Investment Rating - The report assigns a "Buy" rating for WuXi AppTec and WuXi Biologics, reflecting a positive outlook on their potential despite legislative uncertainties [51]. Core Insights - The report emphasizes the impact of the revised US BIOSECURE Act on the revenue exposure of WuXi AppTec and WuXi Biologics, particularly focusing on the grandfather clause that extends the partnership termination deadline to January 2032 [2][37]. - It highlights the potential revenue growth for WuXi AppTec at 13% and for WuXi Biologics at 15%, driven by industry growth, with a long-term growth rate of 3% factored into terminal value calculations [2][8]. - The analysis includes two scenarios regarding the impact of the BIOSECURE Act, estimating that 65% of orders for WuXi AppTec and 47% for WuXi Biologics could be affected under the first scenario, while the second scenario suggests that 82% of orders would be impacted [2][5]. Summary by Sections Legislative Impact - The report discusses the legislative process of the BIOSECURE Act, noting that the final form remains uncertain and could affect the operational capabilities of WuXi AppTec and WuXi Biologics [2][37]. - It mentions that the high degree of uncertainty surrounding the bill could lead to delays in securing new orders from US clients, impacting sales from FY25/26 onward [37]. Financial Projections - The report revises sales estimates for WuXi AppTec for 2024-2026 down by -0.5%, -4.2%, and -6%, and net profit estimates by -1.7%, -4.8%, and -5.9% respectively [37][38]. - For WuXi Biologics, the revised sales estimates are -2.1%, -4.5%, and -6.7%, with net profit estimates adjusted by -6.6%, -9.2%, and -10.9% [38]. Valuation Methodology - The implied share prices under different scenarios are calculated, with WuXi AppTec's share price estimated at HK$46.9 under the base case and HK$21.5 under a more restricted scenario [5][37]. - WuXi Biologics' share price is projected at HK$17.5 under the revised estimates, reflecting a 12-month forward P/E of 19x [38][41]. Market Context - The report notes that over 124 US biopharma companies currently depend on China-based manufacturing, indicating a significant reliance on WuXi's services [2]. - It also highlights the potential for a shift towards a "China + 1" model for manufacturing among global pharma clients, which could affect future order volumes [2].

Summary of the Conference Call for China Film Company Overview - **Company**: China Film - **Date of Conference**: May 28, 2024 - **Key Speaker**: Fu Ruoqing, Chairman and General Manager Key Financial Metrics - **Revenue**: 5.334 billion CNY, up 82% year-on-year [2] - **Net Profit**: 263 million CNY, up 222% year-on-year [2] - **Net Cash Flow from Operating Activities**: 1.979 billion CNY, up 2090% year-on-year [2] - **Main Business Segments**: - Creation: 19% - Distribution: 39% - Exhibition: 22% - Technology: 16% - Services: 4% [2] Profitability by Segment - **Creation Segment**: Operating profit of 5.5 million CNY, gross margin of 0.53% [3] - **Distribution Segment**: Operating profit of 700 million CNY, gross margin of 34% [3] - **Exhibition Segment**: Operating profit of 180 million CNY, gross margin of 15% [3] - **Technology Segment**: Operating profit of 300 million CNY, gross margin of 37% [4] - **Services Segment**: Operating profit of 80 million CNY, gross margin of 40% [4] Film Production and Market Share - **Films Released in 2023**: 37 films with a total box office of 26.889 billion CNY, capturing 58.45% market share [4] - **Awards**: 129 awards including Huabiao Award and Golden Rooster Award [4] - **Upcoming Films**: 7 planned for 2024, including "Volunteer Army 2" and "The Legend of the Condor Heroes" [5] Distribution and Exhibition Strategies - **Distribution Market Share**: 82.93% in 2023, with an increasing trend for domestic films [5] - **New Distribution Models**: Introduction of appointment screening products and collaboration with national theater for live broadcasts [5] - **Exhibition Coverage**: 21,577 screens and 2.7091 million seats nationwide, with a market share of 27.91% [6] Technological Innovations - **New Technology**: Launched the world's first 4K120 frame high-format cinema screen [7] - **New Theaters**: 157 CVT theaters opened, with 6 more pending [7] - **Sales of Projection Equipment**: 1,659 new projectors sold, accounting for 59% of new screens [7] 2024 Action Plan - **Focus Areas**: Enhance film quality, optimize asset structure, and promote technological innovation [9][10] - **Governance Improvements**: Strengthening board effectiveness and governance systems [11][12] - **Shareholder Returns**: Cumulative cash dividends of 2.199 billion CNY, with a proposed minimum dividend payout ratio of 41% for 2024 [16] Market Outlook - **Box Office Recovery**: As of mid-May 2024, total box office exceeded 20 billion CNY, recovering to over 80% of 2019 levels [18] - **Future Projections**: Anticipation of surpassing last year's total box office due to a strong lineup of films [20] Industry Trends - **Shift in Audience Preferences**: Increased opportunities for mid-tier films as the dominance of blockbuster films diminishes [28] - **Support for Young Filmmakers**: Initiatives to nurture young talent through the China Film Youth Filmmaker Program [30] Conclusion - **Strategic Focus**: China Film aims to enhance its market position through diversified film offerings, technological advancements, and improved governance, while ensuring shareholder value and audience engagement [58]

Summary of the Conference Call on China Hongqiao Company Overview - **Company Name**: China Hongqiao - **Core Business**: The company primarily engages in the production of aluminum products, including bauxite, alumina, electrolytic aluminum, and aluminum processing products. The core business is electrolytic aluminum, supported by bauxite and alumina production, as well as thermal power generation [3][4][5]. Key Points and Arguments - **Ownership Structure**: China Hongqiao is a private enterprise with the largest shareholder being China Hongqiao Holdings, holding 64.13% of the shares. The founding family, led by Zhang Shiping, controls the company through a family trust [4][5]. - **Production Capacity**: The company has an electrolytic aluminum production capacity of 6.46 million tons, making it the largest electrolytic aluminum producer in China. The capacity is compliant with regulations [5][6]. - **Business Segments**: The business is divided into three main segments: bauxite mining, alumina production, and electrolytic aluminum production. The company has significant production capacities in Shandong and Yunnan [6][7][8]. - **Environmental Regulations**: The company has faced challenges due to increasing environmental regulations, particularly in Shandong, which has affected its production plans [7][8][16]. - **Financial Performance**: In 2022, the company reported a net profit of 11.4 billion yuan, a year-on-year increase of over 30%. The production of aluminum alloy reached approximately 5.75 million tons, an increase of 275,000 tons from 2022 [19][20]. - **Dividend Policy**: The company has a high dividend payout ratio, maintaining around 50% from 2021 to 2023, with a dividend yield consistently above 5% [21][23]. - **Debt Levels**: The company's debt-to-asset ratio has decreased over the years, reaching 47% by the end of 2023, down from 67-68% in 2016-2017 [23][24]. Additional Insights - **Iron Ore Investment**: The company has invested in iron ore, holding a stake in the Simandou iron ore project in Guinea, which is expected to produce 12 million tons annually starting in 2026. This could significantly enhance the company's profitability [22][24][25]. - **Future Profit Projections**: For the current year, the company is projected to achieve a net profit of approximately 18.1 billion yuan, with potential for higher earnings based on current market conditions [26][28]. - **Market Valuation**: The company's market capitalization is around 101.3 billion yuan, with a price-to-earnings (PE) ratio estimated at approximately 6 times, indicating it is undervalued compared to peers [28][29]. Conclusion China Hongqiao is positioned as a leading player in the aluminum industry, with a strong production capacity and a focus on cost management through self-generated power. The company's strategic investments and solid financial performance make it an attractive option for investors, despite facing regulatory challenges and market fluctuations.

更多资料加入知识星球：水木调研纪要关注公众号：水木纪要 Deutsche Bank Research China: The sleeping giant awakes 5/2024 12:14:05 GM Luke Templeman Galina Pozdnyakova Research Analyst 数据加V Research Analyst Luke.Templeman@db.com Galina.Pozdnyakova@db.com +44 207 541 0130 +44 207 547 4994 May 2024 IMPORTANT RESEARCH DISCLOSURES AND ANALYST CERTIFICATIONS LOCATED IN APPENDIX 1. MCI (P) 041/10/2023. UNTIL 19th MARCH 2021 INCOMPLETE DISCLOSURE INFORMATION MAY HAVE BEEN DISPLAYED, PLEASE SEE APPENDIX 1 FOR FURTHER DETAILS. Table of Contents a ...

Summary of the Conference Call Industry Overview - The focus is on the Chinese stock market and its potential for investment despite current challenges [1][2][5] Key Points and Arguments 1. **Transition to New Growth Model**: China is shifting from a growth model reliant on real estate and debt to one focused on consumption and industrial production, aiming for "high-quality growth" [2] 2. **Economic Stability**: The Chinese economy is expected to stabilize with GDP growth projected at 4-5%, while the government addresses structural issues through targeted counter-cyclical policies [2][5] 3. **Cautious Optimism for Stock Market**: Despite challenges, there is cautious optimism for the Chinese stock market due to attractive valuations compared to historical averages and other regions [5] 4. **Improving Economic Indicators**: While many indicators remain low, there are signs of improvement, suggesting that the situation is unlikely to deteriorate significantly [5] 5. **Company Earnings Resilience**: Company earnings appear robust, with slight upward revisions for the next 12 months, indicating that recent market weakness is due to investor re-evaluation rather than a decline in overall earnings [5] 6. **Low International Investor Exposure**: Global active funds have the lowest allocation to Chinese stocks in a decade, highlighting potential for capital inflow when market sentiment improves [5] 7. **Risks to Investment**: Risks include the struggling real estate sector, high youth unemployment, and the threat of deflation, necessitating a cautious investment approach [5] 8. **Long-term Growth Potential**: China's long-term ambitions as a manufacturing powerhouse and the growth of the middle class suggest that the stock market could outperform other regions over the next decade [6][7] 9. **Structural Changes in Global Supply Chains**: China is becoming increasingly important in global supply chains, focusing on exporting components and strategic investments in emerging sectors like AI and electric vehicles [7] 10. **Stress Testing Scenarios**: Even under adverse conditions, such as a decline in GDP growth to 2.5%, Chinese stocks are expected to remain relatively attractive compared to developed markets [7] Additional Important Content - The transition to a "high-quality growth" model is seen as a long-term turning point for China, with stable fundamentals and attractive valuations providing sufficient reasons for investors to consider Chinese stocks [6][7] - The potential for higher returns in the Chinese stock market remains, even in a relatively negative scenario, compared to other major regions [7]

研究院 2024年5月20日 2024年第25期（总第536期） 伦敦经济月刊（2013年1 月） 2013年1月18日 中 银研究产品系列 我国私募股权投资市场 Ω ● 《经济金融展望季报》 发展动态、国际比较及相关建议＊ ● 《中银调研》 ● 《宏观观察》 2023 年中央经济工作会议指出，要鼓励发展 ● 《银行业观察》 创业投资、股权投资。2024 年 4 月 30 日，中共中 ● 《国际金融评论》 ● 《国别/地区观察》 央政治局会议提出，要积极发展风险投资，壮大 耐心资本。私募股权投资作为科技创新和产业创 新的重要催化剂，曾经孵化和培育了以阿里巴 作 者：刘官菁 中国银行研究院 巴、腾讯、美团等为代表的一大批独角兽科技企 电 话：010 – 6659 4027 业，为推动形成创新资本、培育新质生产力和产 业结构调整发挥着越来越重要的作用。特别是自 签 发人：陈卫东 注册制实施以来，许多优秀的中国科技企业在私 审 稿：周景彤 赵 雪 募基金支持下成功上市，形成了良好的正向反 联 系人：王 静 刘佩忠 电 话：010 – 6659 6623 馈。根据中基协统计，2022 年科创板、创业板、 北交所新上市 ...

Summary of the Conference Call Company Overview - The conference call involved China Film, with Chairman and General Manager Fu Ruoqing addressing the audience [1]. Key Points and Arguments - The company recently released its annual report, which includes a proposal for enhancing efficiency and a plan for technological innovation capability construction [1]. Other Important Content - The company acknowledged receiving significant interest and inquiries from investors regarding the announcements made [1].

Financial Data and Key Metrics Changes - The company expects a revenue growth target of over 10% for this year, with a focus on maintaining a double-digit growth in both revenue and profit [18][25][28] - The company reported a significant increase in new business areas, particularly in the digital transformation sector, which is projected to grow by over 30% [8][18] Business Line Data and Key Metrics Changes - The company has established a strategic partnership with Huawei Cloud, contributing approximately 10% to Huawei's public cloud sales, equating to around 20 billion yuan in sales [6][20] - The new business initiatives, including the HarmonyOS and integrated machines, are expected to see substantial growth, with HarmonyOS projected to achieve over 1 billion yuan in revenue this year [10][14][28] Market Data and Key Metrics Changes - The demand for digital transformation services remains strong, particularly in government and enterprise sectors, with significant growth observed in state-owned enterprises [34][35] - The company has noted a rapid growth in sectors such as automotive electronics and telecommunications, with major clients like China Mobile and China Telecom showing over 50% growth [35][36] Company Strategy and Development Direction - The company is focusing on a "1+3" strategy, emphasizing deep collaboration with Huawei Cloud and exploring niche markets where it has competitive advantages [5][6] - The company aims to leverage the opportunities presented by the decoupling of China and the US, positioning itself to replace foreign software with domestic alternatives [4][5] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the digital transformation landscape, anticipating continued high growth rates in cloud-related services [8][18] - The company is preparing for a recovery in its core business, with expectations that Huawei's overall business will stabilize and grow in the coming years [33] Other Important Information - The company has initiated share buybacks and increased dividends to reward long-term investors [18] - The integrated machine business is still in its early stages, with a revenue target of approximately 120 million yuan for this year [14][28] Q&A Session Summary Question: What is the current business model for Huawei Cloud distribution? - The company operates on a net revenue basis, with a commission structure that includes rebates and discounts, contributing to approximately 10% of Huawei's public cloud sales [20][21] Question: What is the profit guidance excluding stock incentives? - Excluding stock incentives, profit growth is expected to outpace revenue growth, indicating an improvement in gross margins [23][25] Question: How does the company view the impact of H20 price cuts on its business? - The company believes that the demand for AI computing power will remain strong despite the price cuts, with expectations that domestic solutions will grow significantly [30] Question: What is the outlook for the traditional software outsourcing and digital transformation business? - The core business remains stable, with significant growth expected in new initiatives like HarmonyOS and integrated machines, which are projected to contribute positively to revenue [28][29]

Investment Rating - The report does not explicitly provide an investment rating for the industry discussed Core Insights - The Chinese economy is facing significant challenges, including the first negative total social financing net flow since 2005 and increased US tariffs on electric vehicles, yet the underlying fundamentals remain largely unchanged [2][3] - GDP growth is projected to remain on track for the government's target of "around 5%" for the full year, with a notable shift in property policy aimed at addressing inventory issues [2][3] - The property market is experiencing a severe downturn, with new home sales and housing starts significantly below their peaks, raising concerns about potential spillovers to the financial system [12][14] - Manufacturing investment continues to grow robustly despite signs of oversupply in many industrial sectors, with exports expected to contribute positively to GDP growth in the near term [22][24] Summary by Sections Economic Overview - Recent developments in China include negative total social financing net flows and increased tariffs on electric vehicles, but the overall economic fundamentals remain stable [2][3] - The Current Activity Indicator (CAI) tracks at 4.0% for April, indicating that the government's GDP growth target is achievable [3][5] Property Market Analysis - The property market remains weak, with new home prices declining and housing starts down 68% from their peak [12][14] - The government has initiated a relending program and reduced downpayment requirements to stimulate the market, but the measures taken so far are insufficient given the scale of the problem [14][21] - Concerns about potential defaults by major developers like Vanke highlight the fragility of the property sector and its implications for the broader financial system [12][21] Manufacturing Sector Insights - The manufacturing sector is experiencing rising output alongside falling prices, indicating an oversupply situation [22][24] - Despite the challenges, manufacturing investment continues to grow, with exports expected to improve net exports' contribution to GDP growth from -0.6 percentage points in 2023 to +0.4 percentage points in 2024 [22][24]

Summary of the Conference Call Company Overview - The conference call involved China Film, with the Chairman and General Manager Fu Ruoqing presenting the company's annual report and various strategic initiatives [1] Key Points and Arguments - The company has released a series of announcements, including the annual report, a proposal for efficiency improvement and return on investment, and a plan for enhancing technological innovation capabilities [1] Other Important Content - The communication was conducted through an online video platform, indicating a modern approach to stakeholder engagement [1]