Investment Rating - The report initiates coverage with a "Buy" rating for Tencent Holdings, citing its leadership in the internet and gaming sectors, and its potential to benefit from the continued growth of the gaming industry [1][95] Core Views - Tencent is China's largest social platform company, with a massive user base that provides a solid foundation for its various businesses As of Q2 2024, QQ has 571 million monthly active users (MAUs), while WeChat has 1 371 billion MAUs [1] - Tencent is a leader in China's gaming industry, with a 48 2% market share in 2023 The company is expected to benefit from the growth of the mobile gaming industry, which is projected to grow at 4 65%, 3 91%, and 3 30% from 2024 to 2026 respectively [1] - Video accounts are a key growth driver for Tencent's advertising business In Q2 2024, the company's online advertising revenue grew 19% YoY to RMB 29 9 billion, driven by video accounts and long-form video content [1] - Tencent is one of the duopolies in China's payment industry, with WeChat Pay and Alipay accounting for over 94% of the market share in Q3 2023 The third-party personal payment market is expected to grow at 10 8%, 9 7%, and 8 9% from 2024 to 2026 respectively [1] Business Segments Social and Communication - QQ and WeChat are Tencent's core social tools As of Q2 2024, QQ has 571 million MAUs, while WeChat has 1 371 billion MAUs [1][51] - Video accounts are a strategic growth area for Tencent, with significant user engagement and advertising revenue growth In 2023, video account advertising revenue exceeded RMB 3 billion in Q2, and the annual GMV surpassed RMB 100 billion [55][56] Gaming - Tencent is the leader in China's gaming industry, with a 48 2% market share in 2023 The company has over 170 self-developed and licensed games, including popular titles like "Honor of Kings" and "PUBG Mobile" [1][65] - The mini-game market is growing rapidly, with 750 million active users in February 2024, accounting for 80 3% of the total traffic Tencent's mini-game revenue grew over 30% YoY in H1 2024 [1][65] Online Advertising - Tencent's online advertising revenue grew 22 65% YoY in H1 2024, driven by video accounts and long-form video content The company expects the online advertising business to grow at 19%, 21%, and 23% from 2024 to 2026 respectively [88][90] FinTech and Business Services - Tencent's FinTech and Business Services segment is benefiting from the growth of the third-party payment and cloud services markets The third-party personal payment market is expected to grow at 10 8%, 9 7%, and 8 9% from 2024 to 2026 respectively [76][77] - Tencent Cloud holds a 16% market share in China's cloud infrastructure services market in Q2 2024 The company is leveraging its AI capabilities, such as the Hunyuan large model, to attract more customers [81][82] Financial Performance and Valuation - Tencent's revenue grew 9 82% YoY in 2023 to RMB 609 015 billion, with a net profit of RMB 115 216 billion The company expects revenue to grow at 8 56%, 9 24%, and 10 13% from 2024 to 2026, with net profit growing at 47 86%, 12 22%, and 13 13% respectively [2][95] - The company's EPS is expected to be RMB 18 38, RMB 20 63, and RMB 23 34 for 2024, 2025, and 2026 respectively, with a PE ratio of 20 16x, 17 96x, and 15 88x based on the closing price of HKD 402 80 on November 27, 2024 [95] Industry Outlook - China's mobile gaming industry is expected to grow at 4 65%, 3 91%, and 3 30% from 2024 to 2026, driven by the recovery of the economy and the normalization of game license approvals [68] - The online advertising market is projected to grow at a CAGR of 11% from 2024 to 2029, with video accounts playing a significant role in driving Tencent's advertising revenue growth [73][74]

Investment Rating - The report maintains an "Overweight" rating for the computer industry [5] Core Insights - The smart driving industry is entering a rapid development phase, with the end-to-end approach expected to become the mainstream route [10][12] - The global and China autonomous driving market sizes are projected to grow from approximately $10 billion and $2 billion in 2022 to $1.75 trillion and $639 billion by 2030, with CAGRs of 79.75% and 85.62% respectively [27][28] Summary by Sections 1. Clear Trends in Automotive Intelligence and Rapid Development of Smart Driving - Smart driving enhances safety and efficiency, with the potential for rapid growth [21] - High-level autonomous driving is entering a rapid development phase, with significant market penetration expected by 2030 [32] - Policy support is increasing, guiding the industry towards high-quality development [47] 2. Transition to "End-to-End" Smart Driving and the Importance of Data - The importance of software in smart driving systems is continuously increasing [49] - The transition from modular to end-to-end architectures addresses limitations of traditional approaches [60] - The end-to-end approach requires high-quality and large-scale data, with Tesla inputting 10 million human driving videos for training [77] 3. Investment Recommendations - Focus on two main lines: smart driving solution providers and V2X participants, with specific companies recommended for investment [10][80]

Core Insights - The cumulative year-on-year decline in industrial enterprise profits continues to expand, with the growth rate of finished product inventory declining for three consecutive months, and asset growth also decreasing [5][6] - In October, the cumulative year-on-year profit decline for industrial enterprises was -4.3%, while the revenue growth was 1.9%. The profit for October alone showed a year-on-year decline of -10.0%, although this was an improvement from -27.1% in the previous month [5][6] - The Producer Price Index (PPI) has been in negative territory for 25 consecutive months, with a year-on-year decline of -2.9% in October [5][6] Industrial Performance - The growth rate of finished product inventory for industrial enterprises was 3.9% year-on-year for the first ten months, down from 4.6% previously, marking a shift from an upward trend that ended in July [5][6] - Industrial enterprise assets grew by 4.6% year-on-year, while liabilities grew by 4.5%, indicating a return to a downward trend after a temporary rebound [6] PMI Analysis - The manufacturing PMI for November was 50.3%, slightly up from 50.1% in October, indicating a slight improvement in manufacturing activity. The new orders and production indices also showed increases, while inventory and price indices remained below the critical threshold [6][7] - The new orders index for manufacturing PMI rose to 50.8%, while the new export orders index remained below the critical level at 48.1% [6][7] - The production index for manufacturing PMI increased to 52.4%, and the purchasing quantity index rose to 51.0%, indicating improved supply-side conditions [7] Investment Recommendations - The report suggests that the downward trend in finished product inventory growth has ended, and the continuous expansion of PPI decline indicates a potential for a rebound in the industrial inventory cycle due to ongoing counter-cyclical policies [8]

Industry Overview - The global wind power market is expected to grow from 116.6GW in 2023 to 182GW by 2028, with a CAGR of 9.31%. Onshore wind installations are projected to increase from 105.8GW to 145GW, while offshore wind installations are expected to surge from 10.8GW to 37GW, with a CAGR of 27.93% [16] - The Asia-Pacific region (excluding China) is a key growth area, with onshore wind installations expected to grow from 6.5GW in 2023 to 14.4GW by 2028, driven by India and other emerging markets [16] - Africa and the Middle East are also significant growth markets, with onshore wind installations projected to grow at a CAGR of 41.47% and 43.10%, respectively, from 2023 to 2028 [19] - In China, wind power installations reached 72.19GW for onshore and 7.18GW for offshore in 2023, with a CAGR of 30.04% and 32.94%, respectively, from 2018 to 2023 [27] Market Trends - Wind turbine manufacturers are increasingly focusing on larger turbines to reduce costs and improve efficiency. In 2023, the average capacity of newly installed wind turbines in China was 5.60MW, with offshore turbines averaging 9.60MW and onshore turbines averaging 5.37MW [36] - The wind turbine industry in China is highly concentrated, with the top five manufacturers (Goldwind, Envision, Windey, Mingyang, and Sany) accounting for 73.8% of the market share in 2023, up from 64.7% in 2020 [44] - Domestic wind turbine prices in China have stabilized, with onshore turbine prices (including towers) rising from an average of 1,556 yuan/kW in April 2024 to 1,700-1,900 yuan/kW by the end of 2024 [50] Export Opportunities - Chinese wind turbine manufacturers are expanding their presence in international markets, particularly in Asia, Africa, and Latin America. In 2023, China exported 3.67GW of wind turbines, a 60.2% increase year-on-year, with onshore turbines accounting for the majority of exports [4] - Goldwind, a leading Chinese wind turbine manufacturer, had 5.54GW of overseas orders as of September 2024, with significant projects in India and other emerging markets [4] - Sany Renewable Energy secured a major order of over 1GW in India in October 2024, marking a significant breakthrough in its overseas business [4] Key Companies - **Goldwind**: The company reported revenue of 35.84 billion yuan in Q1-Q3 2024, up 22.24% year-on-year, with a net profit of 1.79 billion yuan, up 42.15%. Goldwind's overseas revenue accounted for 23.66% of total revenue in H1 2024, with cumulative overseas installations reaching 8.05GW [77][88] - **Sany Renewable Energy**: The company reported revenue of 9.07 billion yuan in Q1-Q3 2024, up 21.06% year-on-year, but net profit declined by 33.55% due to delays in wind farm construction. Sany secured a 1.32GW order in India in October 2024, marking a significant step in its global expansion [90][95] - **Windey**: The company reported revenue of 13.93 billion yuan in Q1-Q3 2024, up 24.01% year-on-year, with a net profit of 267 million yuan, up 6.25%. Windey's order backlog reached 34.20GW as of June 2024, with 59.20% of orders for turbines with capacities of 6MW or higher [99][106] - **Mingyang Smart Energy**: The company reported revenue of 20.24 billion yuan in Q1-Q3 2024, down 4.14% year-on-year, with a net profit of 809 million yuan, down 34.58%. Mingyang's order backlog reached 45.36GW as of June 2024, with a 28.36% increase in new orders year-on-year [107][116] Investment Recommendations - The report recommends focusing on leading wind turbine manufacturers with stable profitability and strong export potential, such as Goldwind, Sany Renewable Energy, Windey, and Mingyang Smart Energy [5][116]

Investment Rating - The report gives a "Buy" rating for the company, with a target price of 14.53 yuan [5] Core Views - The company's performance in Q3 2024 is under short-term pressure, with revenue of 6.463 billion yuan, down 1.66% YoY, and net profit attributable to the parent company of 842 million yuan, down 18.41% YoY [2] - The cardiovascular business remains stable, with revenue of 4.24 billion yuan, up 3.54% YoY, while the anti-tumor and liver disease treatment businesses grew by 22.68% and 12.64% respectively [2] - The company's core products, such as Compound Danshen Dripping Pills, are expected to stabilize after the impact of centralized procurement policies in 2023 [2] - Huaren Sanniu's potential takeover is seen as a positive development, with expectations of enhanced management, marketing, and policy resources [2] Financial Performance - The company's gross margin, net profit margin, and non-GAAP net profit margin for the first three quarters of 2024 were 66.8%, 13.0%, and 15.2%, respectively, down 0.05, 2.68, and 0.84 percentage points YoY [2] - For Q3 2024, the gross margin, net profit margin, and non-GAAP net profit margin were 65.4%, 8.6%, and 11.8%, down 2.78, 6.32, and 4.8 percentage points YoY [2] - Revenue for 2024-2026 is forecasted to be 8.615 billion yuan, 8.938 billion yuan, and 9.537 billion yuan, with net profit attributable to the parent company of 1.023 billion yuan, 1.176 billion yuan, and 1.363 billion yuan, respectively [3] - The current PE ratios for 2024-2026 are estimated at 21.2X, 18.5X, and 15.9X [3] Business Segments - Cardiovascular business: Revenue of 4.24 billion yuan, up 3.54% YoY [2] - Anti-tumor business: Revenue of 166 million yuan, up 22.68% YoY [2] - Liver disease treatment: Revenue of 532 million yuan, up 12.64% YoY [2] - Cold and fever treatment: Revenue of 239 million yuan, down 36.42% YoY, mainly due to declining sales of Huoxiang Zhengqi Dripping Pills and Chuanxinlian Nei Zhi Dripping Pills [2] Valuation and Forecast - The company's revenue for 2024-2026 is expected to grow at a CAGR of 3.7%, with net profit attributable to the parent company growing at a CAGR of 15.9% [3] - The EPS for 2024-2026 is forecasted to be 0.69 yuan, 0.79 yuan, and 0.91 yuan, respectively [3] - The ROE for 2024-2026 is expected to be 8.0%, 8.8%, and 9.7%, respectively [4] Industry Outlook - The pharmaceutical industry, particularly the cardiovascular and anti-tumor segments, shows strong growth potential, supported by the company's core products and Huaren Sanniu's potential takeover [2][3]

Investment Rating - The report maintains an "Overweight" rating for the non-ferrous metals industry [7]. Core Viewpoints - The ongoing escalation of the Russia-Ukraine conflict has led to a rebound in gold prices, but expectations of a pause in interest rate cuts by the Federal Reserve may limit further increases in gold prices. The market anticipates a 44% chance of a pause in rate cuts in December, up from 17% the previous week. Additionally, a strong US dollar is constraining gold's upward momentum. However, the long-term outlook remains positive for gold as a hedge against inflation and currency depreciation [2][32]. - In the industrial metals sector, copper and aluminum inventories are at low levels, which supports prices. The demand for copper is showing marginal improvement due to policies promoting upgrades and replacements. The aluminum sector is facing challenges due to rising alumina prices, which have negatively impacted electrolytic aluminum profits [3][5]. - The rare earth market is expected to perform well in the fourth quarter due to seasonal demand, despite ongoing supply disruptions from Myanmar [5]. Summary by Sections 1. Weekly Sector Performance Review - The non-ferrous metals index experienced a slight decline of 0.31% week-on-week, ranking 5th among 31 sectors. Year-to-date, the sector has seen an overall increase of 9.94% [19]. 2. Price and Inventory Performance 2.1 Precious Metals - COMEX gold closed at $2718.20 per ounce, up 5.87% week-on-week. COMEX silver rose to $31.405 per ounce, an increase of 3.53%. The gold-silver ratio reached 86.55, up 2.27% [31][32]. 2.2 Industrial Metals - Copper prices were reported at $8972.5 per ton, with a slight increase of 0.04%. Aluminum prices fell to $2630 per ton, down 1.26%. Copper inventories showed a slight increase, while aluminum inventories decreased [3][37]. 2.3 Energy Metals - Lithium carbonate prices increased by 0.51%, reaching 79,100 yuan per ton, while hydroxide lithium prices rose by 1.05% to 67,900 yuan per ton [44]. 2.4 Minor Metals and New Materials - Prices for rare earth elements showed mixed results, with praseodymium-neodymium oxide down 2.38% and dysprosium oxide down 0.88%. Other minor metals also experienced varied price changes [4][56]. 3. Important News of the Week (2024.11.18-2024.11.24) - The European Parliament's Trade Committee Chairman indicated that the EU is close to reaching a tariff agreement with China regarding electric vehicles, reflecting ongoing adjustments in trade policies [70][72].

Investment Rating - The industry investment rating is "Increase" [4][5] Core Viewpoints - The Australian Aluminium Association advocates for the inclusion of bauxite, alumina, and aluminium in the "Critical Minerals List," which may enhance the strategic value of aluminium resources and raise investment entry barriers [4] - The updated Critical Minerals List includes 30 minerals, but bauxite, alumina, and aluminium were not included, indicating a potential shift in the strategic importance of these resources [4] - If bauxite, alumina, and aluminium are included in the Critical Minerals List, it could lead to a more fragile global aluminium supply chain, making aluminium prices more susceptible to fluctuations [4] - The inclusion could also boost industry valuations and allocation value, particularly benefiting domestic companies that have already established overseas aluminium resource layouts [5] Summary by Relevant Sections - **Industry Overview**: The report discusses the strategic importance of aluminium resources and the implications of Australia's potential policy changes regarding critical minerals [4] - **Market Dynamics**: The concentration of global bauxite production, with Australia and Guinea accounting for nearly 49% of total output, highlights the vulnerability of the aluminium supply chain [4] - **Investment Opportunities**: Companies such as China Aluminium, Tianshan Aluminium, China Hongqiao, and Nanshan Aluminium are identified as potential beneficiaries of the strategic shifts in aluminium resource management [5]

Investment Rating - The report maintains a rating of "Overweight" for the non-ferrous metals industry [4]. Core Insights - The non-ferrous metals industry saw a slight year-on-year increase in net profit attributable to shareholders of 0.05% in the first three quarters of 2024. The industry achieved a total operating revenue of CNY 25,671.14 billion, a year-on-year growth of 2.95%, while total profit decreased by 0.34% to CNY 1,714.10 billion [4][13]. - The gold sector performed well, with operating revenue reaching CNY 2,177.60 billion, up 24.98% year-on-year, and net profit attributable to shareholders increasing by 43.79% to CNY 92.37 billion [4][19]. - The copper sector reported a net profit growth of 27.81%, with operating revenue of CNY 12,063.74 billion, reflecting a 4.83% increase year-on-year [4][41]. - The aluminum sector also showed strong performance, with net profit increasing by 32.97% to CNY 294.51 billion, while operating revenue grew by 4.55% [4][64]. - The lead-zinc sector experienced a net profit increase of 25.86%, despite a slight decline in operating revenue [4][41]. - The tin sector saw significant growth, with companies like Tin Industry Co. and Xinyi Nonferrous achieving net profit increases of 17.2% and 139.4%, respectively [4]. Summary by Sections 1. Overview - The non-ferrous metals industry recorded a slight increase in net profit attributable to shareholders of 0.05% in the first three quarters of 2024, with total operating revenue of CNY 25,671.14 billion and total profit of CNY 1,714.10 billion [4][13]. 2. Precious Metals - The gold sector's performance improved significantly, with a year-on-year revenue increase of 24.98% and net profit growth of 43.79% [4][19]. 3. Industrial Metals - **Copper**: The copper sector achieved a net profit growth of 27.81% with operating revenue of CNY 12,063.74 billion [4][41]. - **Aluminum**: The aluminum sector reported a net profit increase of 32.97% and operating revenue growth of 4.55% [4][64]. - **Lead-Zinc**: The lead-zinc sector saw a net profit increase of 25.86% despite a decline in revenue [4][41]. - **Tin**: The tin sector experienced substantial growth, with notable increases in net profits for key companies [4]. 4. Q4 Outlook and Investment Recommendations - The report suggests focusing on non-ferrous metals with favorable supply-demand dynamics and potential price increases, highlighting specific companies in both precious and industrial metals sectors [4].

Group 1 - The core viewpoint indicates a slight decrease in the margin balance of margin trading in the A-share market, with overall trading activity declining. The PE valuation percentiles of major indices have generally decreased, with the CSI 500 leading the decline. The PE valuation percentiles of major styles have also fallen, particularly in the cyclical style, while the media sector has seen a significant increase in valuation percentiles [4][5][6]. Group 2 - The stock-bond yield spread has decreased, indicating a relatively high investment cost-effectiveness in equity investments. As of November 27, 2024, the dividend yield of the CSI 300 is 3.00%, while the 10-year government bond yield is 2.08%, resulting in a stock-bond yield of -0.92%, which is below the average since 2024 [14][17]. - The average margin balance for the week of November 21-27 was approximately 1.84 trillion yuan, a slight decrease of 0.11% compared to the previous week. The proportion of financing purchases in total A-share trading volume also decreased, averaging 9.65%, down 0.54 percentage points from the previous week [17][21]. - Trading activity has generally declined, with the CSI 300 experiencing the largest drop in trading volume, down 23.37% week-on-week. The turnover rates of major indices have also decreased, with the ChiNext index seeing the largest decline of 0.59 percentage points [21][22]. Group 3 - The PE valuation percentiles of major indices have generally declined, with the CSI 500 leading the drop at 4.7 percentage points. The Shanghai Composite Index and Shenzhen Component Index both fell by 2.8 percentage points [25][31]. - All major styles have seen a decline in PE valuation percentiles, with the cyclical style experiencing the largest drop of 3.4 percentage points. The growth style also saw a decrease of 2.4 percentage points [31][32]. - Most industry PE valuation percentiles have decreased, with the construction sector leading the decline at 6.8 percentage points. In contrast, the media sector saw an increase of 3.5 percentage points [41][43].

Macro Liquidity - The 2-year and 10-year government bond yields in China decreased, with the 10Y-2Y yield spread rising to 0.6914%[14] - The People's Bank of China injected a net of 187.1 billion yuan into the market, while the MLF net withdrawal in November was 1.45 trillion yuan[14] - The 10-year U.S. Treasury yield rose to 4.43%, and the U.S. dollar index strengthened to 106.68[20] Market Liquidity - A total of 52 new funds were established in November, with 29 being equity funds, marking the highest monthly issuance since June 2015 at approximately 76 billion yuan[5] - The number of newly established ETFs decreased year-on-year, with 134 ETFs created in 2024, compared to 139 in 2023, totaling 85.9 billion yuan in issuance[27] - Southbound capital saw a net inflow of approximately 332 billion yuan last week, with a total net inflow of 605.1 billion yuan year-to-date[6] Financing and Fundraising - The average financing purchase amount was 223.3 billion yuan, down 13.7% week-on-week, with a total margin balance of approximately 1.84 trillion yuan[42] - In November, there were 3 IPOs raising 1.25 billion yuan, while the total equity financing scale was about 15.8 billion yuan[48] - The net inflow in the electronics sector was the highest at approximately 71.8 billion yuan, followed by computers at 64.4 billion yuan[44] Risk Factors - Economic recovery may be weaker than expected, potentially impacting overall economic performance[50] - The pace of overseas interest rate cuts may not meet expectations, affecting global capital flows and investor risk appetite[50]