Investment Rating - The report maintains a "Buy" rating for the company with a target price adjusted to $4.5 [2][8]. Core Insights - The company's revenue is expected to slightly decline by 1% quarter-on-quarter to RMB 1.53 billion in Q3, primarily due to weak performance in the live streaming business, which is projected to decrease by 8% to RMB 1.13 billion [2]. - Game-related services are anticipated to see significant year-on-year growth, reaching RMB 380 million, accounting for 25% of total revenue [2]. - The gross margin is expected to decrease by 0.3 percentage points to 13.6% due to declining live streaming revenue and increased event costs [2]. - The revenue forecast for 2024 has been adjusted to RMB 6.11 billion, with a projected net profit of RMB 272 million and a net profit margin of 4.5% [2][5]. - The company has approximately $800-900 million in cash on its balance sheet, which is comparable to its current market capitalization [2]. Financial Summary - Revenue for 2024E is projected at RMB 6,109 million, reflecting a decrease of 2.14% from previous estimates [5]. - Gross profit is expected to be RMB 831 million, down 3.26% from prior forecasts [5]. - The adjusted net profit for 2024E is estimated at RMB 272 million, a decrease of 1.39% from earlier predictions [5]. - The adjusted net profit margin is forecasted to be 4.5%, consistent with previous estimates [5].

Investment Rating - The report maintains a "Hold" rating for the company [2][21]. Core Views - The company is expected to see a revenue growth rebound in Q3 due to the nationwide trade-in subsidy policy, with projected revenue of RMB 258.2 billion, representing a year-on-year increase of 4.2% [2][3]. - The company is adjusting its target price to HKD 155 / USD 40, corresponding to a P/E of 10.4x for 2024E and 10.0x for 2025E [2][3]. - The company is anticipated to benefit from the extended Double Eleven shopping event and increased discount efforts, which may further enhance revenue growth in Q4 [2][3]. Financial Projections - Projected operating revenue for 2024E is RMB 1,130,955 million, a slight increase of 0.16% from the previous forecast [3]. - Projected gross profit for 2024E is RMB 173,994 million, with a gross margin of 15.4% [3]. - Projected net profit attributable to shareholders for 2024E is RMB 34,564 million, with a net profit margin of 3.1% [3]. - Adjusted net profit for 2024E is projected at RMB 41,349 million, with an adjusted net profit margin of 3.7% [3]. Market Context - The company is expected to experience high single-digit growth in GMV, driven by the trade-in subsidy policy and strong performance in the daily necessities category, particularly in supermarkets [2][3]. - The report highlights the competitive landscape and potential challenges in user growth and profit margins, which could impact overall performance [2][3].

Investment Rating - Upgraded to "Buy" rating for Haidilao (6862 HK) with a target price of HKD 19 5 based on 19x 2025 P/E or 10x 2025 EV/EBITDA [2] Core Views - Haidilao's multi-brand strategy visibility has improved with the new brand "Yanqing" expected to accelerate store openings in the next two years [2] - The company plans to open 40-50 new stores in 2H24 and expects net store growth for the full year with annual store openings reaching mid-to-high single-digit percentages of existing stores in 2025-2026 [2] - The new brand "Yanqing" is expected to leverage synergies with Haidilao in procurement labor and rental costs with plans to open 50 stores in 2024 and 150 stores in 2025 [2] - Haidilao's main brand is expected to see stable performance with a slight improvement in operating profit margin in 2H24 due to optimized employee incentives and stable or slightly increased average customer spending [2] Financial Performance and Forecast - Revenue is expected to grow by 7 5% in 2024E reaching RMB 44 571 million with a slight increase to RMB 46 505 million in 2025E [6] - Net profit attributable to shareholders is forecasted to remain flat in 2024E at RMB 4 498 million but grow by 12 2% in 2025E to RMB 5 047 million [6] - Operating profit margin is projected to improve from 12 3% in 2024E to 12 8% in 2025E [6] - Gross margin is expected to increase from 60 8% in 2024E to 60 9% in 2025E [6] Store Expansion and Operational Metrics - Haidilao opened 11 new stores in 1H24 but closed 43 stores resulting in a net decrease of 32 stores to a total of 1 343 stores [2] - The company plans to accelerate store openings in 2H24 with 40-50 new stores and reduce store closures to single digits [2] - The overall table turnover rate remained stable in July-August 2024 with a slight decline in September but exceeded 5 times per day during the National Day holiday [2] New Brand "Yanqing" - The new brand "Yanqing" is expected to benefit from synergies with Haidilao in procurement labor and rental costs [2] - Management plans to open "Yanqing" stores near existing Haidilao locations and utilize Haidilao store managers for multi-brand management [2] - The company aims to open 50 "Yanqing" stores in 2024 and expand to 150 stores in 2025 with a long-term goal of 300-400 stores in 3-5 years [2] Market Expectations and Valuation - The market expectation for Haidilao's stock price ranges from HKD 12 4 to HKD 26 2 with SPDBI's target price set at HKD 19 5 [4] - The stock's current price is HKD 16 6 with a total market capitalization of HKD 92 640 million [3]

Group 1: Macroeconomic Policy Insights - The Ministry of Finance announced a significant increase in local government debt limits to address hidden debt risks, with a planned allocation of CNY 3.4 trillion for 2023-2024[1] - Special government bonds are expected to be issued to inject capital into state-owned banks, with estimates suggesting the scale could reach at least CNY 1 trillion[1] - The government plans to allow special bonds to be used for acquiring existing housing or land, with a total of CNY 2.3 trillion in special bond funds available for the next three months[2] Group 2: Economic Stimulus Measures - The government is expected to issue CNY 2-3 trillion in special bonds to stimulate consumption and stabilize investment, focusing on bank capital injections and debt resolution[1] - The Ministry of Finance indicated that additional policies may be introduced if current measures do not meet expectations, particularly in the real estate sector[2] - The central government has allocated CNY 4 billion from local government debt limits to enhance local fiscal capacity, indicating a reluctance to issue more special bonds for fiscal gaps[2] Group 3: Future Policy Directions - The Minister of Finance signaled that there is significant room for increasing the fiscal deficit rate, which may exceed 3% in the coming years[2] - Future reforms will focus on improving the budget system and fiscal transfer support mechanisms, suggesting ongoing fiscal stimulus beyond the current measures[2] - The upcoming meetings in December and March will be crucial for further policy announcements and economic strategies[1]

Inflation Data - The core CPI inflation rate in the US for September rose to 0.31%, exceeding market expectations of 0.2%[1] - Overall CPI growth remained stable at 0.18%, while year-on-year CPI decreased by 0.1 percentage points to 2.4% due to a high base effect[1] - The core CPI year-on-year unexpectedly increased by 0.1 percentage points to 3.3%[1] Key Drivers of Inflation - The rise in core CPI was primarily driven by improvements in core goods CPI and a significant increase in super core services CPI, which rose to 0.55% in September from 0.24% in August[1] - Clothing prices contributed to the core goods CPI turning positive at 0.17% in September, up from -0.17% in August[1] - Transportation goods CPI also turned positive at 0.25%, aided by improvements in used car prices[1] Housing and Rental Trends - Housing prices saw a significant drop, with the month-on-month growth rate falling by 0.3 percentage points to 0.22%[1] - The inflation rate for lodging (mainly hotels) plummeted to -1.93% in September from 1.75% in August[1] - Owner's equivalent rent inflation rate decreased by 0.17 percentage points to 0.33% in September[1] Labor Market Insights - Non-farm payrolls in September increased by 254,000, significantly above the market expectation of 150,000[1] - The unemployment rate fell by 0.1 percentage points to 4.1%[1] - Average hourly earnings showed a slight acceleration in year-on-year growth, despite a slowdown in month-on-month growth[1] Future Monetary Policy Outlook - The expected interest rate cut in November is likely to be limited to 25 basis points, down from a previous forecast of 50 basis points[2] - The Federal Reserve's focus has shifted from inflation to employment data, with recent data indicating a better-than-expected labor market[2] - The overall economic downtrend is expected to continue, with the possibility of a more pronounced economic downturn if upcoming data does not exceed expectations[2]

Investment Rating - The report initiates coverage on Apple (AAPL US) with a "Buy" rating and a target price of $264 9, implying a potential upside of 19 5% [3][6] Core Views - Apple is expected to continue leading the AI technology wave, with generative AI potentially opening new growth opportunities for the company [3] - Apple's ecosystem, particularly its software services, is well-positioned to benefit from the integration of generative AI, creating a favorable application scenario for AI on the device side [3] - The company's hardware products, including iPhone, Apple Watch, AirPods, and Apple Vision Pro, are expected to see growth driven by AI integration, with iPhone revenue projected to grow by 3% and 8% in FY2025 and FY2026, respectively [3] - Apple's service revenue is forecasted to grow by 11 5% annually in FY2025 and FY2026, driven by the expansion of AI capabilities and scale effects [3] Financial Projections - Apple's revenue is expected to grow by 9% and 7% in FY2025 and FY2026, respectively, reaching $421 6 billion and $450 5 billion [5] - Net profit is projected to grow by 9% in both FY2025 and FY2026, reaching $112 billion and $122 5 billion, respectively [5] - The company's P/E ratio is expected to be 36 0x and 32 9x for FY2025 and FY2026, respectively [5] AI and Hardware Integration - Apple Intelligence, the company's AI platform, is expected to drive growth in hardware products, particularly iPhone, by enhancing user experience and driving upgrade demand [3][24] - The integration of AI into Apple's ecosystem is expected to create a commercial loop, linking supply-side manufacturers with consumer demand [3] - Apple's AI capabilities are expected to expand to other hardware products, including Mac, iPad, and Apple Watch, further broadening the company's business boundaries [3][24] iPhone Growth and Market Position - iPhone remains Apple's core revenue driver, accounting for over 50% of the company's total revenue [31] - The iPhone's growth is expected to be driven by AI integration, with the company maintaining a strong position in the high-end smartphone market [31][35] - Apple's market share in North America and China is expected to remain stable, with potential growth in emerging markets like India [35] Valuation - The report uses a DCF valuation model, assuming a growth rate of 7% from FY2029 to FY2033 and a perpetual growth rate of 3%, with a WACC of 7 4%, to arrive at the target price of $264 9 [4] AI Model and Ecosystem - Apple's AI model, with 3 billion parameters, is optimized for specific tasks and is expected to outperform larger models like Google's Gemma-7B [24][27] - The company's AI ecosystem is expected to integrate with third-party models like OpenAI's GPT-4o, enhancing its capabilities in areas like Siri and other system-level applications [24][25] Hardware Upgrades - The iPhone 16 series is expected to feature significant hardware upgrades, including improved AI capabilities, enhanced camera systems, and larger screen sizes [41][42] - The A18 series chips, built on a second-generation 3nm process, are expected to deliver significant performance improvements, particularly in AI processing [41] Market Outlook - Apple's iPhone shipments are expected to reach 227 million and 234 million units in 2024 and 2025, respectively, driven by AI integration and hardware upgrades [42] - The company's supply chain is expected to benefit from increased demand for components related to AI and hardware upgrades [42]

Investment Rating - The report maintains a "Buy" rating for Anta Sports (2020 HK) with a target price of HKD 119 8, implying a potential upside of 19 7% from the current price of HKD 100 1 [2][3] Core Views - Anta Sports' 3Q24 sales performance fell short of market expectations, with both Anta and Fila brands underperforming Anta brand sales grew by mid-single digits, while Fila sales declined by low-single digits [2] - Despite the weak 3Q24 performance, the company has not revised its full-year 2024 sales guidance, with management expressing confidence in achieving the targets due to strong sales during the National Day holiday [2] - The report highlights Anta's continued brand strength, driven by store upgrades and expansion into new e-commerce channels like Douyin, as well as its multi-brand strategy [2] Financial Performance and Forecasts - Revenue for 2024E is projected at RMB 69 369 million, representing an 11 2% YoY growth, while core net profit is forecasted at RMB 12 064 million, up 17 9% YoY [3][5] - Gross margin is expected to improve slightly to 62 8% in 2024E, with operating margin projected at 24 0% [5] - The report slightly revised down the 2024E revenue and profit forecasts due to a more conservative outlook for 4Q24 [2] Brand Performance - Anta brand's 3Q24 sales grew by mid-single digits, outperforming domestic competitors, while Fila's sales declined by low-single digits, with its core product line remaining flat [2] - Descente and Kolon maintained strong growth momentum in 3Q24, continuing their high growth rates from the first half of the year [2] - Inventory levels remained healthy, with Anta brand at 4-5x and Fila close to 5x, allowing stable retail discounts [2] Market and Industry Context - The report notes that Anta Sports remains one of the fastest-growing brands in China's sportswear industry, benefiting from its multi-brand strategy and strong brand positioning [2] - The company's performance during the National Day holiday was driven by its new offline store formats, such as Anta Champion stores and Super Anta, which capitalized on the surge in tourism and consumption [2] Valuation and Target Price - The target price of HKD 119 8 is based on a 22x 2025E P/E multiple, reflecting improved market sentiment and liquidity in Hong Kong, as well as expectations for further stimulus policies [2] - The report outlines three scenarios for Anta's stock price: optimistic (HKD 149 8), base case (HKD 119 8), and pessimistic (HKD 95 8), with probabilities of 25%, 55%, and 20%, respectively [13]

Group 1: Macroeconomic Policies - The National Development and Reform Commission (NDRC) has allocated a total of CNY 700 billion for central budget investments, fully directed towards "two heavy" constructions[1] - An additional CNY 1 trillion in ultra-long-term special bonds has been fully allocated to projects and local governments, with plans to continue issuing these bonds next year[1] - The NDRC plans to announce a list of CNY 1,000 billion for "two heavy" construction projects and another CNY 1,000 billion for central budget investments by the end of this month[1] Group 2: Infrastructure Investment Focus - The NDRC highlighted that the total investment required for underground pipeline construction and renovation over the next five years is approximately CNY 4 trillion, with nearly 600,000 kilometers needing renovation[1] - The remaining CNY 290 billion of special bonds for this year will be issued by the end of October, with an emphasis on supporting urban railways and rapid transit projects[1] Group 3: Debt Management and Market Stability - The NDRC aims to enhance support for local governments in debt replacement, potentially through the issuance of additional special bonds or ultra-long-term bonds[1] - Measures to stabilize the capital market include encouraging long-term funds to enter the market and supporting mergers and acquisitions of listed companies[1] - The NDRC is expected to implement policies to protect small and medium investors, with various measures being expedited for rollout[1] Group 4: Future Expectations - The government may announce an increase in special bond issuance of CNY 2-3 trillion to stimulate consumption and address local debt risks, with potential announcements expected in mid-October[2] - There is a possibility of expanding the use of special bonds to support idle land and accelerate the consumption of existing housing stock[1]

Macro Analysis - The report anticipates continued policy stimulus, particularly in fiscal and real estate sectors, with expectations of issuing 2-3 trillion yuan in special bonds to stimulate consumption and mitigate local debt risks [1][6][10] - The government may introduce tax or social security incentives to help low-income groups increase disposable income to support consumption [1][11] - The report suggests that the scale of this round of policy stimulus may exceed previous measures since the policy shift began in the second half of last year [6][10] Strategy - The current market focus is on policy developments, and if unexpected fiscal policies are introduced, the market rally is likely to continue [1][6] - As of October 2, 2024, the Hang Seng Index's forward P/E ratio is at 10.2 times, returning to the average of the past five years, which may attract foreign capital inflows [1][6] - The report predicts that the initial phase of the market rally will be driven by valuation recovery, with high beta stocks performing well; mid-term may see consolidation with alpha stocks outperforming; and later stages may return to fundamentals with core assets regaining investor attention [1][6] Consumer Sector - The investment logic in the current market is primarily focused on "bargain hunting," with attention on domestic demand-driven consumer companies [1][6] - Consumer sectors that previously experienced significant declines and are perceived to face fundamental and growth challenges have shown strong performance in this rally [1][6] - The report emphasizes that the recovery of consumer fundamentals will lag behind market sentiment, indicating potential risks and uncertainties for future performance [1][6] - Key recommended stocks include Pop Mart (9992.HK), China Feihe (6186.HK), Anta Sports (2020.HK), Genscript Biotech (2367.HK), and Teha International (9658.HK/HDL.US) [1][6] Internet Sector - The significant rise in internet sector stock prices is primarily driven by market sentiment returning due to policy support, with a more optimistic rebound than expected [1][6] - Short-term profit-taking pressure exists, but the medium to long-term upward trend remains clear, with valuations still at low levels [1][6] - The report highlights three advantages: profit improvement, low valuations, and dividends/buybacks, combined with liquidity release, creating a safety margin [1][6] - Preferred stocks for selection include leading companies like Tencent and Alibaba, high-growth yet undervalued stocks like Pinduoduo, and companies closely aligned with consumer recovery like Meituan [1][6] Technology Sector - The technology sector, particularly consumer electronics and semiconductors, has recorded positive returns ranging from 8% to 50% following policy announcements [2][6] - The report indicates that the smartphone market is still in a recovery growth phase, and the semiconductor sector's fundamentals are expected to improve in the second half of the year [2][6] - Recommended stocks with valuation or rebound potential include Transsion Holdings, BYD Electronics, Luxshare Precision, Sunny Optical, and Times Electric [2][6] New Energy Vehicle Sector - The report notes that the fundamentals of Chinese new energy vehicle companies have generally improved, aligning with recent surveys indicating higher penetration rates and sales exceeding initial forecasts [2][6] - The report remains optimistic about new model increments, plug-in hybrid market momentum, and the long-term growth potential of new energy vehicles [2][6] - Recommended stocks with valuation upside include NIO, Xpeng, Li Auto, and BYD, while Leap Motor and Li Auto show potential for fundamental improvement [2][6] Pharmaceutical Sector - The pharmaceutical sector has rebounded significantly, with the MSCI China Pharmaceutical Index rising 25.3% from September 24 to October 3, outperforming the broader market [2][6] - The report attributes this outperformance to the sector's previous deep declines and overall undervaluation, coupled with improved market sentiment following the onset of the US dollar interest rate cut cycle [2][6] - The report maintains a positive outlook for the innovative drug sector in the second half of 2024, recommending focus on innovative drugs, high-value consumables, and medical devices [2][6]

Global Capital Flows - Global capital flows are undergoing adjustments, with significant inflows into the Chinese market due to the Fed's rate cut and China's economic stimulus policies [2][7] - Emerging markets saw a net inflow of $165.6 billion in September, outperforming developed markets by 5% [2][7] - From September 25 to October 2, emerging markets recorded a net inflow of $154.8 billion, while developed markets saw a net outflow of $106.1 billion [2][7] - The US, China, and Japan all experienced strong domestic capital inflows in September, with the US recording $172.2 billion, China $125.1 billion, and Japan $7.8 billion [7] Foreign Capital Inflows into China - Foreign capital inflows into China have shown signs of a turning point, with passive foreign capital recording a significant net inflow of $5.3 billion from August 29 to September 25 [2][13] - From September 26 to October 2, active foreign capital turned to a net inflow of $3.54 billion, marking the first net inflow of the year [2][13] - Passive foreign capital inflows surged to $58.2 billion during the same period, indicating active trading in the Chinese market [2][13] - Foreign capital positions in the Chinese market remain low, suggesting potential for further inflows if market sentiment remains positive [2][13] Domestic Capital Inflows into China - Domestic capital inflows into China remained strong, with a net inflow of $125.1 billion from August 29 to September 25, though slightly lower than the $165 billion in August [3][13] - From September 26 to October 2, domestic capital recorded a net inflow of $80.3 billion, driven by increased trading activity from both institutional and retail investors [3][13] - The "national team" is likely still actively participating in the market, contributing to the robust inflows [3][13] Hong Kong Market Capital Flows - Foreign capital inflows into Hong Kong accelerated in September, with a net inflow of $3.1 billion, marking the fourth consecutive month of inflows [3][16] - Passive foreign capital inflows into Hong Kong increased significantly to $3.4 billion from September 26 to October 2, while active foreign capital saw a slight net outflow of $0.1 billion [3][16] - Southbound capital inflows into Hong Kong slowed to HK$119.4 billion in September, but their share of daily trading volume rose to 16.5% [3][16] - Southbound capital favored high-beta stocks, particularly in the financial and consumer sectors, which have underperformed year-to-date [3][16] Sector and Stock Preferences - Southbound capital inflows into Hong Kong were concentrated in sectors such as pharmaceuticals, biotech, consumer services, and retail, while outflows were seen in software, services, and automotive sectors [20][22] - High-beta stocks in the financial and consumer sectors, such as Ping An Insurance (2318 HK), AIA (1299 HK), and Hong Kong Exchanges & Clearing (388 HK), were preferred by southbound capital [23][25] - Defensive stocks like China Telecom (728 HK), China Construction Bank (939 HK), and Industrial and Commercial Bank of China (1398 HK) also saw continued interest from southbound capital [23][25]