Investment Rating - Maintains an "Overweight" rating for the company [3] Core Views - The company plans to acquire Kirin Holdings' subsidiary Kyowa Hakko Bio for 10.5 billion yen (approximately 500 million RMB), which includes food amino acids, pharmaceutical amino acids, and human milk oligosaccharides (HMO) businesses [3] - The acquisition will expand the company's product portfolio and accelerate its overseas strategic layout, particularly through overseas production bases [3] - In Q4 2024, the company's MSG product prices remain under pressure, but lysine and threonine prices have increased, leading to a significant improvement in profitability [3] - The company's Q4 2024 performance is expected to reach a new high for the year, driven by improved profitability in key amino acid products [3] Financial Summary - Revenue for 2024E is projected at 26,127 million RMB, with a year-on-year decline of 5.9% [4] - Net profit attributable to the parent company for 2024E is forecasted at 2,822 million RMB, a year-on-year decrease of 11.3% [4] - Gross margin for 2024E is expected to remain stable at 18.9% [4] - ROE for 2024E is projected at 16.6% [4] Market Data - The company's closing price on November 22, 2024, was 10.55 RMB [5] - The price-to-book ratio is 2.0, and the dividend yield is 5.65% [5] - The company's A-share market capitalization is 30,097 million RMB [5] Key Projects and Capacity Expansion - The company is rapidly expanding its production capacity, including projects such as the Tongliao MSG expansion and technical transformation, Xinjiang isoleucine technical transformation, and xanthan gum process improvement [3] - The Jilin lysine project has completed the approval process [3] Valuation and Earnings Forecast - The company's 2024-2026 net profit forecasts have been revised upward to 2,822, 3,118, and 3,512 million RMB, respectively [3] - The current market valuation corresponds to a PE ratio of 11X, 10X, and 9X for 2024-2026 [3]

Investment Rating - The report maintains a "Buy" rating for the company [4]. Core Views - The company's Q3 2024 results met expectations, with a steady improvement in gross margin [4]. - Total sales for the first three quarters reached 99,000 units, a year-on-year increase of 21.0%, while total revenue was CNY 24.76 billion, up 40.5% year-on-year [4]. - The gross margin improved to 14.2%, an increase of 16.3 percentage points year-on-year, and the net profit attributable to shareholders was a loss of CNY 4.46 billion, reducing losses by CNY 4.57 billion year-on-year [4]. Summary by Sections Sales and Revenue - In Q3 2024, total sales were 47,000 units, with a quarter-on-quarter increase of 16.3% and a year-on-year increase of 54.0% [4]. - Total revenue for Q3 was CNY 10.1 billion, reflecting an 18.4% increase year-on-year and a 24.5% increase quarter-on-quarter [4]. Gross Margin and Profitability - The gross margin for Q3 was 15.3%, showing a quarter-on-quarter increase of 1.3 percentage points [4]. - The company continues to improve profitability through cost reduction initiatives, with the gross margin for automotive sales rising from 6.4% in Q2 to 8.6% in Q3 [5]. New Product Launches - The launch of the new model MONA M03 significantly boosted sales, achieving over 30,000 pre-orders within 48 hours of its release [5]. - The company also introduced the P7+ model, which saw over 10,000 pre-orders within 12 minutes of its launch [5]. International Expansion - The company has accelerated its international expansion, with significant sales growth in overseas markets, contributing to 15% of total sales in Q3 [5]. Financial Forecasts - Revenue forecasts for 2024-2026 have been revised upwards, with expected revenues of CNY 40.83 billion, CNY 78.92 billion, and CNY 101.35 billion respectively [6]. - The net profit forecast for 2024-2026 has also been adjusted, with expected losses narrowing to CNY 5.91 billion in 2024 and a projected profit of CNY 1.48 billion by 2026 [6].

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Investment Rating - The report maintains a positive outlook on the shipping and aviation sectors, recommending companies such as China Shipbuilding, China Heavy Industry, and China Southern Airlines [1][5][24]. Core Insights - New ship prices have rebounded, with the current new ship price index at 189.17, reflecting a slight increase, indicating resilience in ship prices [5][17]. - The shipping sector has undergone structural changes, with larger vessels like VLCC and Cape outperforming smaller ships, suggesting a shift in demand dynamics [5][6]. - The report highlights the potential for recovery in the aviation sector driven by supply-side improvements and increased international travel due to expanded visa-free policies [24]. Summary by Sections Shipping Sector - New ship prices have shown resilience, with the Dry Cargo index rising to 207.37 and the oil tanker index to 223.19, indicating a strong market for larger vessels [5][6]. - The report recommends focusing on companies with high VLCC and Cape ratios, such as COSCO Shipping Energy and China Merchants Energy [5][6]. - Recent shipping data shows a mixed performance, with VLCC rates increasing by 1% to $30,635 per day, while some rates have started to decline due to market adjustments [6][9]. Aviation Sector - The sale of wide-body aircraft by China Southern Airlines is expected to streamline operations and enhance competitive positioning in international routes [24]. - The expansion of visa-free travel for several countries is anticipated to boost international passenger traffic, benefiting airlines like Cathay Pacific and China Eastern Airlines [24]. - The report emphasizes a cyclical recovery in the aviation sector, recommending airlines that are well-positioned to capitalize on this trend [24]. Logistics and Express Delivery - The express delivery sector has shown robust growth, with a reported 24% increase in volume in October, driven by pre-holiday demand [21][22]. - Companies like SF Express and JD Logistics are highlighted for their potential to recover and grow as demand stabilizes [22]. - The report suggests that the overall logistics market remains resilient, with expectations for continued growth despite recent price pressures [22]. Rail and Road Transport - The report recommends major rail and road companies such as Daqin Railway and China Merchants Highway, noting a slight increase in rail freight volumes [25]. - The cumulative number of China-Europe freight trains has surpassed 100,000, indicating strong demand for rail logistics [25]. - The report highlights the importance of monitoring freight traffic trends as they can significantly impact logistics companies' performance [25].

Investment Rating - The report maintains a "Buy" rating for both Trip.com and Tongcheng Travel, with target prices adjusted to HKD 611 and HKD 22.5 respectively [7][8]. Core Insights - Trip.com reported a 16% year-on-year revenue increase to CNY 15.9 billion in Q3 2024, with outbound travel revenue growing 40%, returning to 2019 levels. Q4 2024 is expected to see over 30% growth [7]. - Tongcheng Travel's Q3 2024 revenue rose 51% year-on-year to CNY 5 billion, with adjusted net profit increasing 47% to CNY 910 million, driven by efficiency improvements [8]. - The report highlights the potential for both companies to capture market share in the online travel sector, with Trip.com showing strong growth in international markets and Tongcheng Travel focusing on cost reduction and marketing efficiency [7][8]. Summary by Sections 1. Overseas Strategy - The report discusses the verification of policy effects as a pathway to mitigate potential market risks, indicating a cautious market outlook until the central economic work conference outlines next year's economic direction [6]. 2. Overseas Consumer Services 2.1 Trip.com Q3 Report - Trip.com achieved a 16% revenue growth to CNY 15.9 billion in Q3 2024, with a non-GAAP operating profit of CNY 5.5 billion, exceeding expectations due to better-than-expected marketing expenses [7]. - Outbound travel revenue increased by 40% year-on-year, with expectations for Q4 2024 to exceed 30% growth [7]. - The Trip.com brand saw a 60% revenue increase in Q3, contributing 9% to total revenue, with expectations to maintain over 50% growth in Q4 [7]. 2.2 Tongcheng Travel Q3 Report - Tongcheng Travel's revenue grew 51% year-on-year to CNY 5 billion in Q3 2024, with adjusted net profit rising 47% to CNY 910 million, surpassing expectations due to efficiency improvements [8]. - The core OTA business revenue increased by 22%, with a record monthly paid user count of 46.4 million [8]. - International hotel room nights and international flight ticket volumes grew by 130% and 110% respectively, with expectations for outbound travel to turn profitable next year [8]. 3. Key Focus Areas - The report emphasizes the importance of monitoring companies such as Trip.com (09961.HK), Tongcheng Travel (00780.HK), Sands China (01928.HK), and Yum China (09987.HK) for potential investment opportunities [11].

Investment Rating - The report maintains an "Overweight" rating for the defense and military industry, indicating a positive outlook for the sector's performance relative to the overall market [1]. Core Insights - The defense industry is currently experiencing a short-term adjustment due to a temporary vacuum in logic related to industry orders and market sentiment, but the long-term demand and recovery are expected to remain strong [2][3]. - The report highlights significant fluctuations in stock performance within the defense sector, with notable gains in specific stocks such as Sichuan Jiuzhou (up 60.99%) and Rongfa Nuclear Power (up 32.15%) [1][5]. - The report emphasizes the importance of increasing attention to the defense sector, particularly focusing on two categories of core stocks: elastic varieties and value varieties [2][3]. Market Review - Last week, the Shenwan Defense and Military Index fell by 2.78%, while the CSI Military Leader Index decreased by 2.55%. In comparison, the Shanghai Composite Index dropped by 1.91% [1][5]. - The report notes that the defense sector's decline ranked 25th among 31 Shenwan primary industry sectors [5]. - The report identifies the top five performing stocks in the defense sector, with Sichuan Jiuzhou leading at a 60.99% increase, while the bottom five included China Satellite Communications with a -9.34% decrease [1][12]. Valuation Changes - The current PE-TTM for the Shenwan Defense Sector is 70.95, indicating it is in the upper range historically, with a valuation percentile of 58.04% since January 2014 [13]. - The report indicates that the aerospace and aviation equipment sectors are currently at relatively high PE valuations compared to historical data [13]. Foreign Investment Trends - As of August 16, foreign ownership in the defense sector remains stable at 2.56%, with a long-term upward trend in foreign investment [21][24]. - The report lists the top five stocks with the most significant changes in foreign ownership, highlighting a positive trend for companies like Aerospace Science and Technology [21][26]. Key Investment Themes - The report suggests focusing on high-end combat capabilities and new types of combat power, including high-temperature casting alloys and low-orbit satellites, which are expected to see accelerated development [2][3]. - Specific stocks to watch include Aviation Industry Corporation of China, Aerospace Power, and other key players in the defense sector [2][3].

行 业 及 产 业 证 券 研 究 报 告 国防军工 2024 年 11 月 25 日 内外双驱开创军贸新格局，需求牵 引带动三大装备加速放量 看好 ——军贸行业深度报告之一 行 业 研 究/ 行 业 深 度 证券分析师 韩强 A0230518060003 hanqiang@swsresearch.com 武雨桐 A0230520090001 wuyt@swsresearch.com 穆少阳 A0230524070009 musy@swsresearch.com 研究支持 穆少阳 A0230524070009 musy@swsresearch.com 联系人 穆少阳 (8621)23297818× musy@swsresearch.com 本期投资提示： ⚫ 分析军贸市场历史及现状，当前美国仍为最大出口国，我国出口份额持续提升中。1） 放眼全球，出口端方面，当前美国军贸出口份额稳居全球第一，2023 年出口额占比高 达 39%；进口端方面，乌克兰近两年军贸需求增加，当前军贸进口体量暂居第一， 2023 年进口额占比为 14%，亚非各国军贸进口需求旺盛；2）聚焦国内，伴随军事实 力增强以及国际地位提升，我国军贸 ...

Investment Rating - The report maintains a "Positive" outlook on the IP derivative products industry, particularly highlighting the growth potential of the "Guzi" economy [2][3]. Core Insights - The "Guzi" economy is experiencing high prosperity, leading to the revival of shopping malls and significant growth for IP licensing companies. The market for secondary products related to anime and games is projected to reach 160 billion by 2026, with product licensing accounting for 130 billion [3][16]. - The report emphasizes the distinction between "Guzi" and trendy toys, noting that "Guzi" products primarily carry secondary IPs and cater to a younger demographic, particularly those under 22 years old [2][11]. - The competitive landscape of the "Guzi" industry is characterized by a focus on IP and distribution channels, with companies like Card Game and Guangbo focusing on product design and distribution rather than full industry chain integration [4][24]. Summary by Sections Guzi Economy Overview - The "Guzi" economy, representing products related to anime, games, and other IPs, is gaining traction, with significant growth in consumer spending observed in 2023 [3][9]. - The report highlights the difference in consumer psychology between "Guzi" and trendy toys, with "Guzi" products appealing to younger consumers seeking emotional and social value [11][14]. Market Growth and Trends - The market for secondary products related to the "Guzi" economy is expected to grow significantly, with a projected market size of 160 billion by 2026, reflecting a 1.7 times increase from 2021 [16]. - Retail sales of sports and entertainment products have outpaced overall retail growth, indicating a robust market for "Guzi" products [16][17]. Industry Chain Analysis - The "Guzi" industry chain consists of IP acquisition, product development, and distribution, with a notable reliance on external IP licensing [24][27]. - Companies like Card Game and Guangbo are focusing on midstream product design and distribution, while the full industry chain integration remains limited [4][24]. Competitive Landscape - Card Game relies heavily on a vast distributor network, while Pop Mart has transitioned to a brand-centric model with self-operated stores [5][32]. - The report identifies key players such as Pop Mart, Shanghai Film, Yaoji Technology, and Guangbo as potential investment opportunities within the "Guzi" economy [36][46]. Investment Recommendations - The report suggests focusing on investment opportunities within the "Guzi" economy, particularly companies with strong IP reserves and comprehensive industry chain layouts [36][46].

Investment Rating - The report rates the industry as "Overweight" indicating a positive outlook for the smart manufacturing sector [4]. Core Insights - AI enhances the capabilities of robots, enabling them to mimic human thought processes and perform complex tasks such as natural language understanding and facial recognition [2]. - Hardware companies in the robotics sector demonstrate strong manufacturing capabilities, focusing on improving mechanical performance and enabling various movement types for robots [2]. - Industrial software solution companies possess extensive application data, facilitating the commercialization of robotics, particularly in automated inspection tasks [2]. Summary by Sections Case Studies - **Case Study 1**: Zhongkong Technology has served over 30,000 clients globally, developing a comprehensive robotic hardware and software platform tailored for various industrial applications, including significant contracts with Saudi Aramco [3]. - **Case Study 2**: Nengke Technology collaborates with Huawei to empower manufacturing through AI, focusing on digital transformation in industries such as automotive and electronics [3]. - **Case Study 3**: Baoxin Software leverages its strong foundation in the steel industry to provide comprehensive digital solutions, enhancing automation and information technology in manufacturing [3]. Key Companies - Key investment targets include Zhongkong Technology, Nengke Technology, and Baoxin Software, which are highlighted for their potential in the smart manufacturing sector [4]. Valuation Table - Zhongkong Technology: Market Cap 372 billion, 2023 Net Profit 1,102 million, projected 2024 Net Profit 1,256 million, PE ratio 34 for 2023A [8]. - Nengke Technology: Market Cap 73 billion, 2023 Net Profit 220 million, projected 2024 Net Profit 250 million, PE ratio 33 for 2023A [8]. - Baoxin Software: Market Cap 816 billion, 2023 Net Profit 2,554 million, projected 2024 Net Profit 3,011 million, PE ratio 32 for 2023A [8].

Investment Rating - The report maintains a positive outlook on the construction decoration industry, rating it as "Overweight" [1]. Core Insights - The construction decoration sector has shown resilience, with the SW Construction Decoration Index declining by only 1.61%, outperforming major indices like the Shanghai Composite Index, which fell by 2.60% [4][6]. - Key sub-sectors such as home decoration (+4.48%), ecological landscaping (+0.87%), and professional engineering (+0.78%) have demonstrated strong performance, with notable companies like Dongyi Risheng (+17.62%) and Daqian Ecological (+40.85%) leading the gains [6][9]. - The report highlights significant macroeconomic developments, including President Xi Jinping's visit to Brazil, which aims to enhance bilateral cooperation and align development strategies with the Belt and Road Initiative [16]. Summary by Sections Industry Performance - The construction decoration industry experienced a weekly decline of 1.61%, outperforming the Shanghai Composite Index and other major indices [4][6]. - The best-performing sub-sectors for the week included home decoration, ecological landscaping, and professional engineering, with respective gains of 4.48%, 0.87%, and 0.78% [6][9]. Key Company Developments - China Chemical signed new contracts worth 311.28 billion yuan in Q1-Q3 2024, reflecting a year-on-year increase of 7.20% [19]. - Zhite New Materials secured a significant overseas contract valued at approximately 29.29 million yuan, representing 1.31% of its 2023 revenue [19]. - Baoying Co. won a major project totaling 745 million yuan, accounting for 18.11% of its 2023 revenue [20]. Market Outlook - The report suggests that government investment is expected to play a crucial role in driving growth in the construction sector in Q4 2024 and 2025, with a focus on state-owned enterprises [1][19]. - Key companies recommended for investment include China Railway, China Railway Construction, and China Communications Construction, among others [1][19].