Investment Rating - The report maintains a "Buy" rating for TSMC (2330.TT) and TSM (TSM.US) with target prices of NT$1,401.1 and US$256.3 respectively, indicating potential upside of 27% and 24% [1][13]. Core Insights - TSMC is expected to benefit significantly from the ongoing AI demand, which is projected to drive revenue growth in the coming years. The company anticipates a compound annual growth rate (CAGR) of 40% for AI-related revenue over the next five years, contributing to an overall revenue CAGR of 20% [6][9]. - The company has revised its earnings forecasts upward for 2025 and 2026, with a projected net profit growth of 33% in 2025 [1][11]. Financial Projections - Revenue projections for TSMC from 2023 to 2027 are as follows: - 2023: NT$2,161,736 million - 2024: NT$2,894,308 million (34% YoY growth) - 2025E: NT$3,713,586 million (28% YoY growth) - 2026E: NT$4,570,688 million (23% YoY growth) - 2027E: NT$5,509,213 million (21% YoY growth) [2][7]. - Gross margin is expected to remain robust, with projections of 58.3% in 2025 and maintaining above 53% in the long term [6][11]. Earnings and Valuation Metrics - The report forecasts the following earnings per share (EPS) for TSMC: - 2023: NT$32.8 - 2024: NT$45.2 - 2025E: NT$60.0 - 2026E: NT$72.5 - 2027E: NT$86.8 [2][11]. - The target price is based on an EV/EBITDA multiple of 14x under the base case scenario, which aligns with historical averages [13][14]. Recent Performance and Guidance - TSMC's Q4 2024 results showed a revenue increase of 39% YoY and a net profit increase of 57% YoY, driven by strong demand for 3nm and 5nm technology nodes [9][10]. - For Q1 2025, TSMC has provided guidance indicating a revenue growth of 41% YoY, despite a seasonal decline due to smartphone demand [6][10].

Investment Rating - Maintains a "Buy" rating with a target price of HKD 66 0, implying a potential upside of 23 8% from the current price of HKD 53 3 [1][4] Core Views - The company's management has raised the 2024 full-year performance guidance, expecting revenue growth of around 50% and net profit growth of around 40% [1] - The company's main brand, Kefumei, achieved a GMV growth of 78 1% in 2024, driven by strong performance during the "Double 11" shopping festival and new product launches [1] - The company has raised its 2024 performance guidance three times, reflecting strong confidence in achieving its targets [2] - The company is expected to maintain high growth in 2025, driven by the expansion of key products and improved brand strength of its two major brands, Kefumei and Kelijing [2] - The company's medical aesthetic products are expected to be approved as scheduled, with the injection recombinant collagen product for eye wrinkles expected to be approved in Q1 2025 [3] Financial Performance and Forecasts - Revenue for 2024E is expected to reach RMB 5,377 million, a 52 6% YoY increase, with net profit expected to reach RMB 2,044 million, a 40 8% YoY increase [9] - The company's gross margin is expected to remain stable at around 82 3% in 2024E, with an operating margin of 42 4% [10] - The company's ROE is expected to be 34 7% in 2024E, gradually declining to 32 4% by 2026E [9] - The company's PE ratio is expected to decrease from 24 6x in 2024E to 15 0x in 2026E, reflecting strong earnings growth [9] Product and Brand Performance - Kefumei's GMV grew by 78 1% in 2024, with a growth rate of over 80% during the "Double 11" period [1] - Kelijing's GMV grew by over 150% during the "Double 11" period, driven by core products such as the Pong Pong Essence and Collagen Series [1] - The new product, Focus Cream, launched in 2024, has contributed to Kefumei's growth, providing a new growth driver beyond the Collagen Stick [1] Market and Industry Context - The company's stock price has shown strong performance, with a 52-week range of HKD 28 5 to HKD 58 0, and a current market capitalization of HKD 54,804 million [4] - The company's daily average trading volume over the past three months was HKD 164 2 million, indicating strong market interest [4] - The company is part of the cosmetics industry, with peers such as Proya and Shanghai Jahwa also showing strong performance [15]

Investment Rating - The report maintains a "Buy" rating for Leap Motor (9863.HK) with a target price of HKD 40.6, indicating a potential upside of 26% from the current price of HKD 32.20 [3][5][8]. Core Insights - Leap Motor is expected to achieve its first positive net profit in Q4, becoming the second profitable new energy vehicle manufacturer among its peers. The company anticipates a significant increase in sales volume, targeting 500,000 units by 2025, supported by stable domestic subsidy policies [8]. - The report highlights a substantial improvement in gross margin, projecting it to reach around 13% in Q4 2024, driven by increased sales volume and effective cost management [8]. - The financial forecasts for Leap Motor show a revenue increase from RMB 12.4 billion in 2022 to RMB 69.2 billion by 2026, with a projected revenue growth rate of 295% in 2022 and 37% in 2026 [4][10]. Financial Summary - Revenue projections for Leap Motor are as follows: - 2022: RMB 12,385 million - 2023: RMB 16,747 million - 2024E: RMB 30,771 million - 2025E: RMB 50,581 million - 2026E: RMB 69,234 million - The expected gross margin is projected to improve from (15.4%) in 2022 to 15.9% in 2026, with net losses decreasing significantly over the forecast period [4][9]. - The report estimates that Leap Motor will achieve a net profit of RMB 2.85 billion by 2026, transitioning from a net loss of RMB 5.1 billion in 2022 [4][10]. Valuation - The valuation method used is the sum-of-the-parts approach, applying a price-to-sales ratio of 1.0x for both automotive sales and services, leading to a target price of HKD 40.6 [11]. - The current price-to-sales ratio for Leap Motor is noted to be 0.7x, suggesting potential for upward revaluation as profitability improves [8][11].

Investment Rating - The report suggests a positive outlook for U.S. AI companies and highlights potential benefits for Chinese companies involved in AI server power and power management due to new U.S. export regulations [5]. Core Insights - The U.S. government has introduced new export control regulations for AI chips and models to strengthen its leadership in the AI sector and accelerate the domestic production process in China [3][5]. - The new framework categorizes countries into three tiers, with varying levels of export restrictions on advanced computing chips [4][7]. - The first tier includes U.S. allies who can access advanced computing chips without restrictions, while the second tier faces total processing performance limits, and the third tier, which includes countries like China, faces a complete ban on advanced chip exports [4][7]. Summary by Sections Export Control Framework - The U.S. has established a 120-day public comment period for the new AI export control framework, which aims to regulate the global dissemination of advanced AI models and computing integrated circuits [3]. - Countries are classified into three categories: - Tier 1: U.S. allies with unrestricted access to advanced chips [4]. - Tier 2: Other countries facing total processing performance limits, with a cap of 790 million TPP (Total Processing Performance) over 2025-2027 [7]. - Tier 3: Countries under arms embargo, such as China, facing a complete ban on advanced chip exports [4][7]. Investment Recommendations - The report recommends focusing on U.S. AI chip companies like TSMC, NVIDIA, and AMD, which are expected to benefit from the new regulations [5]. - It also suggests monitoring Chinese companies that may benefit from the domestic AI production process, including Huahong Semiconductor, SMIC, and others involved in AI server power and management [5].

Inflation Data - The core CPI in the US for December decreased slightly by 0.08 percentage points to 0.23%, below the market expectation of 0.3%[1] - The overall CPI increased by 0.08 percentage points to 0.39%, in line with market expectations, primarily due to a significant rebound in energy prices[1] - Year-on-year, the overall CPI rose by 0.2 percentage points to 2.9%, while the core CPI fell by 0.1 percentage points to 3.2%[1] Employment Data - The non-farm payrolls for December increased by 256,000, exceeding market expectations of 165,000 and the previous value of 212,000[3] - The unemployment rate decreased from 4.231% in November to 4.086% in December[3] Market Outlook - The Federal Reserve is expected to pause interest rate cuts in January, with a significant reduction in the forecasted number of cuts for 2024[5] - Concerns regarding potential inflation from Trump's tariff policies are noted, but the impact on inflation in 2025 is expected to be limited[5] - The report suggests that the number of rate cuts in 2024 may be higher than the Fed's current prediction, estimating 3-4 cuts of 25 basis points each[5]

Investment Rating - The report maintains a "Buy" rating for the company's US and Hong Kong stocks, and upgrades the A-share rating to "Buy" [3][10]. Core Insights - The company has provided its first-ever guidance on profitability, expecting to achieve GAAP operating profit breakeven in 2025. This guidance has positively impacted market sentiment, leading to stock price increases across all markets [3][10]. - The target prices have been raised to USD 268 for US stocks, HKD 161 for Hong Kong stocks, and CNY 197 for A-shares, reflecting an expected upside of 45%, 40%, and 10% respectively [3][10][8]. Financial Performance and Projections - The company reported revenues of USD 1,416 million in 2022, with projections of USD 2,459 million in 2023, USD 3,696 million in 2024, USD 4,689 million in 2025, and USD 5,346 million in 2026, indicating a compound annual growth rate (CAGR) of 20.4%, 73.7%, 50.3%, 26.9%, and 14.0% respectively [11][15]. - The net loss attributable to shareholders is projected to decrease from USD 2,004 million in 2022 to a profit of USD 57 million in 2025 and USD 199 million in 2026 [11][15]. Market Position and Product Pipeline - The company holds a strong position in the CLL market, with its core product, Zebrutinib, capturing approximately 50% of the new patient market share [4]. - The company is advancing two next-generation hematologic cancer products, with significant clinical trial milestones expected in 2025 [5][6]. Research and Development Efficiency - The company demonstrates strong execution capabilities, with an average time of 8-9 months from GLP toxicology studies to first-in-human trials, which is 30% faster than industry standards [6]. - The clinical team is expected to grow from over 3,000 to 3,600 by the end of 2024, enhancing the company's research and development efficiency [6]. Valuation Metrics - The report indicates a price-to-sales (P/S) ratio of 13.9 in 2022, decreasing to 3.7 by 2026, reflecting improved revenue generation relative to market valuation [11][15]. - The projected operating margin is expected to improve significantly, with a breakeven point anticipated in 2025 [10].

Investment Rating - The report maintains a "Buy" rating for Huazhong Microelectronics (688396.CH) [3] Core Views - Huazhong Microelectronics is expected to experience significant growth in 2025 driven by several factors: 1) Rapid growth in downstream new energy vehicle demand, 2) Expansion into third-generation semiconductors, including SiC and GaN, 3) Release of capacity from two 12-inch production lines in Chongqing and Shenzhen [3][2] - The company is focusing on high-value-added businesses in automotive electronics, industrial control, and new energy sectors, while balancing organic growth with mergers and acquisitions [1][2] - The AI server power supply market is experiencing strong demand, with the power supply accounting for approximately 3% of the server's value, leading to an increase in efficiency and power density [2] Summary by Sections Company Strategy - Huazhong Microelectronics is expanding its production capacity in Chongqing (power devices) and Shenzhen (integrated circuits) to enhance its product offerings in automotive electronics, industrial control, and new energy [1] - The company plans to invest CNY 700 million in mask-related capital expenditures by 2025, with a planned capacity of 5,000 wafers per month for its mask project [1] Market Trends - The demand for AI server power supplies is expected to grow further due to the rising need for domestic computing power, benefiting Huazhong Microelectronics' high-performance semiconductor power devices [2] - The smart electric vehicle business is rapidly growing, with Huazhong Microelectronics providing comprehensive solutions across various automotive applications, which will be a key growth driver in 2025 [2]

Investment Rating - The report does not explicitly provide an investment rating for the companies discussed, but it implies a cautious outlook on the potential of the company Bruco compared to Pop Mart [4][46]. Core Insights - The Chinese潮玩 (trendy toy) industry has gained significant attention due to the rapid growth of Pop Mart and the upcoming IPO of Bruco, but not all toy companies fit into the潮玩 category, nor can they replicate Pop Mart's success [4][7]. - Pop Mart is characterized by its strong IP incubation capabilities, having developed 10 self-owned IPs with over 100 million in sales by the end of 2023, while Bruco relies heavily on licensed IPs, limiting its long-term growth potential [9][15]. - The report emphasizes the importance of product diversity and the ability to cater to different consumer preferences, noting that Pop Mart has successfully expanded its product range, whereas Bruco's focus on a single product category may restrict its growth [38][41]. Summary by Sections 1. Nature of潮玩 -潮玩 is defined as toys that integrate art and trendy elements, primarily designed by artists, providing emotional value to consumers. Pop Mart exemplifies this definition, while Bruco's products are more traditional and aimed at a younger audience [9][10][11]. 2. IP Incubation Capability - Pop Mart's success is attributed to its robust IP incubation capabilities, having a fully integrated IP operation model. In contrast, Bruco's reliance on licensed IPs raises concerns about its ability to develop self-owned IPs, with only one significant contributor to its revenue [15][20][25]. 3. International Expansion Potential - The report highlights that while Pop Mart has successfully expanded internationally, Bruco is still in the early stages of exploring overseas markets, lacking the necessary capabilities for significant growth abroad [27][36]. 4. Product and IP Diversity - Pop Mart has diversified its product offerings to meet various consumer needs, while Bruco's focus on a single product line (building block toys) limits its market potential. The heavy reliance on a few licensed IPs, particularly Ultraman, poses risks for Bruco's revenue stability [38][41][45].

Investment Rating - The report maintains a "Buy" rating for Anta Sports [1]. Core Views - Anta's 4Q24 performance exceeded market expectations, with significant improvement in Fila's sales, alleviating concerns about its growth slowdown. This is expected to stimulate a short-term rebound in stock price [1]. - The company's 2024 performance is largely determined, aligning with previous forecasts, and despite challenges in 2025, Anta is expected to achieve higher sales growth than peers through continuous store upgrades and product adjustments [1][2]. - The report highlights the potential for acquisitions in 2025, which could further enhance growth amid uncertain market demand [2]. Financial Performance Summary - Anta's 4Q24 total revenue increased by a high single-digit percentage year-on-year, with Fila's revenue also showing a significant recovery compared to 3Q24 [10]. - The forecast for 2024 anticipates a 12% year-on-year revenue growth, with Anta brand revenue expected to grow nearly 10% and Fila brand revenue projected to increase by 6% [10]. - The report predicts a core net profit of RMB 11.886 billion for 2024, reflecting a 16.1% year-on-year increase [12][15]. - The target price for Anta is set at HKD 93.0, indicating a potential upside of 23.5% from the current price of HKD 75.3 [4][5]. Brand Performance Insights - Fila's 4Q24 revenue growth was significantly better than the previous quarter, with a year-on-year increase in the high single digits [10]. - Descente and Kolon are expected to maintain high growth rates in 2025, contributing to overall group profitability [2]. - The report notes that Anta's online discount levels improved slightly, while offline discounts remained stable, indicating effective inventory management [10]. Market Position and Strategy - Anta is recognized as one of the best-performing domestic brands in the Chinese sportswear market, attributed to management's proactive store renovations and expansion into emerging e-commerce channels [2]. - The report emphasizes the importance of maintaining a stable inventory turnover ratio and discount levels to support profitability [10]. Financial Projections - Revenue projections for 2024 are set at RMB 69.627 billion, with a gross profit margin expected to remain stable at around 62.6% [12][21]. - The report outlines a gradual increase in net profit and earnings per share over the next few years, with a projected core net profit of RMB 14.240 billion in 2025 [12][15].

Core Insights - The report highlights the implementation of the "Two New" policies by the National Development and Reform Commission (NDRC) and the Ministry of Finance, which are expected to stimulate demand in the electric vehicle and smartphone sectors as part of a broader push for consumption upgrades [1][2] - The policies include expanded subsidies for the replacement of old vehicles and the introduction of trade-in programs for smartphones and other digital products, aiming to enhance consumer purchasing power and drive market growth [1][2] Electric Vehicle Industry - The subsidy policy for electric vehicles continues from the previous year, maintaining the same subsidy amounts while expanding the scope to include more vehicles eligible for trade-in [2][5] - The report indicates that the subsidy is particularly beneficial for price-sensitive consumers looking to purchase economical vehicles priced below 200,000 yuan, with companies like BYD and Leap Motor positioned to benefit significantly [2][5] - The maximum subsidy for electric vehicles is set at 15,000 yuan, while for fuel vehicles, it is 13,000 yuan, which is expected to accelerate the replacement of older models [2][5] Smartphone Industry - The new policy extends the trade-in program to smartphones, tablets, and smartwatches, providing a subsidy of 15% of the product's sales price, capped at 500 yuan per item [2][6] - This nationwide subsidy is anticipated to encourage upgrades from mid-range to higher-end smartphones, benefiting brands like Xiaomi and their supply chain partners such as BYD Electronics and Lens Technology [2][6] - The report notes that the policy aims to stimulate both demand for new smartphones and the replacement of older models, thus enhancing overall market activity [2][6] Policy Implementation and Impact - The report outlines a comprehensive timeline of policy announcements and implementations, indicating a coordinated effort between central and local governments to support the "Two New" initiatives [7][9] - Various local governments have also introduced their own measures to enhance the effectiveness of the national policies, further expanding the range of products eligible for subsidies [10][11] - The overall strategy is designed to not only boost immediate consumer spending but also to lay the groundwork for sustainable growth in the electric vehicle and technology sectors [7][9]