co Ltd (000423 CH) with a target price of RMB83 78 [2] - The target price implies a 38% upside potential from the current price of RMB60 85 [2] Core Views - The company's equity incentive plan is expected to enhance management vitality and achieve a net profit CAGR of at least 15% from 2025 to 2027 [5][9] - The company's product portfolio expansion and customer base growth are anticipated to drive revenue growth with a projected CAGR of 20% from 2023 to 2026 [6][9] - The target price of RMB83 78 is based on a DCF valuation with a WACC of 8 6% and represents a 35% premium over the industry average PE of 23x for 2025 [6] Financial Performance - Revenue is expected to grow from RMB4 042mn in 2022 to RMB8 178mn in 2026 [8] - Gross profit is projected to increase from RMB2 761mn in 2022 to RMB5 908mn in 2026 [8] - Net profit attributable to shareholders is forecasted to rise from RMB780mn in 2022 to RMB2 142mn in 2026 [8] - EPS is expected to grow from RMB1 19 in 2022 to RMB3 33 in 2026 [8] Equity Incentive Plan - The company plans to grant up to 1 2472 million restricted shares (0 19% of total shares) with an initial grant of 998k shares to 179 individuals at RMB37 22 per share [5] - The vesting period is 5 years with three vesting milestones at the end of the 2nd 3rd and 4th years [5] - Vesting conditions include achieving ROE of at least 11 5%/12 0%/12 5% in 2025/2026/2027 and maintaining a net profit CAGR of at least 15% from 2023 [5] Product and Market Strategy - The company's new product offerings such as convenient Ejiao powder fashionable Ejiao cakes and the Royal Weichang 1619 series are expected to drive short and long-term revenue growth [6] - The company's leadership in the OTC market and its strong brand recognition in the traditional Chinese medicine industry justify a valuation premium [6]

Industry Investment Rating - The report maintains a positive outlook on the Chinese healthcare services industry, recommending stocks such as **Haiya (603939CH, Buy, target price RMB44.96)**, **Jinxin Fertility (1951 HK, Buy, target price HK$4.78)**, and **Gushengtang (2273 HK, Buy, target price HK$73.95)** [2][3] Core Viewpoints - The implementation of **immediate settlement of medical insurance funds** in Anhui Province, starting from January 1, 2025, is expected to significantly alleviate the financial pressure on medical institutions by reducing the reimbursement cycle from **60 days to 1 day** [1] - Immediate settlement is anticipated to improve the **cash flow levels** of the entire industry, benefiting both medical institutions and the upstream pharmaceutical sector [2] - The reform is seen as a key driver for the **sustainable development** of medical institutions, enhancing operational efficiency and accelerating reimbursement processes [1][2] Industry Analysis - The reform shifts the settlement model from a **"post-payment system"** to an **"immediate settlement system"**, where funds are automatically collected and settled on the same day, with payments arriving the next day [1] - This change is expected to **streamline cash flow** for medical institutions, reducing their reliance on upfront payments and improving overall financial health [1][2] - The report highlights the potential for **accelerated reimbursement** and **improved operational efficiency** across the healthcare services industry, driven by the new settlement model [2] Company Recommendations - **Haiya (603939CH)**: Buy rating with a target price of RMB44.96 [2] - **Jinxin Fertility (1951 HK)**: Buy rating with a target price of HK$4.78 [2] - **Gushengtang (2273 HK)**: Buy rating with a target price of HK$73.95 [2]

Investment Rating - The report maintains a "Buy" rating for Micron Technology (MU US) with a target price of $118 00, down from the previous target of $148 00 [2][23][25] Core Views - The report highlights potential upside in 2HFY25 driven by HBM (High Bandwidth Memory) volume growth and recovery in traditional DRAM business, which could lead to revenue outperformance [8][25] - Despite near-term challenges in NAND and DRAM markets, the report expects HBM and data center revenue growth to offset some of the pressures, particularly with 12Hi HBM3E contributing to improved product mix [12][13][25] - The report notes that the current stock price already reflects the weaker-than-expected 2QFY25 revenue and gross margin guidance, particularly due to NAND weakness [8][12][22] Financial Adjustments - The report revises FY2025-2027 EPS estimates downward to $7 05, $11 27, and $10 03, respectively, reflecting a 16%, 8%, and 8% reduction from previous estimates [5][14][25] - Revenue forecasts for FY2025-2027 are also adjusted downward by 8%, 2%, and 5%, respectively, due to weaker NAND demand and pricing pressures [11][25] - Gross margin is expected to face pressure from NAND price declines, but HBM revenue growth is seen as a mitigating factor [13][19] Market and Industry Outlook - The semiconductor industry is rated as "Neutral," with expectations of relative performance within a -10% to 10% range compared to the broader market [2][4] - Micron's HBM business is expected to gain traction, with the company already shipping to a second HBM customer and preparing to ship to a third in 1Q25 [12][25] - The report anticipates a recovery in DRAM pricing and volume in 2HFY25, driven by inventory restocking in PC and mobile markets, as well as data center demand [11][12][25] Valuation and Target Price - The report uses a Sum-of-the-Parts (SOTP) valuation method, assigning a 10x P/E multiple to the DRAM business and a 5x P/E multiple to the NAND business, resulting in a total equity valuation of $128 7 billion and a target price of $118 [25][43] - The target price implies a 35% upside from the current stock price of $87 09 [16][25]

Industry Overview - The US and its allies have imposed stricter semiconductor export controls on China, targeting advanced logic processes, memory chips, and high-performance chip technologies [89][90][91] - Japan and the Netherlands have followed the US in restricting semiconductor equipment exports to China, particularly in areas like EUV lithography and etching equipment [89][95][122] - China has shifted its semiconductor equipment imports from the US and Netherlands to Japan and Singapore, with significant declines in imports of key equipment like CVD and lithography machines [102][108][111] Company Analysis - Northern Huachuang (002371 CH) - Northern Huachuang is expected to see strong revenue growth in 2025 driven by new equipment models and increased domestic substitution [33][35] - The company's ICP and CCP etching equipment, as well as CVD products, are expected to contribute significantly to revenue growth in 2025-2026 [36] - Despite being added to the US Entity List in December 2024, the impact on Northern Huachuang is expected to be limited due to its gradual shift to domestically produced components [1][35] - The company's 3Q24 gross margin reached 42.3%, up 5.89% YoY, driven by improved manufacturing efficiency and higher-margin product mix [1] - Northern Huachuang's target price was raised to RMB 491.00, with a "Buy" rating maintained [35][37] Company Analysis - AMEC (688012 CH) - AMEC's new orders in 9M24 grew 52% YoY to RMB 7.64 billion, with etching equipment orders up 54.7% to RMB 6.25 billion [56][69] - The company's LPCVD equipment achieved its first revenue of RMB 28 million in 9M24, with potential for cross-selling opportunities [56][69] - AMEC's 3Q24 gross margin was 43.7%, down 2% YoY, but is expected to improve in 2025 due to higher-margin products and domestic component substitution [70] - The target price for AMEC was raised to RMB 276.00, with a "Buy" rating maintained [70][68] Company Analysis - Kingsemi (688037 CH) - Kingsemi's 3Q24 gross margin improved to 46.2%, up 5.1% YoY, driven by cost reductions from domestic component substitution and strong performance in advanced packaging equipment [14] - However, the company's 3Q24 net profit fell 63% YoY to RMB 31 million due to higher R&D and equity incentive expenses [14] - Kingsemi's target price was lowered to RMB 95.00, with a "Hold" rating maintained [13][14] Key Risks - Downstream demand may fall short of expectations, potentially delaying semiconductor fab investments and reducing orders for equipment manufacturers [63][103] - Further US restrictions on China's semiconductor industry could impact equipment companies' operations and product shipments [22][63] - Intensifying competition in the semiconductor equipment sector, particularly from domestic manufacturers, could pressure profit margins [7][63] Investment Recommendations - AMEC is the top pick in the semiconductor equipment sector, with strong growth potential in 2025-2026 [81][101] - Northern Huachuang is recommended as a long-term beneficiary of domestic substitution trends [81][101] - Kingsemi is advised to be approached with caution due to its ongoing operational adjustments [81][101]

Investment Rating - The report maintains a "Buy" rating for RoboSense (2498 HK) with a target price of HK$38.18 [2][7][9] Core Views - RoboSense's MX product is expected to accelerate the penetration of ADAS LiDAR in the mid-to-low-end market, becoming a major growth driver in 2025 [6][7] - The robotics business is anticipated to become a second growth curve, with projected LiDAR shipments reaching 100,000 units in 2025 [6][8] - The company's LiDAR shipments are expected to grow significantly, with 2024E shipments forecasted at 589,900 units, a 127.2% YoY increase [9] - The average selling price (ASP) of LiDAR is expected to decline to RMB 2,000 in 2025 and further to RMB 1,800 in 2026 due to the increasing proportion of MX products [9][18] Financial Performance - RoboSense's revenue is projected to grow from RMB 1,721 million in 2024E to RMB 2,880 million in 2026E [11][18] - The company's gross margin is expected to improve from 16.3% in 2024E to 28.0% in 2026E, driven by economies of scale and cost reductions from in-house chip development [18] - RoboSense is forecasted to achieve positive adjusted net income in 2026E, reaching RMB 96 million [11][18] Market Position and Competitive Advantage - RoboSense ranked first in LiDAR installations in 2024, with 401,940 units installed, capturing a significant market share [7] - The company has secured partnerships with over 2,600 robotics companies, positioning itself well in the robotics sector [8] - RoboSense's ADAS LiDAR is widely adopted by major automakers, including XPeng, AITO, Zeekr, and BYD (Yangwang) [7] Valuation - The report values RoboSense at 7x P/S for 2025E, resulting in a target price of HK$38.18 [9][22] - Compared to peers, RoboSense is expected to command a higher valuation due to its leading market position, improving gross margins, and potential growth in the robotics industry [22][24] Industry Outlook - The LiDAR penetration rate in the Chinese new energy vehicle market reached 12.0% in 2024, indicating significant growth potential [7] - The robotics industry is in its early stages of rapid development, with increasing demand for sensors like LiDAR expected to drive future growth [8]

Investment Rating - The report assigns an "Overweight" rating to the automotive and auto parts industry, indicating a positive outlook for investment opportunities in this sector [3]. Core Insights - The "scrap + replacement" subsidy policy has shown significant effects, stimulating a rapid increase in new energy vehicle (NEV) sales, which are expected to maintain high growth rates into December [3][8]. - In November, retail and wholesale sales of passenger cars grew by 16.5% and 15.3% year-on-year, respectively, with NEV sales experiencing a remarkable 50.5% increase in retail volume [6]. - The total number of applications for the "scrap + replacement" subsidy has exceeded 5 million, suggesting strong consumer demand for vehicle upgrades [8]. Summary by Sections Sales Performance - In November, the retail sales of narrow-sense passenger cars reached 2.423 million units, a year-on-year increase of 16.5%, while wholesale sales reached 2.940 million units, up 15.3% [6]. - NEV retail sales in November hit 1.268 million units, marking a 50.5% year-on-year increase, with a penetration rate of 52.3% [6]. Battery Production and Sales - In November, the sales and installed capacity of power batteries increased by 10.9% and 13.5% month-on-month, respectively, with an average single vehicle battery capacity of 45.3 kWh [4][7]. - Cumulative sales of power and energy storage batteries reached 914.3 GWh from January to November, reflecting a year-on-year growth of 42.8% [7]. Policy Impact - The "scrap + replacement" subsidy applications have surpassed 5 million, with expectations for continued high sales growth in December due to the impending deadline for subsidy applications [8]. - The report highlights that the automotive market remains buoyant, driven by the ongoing effects of the subsidy policies [8]. Market Trends - The report notes a significant release of production capacity among NEV manufacturers, with November production reaching 1.481 million units, exceeding retail sales by 213,000 units, indicating optimism for future sales [6]. - The overall inventory of passenger cars has decreased, with manufacturers reducing stock by 210,000 units from January to November [6].

Investment Rating - The report assigns an "Overweight" rating to the pharmaceutical industry, indicating a positive outlook for investment opportunities [2]. Core Insights - The negative factors affecting the valuation of leading Chinese CXO companies have been eliminated following the failure to include the Biodefense Act in the National Defense Authorization Act (NDAA) [3]. - The financing and demand sides of the CXO industry are expected to continue improving, with a favorable environment for pharmaceutical investments anticipated in 2025 [4]. - The report highlights the growth potential of leading Contract Research Organizations (CROs) and recommends focusing on WuXi AppTec A, WuXi AppTec H, and WuXi Biologics [4]. Summary by Sections Industry Overview - The failure to include the Biodefense Act in the NDAA signifies the removal of short-term negative valuation factors for the CXO industry [3]. - The global pharmaceutical research and development sector is recovering, which is expected to enhance profit margins for leading CXO companies while maintaining long-term growth [4]. Financial Environment - The Federal Reserve's decision to lower the federal funds rate target range to 4.50% to 4.75% is anticipated to improve the investment environment for pharmaceuticals in 2025 [4]. - The rapid growth of peptide drugs represented by GLP-1 and the continuous expansion of the ADC market are expected to bring new business increments to the global CXO industry [4]. Recommended Companies - The report recommends the following companies for investment: - WuXi AppTec A (603259 CH) with a buy rating and a target price of RMB 66.31 [4]. - WuXi AppTec H (2359 HK) with a buy rating and a target price of HK$ 73.00 [4]. - WuXi Biologics (2269 HK) with a buy rating and a target price of HK$ 26.12 [4].