Investment Rating - The report reiterates a "Buy" rating for Hua Hong Semiconductor (1347 HK) with a target price of HKD 27 7, implying a potential upside of 19% [2][3] - For Hua Hong Company (688347 CH), the target price is adjusted to RMB 55 2, indicating a potential upside of 21% [2] Core Views - Hua Hong Semiconductor's fundamentals are expected to continue improving in Q3 and Q4, driven by a recovery in semiconductor demand [2][3] - The company's Q3 gross margin increased by 1 7 percentage points sequentially, and further improvement is anticipated in Q4 [3] - Revenue from logic and RF products surged by 54 4% YoY in Q3, while analog and power management revenue grew by 21 8% YoY [3] - The company expects significant growth in CMOS image sensors and power management products in 2024, with MCU products likely to recover [3] - Hua Hong's current EV/EBITDA is 4 8x, and its price-to-book ratio is 0 8x, indicating attractive valuations [3] Financial Performance and Forecasts - Revenue for 2024E is projected at USD 2,000 million, with a YoY decline of 13%, but a recovery to USD 2,396 million is expected in 2025E, representing a 20% YoY growth [1] - Gross margin is forecasted to improve from 10 7% in 2024E to 15 1% in 2025E and 16 6% in 2026E [1] - Net profit for 2024E is estimated at USD 98 million, with a significant recovery to USD 247 million in 2025E, reflecting a 151% YoY growth [1] - Basic EPS is projected to increase from USD 0 06 in 2024E to USD 0 14 in 2025E and USD 0 17 in 2026E [1] Valuation and Target Price - The target EV/EBITDA for 2025 is set at 8 0x, leading to a target price of HKD 27 7 for Hua Hong Semiconductor (1347 HK) and RMB 55 2 for Hua Hong Company (688347 CH) [3] - The potential upside for Hua Hong Semiconductor is 19%, while for Hua Hong Company, it is 21% [2][3] Operational Highlights - Q3 2024 revenue reached USD 526 million, exceeding guidance and showing a 10% sequential growth [3] - Q3 2024 gross margin was 12 2%, above the guidance range, with a sequential improvement of 1 7 percentage points [3] - Net profit in Q3 2024 was USD 44 8 million, marking a triple-digit YoY and sequential growth [3] - The company expects Q4 2024 revenue to grow by 2% sequentially, with gross margin potentially improving further [3] Industry Context - The semiconductor industry is experiencing a recovery in demand, particularly in logic, RF, and power management segments [3] - Hua Hong Semiconductor is well-positioned to benefit from this recovery, especially with the ramp-up of its second 12-inch wafer fab in Wuxi [3] Financial Ratios and Metrics - ROE is expected to improve from 1 2% in 2024E to 3 0% in 2025E and 3 4% in 2026E [6] - EBITDA margin is forecasted to increase from 29 6% in 2024E to 34 2% in 2025E and 35 7% in 2026E [6] - Free cash flow is projected to improve from USD -394 million in 2024E to USD -206 million in 2026E [6]

Investment Rating - The report maintains a "Buy" rating for AppLovin (APP US) with a target price of $213, representing a potential upside of 26% from the current price of $168 55 [4][6] Core Views - AppLovin s 3Q24 revenue reached $1 198 billion, up 39% YoY, surpassing market expectations by 5 9% Net profit was $434 million with a net margin of 36% Adjusted EBITDA was $722 million, exceeding market expectations by 12 4%, with an adjusted EBITDA margin of 60 2%, up 11 7pp YoY [2] - The company provided strong guidance for 4Q24, with revenue expected to be $1 24-1 26 billion, representing a YoY growth of 30-32%, and adjusted EBITDA guidance of $740-760 million, maintaining a 60% margin [2] - AppLovin increased its stock repurchase authorization by $2 billion, bringing the total remaining authorization to $2 3 billion [2] Software Platform Growth - AppLovin s Software Platform revenue in 3Q24 was $835 million, up 66% YoY and 17% QoQ, driven by continuous improvements in the AXON engine The adjusted EBITDA margin for this segment expanded to 78% due to operational leverage and one-time factors such as the renewal of the Google Cloud contract, PSU vesting, and favorable currency exchange rates [3] - The Apps segment revenue was $363 million, up 1% YoY, with an adjusted EBITDA margin of 19% The Apps segment is not a focus area for the company, and its performance is expected to remain stable [3] E-commerce Expansion - AppLovin has initiated pilot projects in the e-commerce sector, achieving promising results comparable to traditional customer acquisition channels The company is integrating resources to scale up its e-commerce business, with plans to fully launch next year This expansion is expected to significantly increase the company s total addressable market and could become a new growth driver [3] Financial Projections - The report raises 2024E/2025E revenue forecasts to $4 6 billion and $5 4 billion, respectively, with adjusted EBITDA margins of 57% and 61% The target price of $213 implies a 2025E EV/EBITDA multiple of 23 5x [4] - Key financial metrics for FY24E include revenue of $4 585 billion, operating profit of $1 803 billion, and adjusted EBITDA of $2 626 billion [5] Valuation and Market Performance - AppLovin s current market capitalization is $59 618 billion, with a 52-week trading range of $35 79-$176 99 The stock has shown strong performance relative to the S&P 500 index [6] - The report outlines optimistic, base, and pessimistic scenarios with target prices of $269, $213, and $160, respectively The optimistic scenario assumes better-than-expected revenue and profit growth, accelerated expansion into new areas, and margin expansion [13]

Group 1: Federal Reserve Meeting Insights - The Federal Reserve lowered interest rates by 25 basis points as expected during the November meeting[1] - The statement removed confidence in inflation reaching 2%, indicating a potential pause in rate cuts[1] - The labor market assessment was updated to reflect a general easing, suggesting a cautious approach to further rate cuts[1] Group 2: Economic Data and Projections - The unemployment rate rose from 4.051% in September to 4.145% in October, indicating a weakening labor market[2] - The Federal Reserve maintains a 25 basis point rate cut prediction for December, with a 30% chance of pausing[1] - Powell emphasized that the primary goals remain full employment and price stability despite recent economic data showing a 2.8% GDP growth rate in Q3[1] Group 3: Political and Policy Considerations - Trump's election is not expected to impact the December rate decision but may influence future decisions starting in 2025[2] - Potential inflationary pressures from Trump's fiscal, tariff, and immigration policies could affect the Fed's rate decisions in the coming years[3] - The Fed's independence is highlighted, with Powell stating that they will not speculate on fiscal policy impacts[1]

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年年 科技行业 | 行业点评 浦银国际 行业点评 科技行业 特朗普 2.0 对科技行业的影响 ——美大选结果有望加速国产替代， 扩张国内需求 北京时间 11 月 6 日下午，美国大选结果揭晓，特朗普当选总统， 共和党在参议院中获胜，在众议院选举中领先。这利好中国科技产 业加速国产化进程。 首先，从特朗普主张的加大美国贸易关税以及加大对中国贸易壁垒 角度看，这对于中国相关科技产业，尤其是智能手机类消费电子以 及新能源车等下游需求影响较小。中国企业，包括智能手机和新能 源车，在美国的销售体量几乎可以忽略不计。而且，中国这些 C 端 产品企业的海外战略不在于美国市场，而是在于欧洲、东南亚、中 东、非洲、南美等其他海外市场。因此，从基本面角度来看，我们 认为美增加关税对于中国智能手机、新能源车及其产业链短期的基 本面影响较小。 而美国本土企业，如苹果、特斯拉等，也在这两年保持对于海外供 应链的建设，以减少对于中国供应链依赖的风险。但是，美政策对 于这些美国科技龙头的影响有待持续观察。 在消费电子领域，我们维持此前的判断，对于比亚迪电子（285.HK）、 立讯精密（002475.CH）、蓝思科技（300433.CH）等 ...

Investment Rating - The report maintains a positive outlook on the Chinese internet industry, suggesting that the overall long-term trend is upward, with a focus on investment opportunities in the sector [1]. Core Insights - The direct impact of Trump's re-election on the Chinese internet industry is considered limited, although there are rising risks for companies operating internationally due to potential tariff increases and geopolitical tensions [1]. - The report highlights that the "信创" (Xinchuang) sector may see a valuation recovery as domestic software industry replacement accelerates [1]. - The report emphasizes the importance of monitoring U.S. government actions regarding TikTok as a key indicator of market sentiment towards Chinese internet investments [1]. Summary by Sections Industry Overview - The report notes that cross-border e-commerce companies, represented by Pinduoduo (Temu), may face higher tariff costs, which could hinder market expansion in the U.S. [1]. - Most major internet companies have overseas revenue contributions below 10%, indicating limited direct impact from geopolitical risks [1]. Market Outlook - The Chinese internet sector has experienced a strong rebound since September 23, 2024, and is expected to provide buying opportunities after natural corrections [1]. - Valuations remain at historical lows, with many leading internet companies projected to have a price-to-earnings (P/E) ratio around 10x for 2025 [1]. Investment Recommendations - The report suggests focusing on: 1. Undervalued e-commerce sectors benefiting from consumer recovery [1]. 2. Game industry leaders with stable competition and improving profitability [1]. 3. SaaS sectors that may benefit from domestic replacement and valuation recovery opportunities [1].

Investment Rating - The report maintains a positive outlook on the pharmaceutical industry, particularly on innovative drugs, high-value consumables, and medical devices [7]. Core Insights - The impact of Trump's election on the Chinese pharmaceutical industry is expected to be limited, with short-term effects on market sentiment for the CXO sector and innovative drug companies [3][4]. - The potential for the "Inflation Reduction Act" (IRA) pressure to ease may boost market sentiment for Chinese innovative drug sales overseas [4]. - The likelihood of comprehensive tariffs on Chinese products is considered limited, as the current export of Chinese pharmaceuticals to the U.S. is minimal, primarily consisting of raw materials [5][7]. Summary by Sections Impact of U.S. Election - Trump's election may lead to a higher probability of the standalone legislation of the "Biological Security Act," which could negatively affect market sentiment for CXO stocks in the short term [3]. - Concerns about the slowdown in overseas financing for biopharmaceuticals may arise due to a potential delay in the Federal Reserve's interest rate cuts [3]. Market Sentiment and Policy Changes - The easing of IRA pressures could positively influence the sentiment for Chinese pharmaceutical companies' overseas sales, as Trump's administration may favor market competition over price negotiations [4]. - If the pricing pressure on overseas pharmaceutical companies is alleviated, it may lead to increased cross-border business development transactions, benefiting Chinese innovative drug companies [4]. Tariff Implications - The report suggests that the impact of potential tariffs on Chinese pharmaceutical companies would be limited, as the majority of exports are raw materials, and many innovative companies are opting for licensing agreements to mitigate risks [5]. - For medical devices, the report indicates that the impact of tariffs would also be minimal, as companies have already begun to adapt to geopolitical risks [7]. Investment Recommendations - The report recommends focusing on innovative drugs, high-value consumables, and medical devices, highlighting specific companies such as HCM, 康方生物, 归创通桥, 春立医疗, and 迈瑞医疗 as potential investment opportunities [7].

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Investment Rating - The report maintains a "Buy" rating for Yum China (YUMC.US/9987.HK) with a target price of HKD 479.7 for the Hong Kong-listed shares and USD 61.5 for the US-listed shares [2][3] Core Views - Yum China's 3Q24 operating profit growth exceeded expectations due to cost reduction and efficiency improvements [2] - The company's flexible operational strategies and strong management capabilities are driving improved same-store sales and continued cost optimization [2] - Yum China plans to increase shareholder returns from USD 3 billion to USD 4.5 billion for 2024-2026, which is expected to boost market sentiment [2] Same-Store Sales Outlook - Same-store sales are expected to trend positively in 2025, with KFC likely to return to positive same-store sales growth and Pizza Hut narrowing its decline [2] - KFC's average check is expected to remain stable, while Pizza Hut's average check may face downward pressure due to the increasing proportion of WOW stores [2] Cost Optimization and Efficiency - Despite declining average checks, restaurant-level margins remained flat YoY in 3Q24, and operating margins expanded by 1.0ppt [2] - The company expects cost optimization efforts to continue, though the marginal benefits may weaken in 2025 [2] - Management aims to maintain the administrative expense ratio below 5% in the medium to long term [2] Franchise Expansion - Yum China plans to accelerate franchise development, with franchise stores expected to account for 40%-50% of KFC's net new openings and 20%-30% of Pizza Hut's net new openings [2] - The franchise model is seen as complementary to company-owned stores, helping to expand into new markets and regions [2] - Franchise stores are expected to achieve operating margins comparable to company-owned stores, with strict controls in place to ensure operational quality and food safety [2] Financial Performance and Forecasts - Revenue is projected to grow from USD 11,352 million in 2024E to USD 13,041 million in 2026E, with net income attributable to shareholders increasing from USD 919 million to USD 1,059 million over the same period [6] - The company's EV/EBITDA multiple is expected to decline from 9.9x in 2024E to 8.4x in 2026E, reflecting improved profitability and efficiency [6] Market Sentiment and Valuation - The report highlights a potential upside of 27.3% for Yum China's US-listed shares and 24.3% for its Hong Kong-listed shares based on the target prices [3][4] - The company's market capitalization stands at USD 8,386 million, with a 3-month average daily trading volume of USD 144.9 million [3]

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