Investment Rating - The report maintains a "Buy" rating for the company, with a slight increase in the target price to $26.5 USD / HK$41.3 [1][5][16] Core Insights - The sale of non-core assets from Shanghai Hutchison Pharmaceuticals is expected to generate significant cash flow, which will be directed towards the development of the Antibody-Drug Conjugate (ATTC) platform. The company announced a cash sale of 45% of Shanghai Hutchison Pharmaceuticals for $608 million, with a pre-tax gain of $477 million expected over three years. This transaction is anticipated to be completed by the end of Q1 2025, leaving the company with a 5% stake in Shanghai Hutchison Pharmaceuticals [5][6][8] - The ATTC platform has two preclinical candidates, with the first expected to enter clinical trials in the second half of 2025. The ATTC technology uses small molecule targeted drugs as payloads, which may overcome traditional chemotherapy resistance and allow for long-term administration [5][6][8] - The New Drug Application (NDA) for Savolitinib as a second-line treatment for EGFR mutation-positive non-small cell lung cancer (NSCLC) has been submitted and is under priority review, with approval expected within the year. The company anticipates positive outcomes from ongoing studies and collaborations with AstraZeneca for further submissions in the U.S. [5][6][8] Financial Summary - The company's projected revenues and net profits for the upcoming years are as follows: - Revenue: $426 million in 2022, projected to increase to $978 million by 2026, with a year-on-year growth rate of 20.1% [7][9] - Net Profit: A loss of $361 million in 2022, expected to turn into a profit of $275 million by 2025, and $116 million by 2026 [7][9] - The report indicates a slight increase in the 2025 estimated net profit to $270 million, primarily due to the one-time gain from the sale of Shanghai Hutchison Pharmaceuticals [5][6][8]

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of RMB 27.1, indicating a potential upside of 23.3% from the current price of RMB 22.0 [2][4][12]. Core Insights - The company is expected to experience strong growth in 2025, driven by multiple business segments including increased component value from new models of major clients, rapid expansion in Android customer base, and growth in non-smartphone sectors such as home appliances and automotive [7]. - The report highlights that the company is well-positioned to benefit from the AI wave in consumer electronics, reinforcing its status as a leading player in the sector [7]. - Financial projections indicate significant revenue growth, with expected revenues of RMB 89.8 billion in 2025, representing a 31% year-on-year increase [3][10]. Financial Summary - Revenue Forecast (2022-2026E): - 2022: RMB 46.7 billion - 2023: RMB 54.5 billion - 2024E: RMB 68.4 billion - 2025E: RMB 89.8 billion - 2026E: RMB 102.4 billion - Net Profit Forecast (2022-2026E): - 2022: RMB 2.4 billion - 2023: RMB 3.0 billion - 2024E: RMB 4.0 billion - 2025E: RMB 5.1 billion - 2026E: RMB 5.8 billion - Projected Gross Margin: - 2022: 19.2% - 2023: 16.6% - 2024E: 17.8% - 2025E: 16.9% - 2026E: 16.6% [3][10][12]. Valuation - The report employs a sum-of-the-parts valuation method, assigning different P/E ratios to various business segments, leading to a target price of RMB 27.1 based on a projected P/E of 26.5x for 2025 [12][13].

宏观经济 | 政策解读 大规模设备更新和消费品以旧换新 政策再次升级 核心观点：设备更新和消费品以旧换新政策再次升级，扩容政策支持 范围，这将有助于制造业投资和消费的持续改善。我们预计此轮设备 更新和消费品以旧换新的整体资金支持或高于去年的 3000 亿元，而 后或根据经济情况择机加码。我们相信其他政策支持近期亦会跟进 以稳增长和促通胀：在货币政策上，尽管降息空间短期或有所减小， 但我们认为央行或在农历春节前降低存款准备金率 25-50 个基点。在 央行今年年初连续两次提及"择机降准降息"的情况下，我们亦不能 排除本月再次同时降准降息的可能性。去年 12 月起房产销售数据尚 可，政策短期内重点或继续聚焦此前已预告政策的落实以及成效观 察。特朗普上任在即，如果关税战进展快于我们预期，那么国内政策 支持或亦会提早加码，尤其在支持出口企业方面。 1 月 8 日，国家发改委和财政部发布《关于 2025 年加力扩围实施大 规模设备更新和消费品以旧换新政策的通知》（简称"通知"），相关 政策得以再度升级。这与我们此前经济展望报告中的预期相一致。 扫码关注浦银国际研究 金晓雯，PhD，CFA 首席宏观分析师 xiaowen ...

Investment Rating - The report maintains a "Buy" rating for Tencent (700 HK) with a target price of HKD 500, implying a potential upside of +22% from the current price of HKD 409 4 [4][7] Core Views - The inclusion of Tencent in the US Department of Defense's 1260H list is seen as having limited fundamental impact on the company, as its core business is concentrated in China with low reliance on US technology and markets [7] - Short-term market sentiment may face pressure due to potential negative impacts on overseas cooperation and international business development, especially with rising geopolitical uncertainties [7] - Tencent is expected to actively address the situation, similar to its previous successful appeal against the WeChat ban in the US [7] - The company's leading position remains strong, with improving profitability, and the focus for 2025 will be on the progress of WeChat's e-commerce ecosystem as a new growth driver [7] Financial Analysis and Forecasts - Revenue is projected to grow from RMB 554 552 million in FY22 to RMB 758 304 million in FY26E, with a CAGR of 7 0% [3][8] - Adjusted net profit is expected to increase from RMB 115 649 million in FY22 to RMB 250 348 million in FY26E, with a CAGR of 17 0% [3][8] - The adjusted target P/E ratio is forecasted to decline from 20 1x in FY24E to 17 0x in FY26E [3][8] - Key profitability ratios such as gross margin, operating margin, and adjusted net margin are expected to improve steadily over the forecast period [8] Market Expectations and Scenarios - The report presents three scenarios for Tencent: - Base case target price: HKD 500 - Optimistic case target price: HKD 537 (20% probability) - Pessimistic case target price: HKD 320 (20% probability) [15][16] - The optimistic scenario assumes better-than-expected performance in gaming and advertising, while the pessimistic scenario assumes weaker gaming performance and video monetization [15][16] Industry Coverage - The report covers major internet companies in China and globally, including Alibaba, JD com, Pinduoduo, NetEase, Bilibili, Meituan, and Kuaishou, among others [18] - Most companies in the coverage universe have "Buy" ratings, reflecting the analyst's positive outlook on the internet sector [18]

Group 1 - The report highlights the strong resilience of the US economy, which has led to a significant inflow of funds into US stocks, indicating a "siphoning effect" from other markets [3][4][5] - From November 28 to December 25, 2024, US stocks saw a net inflow of $34.88 billion, while most other major stock markets experienced net outflows [4][5] - Developed markets attracted more funds compared to emerging markets, with a net inflow of $60.22 billion into developed markets during the same period, while emerging markets saw a net outflow of $1 billion [5] Group 2 - Foreign capital outflow from the Chinese market has slowed down, with a total of $3.56 billion net outflow recorded from November 28 to December 25, 2024, compared to a larger outflow of $9.74 billion in the previous comparable period [14][15] - Domestic capital saw a significant monthly net inflow of $5 billion into the Chinese stock market during the same period, although there was a net outflow of $340 million in the following week [15][21] - The report notes that foreign capital has continuously net flowed into the Hong Kong stock market for seven consecutive months, with a net inflow of $550 million from November 28 to December 25, 2024 [21][22] Group 3 - The report indicates that the Southbound capital flow into Hong Kong stocks has decreased, but the trading volume share has slightly increased, with Southbound capital accounting for 23.6% of the daily trading volume in December [25][29] - Defensive sectors such as financials, information technology, and telecommunications have seen significant net inflows, while the materials sector recorded a net outflow [32][34] - High-dividend stocks, particularly in the financial, telecommunications, and energy sectors, have attracted Southbound capital, with notable interest in leading companies like China Mobile and Industrial and Commercial Bank of China [34][35]

Macroeconomic Outlook - The Federal Reserve lowered interest rates by 25 basis points in December, but significantly revised down its rate cut expectations for next year[1] - The Summary of Economic Projections (SEP) raised economic growth forecasts for 2024 and 2025 to 2.5% and 2.1%, respectively, while lowering unemployment rate expectations to 4.2% and 4.3%[1] - Core PCE inflation expectations for 2024 and 2026 were raised by 0.2 percentage points, with the 2025 forecast at 2.5%, slightly above the 2.4% prediction[1] Interest Rate Projections - The Fed's forecast for rate cuts next year was halved to two cuts of 25 basis points each, with the median rate for 2025 adjusted up by 50 basis points to 3.9%[1] - The median rate for 2026 and 2027 was also raised to 3.4% and 3.1%, indicating a prolonged easing cycle until 2027[1] Economic Concerns - The Fed's optimism regarding the economy and labor market may be overly optimistic, with unemployment rising to 4.246% and expected to face upward pressure[1] - Economic growth is projected to slow from 2.6% in 2024 to 1.5% in 2025, primarily supported by consumer spending[1] - Risks include slow rate cuts potentially leading to recession and inflation risks from potential policy changes under the next presidential administration[1]

Investment Rating - The report gives an "Overweight" rating for the online music industry, with "Buy" ratings for Spotify (SPOT.US), Tencent Music (TME.US/1698.HK), and NetEase Cloud Music (9899.HK) [1][14][23]. Core Insights - The global online music industry is experiencing rapid growth, becoming a significant driver in the music market. The stable competitive landscape and increasing bargaining power of platforms provide profit enhancement opportunities for music streaming [11][12]. - The music streaming market grew by 10% year-on-year in 2023, with the Chinese online music market growing at an impressive rate of 33% [11][43]. - Music streaming now accounts for 67% of the overall recorded music industry revenue, highlighting its importance as a growth driver [11][35]. Summary by Sections Online Music Industry Overview - The online music industry has transitioned from physical sales to streaming, with streaming revenue reaching $19.3 billion in 2023, representing 67% of the total recorded music industry revenue [11][35]. - The Chinese online music market is the fifth largest globally, driven by increasing willingness to pay, improved copyright environments, and technological innovations [43]. Competitive Landscape - The competitive landscape is relatively stable, with major players like Spotify, YouTube, Apple, and Amazon holding over 85% of the market outside China. Tencent Music and NetEase Cloud Music dominate the Chinese market with over 90% market share [12][49]. - The high content copyright costs create a barrier to entry, ensuring a stable competitive environment in the future [12][49]. Future Growth Drivers - Key growth drivers include: 1. Increased penetration rates, with global music subscription penetration at only 12.5%, compared to over 50% in mature markets, indicating significant long-term growth potential [13][18]. 2. Subscription price increases, as music streaming platforms steadily raise prices, maintaining high user retention due to the cost-effectiveness of music as an entertainment option [13][18]. 3. Content expansion into new formats such as podcasts, audiobooks, and live streaming, which will contribute to new revenue streams [13][18]. Company-Specific Insights - **Spotify (SPOT.US)**: The global leader in music streaming with a market share of approximately 30%. The company is expanding into emerging markets and diversifying content offerings, receiving a "Buy" rating with a target price of $555 [20][23]. - **Tencent Music (TME.US/1698.HK)**: The largest online music platform in China, benefiting from a rich content library and integration with Tencent's ecosystem. It has a target price of $14.5 [21][23]. - **NetEase Cloud Music (9899.HK)**: Focused on young users and independent musicians, with a target price of 145 HKD. The company has significant growth potential as it matures its commercialization strategy [21][23].

Investment Rating - The report gives an "Overweight" rating for the lidar industry and initiates coverage on Hesai Technology (HSAI.US) and Suteng Juchuang (2498.HK), both receiving a "Buy" rating [2][12]. Core Insights - The lidar industry is positioned for growth as the automotive sector increasingly adopts intelligent driving technologies, with lidar serving as a critical sensor for vehicle perception [2][12]. - The report highlights that the global lidar solutions market is expected to exceed RMB 1 trillion by 2030, with a compound annual growth rate (CAGR) of 55% in lidar shipments from 2023 to 2029 [12][10]. - Chinese manufacturers are gaining a dominant position in the lidar market, capturing nearly 80% of global designated partnerships, which sets a solid foundation for future shipment volumes [12][10]. Summary by Sections Industry Overview - Lidar, or Light Detection and Ranging, is recognized as a key sensor technology for precise distance measurement and environmental perception in intelligent driving systems [13][14]. Development Path - The evolution of lidar technology has transitioned from research and surveying applications in the 1960s to commercial applications in various sectors, including automotive, industrial, and robotics [27][28]. Technical Evolution - The lidar industry features diverse technical routes, with the Time of Flight (ToF) method being the most mature and widely adopted for automotive applications, while Frequency Modulated Continuous Wave (FMCW) technology is still in the early stages of development [43][44]. Market Dynamics - The report indicates that the average price of lidar systems is decreasing rapidly due to increased production volumes, which is expected to enhance adoption rates among automotive manufacturers [12][10]. - The report anticipates that the introduction of cost-effective lidar solutions priced around USD 200 will further alleviate cost pressures for automakers and promote higher integration rates [12][10]. Investment Value - In the short to medium term, the report sees high visibility for lidar applications in vehicles, while the long-term potential in robotics and other sectors remains significant [12][10].

Investment Rating - The report initiates coverage on Duolingo (DUOL.US) with a "Buy" rating and a target price of $400, indicating a potential upside of 16% from the current price of $344.35 [1][3][4]. Core Insights - Duolingo is one of the largest language learning platforms globally, with a monthly active user (MAU) count of 113 million as of Q3 2024, representing a year-over-year growth of 36%. The company integrates game elements into its free content and monetizes through subscriptions, advertising, and the Duolingo English Test (DET) [1][2][27]. - The report highlights the significant market potential, with only 6% of the global language learning market penetrated, suggesting a substantial growth opportunity as the company aims to reach an MAU of 176 million by 2026, with a compound annual growth rate (CAGR) of 30% [1][40]. - Subscription services, particularly the Super Duolingo and Duolingo Max, are crucial for revenue, contributing approximately 80% of total income. The number of paid subscribers reached 8.6 million in Q3 2024, a 48% increase year-over-year, with expectations to exceed 15.6 million by 2026 [2][45][48]. Summary by Sections User Engagement and Growth - Duolingo's gamified approach significantly enhances user engagement, with features like leaderboards and reward systems that lower barriers to entry for new users. The platform's MAU has grown rapidly, with daily active users (DAU) reaching 37.2 million, a 54% increase year-over-year [1][35][40]. Commercialization Strategies - The company’s primary revenue source is paid subscriptions, which account for about 80% of total revenue. The introduction of family plans and the Duolingo Max service, which leverages AI capabilities, is expected to further drive growth in paid users [2][45][48]. Market Position and Competitive Landscape - Duolingo holds a leading position in the online language learning market, with a 60% share of total usage in 2023. The global online language learning app market is projected to grow significantly, with Duolingo's innovative marketing strategies aimed at attracting younger users [40][43][51]. Financial Projections - The report forecasts substantial revenue growth, with expected revenues of $742 million in FY24, increasing to $1.218 billion by FY26. The EBITDA is projected to grow at a CAGR of approximately 60% from FY23 to FY26 [3][67].

Economic Performance - In November, the year-on-year growth rate of retail sales of consumer goods dropped significantly from 4.8% in October to 3.0%, below the market expectation of 5.0%[1] - Fixed asset investment growth rate fell to 3.3% in November, down from 3.4% in October, also below the expected 3.5%[1] - The cumulative year-on-year decline in real estate investment expanded to -10.4% in November, while new construction area also saw a decline of -23.0%[1] Consumer Trends - Retail sales of automobiles increased by 2.9 percentage points to 6.6%, while home appliance sales dropped to 22.2% from 39.2% in October[1] - The retail sales growth of cosmetics saw a significant decline of 26.4%, while communication equipment retail sales fell by 22.1 percentage points to -7.7%[1] - Service retail maintained stability with a cumulative year-on-year growth rate of 6.4% in November, and restaurant retail sales increased by 0.8 percentage points to 4.0%[1] Policy Outlook - The central economic work conference emphasized the need for more proactive macro policies to stabilize the economy and promote inflation, with a focus on expanding domestic demand[6] - The expected economic growth target for 2025 is likely to be set around 5% to highlight the commitment to stable growth[6] - The government plans to increase the budget deficit ratio to 3.5%-4.0% and the issuance of special bonds to 4.2-4.5 trillion yuan in 2024[6]