Group 1: Overview of Consumption Trends - Both China and the US are experiencing a weak recovery in consumption, with China's recovery lagging behind that of the US, particularly in sectors like dining and tourism [2][4] - The growth in essential consumption remains robust, while discretionary consumption shows weaker performance [4][28] - The consumer confidence index in China is at 88.2, indicating a cautious outlook among residents regarding future economic conditions [43] Group 2: Market Performance and Valuation - The Hong Kong food and beverage sector has seen a decline of 4.3%, with significant disparities in performance across sub-sectors; the tobacco sector surged by 45%, while dairy and liquor sectors faced declines of 24.6% and 20.3% respectively [34][35] - Current valuation levels in the market are at historical lows, with an average PE-TTM of 11x, suggesting that stock prices are significantly misaligned with fundamentals [14][36] - Leading companies in the sector have a PE-TTM ranging from 13-18x, indicating they are still undervalued [14][36] Group 3: Sector-Specific Insights - In the dining sector, major chains have expanded their store numbers significantly, leading to a competitive environment where individual store revenues have declined, yet overall revenues for many companies have increased compared to 2019 [106][129] - The beer sector is experiencing a notable recovery, with companies like China Resources Beer and Qingdao Beer expected to see net profit growth of 17.2% and 16.8% respectively in 2024, with PE ratios at 13.8x and 13.3x [105][114] - The liquor sector, particularly for companies like Zhenjiu Lidou, is projected to grow by 20.5% in net profit for 2024, with a PE of 13.2x, indicating strong performance relative to the industry [5][115] Group 4: Consumer Spending and Economic Indicators - In the first quarter of 2024, per capita income in China was 11,500 yuan, reflecting a year-on-year growth of 6.2%, which is crucial for building consumer confidence [17] - The total retail sales in China for the first five months of 2024 reached 19.5 trillion yuan, growing by 4.1% year-on-year, although the growth rate has been gradually slowing [41][20] - The tourism sector has shown a strong recovery, with the May Day holiday tourism revenue reaching 166.8 billion yuan, a 42% increase compared to 2019 [46][142]

OTA Industry Overview - Domestic tourism revenue in 1Q24 exceeded expectations, with a 14% increase compared to 1Q19, reaching 1.52 trillion RMB [4][39][82] - Domestic tourism trips in 1Q24 recovered to 80% of 1Q19 levels, totaling 1.42 billion trips [5][82] - Online penetration is identified as the next growth driver for OTAs, with new players like Douyin and Kuaishou entering the market [2][49] - The 2024 domestic tourism revenue is projected to reach 6 trillion RMB, a 5% increase from 2019 levels [4] Holiday Tourism Performance - The May Day holiday saw a 28% increase in domestic tourism trips and a 13% increase in revenue compared to 2019, making it the strongest holiday performance so far in 2024 [41][92] - The Dragon Boat Festival showed weaker performance, aligning with the overall decline in hotel and airfare prices during non-holiday periods [41] - During the Spring Festival and Qingming Festival, per capita spending fully recovered to 2019 levels, but it remained below 2019 levels during the May Day and Dragon Boat Festival, reflecting a trend of cost-conscious travel [6] OTA Stock Performance - Ctrip Group-S and Tongcheng Travel have outperformed the broader market year-to-date, with Ctrip up 39% and Tongcheng up 7%, compared to a 6% rise in the Hang Seng Index and a 2% decline in the Hang Seng Tech Index [3][91] - Among overseas OTAs, Booking saw a 12% increase in stock price, while Expedia declined by 16% and Airbnb rose by 10% [11][37] Ctrip Group Analysis - Ctrip's 1Q24 adjusted net profit reached 4.1 billion RMB, exceeding market expectations by 45%, with a profit margin of 34% [43] - International OTA platform Trip.com contributed approximately 10% of total revenue, with an 80% year-over-year increase in revenue [44] - Ctrip's domestic and outbound hotel and air ticket bookings increased by over 20% and 100% year-over-year, respectively [17] - The company's 2Q24 revenue is expected to grow by 15%, with full-year 2024 revenue projected to increase by 18% to 52.7 billion RMB [33] Tongcheng Travel Analysis - Tongcheng Travel's core OTA business revenue grew by 24% year-over-year in 1Q24, with a 6.6 billion RMB contribution from its vacation business [20] - The company's core OTA operating profit was 720 million RMB, with an operating profit margin of 22.6%, down 3.7 percentage points year-over-year [20] - Tongcheng's vacation business is expected to achieve mid-to-low single-digit operating profit margins in the medium to long term [34] Outbound Tourism Recovery - Outbound tourism during the May Day holiday saw a 35% year-over-year increase in trips, recovering to 80% of 2019 levels [23] - International air passenger traffic from January to May 2024 recovered to 72%-85% of 2019 levels, with May reaching 85% [27][86] - Japan, Thailand, and South Korea lead in planned summer flights, recovering to 82%, 80%, and 88% of 2019 levels, respectively [58][68] Online Travel Market Projections - The online travel market size in 2024 is projected to exceed 2.8 trillion RMB, a 15% increase from the initial forecast, driven by growth in online user penetration [53][96] - By 2026, online travel user penetration is expected to reach 48%, with average trips per user increasing to 5.4 times and average spending growing at a 2% CAGR [31] User Demographics and Trends - Post-00s and university students are driving high-speed growth in travel bookings, with a 90% year-over-year increase in travel bookings for high school and university graduates in June 2024 [25] - Post-00s accounted for 35% of domestic long-distance travel bookings and saw a 153% year-over-year increase in outbound travel orders [51]

Investment Rating - The report gives an "Accumulate" rating for the company [4]. Core Views - Kangchen Pharmaceutical has been deeply engaged in the nephrology sector for over 26 years, establishing itself as a leading enterprise in traditional Chinese medicine for kidney diseases. The company is expanding its product lines into pediatrics, imaging, orthopedics, dermatology, hepatobiliary, and digestive products [1][12]. - The core product, Uremic Clear Granules, has shown steady sales growth, while new products like Oral Iron Dextran Solution and Yishen Huashi Granules are emerging as new growth drivers. The company has a robust pipeline with three products expected to launch this year and five more submitted for registration [2][20]. - The company emphasizes shareholder returns, with an average dividend payout ratio exceeding 30%. In 2023, the dividend payout ratio and yield reached 42% and 9%, respectively, placing it among the top in the pharmaceutical sector [2][18]. Summary by Sections Company Overview - Kangchen Pharmaceutical has been a leader in the nephrology market in China, with a focus on modern traditional Chinese medicine. The company was listed on the Hong Kong Stock Exchange in 2013 and has subsidiaries including Guangzhou Kangchen Pharmaceutical Co., Ltd. and Guangxi Yulin Pharmaceutical Group [12][13]. Financial Performance - Revenue increased from 1.73 billion in 2019 to 2.59 billion in 2023, with a CAGR of 10.6%. Net profit rose from 80 million to 785 million during the same period, with a CAGR of 77.1% [15]. - The company's gross margin and net margin for 2023 were 74.2% and 30.3%, respectively. The nephrology segment accounts for 67.2% of total revenue [15][16]. Product Pipeline - The company employs a "1+6" model to build its product cluster, with 67 products included in the 2023 National Medical Insurance Directory. The nephrology segment's Uremic Clear Granules is the top product, generating annual sales of 1.6 billion [20][21]. - The pipeline includes 14 products, with 6 innovative drugs and 8 generic drugs. Key products expected to be approved in 2024 include Iodixanol Injection and Iopamidol Injection [25][26]. Investment Recommendations - Revenue projections for 2024-2026 are 2.85 billion, 3.16 billion, and 3.54 billion, with corresponding growth rates of 10.0%, 10.9%, and 11.8%. Net profit estimates are 889 million, 1.01 billion, and 1.14 billion, with growth rates of 13.4%, 13.6%, and 12.9% [28].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 20.2, compared to the current price of HKD 16.9 as of June 18, 2024 [1]. Core Insights - The company, China Tobacco Hong Kong (6055.HK), has shown strong growth in recent years, with a record revenue of HKD 11.8 billion in 2023, representing a 42% year-on-year increase, and a net profit of HKD 690 million, up 49% year-on-year [5][14]. - The growth drivers include the recovery of cigarette export business, an increase in both volume and price in tobacco leaf imports, and growth in tobacco leaf exports [20]. - The company's unique competitive advantage lies in its exclusive operating rights for tobacco imports into China and exports to Southeast Asia and regions like Hong Kong and Macau [5][23]. Company Overview - China Tobacco Hong Kong was established in 2004 and serves as the designated overseas platform for China Tobacco International, focusing on capital market operations and international business expansion [9]. - The company is primarily engaged in the import and export of tobacco leaves, cigarette exports, and new tobacco products [9]. Financial Performance - The company reported a significant increase in revenue and net profit in 2023, with revenue contributing 68.26% from tobacco leaf imports and cigarette exports being the second-largest source of profit [14][18]. - The forecast for 2024 indicates a revenue growth of at least 10% and a net profit increase of no less than 30% in the first half of the year [20]. Market Dynamics - The global tobacco production has been declining, but prices are currently in an upward cycle, influenced by factors such as climate conditions affecting supply [44]. - The company benefits from a stable demand for high-end tobacco leaves in China, with a notable increase in imports and prices over recent years [39][48]. Business Segments - The tobacco leaf import business has shown robust growth, with revenue increasing from HKD 4.63 billion in 2019 to HKD 8.08 billion in 2023, reflecting a compound annual growth rate of 14.9% [25]. - The cigarette export business is recovering post-pandemic, with potential for further growth as international travel resumes [29]. Future Outlook - The company anticipates continued growth in its new tobacco product exports, particularly in the heated not burned (HNB) market, which reached a market size of USD 34.1 billion in 2023, growing by 11.6% [5][20]. - The expected revenue for the company is projected to reach HKD 13.1 billion in 2024, HKD 14.4 billion in 2025, and HKD 15.8 billion in 2026 [5].

Investment Rating - The report maintains a "Buy" rating for the company, with an updated target price of HKD 131, up from HKD 119, based on a 17x 2024 price-to-earnings ratio for the food delivery and in-store travel business [1][3][47]. Core Insights - The company's Q1 performance exceeded market expectations, with total revenue increasing by 25% year-on-year to HKD 73.3 billion, surpassing market expectations by 6% and internal forecasts by 4% [19][50]. - The core local business and new business segments saw year-on-year revenue growth of 27% and 19%, respectively, reaching HKD 54.6 billion and HKD 18.7 billion [19][50]. - Adjusted net profit for Q1 was HKD 7.5 billion, significantly above market expectations of HKD 5.8 billion, reflecting better-than-expected revenue and cost control [50]. Financial Performance - The company's adjusted operating profit for the core local business was HKD 9.7 billion, exceeding market expectations of HKD 8.4 billion, with an operating margin of 17.8%, up 3.2 percentage points quarter-on-quarter [26][50]. - Instant delivery orders grew by 28% year-on-year, with daily average orders reaching 51.6 million, while the average order value (AOV) faced downward pressure [2][27]. - The company expects Q2 revenue to grow by 18.5% year-on-year, with a projected slowdown in food delivery order growth to 13% due to base effects [3][19]. Business Segments - The food delivery segment's revenue increased by 25% to HKD 21.1 billion, driven by strong growth in instant delivery orders [7][19]. - The in-store travel segment's gross transaction value (GTV) grew over 60% year-on-year, with revenue growth improving relative to GTV growth [8][45]. - The new business segment reported an adjusted operating loss of HKD 2.8 billion, better than the market expectation of HKD 3.2 billion, with a focus on high-quality growth strategies [20][28]. User Metrics - The number of active users in the food delivery segment increased to approximately 500 million, with high-frequency users showing faster transaction frequency growth than the average [2][27]. - The number of active merchants in the in-store travel segment reached a record high, contributing to the overall growth in user engagement [8][45].

Investment Rating - The report assigns an IPO-specific rating of "6.0" to the company, suggesting a recommendation to subscribe [34]. Core Insights - The company, Jingtai Technology, established in 2015, is a leading AI pharmaceutical company in China and the first uncommercialized enterprise to list on the Hong Kong Stock Exchange through the 18C mechanism [11][34]. - The company has developed an innovative R&D platform powered by quantum physics, AI, and robotics, providing drug and materials science R&D solutions [11][22]. - The financial performance shows significant growth, with revenue increasing from 62.8 million yuan in 2021 to 170 million yuan in 2023, representing a CAGR of 66.7% [11]. Industry Overview - According to Frost & Sullivan, the drug discovery outsourcing service market in China is projected to grow from $3.5 billion in 2023 to $12.2 billion by 2030, with a CAGR of 19.6% [1]. - The solid-state R&D service market in China is expected to expand from $0.8 billion in 2023 to $5.9 billion by 2030, with a CAGR of 32.1% [1]. - The automated R&D laboratory market in China is forecasted to grow from $1.2 billion in 2023 to $17.4 billion by 2030, with a CAGR of 39.6% [1]. - Key growth drivers include increased demand for accelerated drug development, advancements in AI technology, and the expansion of application fields [1]. Financial Summary - The company reported net losses of 2.14 billion yuan, 1.44 billion yuan, and 1.91 billion yuan from 2021 to 2023, respectively [11]. - Adjusted net profits, excluding the impact of certain financial liabilities and listing expenses, were -270 million yuan, -440 million yuan, and -520 million yuan for the same period [11]. Use of Proceeds - Approximately 75% (705.8 million HKD) of the IPO proceeds will be used to enhance the company's R&D capabilities and solution provision [33]. - About 15% (141.2 million HKD) will be allocated to improve commercialization capabilities domestically and internationally [33]. - The remaining 10% (94.1 million HKD) will be used for working capital and other general corporate purposes [33]. Strategic Partnerships - The company has established strong strategic partnerships with leading international pharmaceutical companies and national research institutions, including Pfizer and the Singapore National Drug Design and Discovery Platform [2]. Management Team - The management team consists of three co-founders who are physicists trained at MIT, bringing a wealth of experience in quantum physics and AI applications in pharmacology [30].

Investment Rating - The report assigns a **Buy** rating to Nexteer Automotive (1316 HK) with a target price of **HKD 7 0**, representing a 17x P/E for 2024 [1][3] Core Views - Nexteer is positioned as a global leader in **steer-by-wire (SBW)** technology, which is a key component for autonomous driving The company is expected to benefit from the industry upgrade towards autonomous driving [1][2] - Nexteer has secured significant orders, including a **USD 2 billion SBW order** from a leading German automaker in 2022 and a second SBW order in 2023 The company has also entered into a partnership with Tesla, supplying EPS for the Model Q in North America, with potential expansion to Europe and China [2][28] - The company’s revenue is expected to grow from **USD 4 569 million in 2024E to USD 5 306 million in 2026E**, with net profit increasing from **USD 132 million in 2024E to USD 224 million in 2026E** [27][32] Business Overview - Nexteer is a **century-old company** founded in 1906, specializing in automotive steering and driveline systems Its product portfolio includes **EPS, CIS, DL, HPS, SBW, eDrive, and software solutions** [8][17] - The company serves over **60 global automakers**, including BMW, BYD, Ford, General Motors, Toyota, and Tesla North America is its largest market, contributing **54% of revenue in 2023**, while China is the fastest-growing market, accounting for **29% of revenue** [8][19] - **EPS** is the largest revenue contributor, accounting for **68% of total revenue in 2023**, followed by **DL (19%)** and **CIS (9%)** [18][19] Industry Overview - The automotive steering system has evolved from **mechanical steering (MS)** to **hydraulic power steering (HPS)**, **electric power steering (EPS)**, and now **steer-by-wire (SBW)** SBW is considered the next-generation technology, essential for **high-level autonomous driving** due to its precision and integration with advanced driver-assistance systems (ADAS) [20][21][22] - SBW offers advantages such as **improved safety, comfort, and integration with vehicle control systems** It eliminates mechanical connections, reducing driver fatigue and enabling personalized driving experiences [23][24] Competitive Advantages - Nexteer has a **strong market position** with a **20% market share in North America** and ranks among the top three globally in steering systems The company’s long-standing relationships with major automakers create high barriers to entry for competitors [25] - The company has a **robust R&D capability**, with over **1,000 engineers and technicians** and a **3 6% R&D expenditure-to-revenue ratio in 2023** This ensures continuous innovation and product development [26] - Nexteer’s **global presence** includes **27 factories, 13 customer service centers, and 5 technology centers** across the US, China, Japan, India, Germany, Poland, Italy, and France [25] Financial Performance - Nexteer’s revenue grew from **USD 3 84 billion in 2022 to USD 4 21 billion in 2023**, driven by strong demand in China and new orders However, net profit declined to **USD 37 million in 2023** due to operational challenges such as US labor strikes and supplier issues [15][16] - The company’s **gross margin** is expected to improve from **9% in 2023 to 12% in 2026**, with **net margin** increasing from **1% in 2023 to 4% in 2026** [16][33] - Nexteer’s **ROE** is projected to rise from **1% in 2023 to 5% in 2026**, reflecting improved profitability and operational efficiency [33] Growth Drivers - **Autonomous driving trends**: Nexteer is well-positioned to capitalize on the shift towards SBW, which is critical for autonomous vehicles The company has established research partnerships with several Chinese automakers, indicating strong growth potential in China [2][28] - **New factory in China**: Nexteer’s new plant in Changshu, set to begin operations in 2025, will produce **EPS and SBW products**, further supporting its growth in the Chinese market [19] - **Strong order pipeline**: The company secured **USD 6 1 billion in new orders in 2023**, with expectations of similar or higher order volumes in 2024 [2][28]

Investment Rating - The report does not specify an investment rating for the company [4]. Core Insights - Jingneng Clean Energy is the largest gas power supplier in Beijing, with its gas power and heating segment contributing 61% of the company's revenue and 36% of its operating profit in 2023 [2]. - The company has a strong focus on renewable energy, with an expected increase in renewable energy installed capacity to 12.5GW by the end of 2024, up from 9.78GW in 2023 [2]. - The company emphasizes shareholder returns, with a dividend yield of 7.2%, which is the highest in the industry [3]. Summary by Sections Company Overview - Jingneng Clean Energy, a subsidiary of Jingneng Group, was listed on the Hong Kong Stock Exchange in 2011 and operates in various clean energy sectors including gas, wind, solar, and hydropower across 26 provinces [1][2]. Gas Power Segment - The gas power segment has an installed capacity of 4.7GW, accounting for over 40% of Beijing's gas power generation and heating supply [2]. - In 2023, gas power generation contributed 50% of the company's total generation, with sales agreements linked to the pricing guidelines from the Beijing Development and Reform Commission [2]. Renewable Energy Growth - The company has been increasing its investment in renewable energy projects, with wind power being the largest segment at 5.57GW and solar power at 3.8GW [2]. - Renewable energy generation accounted for 50% of the total generation in 2023, contributing 38% to the company's revenue and 73.9% to its operating profit [2]. Shareholder Returns - The company has a strong track record of returning value to shareholders, with cumulative dividends reaching 6.78 billion yuan since its listing and a rising dividend payout ratio from 24.5% in 2021 to 37.7% in 2023 [3]. - The operating cash flow was robust, reaching 11.27 billion yuan in 2022 and 9.43 billion yuan in 2023, supporting the company's high dividend policy [3]. Financial Metrics - The company's market capitalization is approximately 17.23 billion HKD, with a current share price of 2.09 HKD [4]. - The expected net profit for 2024 is projected to exceed 3 billion yuan, corresponding to a low PE ratio of 5.2 times, indicating potential for stock price appreciation [3].

Investment Rating - The report maintains a "Buy" rating for Xiaomi Group with a target price of HKD 24.0, representing a potential upside of 31.1% from the recent closing price of HKD 18.3 [2][3]. Core Insights - Xiaomi Group's Q1 2024 total revenue increased significantly by 27% year-on-year to RMB 75.5 billion, surpassing Bloomberg's consensus estimate of RMB 73.4 billion. The overall gross margin improved by 2.8 percentage points to 22.3% [1]. - Adjusted net profit for Q1 2024 grew by 100.8% year-on-year to RMB 6.5 billion, exceeding the market expectation of RMB 5.1 billion, despite incurring RMB 2.3 billion in expenses related to its automotive innovation business [1]. - The report highlights the successful launch of Xiaomi's first electric vehicle, the Xiaomi SU7 series, which has received strong market demand with 10,000 units delivered by mid-May 2024 [1]. Summary by Sections Smartphone Business - In Q1 2024, Xiaomi ranked third globally in smartphone shipments with a market share of 13.8%, shipping 40.6 million units, a year-on-year increase of 33.7%, outperforming the global smartphone market's growth of 9.8% [1]. - Revenue from the smartphone segment reached RMB 46.5 billion, up 32.9% year-on-year, with the average selling price (ASP) slightly decreasing by 0.6% to RMB 1,144 due to increased overseas market revenue [1]. Internet and IoT Services - Internet services revenue hit a record high of RMB 8 billion in Q1 2024, growing 14.5% year-on-year, with a gross margin of 74.2%, up 1.9 percentage points [1]. - Revenue from IoT and lifestyle products reached RMB 20.4 billion, a 21.0% year-on-year increase, with a gross margin of 19.9%, marking a significant improvement of 4.1 percentage points [1]. Automotive Business - The automotive business commenced successfully with the launch of the Xiaomi SU7 series, achieving 10,000 deliveries by May 15, 2024, and aiming for monthly deliveries exceeding 10,000 units by June 2024 [1]. - The report emphasizes the need to monitor the production capacity expansion plans for Xiaomi's automotive segment [1].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 8 HKD based on a 20x PE for FY2025 [1][4]. Core Insights - The company achieved a revenue of 28.93 billion RMB for FY2024, reflecting a year-on-year growth of 6.9%. The gross margin improved by 0.1 percentage points to 41.8%, and the net profit attributable to shareholders increased by 20.5% to 2.21 billion RMB [1][2]. - The retail and multi-brand recovery has driven sales growth, with the main brands (Nike and Adidas) generating a revenue increase of 6.5% to 24.83 billion RMB, while non-main brands saw a growth of 10.5% to 3.89 billion RMB [1][2]. - The retail business grew by 8.9% to 24.7 billion RMB, while wholesale business declined by 3.3% to 4.02 billion RMB, indicating a strong recovery in retail channels [1][2]. Financial Performance Summary - Revenue for FY2024 is reported at 28.93 billion RMB, with a growth rate of 6.9% compared to the previous year [3]. - The net profit attributable to shareholders for FY2024 is 2.21 billion RMB, showing a growth rate of 20.5% [3]. - The gross margin for FY2024 is 41.8%, with a net profit margin of 7.6% [3][11]. - The forecasted EPS for the next three fiscal years is 0.38, 0.43, and 0.48 RMB respectively [2][3]. Operational Developments - The company has reduced its store count by 421 to a total of 6,565 stores, aligning with the recovery in consumer traffic post-pandemic [2]. - The company is expanding its presence in the professional sports sector, with a notable increase in the number of stores for brands like The North Face and HOKA [2]. - The online business segment has been diversified, with direct online sales accounting for 20-30% of total sales, and over 2,000 mini-program stores established [2]. Future Outlook - The company is expected to continue its steady growth trajectory in the retail sector, with projected revenues of 30.91 billion RMB for FY2025, reflecting a growth rate of 6.8% [3][8]. - The net profit for FY2025 is estimated to be 2.38 billion RMB, with a growth rate of 7.4% [3][8]. - The gross margin is anticipated to further improve to 41.9% by FY2025 [3][11].