Investment Rating - Maintains a "Buy" rating for Huazhu Group (1179 HK/HTHT US) with an upward revision of the target price to HKD 32.9 for HK shares and USD 41.1 for US shares [2][3] Core Views - Huazhu Group's 3Q24 revenue reached RMB 6.4 billion, a YoY increase of 2.4%, with domestic revenue growing 1% and overseas revenue growing 8.9% [2] - Net profit attributable to shareholders in 3Q24 was RMB 1.27 billion, a YoY decline of 4.8%, impacted by one-off factors [2] - The company opened 790 new stores in 3Q24, setting a new quarterly record, with 774 net new stores in China and 16 overseas [2] - Domestic RevPAR in 3Q24 was RMB 256, a YoY decline of 8.1%, primarily due to high base effects from the previous year and adverse weather conditions [2] - Overseas business restructuring is expected to drive long-term high-quality growth, with one-time restructuring costs of RMB 81 million in 3Q24 [2] Financial Performance and Forecasts - Revenue for 2024E is projected at RMB 23.6 billion, with a YoY growth of 7.8%, while net profit attributable to shareholders is expected to be RMB 3.525 billion, a YoY decline of 13.7% [4] - Gross margin for 2024E is forecasted at 35.7%, with operating margin at 19.7% [4] - The company's PE ratio for 2024E is estimated at 22.1x for US shares and 22.0x for HK shares [4] Operational Metrics - Domestic ADR in 3Q24 was RMB 301, a YoY decline of 7%, while OCC remained relatively stable at 84.9%, down 1ppt YoY [15] - Overseas ADR in 3Q24 was USD 117, a YoY increase of 2.5%, with OCC at 69.8%, up 0.8ppt YoY [15] Market Valuation and Target Price - The target price for Huazhu Group's HK shares is set at HKD 32.9, representing a potential upside of 26.1% from the current price of HKD 26.1 [3] - The target price for Huazhu Group's US shares is set at USD 41.1, representing a potential upside of 24.2% from the current price of USD 33.1 [3] Industry Context - The hotel industry's valuation multiple has increased, leading to an upward revision of Huazhu Group's target price based on a 14x 2025E EV/EBITDA, a 20% discount compared to the average of international hotel groups [2]

Global Economic Outlook - Global economic uncertainty increases significantly with Trump's potential re-election, particularly due to his tariff policies[2] - The US may impose tariffs on 25-50% of China's exports to the US in the second half of 2025, potentially impacting China's GDP by 0.3-0.6 percentage points[2] China's Economic Policy - China's fiscal deficit ratio is expected to rise to 3.5%-4.0% in 2025, with new special bond issuance increasing by 300-600 billion yuan[2] - Monetary policy will remain accommodative, with 20-30 basis points of rate cuts and 50-100 basis points of reserve requirement ratio (RRR) cuts expected in 2025[2] - At least 800 billion yuan of new special bonds will be allocated to support land acquisition and storage, with an initial scale of 300 billion yuan for central bank loans[2] Domestic Demand and Inflation - Domestic demand in China is expected to improve significantly in 2025, with investment and consumption contributing 0.9 percentage points more to GDP than in 2024[2] - Inflation is projected to rise, with CPI expected to increase to 0.8% in 2025, helping nominal GDP growth rise by 0.5 percentage points to 4.7%[21] US Economic Outlook - The US economy is expected to achieve a soft landing, with GDP growth slowing from 2.6% in 2024 to 1.5% in 2025[13] - The Federal Reserve is expected to cut rates six times by 25 basis points each, bringing the policy rate down to 3.0% by the end of 2025[13] Trade and Tariffs - Net exports are expected to contribute negatively to China's GDP in 2025, with a projected contribution of -0.2 percentage points, down from +1.2 percentage points in 2024[20] - If tariffs on all Chinese exports to the US rise to 60%, China's GDP growth could be reduced by 2.3 percentage points[69] Real Estate and Investment - Real estate investment in China is expected to decline by 5.0% in 2025, an improvement from the -10.5% decline in 2024[33] - Fixed asset investment is projected to grow by 4.4% in 2025, driven by improvements in infrastructure and manufacturing investment[30] Consumer and Retail - Retail sales growth in China is expected to accelerate to 5.0% in 2025, up from 3.6% in 2024, supported by policy incentives and labor market improvements[43] - Consumer confidence remains weak, with the consumer confidence index continuing to decline, reflecting ongoing challenges in boosting consumption[41] Export and Import Trends - China's export growth is expected to slow to 1.0% in 2025, down from 5.0% in 2024, due to global economic conditions and potential tariff impacts[51] - Import growth is projected to remain low, with a slight increase to 2.0% in 2025, driven by weak domestic demand and falling commodity prices[59] Risks and Uncertainties - Key risks include the potential for a slower-than-expected recovery in China's real estate sector and the impact of US tariff policies on trade and economic growth[3] - The US faces risks of re-inflation if Trump's policies lead to faster-than-expected tariff increases or immigration restrictions[3]

Investment Rating - The report initiates coverage on Kolun Botai (6990.HK) with a "Buy" rating and recommends it as a top pick in the ADC industry, setting a target price of HKD 230 [3][6][15]. Core Insights - Kolun Botai is recognized as a leader in the Chinese ADC industry, with significant international collaboration, particularly with Merck, which has resulted in multiple licensing agreements totaling over USD 10 billion [4][15]. - The company's core asset, SKB264 (TROP2 ADC), is positioned as a global best-in-class product with promising clinical data and a robust pipeline, including several NDA submissions expected in the near future [5][39][44]. - The anticipated commercialization of multiple products in the domestic market is set to begin, with approvals expected for SKB264 and other key products by late 2024 and early 2025 [6][39][45]. Financial Projections - Revenue projections for Kolun Botai are estimated at RMB 1.895 billion for 2024, RMB 1.675 billion for 2025, and RMB 2.877 billion for 2026, with net losses expected to be RMB 351 million, RMB 1.042 billion, and RMB 255 million for the respective years [6][11][13]. - The report utilizes a DCF valuation model with a WACC of 10.8% and a perpetual growth rate of 3%, leading to a target market capitalization of HKD 51.3 billion [6][11]. Product Pipeline - Kolun Botai has over 10 products in clinical stages, with four products, including SKB264 and A166, expected to receive market approval in the near term [39][44]. - The company is actively conducting multiple Phase III clinical trials for its key products, indicating a strong commitment to advancing its pipeline [44][45]. Shareholder Structure - The major shareholder, Kolun Pharmaceutical, holds a 67.4% stake in Kolun Botai, while Merck is the second-largest shareholder with a 6.0% stake [23][24]. Management Team - The management team includes experienced professionals from various pharmaceutical backgrounds, with a strong focus on strategic planning and operational decision-making [26][30][36].

Investment Rating - The report initiates coverage on WuXi AppTec (2268.HK) with a "Buy" rating and a target price of HKD 35, indicating a potential upside of 33% from the current price of HKD 26.4 [2][10]. Core Insights - The ADC market is experiencing rapid growth, with a projected compound annual growth rate (CAGR) of 30% from USD 7.9 billion in 2022 to USD 64.7 billion by 2030, significantly outpacing the overall biopharmaceutical market [10][11]. - WuXi AppTec is positioned as a leading global ADC outsourcing service provider, benefiting from a high outsourcing rate of approximately 70% in the ADC sector, compared to 34% in the biopharmaceutical sector [10][11]. - The company has a robust project pipeline with 167 projects as of June 30, 2024, including 91 preclinical projects and 12 in Phase 3, indicating strong revenue growth potential [10][71]. Summary by Sections Company Overview - WuXi AppTec was established in 2013 and has grown into a leading integrated research, development, and manufacturing platform for bioconjugates, ranking second globally in ADC outsourcing services by revenue [25][34]. Market Analysis - The ADC market is expected to grow from USD 7.9 billion in 2022 to USD 64.7 billion by 2030, with China’s market projected to reach RMB 66.2 billion, reflecting a CAGR of 72.8% [10][11]. - The global ADC outsourcing market is projected to expand from USD 1.5 billion in 2022 to USD 11 billion by 2030, with a CAGR of approximately 28% [10][15]. Financial Projections - Revenue forecasts for WuXi AppTec are RMB 3.4 billion in 2024, RMB 4.9 billion in 2025, and RMB 6.7 billion in 2026, with adjusted net profits expected to reach RMB 820 million, RMB 1.12 billion, and RMB 1.53 billion respectively [4][87]. - The company’s revenue CAGR from 2020 to 2023 was 180%, with a 68% year-over-year growth in the first half of 2024 [87][95]. Operational Efficiency - WuXi AppTec has reduced the average development timeline from 24-30 months to 13-15 months for projects moving from antibody DNA sequence to IND submission, significantly enhancing operational efficiency [35][66]. - The company operates three facilities within a 200 km radius in China, facilitating coordinated development and production, which further reduces costs and time [66][71]. Client Base and Growth Strategy - The client base has expanded to 419 as of June 30, 2024, with 13 of the top 20 global pharmaceutical companies contributing to 29% of revenue [80][84]. - The "Empower, Follow, and Win Molecules" strategy is expected to drive continuous revenue growth as projects advance through clinical phases [71][75].

Investment Rating - The report initiates coverage on Hengrui Medicine with a "Buy" rating and a target price of RMB 61 [1][2] Core Views - Hengrui Medicine's innovative drug revenue has become a strong engine for its performance growth, with a 22% YoY increase in 2023 and a 33% YoY increase in 1H24 [2] - The company's ADC pipeline is one of the most abundant in China, with 12 differentiated ADC molecules in clinical stages, and the first ADC product, SHR-A1811, is expected to be approved in 2025 [2] - Hengrui Medicine is accelerating its internationalization efforts, with increasing out-licensing deals and partnerships with global pharmaceutical companies such as Merck KGaA and GSK [2] - The company is expected to achieve revenue of RMB 27.2 billion, RMB 29.7 billion, and RMB 33.4 billion in 2024E, 2025E, and 2026E, respectively, with net profits of RMB 6.0 billion, RMB 6.5 billion, and RMB 7.7 billion [2] Financial Performance and Forecast - In 2023, Hengrui Medicine's revenue was RMB 22.8 billion, a 7.3% YoY increase, with net profit of RMB 4.3 billion, a 10.1% YoY increase [6] - For 2024E, the company is expected to achieve revenue of RMB 27.2 billion, a 19.1% YoY increase, and net profit of RMB 6.0 billion, a 40.2% YoY increase [6] - The company's innovative drug revenue accounted for 46% of total revenue in 1H24, up from 38% in 2022 [2][19] Pipeline and R&D - Hengrui Medicine has 17 innovative drugs approved in China, covering oncology, hematology, anesthesia, and chronic diseases [22] - The company's ADC pipeline includes 12 differentiated molecules, with 4 in Phase 3 clinical trials, and the first ADC product, SHR-A1811, is expected to be approved in 2025 [2] - Key late-stage assets include SHR-A1811 (HER2 ADC), SHR-A1921 (TROP2 ADC), SHR-A1904 (Claudin 18.2 ADC), and SHR-1701 (PD-L1/TGF-β bispecific antibody) [37] Internationalization - Hengrui Medicine has accelerated its out-licensing efforts since 2023, with deals including HRS-1167 and SHR-A1904 to Merck KGaA and TSLP to OneBio, which was later acquired by GSK [2] - The company is exploring new models for internationalization, such as forming NewCos for GLP-1 drugs with Hercules, allowing it to retain influence and benefit from potential valuation gains [2] - The appointment of Jens Bitsche-Norhave, with over 20 years of BD experience in multinational pharmaceutical companies, is expected to further accelerate the company's internationalization efforts [2]

Investment Rating - The report gives an "Overweight" rating for the antibody-drug conjugate (ADC) industry in China, with specific "Buy" ratings for companies such as Kolon Biotech, Hengrui Medicine, and WuXi AppTec [1][16][22]. Core Insights - The ADC market is expected to grow rapidly, with the global market projected to increase from $7.9 billion in 2022 to $64.7 billion by 2030, reflecting a compound annual growth rate (CAGR) of 30% [13][50]. - China has become a key player in the ADC sector, with domestic ADC drugs accounting for approximately 40% of the global pipeline, and the market is anticipated to reach 66.2 billion RMB by 2030, growing from 800 million RMB in 2022, corresponding to a CAGR of 72.8% [14][15][51]. Summary by Sections ADC Industry: China's Strength and Potential - ADCs combine the targeting ability of antibodies with the cytotoxic effects of drugs, showing significant efficacy in cancer treatment [21]. - The global ADC market has seen a substantial increase, with 15 ADC drugs approved, and the market is expected to grow significantly in the coming years [50][54]. Market Size and Current Status - The ADC market size in China is projected to grow explosively, with expectations of reaching 66.2 billion RMB by 2030 [15][51]. - The report highlights that the ADC market's growth is driven by the increasing number of domestic candidates entering late-stage trials and the approval process [15][21]. Future Development Trends and Outlook - The report identifies three types of players likely to benefit from the ADC wave: leading biotech firms with strong ADC technology platforms, innovative large pharmaceutical companies with robust R&D capabilities, and global leading ADC outsourcing service providers [22]. - The report emphasizes the potential for ADCs to replace a portion of the chemotherapy market, which is valued at approximately 140 billion RMB [51]. Investment Recommendations - Kolon Biotech (6990.HK) is highlighted as a top pick in the ADC sector, with a target price of 230 HKD, representing a potential upside of 34% [16][18]. - Hengrui Medicine (600276.CH) is noted for its strong pipeline and innovative capabilities, with a target price of 61 RMB, indicating a potential upside of 21% [16][18]. - WuXi AppTec (2268.HK) is recognized for its leading position in ADC outsourcing services, with a target price of 35 HKD, suggesting a potential upside of 33% [16][18].

Global Economic Outlook - Global economic uncertainty increases significantly with Trump's potential re-election, particularly due to his tariff policies[2] - The US may impose tariffs on 1/4 to 1/2 of China's exports to the US, potentially impacting China's GDP by 0.3-0.6 percentage points[2] China's Economic Policy - China's fiscal deficit ratio is expected to rise to 3.5%-4.0% in 2025, with new special bond issuance increasing by 300-600 billion yuan[2] - Monetary policy will remain accommodative, with 20-30 basis points of rate cuts and 50-100 basis points of reserve requirement ratio cuts expected in 2025[2] - Real estate policies will continue to be upgraded, with at least 800 billion yuan allocated for land acquisition and storage support[2] Domestic Demand and Inflation - China's domestic demand is expected to improve significantly in 2025, with investment and consumption contributing 0.9 percentage points more to GDP than in 2024[2] - Inflation is expected to rise moderately, with CPI inflation projected to increase to 0.8% in 2025, helping nominal GDP growth rise by 0.5 percentage points[21] US Economic Outlook - The US economy is expected to achieve a soft landing, with GDP growth slowing from 2.6% in 2024 to 1.5% in 2025[13] - The Federal Reserve is expected to cut rates six times by 25 basis points each, bringing the policy rate down to 3.0% by the end of 2025[13] Trade and Tariffs - China's export growth is expected to slow to 1.0% in 2025 due to potential tariff wars and a global economic slowdown[51] - Net exports are projected to contribute negatively to GDP, with a shift from +1.2 percentage points in 2024 to -0.2 percentage points in 2025[20] Real Estate and Investment - Real estate investment is expected to improve, with the decline narrowing to -5.0% in 2025 from -10.5% in 2024[33] - Infrastructure investment is projected to rise to 5.0% in 2025, supported by government policies and debt resolution measures[31] Consumer and Retail - Retail sales growth is expected to accelerate to 5.0% in 2025, driven by policy support and improvements in the labor market[43] - Consumer confidence remains weak, with urban disposable income growth continuing to decline, potentially impacting consumption[41] Inflation and Commodity Prices - Inflation recovery is slower than expected, with PPI remaining negative due to strong industrial production and falling oil prices[36] - Commodity prices, including crude oil and iron ore, are expected to continue declining in 2025, while natural gas prices may rebound[67] Risk Factors - Risks include potential delays in policy implementation, slower-than-expected inflation recovery, and uncertainties surrounding US-China tariff wars[3] - The US faces risks of economic recession if rate cuts are too slow, or reflation if rate cuts are too fast under Trump's policies[3]

Investment Rating - The report maintains a "Buy" rating for Pinduoduo (PDD.US) with a target price adjusted to $129, reflecting a potential upside of 24% from the current price of $104.09 [4][6][24]. Core Insights - Despite rising risks, the opportunities for Pinduoduo are considered to outweigh the risks. The company reported Q3 2024 revenue of 99.4 billion RMB, which was 3.4% below market expectations, but showed a year-on-year growth of 44%. Adjusted net profit was 27.5 billion RMB, a 61% increase year-on-year, yet also fell short of market expectations by 6% [4][5][6]. - Revenue growth has slowed down significantly, with overall revenue growth dropping from 86% in Q2 2024 to 44% in Q3 2024. Advertising revenue grew by 24% year-on-year, while transaction service revenue saw a 72% increase year-on-year, primarily due to supportive policies for quality merchants [5][6]. - The report indicates that the company's net profit margin decreased to 27.6% in Q3 2024 from 35.3% in Q2 2024, attributed to various support measures that have yet to show their full impact [5][6]. Financial Summary - For FY24E, the projected revenue is 404.04 billion RMB, with an adjusted net profit forecast of 120.81 billion RMB. The adjusted net profit margin is expected to be 27.4% [7][12]. - The company’s financial metrics indicate a projected PE ratio of 11.0x for FY24E, decreasing to 10.0x for FY25E and 8.9x for FY26E, suggesting a relatively attractive valuation compared to peers [7][12]. - The report highlights that Pinduoduo's stock price currently reflects the potential risks, including ongoing competitive pressures and macroeconomic uncertainties, but still presents an attractive investment opportunity based on valuation metrics [6][12].

Investment Rating - The report maintains a "Buy" rating for the company [5][20]. Core Views - The company has shown impressive growth during the "Double 11" shopping festival, with its two brands, Kefu Mei and Keli Jin, achieving significant year-on-year GMV growth of over 80% and 150% respectively [3][4]. - The target price has been raised to HKD 62.0, reflecting a potential upside of 26.3% from the current price of HKD 49.1 [5][7]. Financial Performance Summary - The company's revenue is projected to grow from RMB 3,524 million in 2023 to RMB 5,098 million in 2024, representing a year-on-year increase of 44.7% [10]. - The net profit attributable to shareholders is expected to rise from RMB 1,452 million in 2023 to RMB 1,940 million in 2024, indicating a growth of 33.6% [10]. - The report forecasts a consistent increase in revenue and net profit over the next few years, with revenue expected to reach RMB 9,025 million and net profit RMB 3,322 million by 2026 [10]. Market Performance - The company has maintained strong sales performance across various platforms during major promotional events, with Kefu Mei and Keli Jin ranking highly in multiple categories on platforms like Tmall and Douyin [4][18]. - The report highlights that Kefu Mei's collagen sticks and new product launches have contributed significantly to revenue growth, with Keli Jin also showing strong performance [5][18]. Valuation Metrics - The report provides a projected PE ratio decreasing from 30.9 in 2023 to 14.2 by 2026, indicating improving valuation as earnings grow [10]. - The return on equity (ROE) is expected to decline slightly from 40.3% in 2023 to 32.0% in 2026, reflecting a strong but stabilizing profitability [10].

Investment Rating - The report maintains a "Buy" rating for Kuaishou Technology with a target price adjusted to HKD 55, indicating a potential upside of 19% from the current price of HKD 46.4 [2][5][21]. Core Insights - Kuaishou Technology's Q3 2024 revenue reached RMB 31.1 billion, representing a year-on-year growth of 11.4%, while adjusted net profit was RMB 3.95 billion, up 24% year-on-year, aligning with market expectations [1]. - The company's daily active users (DAU) grew to 408 million, a 5.4% increase year-on-year, and monthly active users (MAU) reached 714 million, up 4.3% year-on-year, indicating stable overall traffic growth [1]. - Advertising revenue for Q3 2024 was RMB 17.6 billion, a 20% year-on-year increase, primarily driven by external circulation advertising, particularly in media, e-commerce, and local services [1][2]. - E-commerce gross merchandise volume (GMV) was RMB 334.2 billion, growing 15.1% year-on-year, supported by a 12.2% increase in active buyers [2]. Summary by Sections Financial Performance - Q3 2024 revenue was RMB 31.1 billion, with a year-on-year growth of 11.4% [1]. - Adjusted net profit for Q3 2024 was RMB 3.95 billion, reflecting a 24% increase year-on-year [1]. - Q3 2024 advertising revenue was RMB 17.6 billion, up 20% year-on-year, with external circulation advertising as the main growth driver [1][2]. User Metrics - DAU reached 408 million, a 5.4% increase year-on-year [1]. - MAU was 714 million, growing 4.3% year-on-year [1]. - Daily average usage time was 132 minutes, with total traffic increasing by 7.3% year-on-year [1]. E-commerce Insights - E-commerce GMV for Q3 2024 was RMB 334.2 billion, a 15.1% year-on-year increase [2]. - The number of active buyers increased by 12.2% to 133 million [2]. - The gross margin for Q3 2024 was 54.3%, with a year-on-year increase of 1.2 percentage points [2].