Investment Rating - Buy rating (首次覆盖) [3][5] Core Views - Xiaomi's strategic shift towards high-end products and its business model evolution are key drivers for future growth [3] - The company's organizational and management changes support its high-end strategy [3] - Xiaomi's 3C business is entering a positive cycle, with smartphone shipments reaching 146 million units in 2023, ranking third globally [4] - The integration of MIUI into Hyper OS and the development of Xiaomi SU7 are significant milestones in Xiaomi's ecosystem strategy [4] - Xiaomi's high-end strategy is expected to enhance its financial metrics, including growth rate, profit margin, R&D, and valuation multiples [3] Business Segments Smartphones - Xiaomi's smartphone shipments in 2023 were 146 million units, ranking third globally [4] - The high-end smartphone segment accounted for 22.1% of total shipments in Q2 2024 [12] - Xiaomi's smartphone ASP in China increased by over 19% in 2023, reaching a historical high [101] IoT and Lifestyle Products - Xiaomi's home appliance business revenue grew by 40% in 2023, with shipments of air conditioners, refrigerators, and washing machines reaching record highs [4] - The IoT and lifestyle products segment is expected to grow by 18% in 2024, reaching RMB 94.3 billion [11] Internet Services - Xiaomi's internet services revenue is projected to grow by 12% in 2024, reaching RMB 33.9 billion [11] - The high-end smartphone segment contributes significantly to internet services, with LTV being twice that of non-premium smartphones [146] Smart Electric Vehicles - Xiaomi SU7, the company's first electric vehicle, achieved sales of over 10,000 units for five consecutive months in 2024 [4] - Xiaomi plans to deliver 120,000 units of SU7 in 2024, with a production capacity of 190,000 units in the first phase [124][130] - The company has invested heavily in R&D for its electric vehicle business, with a team of 3,400 engineers and over RMB 10 billion in R&D expenses [141] Financial Projections - Xiaomi's total revenue is expected to grow by 28% in 2024, reaching RMB 347.4 billion [5] - Adjusted net profit is projected to increase by 26% in 2024, reaching RMB 24.3 billion [5] - The company's smartphone business revenue is expected to grow by 19% in 2024, reaching RMB 187.3 billion [10] - The IoT and lifestyle products segment is projected to grow by 18% in 2024, reaching RMB 94.3 billion [11] - Internet services revenue is expected to grow by 12% in 2024, reaching RMB 33.9 billion [11] - The smart electric vehicle business is projected to generate RMB 30.4 billion in revenue in 2024, with a delivery target of 129,600 units [11] Valuation - Xiaomi's "Smartphone x AIoT" segment is valued at RMB 7,165 billion based on a 22x PE multiple for 2025E adjusted net profit of RMB 332 billion [5] - The smart electric vehicle and innovation business segment is valued at RMB 674 billion based on a 0.9x PS multiple for 2025E revenue of RMB 728 billion [5] - The target market capitalization for 2025E is RMB 7,839 billion (HK$ 847.5 billion), with a target price of HK$ 33.9 per share, representing a 21% upside [5]

Investment Rating - The report maintains a "Positive" outlook on the home appliance industry, highlighting strong sales growth during the Double Eleven shopping festival [1]. Core Insights - The home appliance sector outperformed the CSI 300 index, with a decline of 1.5% compared to a 3.3% drop in the index [1][8]. - The total sales during the Double Eleven event reached 14,418 billion yuan, a year-on-year increase of 26.6%, with home appliances accounting for 1,930 billion yuan, representing 16.3% of total sales [2][16]. - The nationwide appliance replacement program saw over 20 million consumers participating, purchasing over 30 million units, leading to sales of approximately 1,377.9 billion yuan [2][17]. Summary by Sections Sales Performance - In October, air conditioner sales volume and revenue increased by 108.2% and 125.0% respectively, with an average price of 4,730 yuan, up 7.82% year-on-year [3][31]. - Refrigerator sales volume and revenue rose by 64.4% and 83.7%, with an average price of 7,298 yuan, up 10.2% year-on-year [35]. - Washing machine sales volume and revenue increased by 54.8% and 71.9%, with an average price of 4,591 yuan, up 9.2% year-on-year [35]. Investment Highlights - The report identifies three main investment themes: 1. White goods benefiting from favorable real estate policies and the appliance replacement program, recommending companies like Hisense, Midea, Haier, and Gree [5]. 2. Export orders are recovering, with significant growth expected in revenue and performance for companies like Dechang and Stone Technology [5]. 3. Core component demand is exceeding expectations, with recommendations for companies like Huaxiang and Shun'an Environment [5]. Market Dynamics - The report notes that raw material prices for copper and aluminum have increased year-on-year, while stainless steel prices have decreased [20]. - The report emphasizes the importance of the appliance replacement program in boosting consumer confidence and stimulating demand during key shopping periods [64][65]. Macroeconomic Environment - As of November 15, 2024, the USD to RMB exchange rate has increased by 1.73% since the beginning of the year [42]. - The report also highlights a 15.52% year-on-year increase in residential property sales area for existing homes [44].

Investment Rating - The report maintains a "Positive" outlook on the transportation industry, indicating expectations for the sector to outperform the overall market performance [2]. Core Insights - VLCC and Capesize bulk carrier rates have rebounded, with seasonal low points potentially being preempted due to election impacts. Key stocks to watch include COSCO Shipping Energy, China Merchants Energy, and US-listed ECO and DHT [5]. - Domestic trade and Asian regional container shipping prices are strong, with recommendations to focus on COSCO Shipping Holdings, Jinjiang Shipping, and Ningbo Ocean [5]. - The report highlights a significant increase in oil tanker rates, with VLCC rates rising 24% to $30,202 per day, driven by optimistic market conditions and a reduction in available shipping capacity [5][9]. - The report notes that the shipping data for the week shows continued increases in VLCC and Cape rates, with strong performance in Southeast Asia and domestic trade container prices [5][9]. Summary by Sections Shipping Market Overview - The transportation industry index fell by 3.34%, underperforming the CSI 300 index by 0.05 percentage points. The bus sector saw the largest increase at 2.16%, while the airline sector experienced the largest decline at -9.47% [4][26]. - The Baltic Dry Index (BDI) rose by 19.40% to 1,785.00 points, while the Shanghai Containerized Freight Index (SCFI) fell by 3.42% to 2,251.90 points [4][53]. Oil and Gas Transportation - The report indicates that VLCC rates are expected to continue rising, with a focus on the upcoming OPEC+ meeting and potential impacts from geopolitical events [8][9]. - The report also notes that the average TCE for DHT's VLCC fleet reached $42,400 per day, with expectations for continued strong performance in the fourth quarter [14]. Container Shipping - The SCFI index recorded a decrease of 3.4%, with European line rates also declining. The report suggests that shipping companies are attempting to stimulate demand through price increases, but the effectiveness of these measures may weaken over time [12][13]. - The report emphasizes the importance of monitoring seasonal demand patterns, particularly with the upcoming Christmas and Chinese New Year periods [12][13]. Logistics and Express Delivery - The express delivery sector is experiencing a price increase trend, with companies like JD Logistics and Cainiao reporting revenue growth. The report recommends focusing on companies with high volume growth and profit elasticity, such as Shentong Express and YTO Express [18]. - The report highlights the potential for significant performance improvements in the express delivery sector due to seasonal demand [18]. Aviation and Airports - The report emphasizes the recovery opportunities in the aviation sector, recommending stocks such as China National Aviation, Spring Airlines, and Southern Airlines [19]. - The report notes that Hainan Airlines has adjusted its aircraft purchase plans, indicating ongoing developments in the aviation market [19]. Rail and Road Transportation - The report recommends stocks in the rail and road sectors, including Daqin Railway and China Merchants Highway, highlighting growth in freight volumes and infrastructure investment [20]. - The report indicates that national railway freight volume increased by 1.26% week-on-week, while highway freight traffic rose by 3.01% [20].

Investment Rating - The report maintains a positive outlook on the textile and apparel industry, indicating a "Look Favorably" investment rating [1]. Core Insights - The textile and apparel sector has shown resilience, with October retail sales for clothing and textiles increasing by 8% year-on-year, benefiting from the early Double Eleven promotions and improved consumer sentiment [3][15]. - The report highlights the ongoing policy support for the industry, which is expected to drive steady recovery in retail sales as the peak season approaches [3][15]. - Key investment opportunities are identified in both domestic and international markets, particularly in companies with strong brand power and those positioned in the outdoor and winter sports segments [21][24]. Summary by Sections Industry Performance - The textile and apparel sector outperformed the market, with the SW textile and apparel index declining by 3.4%, but still outperforming the SW All A index by 0.6 percentage points during the period from November 11 to 15 [1][9]. - The report notes that the apparel segment saw a significant improvement in retail sales, with a total of 134.7 billion yuan in October, marking an 8% year-on-year growth [2][15]. Recent Industry Data - Retail sales for clothing, shoes, and textiles reached 134.7 billion yuan in October, with a cumulative total of 1,157.1 billion yuan for the first ten months, reflecting a 1.1% year-on-year increase [2][48]. - The textile industry exported 25.5 billion USD in October, showing an 11.9% year-on-year growth, with yarn and fabric exports increasing by 16.1% to 12.4 billion USD [2]. Company Recommendations - A-share recommendations include Semir Apparel, Baoxiniao, and others, while Hong Kong stock recommendations include Anta Sports and Bosideng [3][15]. - The report emphasizes the potential of cross-border e-commerce, particularly highlighting Anker Innovations, which is expected to benefit from the ongoing sales season [3][16]. Sector Trends - The report indicates that the textile manufacturing sector continues to show revenue growth, with major companies reporting year-on-year increases in October [4][17]. - The global demand for sports apparel remains strong, with a focus on companies in the sports manufacturing chain for long-term growth potential [4][18]. Policy and Market Outlook - The report discusses the government's push for the ice and snow sports market, projecting a market size of 1.2 trillion yuan by 2027, which is expected to stimulate demand in the textile sector [21][23]. - The report also highlights the importance of brand strength in the domestic market, particularly for companies like Anta Sports and Bosideng, which are well-positioned to capitalize on the growing outdoor and winter sports segments [24][26].

Investment Rating - The report maintains a "Positive" outlook on the electronic industry, indicating expectations for the sector to outperform the overall market performance in the coming months [21]. Core Insights - The electronic sector experienced a decline in indices from November 11 to November 15, with the Shanghai Composite Index down by 3.52% and the Shenzhen Composite Index down by 4.01%. Notably, the Philadelphia Semiconductor Index fell by 8.64% [1][6]. - Key stocks that saw significant gains during this period include Heertai (up 51.09%), Youyan New Materials (up 42.61%), and Mankang (up 19.17%) [1][6]. - Aolai De is positioned to benefit from the trend of stacked materials, with upcoming equipment bidding expected to enhance its market position. The company holds over 80% market share in G6 evaporation sources and is anticipated to gain from accelerated capital expenditures in G8.6 [1][11]. - Jiangfeng Electronics is experiencing rapid growth in its semiconductor components business, with revenue from this segment increasing by 95% and 59% in 2022 and 2023, respectively. The company is well-positioned to capitalize on the expanding market for semiconductor equipment [2][14]. Summary by Sections Weekly Market Review - From November 11 to November 15, both domestic and international electronic indices declined, with the Shanghai Composite Index down 3.52% and the Philadelphia Semiconductor Index down 8.64%. Key stocks with notable gains included Heertai and Youyan New Materials [1][6][7]. Aolai De - Aolai De is set to benefit from the increasing demand for OLED materials, particularly with the upcoming bidding for G8.6 AMOLED production line equipment. The company’s organic light-emitting materials are already being utilized in several high-profile products [10][11]. Jiangfeng Electronics - Jiangfeng Electronics is leveraging its expertise in ultra-pure metal sputtering targets to expand its semiconductor components business, which has shown significant revenue growth. The company’s market share in the global sputtering target market is approximately 18.6% [2][14][15].

Investment Rating - The report maintains a "Positive" outlook on the social services industry, particularly focusing on the tourism sector due to the increase in statutory holidays starting in 2025 [2]. Core Insights - The increase in statutory holidays is expected to significantly boost consumer travel spending, with the potential for daily average tourist numbers during the Spring Festival to reach 59.25 million and daily tourism spending to hit 79.086 billion yuan [3][26]. - The report highlights a notable surge in travel demand, with flight searches for the Spring Festival increasing by 170% and ticket searches on New Year's Eve soaring by 250% since the announcement of the new holiday policy [2][3]. - The Double 11 shopping event saw a substantial increase in group travel demand, with transaction volumes for travel products increasing by nearly 90% year-on-year, indicating a strong recovery in outbound tourism [3][4]. Summary by Sections Section 1: Holiday Adjustments and Market Opportunities - The adjustment of statutory holidays will enhance consumer travel activity, with the Spring Festival and Labor Day each gaining an additional day off, leading to longer holiday periods [26]. - The report notes that statutory holidays account for 32.5% of annual tourism numbers and 27.5% of tourism revenue, suggesting that extended holidays will further unlock tourism potential [3][26]. Section 2: Market Performance Review - The social services index decreased by 2.41% from November 11 to November 15, 2024, outperforming the broader market, which saw a decline of 5.55% in the retail sector [36][37]. - The report identifies key companies in the tourism sector that are expected to benefit from the holiday adjustments, including scenic spots, travel agencies, hotels, and restaurants [4]. Section 3: Company Announcements - The report includes updates on significant company activities, such as the completion of share transfers and changes in management within the retail and social services sectors, indicating ongoing corporate restructuring and strategic shifts [48][51]. Section 4: Industry Highlights - The report emphasizes the strong performance of travel-related brands during the Double 11 event, with 22 brands achieving over 100 million yuan in sales, reflecting robust consumer interest in travel products [57]. - The introduction of electronic invoices for air travel starting December 1, 2024, is expected to streamline the travel experience for consumers [57].

Investment Rating - The report maintains a "Positive" investment rating for the food and beverage industry [1]. Core Insights - The report highlights that with the shift in policies and the implementation of macroeconomic measures, the valuation of the sector has stabilized, indicating that medium to long-term opportunities are emerging. However, fundamental and performance drivers will require time, likely until after the Spring Festival in 2025. If subsequent positive policy combinations effectively improve corporate and household income levels and expectations, as well as enhance employment and asset prices, the demand for the sector is expected to fundamentally improve [1][16]. Summary by Sections Industry Overview - The food and beverage sector experienced a decline of 3.56% last week, with the liquor segment down by 3.49%. The sector underperformed the Shanghai Composite Index by 0.04 percentage points, ranking 15th among 31 sub-industries [15]. Liquor Sector - Moutai's price fell to 2,190 yuan per bottle, down 65 yuan week-on-week, while the box price dropped to 2,250 yuan, down 85 yuan. The price of Wuliangye is around 920 yuan. The retail sales data for October showed a year-on-year growth of 4.8%, primarily benefiting from the appliance replacement policy and early Double 11 promotions. The restaurant sector grew by 3.2% year-on-year, indicating some resilience [17]. Food Sector - The report indicates that the performance of mass-market food products in Q3 met expectations, with revenue under pressure but cost reductions supporting profit improvements. The dairy sector is expected to see a supply-demand balance improve, with upstream capacity reduction accelerating and raw milk prices stabilizing. The report anticipates that the supply-demand relationship will align better in Q4 and into next year, leading to profit improvements for leading companies [18][19]. Recommendations - Key recommendations include top liquor companies such as Kweichow Moutai, Shanxi Fenjiu, and Wuliangye, as well as mass-market food companies like Yili, Anjuke, and Qingdao Beer. The report emphasizes the importance of strategic determination and execution capabilities for companies in the sector, alongside potential dividend levels and structural space for long-term investment value [16][17].

Investment Rating - The report maintains a positive outlook on the computer industry, particularly focusing on AI applications and the growth potential of companies involved in this sector [2][3]. Core Insights - The report emphasizes the continuous investment opportunities in AI applications, highlighting the significant advancements in reasoning technology and the evolution of large models from simple dialogue to complex task planning [3][11]. - It identifies a shift in the payment processing industry, moving from intense competition to price increases due to stricter regulations and a reduction in the number of payment licenses [4][52]. - Key companies such as Hongsoft Technology, Foxit Software, and Kingsoft Office are noted for their strong performance, with significant revenue growth and successful transitions to subscription models [2][69][74]. Summary by Sections AI Applications - The report outlines three major expectations regarding AI applications: the market's perception of AI as a short-term trend, the current limitations of AI agent products, and the anticipated evolution of 2B products and multimodal applications [3][11][27]. - It highlights the ongoing improvements in AI agent capabilities, particularly in task planning and tool usage, which are expected to enhance user experience and operational efficiency [11][18]. Newland Insights - Newland's business model is analyzed, focusing on its merchant operations and value-added services, which are projected to see significant revenue growth due to price increases and international expansion [4][36]. - The report notes that Newland's revenue from merchant services and electronic payment products is expected to grow, driven by local marketing strategies in regions like Latin America and Southeast Asia [67]. Key Company Updates - Hongsoft Technology reported a revenue increase of 18.54% in Q3, with a notable 130% growth in its automotive business segment [69]. - Foxit Software has successfully transitioned to a subscription model, achieving a 65.8% increase in subscription revenue year-over-year [74]. - Kingsoft Office has shown a significant increase in operating cash flow, driven by its SaaS and AI integration strategies [76]. Market Trends - The report indicates a growing trend towards digital economy leaders, with companies like Hikvision and Kingsoft Office positioned for growth due to their innovative solutions and market strategies [5][10]. - It also highlights the competitive landscape in the hardware sector, with Newland leading in global POS machine shipments and expanding its market presence through localized strategies [62][67].

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings [11][13]. Core Insights - Tencent's Q3 2024 revenue reached 167.2 billion RMB, a year-on-year increase of 8%, aligning with consensus expectations. Adjusted net profit was 59.8 billion RMB, up 33% year-on-year, exceeding consensus by 10% [11]. - The report highlights that domestic game revenue grew by 14% year-on-year, while overseas game revenue increased by 9% [8]. - Advertising revenue saw a 17% year-on-year growth, driven by the performance of video accounts and AI enhancements [9]. - Financial technology and enterprise services revenue grew by 2% year-on-year, with payment income declining but expected to recover partially in Q4 [12]. - The report emphasizes Tencent's strong fundamentals, competitive landscape, and growth drivers from gaming and AI, with a target market capitalization adjustment from 47,190 billion RMB to 48,013 billion RMB, corresponding to a target price of 560 HKD [13]. Financial Summary - Revenue projections for Tencent are as follows: - 2022: 554.6 billion RMB - 2023: 609 billion RMB - 2024E: 657.9 billion RMB - 2025E: 723.4 billion RMB - 2026E: 780.3 billion RMB [7][19] - Adjusted net profit forecasts are: - 2024E: 224.7 billion RMB - 2025E: 245.1 billion RMB - 2026E: 280.3 billion RMB [7][19]. - The report indicates a significant increase in deferred revenue, with a year-on-year growth of 93% for non-current liabilities [8].

Investment Rating - The report maintains a "Positive" rating for the steel industry, anticipating a recovery in profits in Q4 2024 [2][3][4]. Core Insights - The steel industry is expected to see a gradual improvement in its fundamentals, driven by strong supply constraints and a recovery in demand, particularly in manufacturing and infrastructure sectors [3][4]. - The report highlights a significant decline in profits for the steel sector in the first three quarters of 2024, with a net profit of -1.8 billion yuan, a year-on-year decrease of 109.6% [2][18]. - The report suggests focusing on low-valuation, high-dividend steel companies, particularly those in the manufacturing sector, as well as high-end stainless steel pipe manufacturers benefiting from the oil and gas sector [3][4]. Summary by Sections 1. Steel Sector Performance - The steel sector index increased by 2.23% in the first three quarters of 2024, underperforming compared to the Shanghai Composite Index, which rose by 12.15% [10]. - The average asset-liability ratio for the steel industry reached approximately 54.7% by the end of September 2024, reflecting an upward trend [28]. 2. Q3 Performance Overview - The steel sector's revenue for the first three quarters of 2024 was 1.3075 trillion yuan, a decrease of 9.15% year-on-year [16]. - The average expense ratio for the steel sector increased to 9.1%, up from 7.83% in the same period of 2023 [23]. 3. Profitability and Price Trends - The average price of rebar in Q3 2024 was approximately 3,306 yuan per ton, down from 3,602 yuan per ton in Q2 2024, indicating a significant decline in profitability [30]. - The report notes that the overall profit level of the steel industry is at a historical low, with a total loss of approximately 33.79 billion yuan in Q3 2024 [31]. 4. Future Outlook - The report anticipates a recovery in steel profits in Q4 2024, supported by government policies aimed at stimulating demand in the real estate and infrastructure sectors [34][38]. - The issuance of special bonds by local governments is expected to accelerate, providing necessary funding for infrastructure projects and boosting steel demand [38].