Investment Rating - The report maintains a "Buy" rating for Leap Motor (9863.HK) with a target price of HKD 52.4, indicating a potential upside of 26% from the current price of HKD 41.5 [2][4][6]. Core Insights - Leap Motor's sales guidance for 2025 is strong, with expectations to exceed 500,000 vehicles sold, driven by new models and mid-cycle updates [6]. - The company aims for a gross margin of over 10%, supported by its self-developed core automotive electronic components and the LEAP 3.5 architecture [6]. - Leap Motor is expected to achieve profitability in 2025, aided by effective cost management and operational leverage [6]. - The current price-to-sales ratio of 0.9x suggests potential for valuation re-rating, making it attractive compared to peers in the new energy vehicle sector [6]. Financial Performance and Forecast - Revenue is projected to grow significantly from RMB 16,747 million in 2023 to RMB 57,812 million in 2025, reflecting a compound annual growth rate (CAGR) of 80% [3][10]. - Gross margin is expected to improve from 0.5% in 2023 to 10.8% in 2025, indicating enhanced profitability [3][10]. - Net losses are forecasted to decrease from RMB 4,216 million in 2023 to a near breakeven of RMB 49 million in 2025, with a return to profitability anticipated in 2026 [3][10]. - The company achieved a revenue of RMB 134.6 billion in Q4 2024, marking a 155% year-on-year increase [9]. Valuation Methodology - The valuation is based on a sum-of-the-parts approach, applying a price-to-sales ratio of 1.1x for automotive sales and 1.0x for services and other revenues, leading to a target price of HKD 52.4 [11].

Investment Rating - The report maintains a "Buy" rating for Leap Motor (9863.HK) with a target price of HKD 52.4, indicating a potential upside of 26% from the current price of HKD 41.5 [2][4][6]. Core Insights - Leap Motor's sales guidance for 2025 is strong, with expectations to exceed 500,000 vehicles sold, driven by new models and mid-cycle updates [6]. - The company aims for a gross margin of over 10%, supported by its self-developed core automotive electronic components and the LEAP 3.5 architecture [6]. - Leap Motor is expected to achieve profitability in 2025, aided by effective cost management and operational leverage [6]. - The current price-to-sales ratio for Leap Motor is 0.9x, suggesting potential for valuation re-rating compared to peers in the new energy vehicle sector [6]. Financial Projections - Revenue is projected to grow significantly from RMB 16,747 million in 2023 to RMB 57,812 million in 2025, reflecting a compound annual growth rate (CAGR) of 80% [3][10]. - Gross margin is expected to improve from 0.5% in 2023 to 10.8% in 2025, indicating enhanced profitability [3][10]. - Net loss is forecasted to decrease from RMB 4,216 million in 2023 to a near breakeven of RMB 49 million in 2025, with a return to profitability anticipated in 2026 [3][10]. Sales and Market Performance - Leap Motor's Q4 2024 revenue reached RMB 13,461 million, a year-on-year increase of 155%, with a gross margin of 13.3% [9]. - The company sold 120,863 vehicles in Q4 2024, marking a 118% increase compared to the same quarter in the previous year [9]. - The average selling price of vehicles increased by 12% year-on-year to RMB 107,099 [9]. Valuation Methodology - The valuation is based on a sum-of-the-parts approach, applying a price-to-sales ratio of 1.1x for automotive sales and 1.0x for services and other revenues, leading to a target price of HKD 52.4 [11].

Investment Rating - The report maintains a "Buy" rating for the company and raises the target price to HKD 217 / USD 56, corresponding to a 12x P/E for 2025E [3][5][26]. Core Insights - The company experienced a revenue rebound with a 13.4% year-on-year growth in 4Q24, reaching RMB 347 billion, driven by strong performance in the electronics category due to national replacement policies [1][2]. - Service revenue also grew by 10.8% year-on-year, with advertising and logistics revenues increasing by 12.7% and 9.5%, respectively [1]. - The company is expected to maintain double-digit growth in product revenue into 1Q25, supported by the expansion of subsidized categories [1][2]. Financial Performance Summary - The gross margin for 4Q24 was 15.3%, an increase of 1.1 percentage points year-on-year, while adjusted net profit rose by 34% to RMB 11.3 billion, exceeding market expectations [2]. - The adjusted net profit margin for 4Q24 was 3.3%, with retail and logistics operating profit margins improving slightly to 3.3% and 3.5%, respectively [2]. - The report forecasts a high single-digit profit margin for the full year, primarily relying on scale efficiencies and product mix optimization [2]. Revenue and Profit Forecasts - The company’s revenue is projected to grow from RMB 1,084.7 billion in FY23 to RMB 1,250.1 billion in FY25E, with adjusted net profit expected to increase from RMB 35.2 billion in FY23 to RMB 51.1 billion in FY25E [4][6]. - The report anticipates a stable profit margin of approximately 4.1% for the full year, with potential for improvement in the medium to long term [2][4]. Market Expectations - The current stock price is HKD 179, with a potential upside of 21% to the target price of HKD 217 [4][5]. - The report highlights a cash dividend of USD 1.5 billion, contributing to an annual shareholder return rate of over 5% [3].

Economic Goals - The economic growth target for 2025 is set at around 5%, consistent with last year's target, reflecting the government's commitment to stabilize growth[3] - The target for urban employment is set at over 12 million new jobs, with an unemployment rate target of around 5.5%, both unchanged from last year[7] - To achieve the employment target, a minimum economic growth rate of 4.8% is required, based on historical data indicating that 1% GDP growth generates approximately 2.512 million new jobs[7] Inflation and Fiscal Policy - The CPI inflation target has been lowered to around 2%, marking the first time it is set below 3%[7] - The fiscal deficit target is set at around 4% of GDP, the highest since the pandemic years, with a total deficit scale of 5.66 trillion yuan, an increase of 1.6 trillion yuan from last year[13] - Local government special bond quotas have increased to 4.4 trillion yuan, up from 3.9 trillion yuan last year, indicating a more aggressive fiscal stance[13] Policy Stimulus and Investment - The government plans to issue 300 billion yuan in special bonds to support the "old for new" consumption policy, doubling last year's issuance[14] - Central budget investment has increased by 35 billion yuan to 735 billion yuan, aimed at enhancing service sector investment[15] - The overall expansion of government debt is projected to increase by 2.9 trillion yuan, equivalent to about 2% of GDP, significantly higher than the 0.9% expansion in 2024[14] Monetary Policy and Market Support - The monetary policy remains "appropriately loose," with expectations of interest rate cuts of 20-30 basis points and reserve requirement ratio reductions of 50-100 basis points throughout the year[19] - The report emphasizes the need for structural monetary policy tools to support key sectors such as real estate, technology innovation, and consumption[19] Reform Directions - The report highlights the importance of technological innovation and industrial upgrading, particularly in AI and emerging industries, as key areas for reform[21] - It also stresses the need for measures to mitigate local government debt risks and enhance investment space[20] - The government aims to expand high-level openness and stabilize foreign trade and investment, despite a challenging external environment[22]

Core Insights - The report emphasizes the importance of maintaining economic growth and high-quality development, with a target economic growth rate of around 5% for 2025, consistent with the previous year, highlighting the significance of stable growth [2][4][5] - The report identifies three key highlights from the 2025 Government Work Report that are expected to benefit specific sectors throughout the year [2][4] Group 1: Key Highlights from the 2025 Government Work Report - Highlight 1: Special actions to boost consumption, including the allocation of 300 billion yuan in special bonds to support the replacement of consumer goods, and the expansion of diverse service offerings in health, elderly care, and childcare [4][5] - Highlight 2: Development of emerging and future industries, focusing on commercial aerospace, low-altitude economy, and advanced manufacturing, with an emphasis on nurturing high-tech sectors such as biomanufacturing and quantum technology [4][5] - Highlight 3: Upgrading traditional industries and promoting the digital economy, with initiatives for the digital transformation of manufacturing and the support of AI applications across various sectors [4][5] Group 2: Market Performance During and After the Two Sessions - Historical analysis shows that major Chinese stock indices tend to perform poorly during the Two Sessions but recover positively in the weeks following, with the Shanghai Composite Index averaging a 3.4% increase one month after the sessions [7][8] - Growth stocks have historically outperformed value stocks during the Two Sessions, with a notable shift in market style observed post-sessions [10][11] - The information technology sector performed relatively well during the Two Sessions, while consumer services and financial sectors showed weaker performance [10][11]

Investment Rating - The report maintains a "Buy" rating for Sea (SE.US) and raises the target price to $165 [4][6]. Core Insights - The company's revenue for Q4 2024 reached $4.95 billion, representing a year-on-year growth of 36.9%, exceeding market expectations by 6.1% [2]. - The adjusted EBITDA for Q4 2024 was $590 million, with an adjusted EBITDA margin of 11.9% [2]. - The adjusted net profit for Q4 2024 was $410 million, with an adjusted net profit margin of 8.3% [2]. - The e-commerce segment showed profitability improvement, with a projected GMV growth rate of 20% for 2025 [2][4]. - Digital financial services revenue grew by 55.2% year-on-year in Q4 2024, driven primarily by credit business [3]. - Digital entertainment revenue turned positive with a 1.2% year-on-year increase in Q4 2024, and the company expects double-digit growth in 2025 [3]. Financial Performance Summary - For FY23, the company reported total revenue of $13.064 billion, with projections of $16.820 billion for FY24 and $20.854 billion for FY25 [5]. - The adjusted EBITDA is expected to grow at a compound annual growth rate (CAGR) of 35% from FY24 to FY27E [4]. - The net profit is projected to increase from $151 million in FY23 to $1.450 billion in FY25 [12]. Market Position and Valuation - The current stock price is $132.31, with a potential upside of 25% to the target price of $165 [7]. - The company has a total market capitalization of $75.726 billion [7]. - The report indicates that the e-commerce business's profitability improvement is expected to drive rapid profit growth for the company [4].

Investment Rating - The report maintains a "Buy" rating for Sea (SE.US) and raises the target price to $165 [4][6]. Core Insights - The company's revenue for Q4 2024 reached $4.95 billion, representing a year-on-year growth of 36.9%, exceeding market expectations by 6.1% [2]. - The adjusted EBITDA for Q4 2024 was $590 million, with an adjusted EBITDA margin of 11.9% [2]. - The adjusted net profit for Q4 2024 was $410 million, with an adjusted net profit margin of 8.3% [2]. - The e-commerce segment showed profitability improvement, with a projected GMV growth rate of 20% for 2025 [2][4]. - Digital financial services revenue grew by 55.2% year-on-year in Q4 2024, driven primarily by credit business [3]. - Digital entertainment revenue turned positive with a 1.2% year-on-year increase in Q4 2024, and the company expects double-digit growth in 2025 [3]. Financial Performance Summary - For FY23, the company reported total revenue of $13.064 billion, with projections of $16.820 billion for FY24 and $20.854 billion for FY25 [5]. - The adjusted EBITDA is expected to grow at a compound annual growth rate (CAGR) of 35% from FY24 to FY27E [4]. - The net profit is projected to increase from $151 million in FY23 to $1.450 billion in FY25 [12]. Market Position and Valuation - The current market price is $132.31, with a potential upside of 25% to the target price of $165 [7]. - The company has a total market capitalization of $75.726 billion [7]. - The report indicates that the company’s various business segments are maintaining strong growth trajectories, particularly in e-commerce and digital financial services [4].

Group 1 - Global funds are beginning to rebalance, with renewed interest in the Chinese market. From January 30 to February 26, the Chinese market saw a net inflow of $1 billion, marking the first monthly net inflow since October of the previous year [2][3][9] - The US stock market experienced a significant reduction in net inflows, dropping from $39.9 billion in January to $20.2 billion in February, while the Indian stock market turned to a net outflow of $1.5 billion [2][3] - European markets also saw increased net inflows, with Germany and France recording net inflows of $2.8 billion and $2.5 billion respectively in February [2][3] Group 2 - The breakthrough in China's AI technology, particularly the DeepSeek language model, has shifted the narrative that AI competition is solely dominated by the US. This has led to a reallocation of funds from crowded markets to those with improved sentiment [4][9] - Despite the outflow of domestic funds, passive foreign funds have significantly net flowed into the Chinese market, totaling $2.36 billion during the same period [9][10] - The report indicates that there is substantial room for active foreign funds to return to the Chinese market, as their current allocation remains below benchmark indices [9][10] Group 3 - Domestic funds experienced a net outflow of $18.33 billion from the Chinese stock market, marking the largest monthly outflow in the past five years [10] - The report highlights a clear preference for AI-related stocks among southbound funds, with significant inflows into leading companies in the internet, telecommunications, and smart driving sectors [34][36] - Notable companies receiving substantial inflows include Alibaba, China Mobile, and Ideal Auto, reflecting strong market interest in AI beneficiaries [34][36]

Investment Rating - The report maintains a "Buy" rating for Duolingo (DUOL.US) with a target price of $380, indicating a potential upside of 29% from the current price of $295.23 [2][5][8] Core Insights - Duolingo reported strong revenue growth of 39% year-over-year in Q4 2024, reaching $210 million, which exceeded market expectations by 2%. However, net profit of $13.9 million fell short of market forecasts [8] - The company is optimistic about 2025, projecting nearly 30% revenue growth for the year, with strong user engagement metrics, including a 51% increase in Daily Active Users (DAU) to 40.5 million and a 32% increase in Monthly Active Users (MAU) to 117 million [8] - The introduction of Duolingo Max, which includes video call features, is expected to drive further growth, contributing to a 5% increase in subscription users [8] Financial Performance and Forecast - Revenue projections for Duolingo are as follows: - FY23: $531 million - FY24: $748 million - FY25E: $976 million - FY26E: $1,242 million - FY27E: $1,556 million [3][9] - Adjusted EBITDA is forecasted to improve from $94 million in FY23 to $544 million by FY27, with corresponding EBITDA margins increasing from 25% in Q4 2024 to a projected 27.5% for the full year of 2025 [3][9] - The report highlights a slight decline in gross margin to 71.9% in Q4 2024, attributed to higher costs associated with Duolingo Max [8] Market Expectations - The report indicates that the market expects Duolingo's revenue growth to continue, with estimates of 31.6% to 33.4% year-over-year growth in Q1 2025 [8] - The stock has shown a significant range over the past 52 weeks, trading between $145.0 and $441.7, reflecting volatility in market sentiment [2][5]

Investment Rating - The report indicates a positive investment outlook for the AI and technology sector, particularly highlighting the potential of DeepSeek to drive investment interest in both primary and secondary markets [2][21][22]. Core Insights - DeepSeek has rapidly gained attention in the AI industry, with its models DeepSeek-V3 and DeepSeek-R1 demonstrating capabilities comparable to leading global AI models, particularly excelling in mathematics and programming [2][4][9]. - The report anticipates a significant increase in capital expenditure by Chinese internet giants on AI, potentially doubling previous investments, which is expected to initiate a super cycle in AI infrastructure in China [2][31][35]. - The emergence of DeepSeek is expected to alleviate the pressure from U.S. semiconductor restrictions, promoting the localization of AI data centers and related infrastructure in China [2][52][60]. Summary by Sections DeepSeek's Impact on AI Models - DeepSeek's models have shown performance metrics that rival those of top-tier AI models, with DeepSeek-R1 achieving 671 billion parameters and outperforming many existing models in key areas [4][9][10]. - The cost of using DeepSeek's API is significantly lower than that of comparable models, with prices for DeepSeek-R1 at $2.19 per million tokens, which is over 90% cheaper than OpenAI's equivalent [10][20]. Investment Trends in AI - The report notes that the success of DeepSeek is likely to reignite investment enthusiasm in the AI sector, similar to the surge seen with ChatGPT, with potential valuations for AI startups expected to rise significantly [21][22]. - Chinese internet companies are projected to increase their capital expenditures substantially, with estimates suggesting a rise from RMB 200-300 billion to RMB 400-600 billion, primarily focused on AI infrastructure [31][35]. AI Infrastructure and Market Growth - The report highlights that the AI data center industry in China is poised for growth, with significant capital expenditures expected in IT-related sectors, particularly in servers, which account for approximately 70% of IT costs [22][24]. - The Chinese AI chip market is forecasted to grow significantly, with a projected market size of RMB 1,412 billion by 2024, reflecting a 17% year-on-year increase [56][58]. Competitive Landscape - The report emphasizes the competitive dynamics between Chinese and U.S. tech companies, noting that while U.S. firms have been more aggressive in AI investments, Chinese companies are beginning to ramp up their efforts [35][41]. - The report also discusses the potential for DeepSeek to mitigate the impact of U.S. restrictions on AI semiconductor exports, thereby enhancing China's capabilities in AI model development [60].