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].

Investment Rating - The report maintains a positive outlook on the Chinese consumer industry, emphasizing the importance of selecting companies with strong fundamentals and earnings certainty [2]. Core Insights - The report highlights that the impact of Trump's aggressive tariff policies on Chinese consumer companies will primarily affect those producing goods in China for export to the U.S. Companies with established overseas production and supply chains are expected to be less affected [1][2]. - It is noted that the election of Trump may accelerate the trend of domestic substitution in the Chinese consumer market, as U.S. policies could lead to increased inflation and affect consumer confidence in China [1]. - The report suggests that while short-term market sentiment may be under pressure, long-term recovery of consumer confidence will depend on the overall economic outlook in China [1]. Summary by Sections Section 1: Impact of Tariff Policies - Trump's proposed tariffs could raise import duties on products from China to over 60%, significantly impacting exports of consumer goods [1]. - Companies with sufficient overseas production capacity, such as Pop Mart and Shenzhou International, are likely to face limited impact from these tariffs [1]. - The report anticipates that if tariffs are implemented selectively, categories heavily reliant on Chinese imports may experience varying levels of impact [1]. Section 2: Investment Strategies - The report recommends focusing on companies that can drive revenue growth through international expansion, meet low-tier market demands, offer low valuations with high shareholder returns, and show short-term performance catalysts [2][3]. - Specific companies highlighted for investment include Pop Mart (9992.HK), Feihe (6186.HK), and Giant Bio (2367.HK) [3]. Section 3: Market Dynamics - The report emphasizes the need for consumer companies to innovate and adapt to the evolving demands of low-tier markets, which are experiencing increased consumption awareness and upgrading needs [2]. - It also points out that companies with lower valuations and higher dividend yields can provide better protection against potential stock price declines amid market uncertainties [3].

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]

Trade and Tariff Impact - Trump's potential increase of tariffs on all Chinese exports to 60% could reduce China's GDP growth by 2.3 percentage points[6] - Average tariffs on Chinese goods exported to the U.S. have risen from 3.8% to over 19.3% since the trade war began[6] - If tariffs are raised to 60%, the negative impact on China's trade and GDP could be at least double that of the previous tariff increases[6] Technology Decoupling - The trend of technological decoupling between the U.S. and China is expected to continue under Trump's second term, with a focus on maintaining U.S. technological superiority[11] - Since 2018, U.S. restrictions on Chinese tech firms have intensified, particularly affecting companies like Huawei and ZTE[9] - China's R&D investment in high-tech sectors has significantly increased in response to U.S. sanctions, with a notable rise in the number of R&D institutions and patents filed[22] Financial Market Response - Trump's election may lead to increased volatility in Chinese financial markets, particularly if a new round of tariffs is implemented[1] - The Chinese government is likely to respond to potential tariffs by allowing the RMB to depreciate and enhancing macroeconomic policy adjustments[15] Diplomatic Relations - The impact of Trump's presidency on U.S.-China diplomatic relations remains uncertain, with potential for both deterioration and improvement depending on his approach[12] - Trump's previous administration's unilateral actions may lead to increased geopolitical tensions, particularly in regions like Taiwan and the South China Sea[12] Government Response Strategies - In anticipation of potential tariffs, the Chinese government may implement measures such as increasing policy support and enhancing trade partnerships with ASEAN and India[16] - Historical responses to trade tensions include significant reductions in reserve requirements and fiscal stimulus measures to stabilize economic growth[21]

Investment Rating - The report maintains a "Buy" rating for the company, Li Auto [1][2] - The target price for Li Auto (LI.US) is raised to USD 30.8, representing a potential upside of 23% [1] - The target price for Li Auto-W (2015.HK) is increased to HKD 120.0, indicating a potential upside of 24% [1] Core Insights - Li Auto's vehicle delivery momentum is sustained, driven by the L6 model, with projected sales of 507,000 units in 2024 and 700,000 units in 2025, maintaining a leading position among new energy vehicle manufacturers [1][2] - The company's profitability significantly improved in Q3, with expectations for continued profit growth through 2025, positioning it as a leader in profitability among new energy vehicle companies [1][2] - The company is expected to benefit from the growth of hybrid vehicles and capture additional market share in pure electric models by 2025 [1] Financial Performance Summary - Q3 2024 revenue reached RMB 42.874 billion, a 24% increase year-over-year and a 35% increase quarter-over-quarter [9] - Gross profit for Q3 2024 was RMB 9.225 billion, up 21% year-over-year and 49% quarter-over-quarter [9] - Operating profit increased by 47% year-over-year and 633% quarter-over-quarter, reaching RMB 3.433 billion [9] - Net profit for Q3 2024 was RMB 2.814 billion, approximately flat year-over-year but up 155% from the previous quarter [9] - The gross margin for Q3 2024 was 21.5%, slightly down from 22.0% year-over-year but improved from 19.5% quarter-over-quarter [10] Revenue and Profit Forecast - Revenue projections for 2024 are set at RMB 146.396 billion, with a growth rate of 18% [11] - The gross profit forecast for 2024 is RMB 30.431 billion, with a gross margin of 20.8% [11] - The net profit forecast for 2025 is RMB 12.534 billion, with a net margin of 6.3% [11] Valuation Methodology - The report employs a sum-of-the-parts valuation method, assigning a price-to-earnings ratio of 17.5x for automotive sales and 17.0x for other revenues, leading to a target price of USD 30.8 for Li Auto [3][13] - The target price corresponds to a P/E ratio of 17.4x for 2025 [3][13]

Investment Rating - The report maintains a "Buy" rating for BYD [3][4] Core Views - BYD's sales of new energy vehicles (NEVs) have shown significant growth, leading to profit release. The company is expected to achieve NEV sales of 4 million and 5 million units in 2023 and 2024, respectively, with high certainty [3][4] - The target price for BYD shares has been raised to HKD 335.0, representing a potential upside of 21%, and for the A-shares to RMB 357.7, indicating a potential upside of 23% [3][4] Financial Performance Summary - In Q3 2024, BYD's revenue reached RMB 201.1 billion, a year-on-year increase of 24% and a quarter-on-quarter increase of 14%. The automotive-related revenue growth rate is close to the total revenue growth rate [4][11] - The gross profit margin for Q3 2024 was 21.9%, a decrease of 0.2 percentage points year-on-year but an increase of 3.2 percentage points quarter-on-quarter. The net profit for Q3 2024 was RMB 11.6 billion, up 11% year-on-year and 28% quarter-on-quarter, marking a historical high for quarterly net profit [4][11][12] - The average profit per vehicle in Q3 2024 was RMB 9,247, showing a quarter-on-quarter increase [11][12] Sales and Production Outlook - BYD's NEV sales in October reached a record high of 501,000 units. The company is expected to continue benefiting from the demand for plug-in hybrid models, particularly in the price range of RMB 100,000 to RMB 200,000 [3][4] - The report projects BYD's net profit for 2024 and 2025 to be RMB 37.3 billion and RMB 46.0 billion, respectively, with a year-on-year growth rate of 24% for both years [4][14] Valuation - The valuation is based on a sum-of-the-parts approach, assigning price-to-earnings ratios of 23.0x for NEVs, 18.0x for mobile and electronic businesses, and 13.0x for other businesses, leading to target prices of HKD 335.0 and RMB 357.7 for the respective shares [4][15]

Investment Rating - The report maintains a "Hold" rating for Jin Jiang Hotels (600754.CH) with a target price of RMB 28.1, indicating a potential upside of 5.6% from the current price of RMB 26.6 [2][5][6]. Core Insights - Jin Jiang Hotels reported a revenue of RMB 38.98 billion in Q3 2024, a year-on-year decline of 7.1%, and a net profit attributable to shareholders of RMB 2.6 billion, down 43.1% year-on-year. The significant drop in net profit is attributed to a normalization of post-pandemic travel demand, negative operating leverage, and one-time factors such as increased effective tax rates [2][3]. - The company is expected to exceed its annual store opening target, having opened 1,149 new stores in the year to date, with a total of 13,186 stores as of Q3 2024. The proportion of mid-to-high-end hotels has increased by 2.7 percentage points to 59.7% [2][3][4]. Financial Performance Summary - **Revenue and Profit Forecasts**: The revenue for 2024E is projected at RMB 14.008 billion, reflecting a decrease of 4.4% year-on-year. The net profit attributable to shareholders is forecasted to be RMB 1.176 billion, a decrease of 20.8% from previous estimates [7][12]. - **RevPAR Performance**: In Q3 2024, the domestic RevPAR for full-service and limited-service hotels decreased by 18.2% and 8.4% year-on-year, respectively, primarily due to significant declines in average room rates [3][11]. - **Operating Efficiency**: The overseas business showed slight improvement with revenues of RMB 12.5 billion in Q3 2024, a year-on-year increase of 1.9%, driven by a 6.3% increase in average room rates due to events like the Paris Olympics [2][3]. Store Expansion and Structure - Jin Jiang Hotels has maintained a high pace of store openings, with 469 new stores added in Q3 2024 alone. The company is on track to exceed its target of opening 1,200 new stores by the end of the year [2][3][4]. - The ongoing optimization of store structure, with an increasing share of mid-to-high-end hotels, is expected to enhance profit margins [2][3].

Investment Rating - The report maintains a "Buy" rating for Microsoft (MSFT.US) and adjusts the target price to $500, reflecting a potential upside of 16% from the current price of $432.5 [4][6][19]. Core Insights - Microsoft reported FY25Q1 revenue of $65.6 billion, a 16% year-over-year increase, slightly exceeding market expectations by 2%. The earnings per share (EPS) was $3.3, up 10% year-over-year, also better than market forecasts [2][3]. - The guidance for cloud business revenue growth has slowed, with FY25Q1 intelligent cloud revenue at $24.1 billion, a 20% year-over-year increase. Azure and other services grew by 33%, but the growth rate is expected to decline further due to increased investments in AI [3][4]. - Capital expenditures for FY25Q1 were approximately $20 billion, a 78.6% increase year-over-year, indicating a continued commitment to AI infrastructure despite short-term pressure on profit margins [4][5]. Summary by Sections Financial Performance - FY25E revenue is slightly adjusted to $276.2 billion, with projected revenues for FY26E and FY27E at $313.7 billion and $357.6 billion, respectively. Operating profit is expected to grow from $122.8 billion in FY25E to $160.6 billion in FY27E [5][9]. - Net profit is forecasted to increase from $98.2 billion in FY25E to $130.1 billion in FY27E, with a target P/E ratio of 38x for FY25E and 32x for FY26E [5][9]. Business Segments - The productivity and business processes (PBP) segment reported revenue of $28.3 billion, a 12% year-over-year increase, with expectations for 10%-11% growth in the next quarter [3][4]. - Personal computing revenue reached $13.2 billion, a 17% increase year-over-year, driven by a 61% growth in gaming, primarily due to the integration of Blizzard [3][4]. Market Position and Outlook - Microsoft continues to hold a leading position in both cloud services and office software, with long-term benefits anticipated from AI integration. The report expresses optimism about Microsoft's future performance despite the current slowdown in cloud revenue growth [4][5][6].

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC (1876.HK) with a target price of HKD 9.85, indicating a potential upside of 21.5% from the current price of HKD 8.11 [4][21]. Core Views - Short-term performance is expected to be challenging due to a decline in consumer spending in the Chinese beer market, with a projected 9.4% year-on-year decrease in overall organic revenue for Q3 2024, driven by an 11.4% drop in sales volume [2][10]. - Despite short-term difficulties, the long-term outlook remains positive due to Budweiser APAC's strong product and brand mix in the premium and super-premium segments, which could provide significant earnings elasticity as consumer spending recovers [2][11]. - The company's current valuation is considered attractive, and its strong management capabilities and backing from AB InBev enhance its appeal to foreign investors [2][11]. Summary by Sections Financial Performance - For Q3 2024, Budweiser APAC reported a 9.4% decline in organic revenue, with sales volume down 11.4% and a slight average price increase of 2.2% [2][10]. - The normalized EBITDA decreased by 16.6% year-on-year, reflecting the negative operating leverage from the significant revenue drop [10][11]. - The company anticipates that the downward trend in revenue and EBITDA will likely continue into Q4 2024 [2][11]. Market Analysis - In the Chinese market, Q3 2024 sales volume fell by 14.2%, attributed to a higher proportion of on-premise sales channels, which were more adversely affected than off-premise channels [2][11]. - The management noted that there has been no significant impact from policy stimulus on beer demand in Q4 2024, suggesting continued pressure on sales and average pricing [2][11]. - Conversely, the South Korean market showed resilience with a double-digit year-on-year growth in organic revenue for Q3 2024, driven by price increases and improved product mix [12][11]. Financial Projections - Revenue projections for Budweiser APAC are expected to decline to USD 6.245 billion in 2024, a decrease of 8.9% year-on-year, with a gradual recovery anticipated in subsequent years [3][18]. - The net profit is projected to drop to USD 700 million in 2024, reflecting a significant year-on-year decline of 17.8% [3][18]. - The report highlights a low price-to-earnings (PE) ratio of 19.6x for 2024, which is expected to improve to 15.3x by 2025, indicating potential for valuation recovery [3][18].