Investment Rating - The report maintains a "Buy" rating for the Hong Kong stock of the company and adjusts the target price to HKD 9.2, indicating a potential upside of 23% from the current price of HKD 7.5 [2][4][12] - The A-share target price is raised to RMB 14.5, but the rating is downgraded to "Hold" due to the stock being in a reasonable valuation range [2][4][6] Core Insights - The company has raised its full-year sales guidance for the drug Orelabrutinib to a growth rate of 45% year-on-year, driven by strong sales performance and new indications being added to insurance coverage [3][4] - In Q3 2024, the company reported a significant narrowing of net losses to RMB 13.57 million, a decrease of 87.5% year-on-year, attributed to better-than-expected R&D expenses and favorable foreign exchange gains [2][3] - The company achieved revenue of RMB 278 million in Q3 2024, representing a 74% year-on-year increase, with Orelabrutinib sales contributing RMB 276 million, up 75.5% year-on-year [2][3] Financial Performance Summary - For the first nine months of 2024, total revenue reached RMB 698 million, a 29.8% increase year-on-year, with Orelabrutinib product revenue at RMB 693 million, up 45% year-on-year [2][3] - The gross margin improved to 86% compared to 81.2% in the same period last year, while the net loss attributable to shareholders for the nine months was RMB 275 million, down 53.7% year-on-year [2][3] - The company forecasts total revenue for 2024 to be RMB 989 million, with a projected growth rate of 34% year-on-year [7][10] Clinical Development and Pipeline - The company is advancing two TYK2 inhibitors for autoimmune indications, with clinical trials for ICP-332 and ICP-488 progressing as planned [4][6] - The management expects Orelabrutinib's overseas potential for progressive multifocal leukoencephalopathy (PML) indications to reach approximately USD 3 billion in sales [3][4] - Clinical trials for the ITP indication are expected to complete by 2025, with ongoing discussions with the FDA for other indications [3][4]

Investment Rating - The report maintains a "Buy" rating for Leap Motor (9863.HK) and raises the target price to HKD 43.2, indicating a potential upside of 27% [1][5]. Core Insights - Leap Motor's Q3 automotive sales saw significant growth, with a notable improvement in gross margin. The company anticipates reaching a sales target of 500,000 new energy vehicles next year, driven by new models and overseas sales growth [1][2]. - The current price-to-sales ratio for Leap Motor is 0.9x, which is considered attractive compared to other comparable new energy vehicle manufacturers [1][3]. Summary by Sections Financial Performance - In Q3, Leap Motor achieved revenue of RMB 9.86 billion, a year-on-year increase of 74% and a quarter-on-quarter increase of 84%. The gross margin for Q3 was 8.1%, up 6.9 percentage points year-on-year and 5.3 percentage points quarter-on-quarter [2][8]. - The company expects continued improvement in gross margin in Q4, potentially exceeding the annual target of 5% [2][3]. Sales and Production Outlook - Leap Motor's sales target for next year is set at 500,000 units, with a gross margin target of 10%. The average selling price of vehicles is expected to improve due to increased sales of the C16 model [3][9]. - The company plans to launch three new B-series models next year, with the B10 expected to start deliveries in April [3][4]. Valuation - The valuation is based on a sum-of-the-parts approach, applying a price-to-sales ratio of 0.9x for automotive sales and 2.0x for services and other income, leading to a target price of HKD 43.2 [3][10]. - The report highlights that Leap Motor's historical average price-to-sales ratio since its listing is 0.9x, indicating that the current valuation is in line with historical performance [11].

Investment Rating - The report maintains a "Buy" rating for Unity (U.US) with a target price raised to $25, indicating a potential upside of 29% from the current price of $22.21 [4][7][18]. Core Insights - Unity's Q3 2024 revenue reached $447 million, exceeding market expectations of $410 million. The strategic revenue segment was $429 million, showing a 2% year-over-year decline. Adjusted EBITDA was $92 million, also above prior guidance. The company has raised its Q4 guidance, expecting strategic revenue between $422 million and $427 million, corresponding to a 0%-1% year-over-year growth [2][4]. - Subscription revenue continues to show double-digit growth, with Q3 2024 Create Solutions revenue at $132 million, a 5% year-over-year increase. The company has shifted back to a seat-based subscription model, which is expected to enhance revenue predictability and developer adoption [3][4]. - Unity's advertising segment is making positive strides, with Q3 2024 Grow Solutions revenue at $298 million, a 5% year-over-year decline. The company is investing in a new data platform to improve user acquisition and monetization performance [4]. Financial Summary - For FY 2024E, Unity's revenue is projected at $1.787 billion, with adjusted EBITDA margin expected to be 21%. For FY 2025E, revenue is forecasted at $1.805 billion, with an adjusted EBITDA margin of 23% [6][10]. - The company reported a total revenue of $1.391 billion in FY 2022, which increased to $2.187 billion in FY 2023. However, a decline is expected in FY 2024E, followed by a slight recovery in FY 2025E and FY 2026E [10][11].

Investment Rating - The report maintains a "Buy" rating for the company, SMIC (中芯国际), and raises the target price for its Hong Kong shares to HKD 32.6, indicating a potential upside of 15%. The target price for its A-shares is raised to RMB 117.0, also reflecting a potential upside of 15% [6][7]. Core Insights - SMIC is positioned in an upward trend within the semiconductor sector, with third-quarter revenue reaching a record high of USD 2.17 billion, representing a year-on-year growth of 34% and a quarter-on-quarter increase of 14%. The gross margin significantly exceeded market expectations, reaching 20.5% in Q3, with expectations for stability in Q4 [6][7][13]. - The company is expected to benefit from the localization of semiconductor demand in China and indirectly from the growth in the semiconductor industry driven by AI applications. As production capacity is released, the company's fundamentals are anticipated to grow steadily [6][7]. Financial Summary - **Revenue Forecast**: The company’s revenue is projected to decline from USD 7.27 billion in 2022 to USD 6.32 billion in 2023, followed by a recovery to USD 8.02 billion in 2024, USD 9.72 billion in 2025, and USD 10.41 billion in 2026, with respective year-on-year growth rates of 34%, (13%), 27%, 21%, and 7% [5][11]. - **Gross Margin**: The gross margin is expected to decrease from 38.0% in 2022 to 19.3% in 2023, before recovering to 17.1% in 2024, 20.2% in 2025, and 28.0% in 2026 [5][11]. - **Net Profit**: Net profit is forecasted to drop from USD 1.82 billion in 2022 to USD 903 million in 2023, then rebound to USD 583 million in 2024, USD 923 million in 2025, and USD 1.81 billion in 2026, with growth rates of 7%, (50%), (35%), 58%, and 96% respectively [5][11]. - **EBITDA Valuation**: The report assigns an EV/EBITDA multiple of 12.8x for SMIC, indicating potential for upward valuation compared to historical averages [7][16]. Performance Metrics - **Q3 2024 Performance**: In Q3 2024, SMIC reported revenue of USD 2.17 billion, a 34% increase year-on-year, with a gross profit of USD 444 million, reflecting a 38% increase from the previous year. The net profit for the quarter was USD 149 million, up 58% year-on-year [13][14]. - **Q4 2024 Guidance**: The company expects Q4 revenue to grow by 1% quarter-on-quarter and 31% year-on-year, with a gross margin guidance of 19%, slightly above market expectations [7][14]. Market Valuation - The current market valuation for SMIC shows an EV/EBITDA of 14.7x, with a price-to-book ratio of 1.1x for Hong Kong shares and 4.2x for A-shares, suggesting room for valuation improvement compared to historical averages [7][16].

Core Viewpoints - A new round of fiscal stimulus has been introduced, focusing on resolving local government debt, which is expected to benefit debt resolution concept stocks [2][3] - The fiscal stimulus plan includes a "6+4+2" trillion yuan local government debt resolution scheme, increasing the local debt limit by 6 trillion yuan for replacing existing hidden debts, with an annual allocation of 2 trillion yuan from 2024 to 2026 [3] Market Focus - The short-term market is anticipated to focus on structural trends, with attention on high-quality Hong Kong high-dividend stocks and blue-chip stocks with significant buybacks [2][4] - As policies take effect, there is an expectation of improved corporate earnings, leading to a potential shift in market focus from policy to fundamentals [4] Investment Opportunities - Short-term trading opportunities may arise in sectors likely to benefit from local government debt resolution, including: 1. Asset Management Companies (AMCs) that have experience in debt management and are expected to see improved fundamentals due to policy support [5] 2. Urban Investment Platforms, which will focus on resolving debts through asset management [5] 3. Public-Private Partnership (PPP) concept stocks, particularly in environmental sectors like landscaping and ecological governance [5] - The real estate and banking sectors are also expected to benefit from local government debt resolution, potentially stabilizing the real estate market and improving bank asset quality [5]

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]

Trade and Economic Impact - Trump's potential increase of tariffs on all Chinese imports to 60% could reduce China's GDP growth by 2.3 percentage points, doubling the impact compared to the 2018-2019 trade war[18] - The average tariff on Chinese exports to the U.S. has risen from 3.8% to over 19.3% since the previous trade war[20] - If tariffs are implemented, the estimated reduction in U.S. imports from China could reach $414.2 billion[20] Market and Investment Strategy - Short-term effects of Trump's election may lead to rising U.S. Treasury yields and a boost in U.S. stock markets[1] - The Chinese government may respond to potential tariffs by allowing the RMB to depreciate and increasing macroeconomic policy support[11] - High-quality dividend stocks and growth stocks in China may be less affected by trade tensions, suggesting a buying opportunity during market corrections[1] Sector-Specific Insights - The internet sector may face increased risks from potential tariffs, impacting cross-border e-commerce expansion[2] - The technology sector could benefit from accelerated domestic demand and a push for self-sufficiency due to U.S. sanctions[2] - The pharmaceutical sector's sentiment may be negatively impacted in the short term, but long-term effects are expected to be limited[3] Risks and Uncertainties - The uncertainty surrounding Trump's trade policies could lead to increased volatility in the Chinese financial markets[11] - Potential geopolitical tensions and the effectiveness of China's policy responses remain significant risks[4] - The impact of Trump's policies on U.S.-China relations is unpredictable, with possible outcomes ranging from improved to deteriorated diplomatic ties[25]

Investment Rating - The report maintains a "Buy" rating for companies such as BYD Electronics (285.HK), Luxshare Precision (002475.CH), and Lens Technology (300433.CH) in the consumer electronics sector [4] - The report reiterates a "Buy" rating for companies like Li Auto (LI.US/2015.HK), Leap Motor (9863.HK), and BYD (1211.HK/002594.CH) in the new energy vehicle sector [4] - The report also maintains a "Buy" rating for Huahong Semiconductor (1347.HK/688347.CH) and New Clean Energy (605111.CH) due to favorable market conditions in the semiconductor industry [4][5] Core Insights - The election of Trump is expected to accelerate the domestic substitution process in China's technology industry, with minimal impact on the sales of Chinese consumer electronics and new energy vehicles in the U.S. market [3] - The report highlights that U.S. companies like Apple and Tesla are working to reduce their reliance on Chinese supply chains, but the long-term effects of U.S. policies on these tech giants remain to be seen [3] - The semiconductor sector in China is experiencing ongoing domestic substitution, particularly in automotive applications, which is expected to drive growth [4] Summary by Sections Consumer Electronics - The report expresses optimism about the steady expansion and profit growth of platform companies such as BYD Electronics, Luxshare Precision, and Lens Technology, maintaining a "Buy" rating for these firms [4] New Energy Vehicles - The report anticipates an accelerated penetration rate in China's new energy vehicle industry, with domestic companies continuing to expand internationally, reaffirming a positive outlook for Li Auto, Leap Motor, and BYD [4] Semiconductor Industry - The report notes that potential increased sanctions from the U.S. on China in semiconductor and technology sectors could positively influence the sentiment of Chinese semiconductor companies and accelerate domestic substitution [4] - Companies like Huahong Semiconductor are expected to benefit from the upward trend in the semiconductor market and attractive price-to-book ratios [4]