Investment Rating - Investment recommendation: Outperform the market (maintained) [3] Core Viewpoints - Tesla has been confirmed as one of the first companies to comply with automotive data security requirements, which is expected to facilitate the entry of Tesla's Full Self-Driving (FSD) technology into the domestic market [2][3] - The FSD is accelerating its iteration, with version V13.3 expected to be pushed out by the end of November 2024, potentially enhancing user experience and leading to a revaluation of Tesla's stock [2][3] - Tesla's production capacity is anticipated to continue expanding, with new production facilities and products expected to drive rapid growth in the second half of next year [2][3] Summary by Relevant Sections - **Investment Suggestion**: The report maintains an "Outperform the market" rating, indicating a positive outlook for Tesla and its supply chain partners [3] - **Event**: On November 8, 2024, the China Automotive Industry Association confirmed Tesla's compliance with data security standards, which is expected to support the rollout of FSD in China [3] - **Production Capacity**: The report highlights potential new factory developments, including a possible factory in northern Mexico, which could produce Tesla's lower-cost models, and the ongoing expansion of the Shanghai Gigafactory [3] - **Growth Opportunities**: With the continuous enhancement of production capacity and the introduction of new vehicles alongside the rapid iteration of FSD, Tesla is expected to enter a new growth phase by the end of 2025 [3]

Investment Rating - The investment rating for the company is "Buy" (maintained) [4] Core Views - The company held its 2024 Investor Open Day on November 8, 2024, focusing on "High-Quality Development of New Energy Vehicle Insurance" and introduced innovative measures in auto insurance management and achievements in new energy vehicle insurance [2][6] - The penetration rate of new energy vehicles continues to rise, making new energy vehicle insurance a key focus for future auto insurance reforms [6] - The company is committed to advancing the transformation and upgrading of new energy vehicle insurance, with expectations for improvement in the combined operating ratio (COR) for new energy vehicle insurance [7][8] Summary by Sections Company Overview - The company is classified under the non-bank financial/insurance sector [4] - Current stock price is HKD 12.52, with a total market capitalization of HKD 86,379.16 million [4] Financial Performance - From 2020 to 2023, the sales of new energy passenger vehicles in China increased from 1.11 million to 7.75 million, with a compound annual growth rate (CAGR) of 91%, significantly higher than the overall growth of traditional passenger vehicles at 4% [6] - The number of new energy vehicles in circulation rose from 4.92 million to 20.41 million, with their share of total vehicle ownership increasing from 1.8% to 6.1% [6] - As of the first half of 2024, the share of new energy vehicles in total vehicle ownership reached 7.2% [6] Market Position - The company's market share in new energy commercial vehicle insurance reached 35.45% in the first nine months of 2024, an increase of 1.49 percentage points year-on-year [7] - The company has served over 22 million new energy vehicle customers [7] Future Outlook - The company aims to create a new business model that covers the entire lifecycle of vehicle insurance and all customer service scenarios, enhancing risk management and service capabilities [7] - The projected net profit for the company from 2024 to 2026 is expected to be HKD 33.87 billion, HKD 35.73 billion, and HKD 39.80 billion, with growth rates of 38%, 6%, and 11% respectively [8]

Investment Rating - The investment rating for the company is "Buy" (maintained) [4] Core Views - The company's revenue for the first three quarters of 2024 reached 764 million yuan, a year-on-year increase of 12.7%, with a net profit attributable to the parent company of 149 million yuan, up 61.2% year-on-year [6][7] - The significant increase in gross margin may indicate a change in revenue structure, with higher contributions from higher-margin businesses [6][7] - The company has secured a major sales contract worth 316 million yuan for ammunition, which is expected to ensure revenue stability for the year [6][7] - The solid rocket engine is identified as a bottleneck in the missile industry chain, and if demand recovers, the company's position in the industry chain may improve [6][7] - The market space is broad, and profit is expected to grow steadily, leading to the maintenance of the "Buy" rating [6][7] Summary by Sections Financial Performance - For 2024, the company is projected to achieve revenues of 1.296 billion yuan, with a growth rate of 24.55% [7] - The net profit is expected to reach 193 million yuan, reflecting a year-on-year growth of 36.84% [7] - The earnings per share (EPS) is forecasted to be 1.10 yuan, with a corresponding price-to-earnings (P/E) ratio of 54x [7] Market Outlook - The company is expected to maintain a compound annual growth rate (CAGR) of 25.19% for revenue and 34.46% for net profit over the next three years [6][7] - The gross margin is projected to improve, indicating a favorable shift in the product mix towards higher-margin offerings [6][7] Industry Position - The company is positioned as a core supplier of solid rocket engines, which are critical in the missile supply chain, potentially benefiting from supply-demand imbalances [6][7] - The defense industry is expected to see increased demand, which may enhance the company's market position [6][7]

Investment Rating - The investment rating for Weichai Power (000338) is "Buy" (maintained) [4] Core Views - In Q3 2024, Weichai Power reported a revenue of 161.95 billion yuan, a year-on-year increase of 1.0%, and a net profit attributable to shareholders of 8.4 billion yuan, a year-on-year increase of 29.2% [2][6] - The company achieved a revenue of 49.46 billion yuan in Q3 2024, a year-on-year decline of 8.8% and a quarter-on-quarter decline of 11.8%, with a net profit of 2.5 billion yuan, a year-on-year decline of 4% and a quarter-on-quarter decline of 24.4% [2][6] - The non-net profit attributable to shareholders was 2.23 billion yuan in Q3, a year-on-year increase of 10% [6] Summary by Sections Financial Performance - For the first three quarters of 2024, Weichai Power's revenue was 1619.5 billion yuan, with a net profit of 84.0 billion yuan [2][6] - In Q3 2024, the company’s gross margin was 22.1%, up 0.3 percentage points year-on-year and 0.7 percentage points quarter-on-quarter [6] - The sales profit margin for Q3 was 7.4%, which is a year-on-year increase of 0.2 percentage points [6] Market Conditions - The heavy truck industry faced pressure with sales of 178,000 units in Q3 2024, a year-on-year decline of 18.2% [6] - Weichai Power outperformed the industry due to its diversified product offerings, particularly benefiting from non-road applications and large-bore engines [6] Future Outlook - The company anticipates a recovery in the industry supported by policy incentives such as trade-in programs [6] - The revenue targets for 2024-2026 are set at 210.2 billion, 231.2 billion, and 258.9 billion yuan, with corresponding net profit targets of 11.23 billion, 13.91 billion, and 15.61 billion yuan [6] - The company aims to achieve a sales profit margin of 8% in 2024, with a projected compound annual growth rate (CAGR) of 20.1% over the next three years [6]

Industry Investment Rating - The report maintains an "Outperform" rating for the power equipment sector, specifically focusing on the precision structural components segment within the lithium battery industry [3] Core Views - Precision structural components are critical parts of lithium batteries, with demand expected to grow at a CAGR of 17.9% over the next three years [2] - The structural components segment is characterized by high barriers to entry in terms of technology, customer relationships, and capital, leading to a stable industry structure dominated by a few key players [2][4] - The industry is expected to maintain a "one superpower, multiple strong players"格局, with leading companies likely to strengthen their competitive advantages [2][4] Market Demand and Growth - The global market size for structural components (including aluminum-plastic film) is projected to reach 514/611/690 billion yuan in 2024/2025/2026, with a CAGR of 17.9% [4] - Square batteries dominate the domestic power battery market, accounting for over 90% of the market share in 2024 [3] - The demand for structural components is driven by the growth in power and energy storage batteries, with global energy storage battery installations expected to reach 149/194/220 GWh in 2024/2025/2026 [44][47] Industry Structure and Competitive Landscape - The structural components industry has evolved through three stages: initial development (pre-2005), domestic rise (2006-2018), and the current "one superpower, multiple strong players"格局 [3] - In 2023, the top five global manufacturers held approximately 63% of the market share, with Kedali leading the market [3] - The industry is characterized by high technical and capital barriers, making it difficult for new entrants to compete [2][4] Technological Trends and Innovations - The development of 46-series cylindrical batteries and fast-charging technologies is expected to drive innovation in structural components, potentially increasing their value [57][62] - Solid-state batteries, while evolving in terms of electrolytes and separators, are expected to maintain the demand for structural components as they still require casings [53][54] - Fast-charging technologies, such as 4C/5C/6C batteries, are becoming a key focus for battery manufacturers, which could lead to higher value-added structural components [64][65] Company Focus: Kedali - Kedali, a leading player in the precision structural components industry, has over 20 years of experience and deep customer relationships [5] - The company is expected to maintain robust profitability through scale advantages and cost control measures, with projected revenues of 12.346/14.846/17.822 billion yuan in 2024/2025/2026 [3] - Kedali's overseas expansion is expected to contribute to future earnings growth [5] Market Segmentation and Applications - Structural components are used in various battery types, including square, cylindrical, and pouch batteries, with square batteries being the mainstream in the power and energy storage markets [15][18] - The demand for structural components is driven by applications in electric vehicles, energy storage, and consumer electronics [16][18] Raw Material and Production Requirements - Precision structural components require high-precision materials, with strict standards for aluminum used in battery casings and covers [73][74] - The production process for structural components involves complex manufacturing techniques, particularly for battery covers, which require multiple materials and processes [20][23]

Macro Environment and Policy Support - The 2013-2016 M&A wave was driven by a combination of policy relaxation, liquidity expansion, and overcapacity, with the current macro environment showing similar conditions [2] - During this period, China faced a downward shift in economic growth and entered a critical phase of industrial restructuring, with the tertiary sector surpassing the secondary sector in GDP contribution [9][10] - A series of supportive policies were introduced to address challenges in M&A, including simplifying approval procedures, improving financial and tax policies, and encouraging cross-regional mergers [11][12] Market Performance and Characteristics - The M&A wave began with the IPO suspension in late 2012 and ended with policy tightening in 2016, with the Wind M&A Index achieving a 246% excess return during this period [15][16] - Small-cap and TMT sectors outperformed, with private enterprises and small-to-medium market cap companies dominating the M&A activities [18][19] - The issuance of shares for asset purchases was the most common M&A method, while the purpose of M&A shifted from shell listings to horizontal integration and diversification strategies [20][21] Industry Participation and Trends - TMT, retail, social services, and defense industries were the most active participants in M&A, benefiting from the mobile internet wave and VC/PE exits [22] - The M&A wave significantly boosted the performance of TMT and social services sectors in 2013 and 2015, with a positive correlation between M&A activity and industry returns [27][28] Financial Impact of M&A - M&A activities had a short-term positive financial effect, with EPS and net profit increasing in the year following the merger, but the effect diminished over time [31][32] - Shell listings showed the most significant EPS and profit growth in the short term, while diversification strategies had more sustainable effects [33] - The M&A wave led to a surge in goodwill, with M&A companies accounting for over 50% of total A-share goodwill from 2016 onwards, increasing the risk of impairment [34][35]

Investment Rating - The report maintains an "Outperform" rating relative to the market for the real estate sector [4]. Core Viewpoints - The report emphasizes the continuous deepening and improvement of storage policies, which are expected to assist in destocking the real estate market. The central and local governments have accelerated the promotion of storage policies for existing housing, including the establishment of a 300 billion yuan special loan for affordable housing [4][9]. - The report highlights the unique progress of the Zhengzhou model, which has successfully stored 106,000 units of affordable housing with a total transaction amount of 33.8 billion yuan, benefiting from strong local government support and favorable financing conditions [4][12]. - The report notes that the national storage efforts face constraints, particularly regarding the need to improve project yield levels, as the average rental yield is currently at 2.25%, which does not cover the costs associated with storage [4][20]. - Future storage measures are expected to focus on improving investment return levels, including extending the assessment period for storage funds and expanding the range of storage projects [4][22]. Summary by Sections 1. Continuous Improvement of Storage Policies - The central government has initiated comprehensive policies for the acquisition of existing housing for affordable rental purposes, with a focus on destocking [9][10]. - Local governments are actively responding with specific implementation details, supporting state-owned enterprises in acquiring unsold properties for affordable housing [15][17]. 2. Zhengzhou Model - Zhengzhou has made significant progress in storage, establishing a dedicated company for this purpose and achieving notable results in affordable housing acquisition [12][14]. - The financial calculations for Zhengzhou's affordable rental housing projects indicate a target of "break-even" profitability, supported by government subsidies [12][16]. 3. National Storage Constraints - The report identifies clear funding sources for storage, including a 300 billion yuan special loan from the central bank and local government special bonds [20][21]. - The current average rental yield in major cities is insufficient to cover the costs of storage, leading to reluctance among developers to sell assets at discounted prices [20][22]. 4. Focus on Improving Investment Returns - The report suggests that future policies should aim to enhance investment returns, including measures such as extending the assessment period for storage funds and considering asset appreciation in revenue calculations [22][24]. - The financial gap in affordable rental housing projects indicates a need for improved rental yields or government subsidies to achieve profitability [22][24]. 5. Investment Recommendations - The report recommends focusing on companies that are likely to benefit from market stabilization, particularly those with strong land acquisition capabilities in first-tier and core second-tier cities [4][24].

Investment Rating - The report maintains a "Buy" rating for Zijin Mining (601899) [3] Core Views - Zijin Mining is a global mining giant with world-class resources and production capacity, which will help the company achieve rapid production growth [2] - The acquisition of the La Arena gold and copper mine in Peru will further enhance the company's gold and copper resource reserves [5] - The La Arena project is expected to significantly contribute to Zijin Mining's 2028 production targets [5] - The company's net profit is forecasted to be 32.265 billion yuan, 38.451 billion yuan, and 45.119 billion yuan for 2024-2026, with EPS of 1.21 yuan, 1.45 yuan, and 1.70 yuan respectively [2][5] Acquisition Details - Zijin Mining's subsidiary, Jin Shan (Singapore) Mining, plans to acquire 100% equity in the La Arena gold mine and its Phase II project from Pan American Silver Corp for $245 million, with additional contingent payments of $50 million and a 1.5% royalty on net smelter returns from gold production [5][9] - The La Arena project has a total asset value of $320 million, with net assets of $165 million and a net profit of $10 million in 2023 [10] - The Phase II project has proven and controlled resources of 740 million tons, containing approximately 175.3 tons of gold and 2.627 million tons of copper [5][17] Production and Development - The La Arena Phase I project, operational since 2011, produces approximately 3 tons of gold annually, with a remaining service life of 3 years [20] - The Phase II project, still in the research phase, is expected to produce 100,000 tons of copper and 3.8 tons of gold annually once operational [20] - The project is located in a world-renowned metallogenic belt, with significant potential for further resource discovery [17] Financial Projections - Zijin Mining's revenue is expected to grow from 270.329 billion yuan in 2022 to 378.865 billion yuan in 2026, with a CAGR of 14.91% from 2024 to 2026 [6] - The company's EBITDA is projected to increase from 42.026 billion yuan in 2022 to 85.052 billion yuan in 2026 [6] - The P/E ratio is expected to decrease from 14.3x in 2024 to 10.2x in 2026, indicating potential undervaluation [6] Industry and Market Position - Zijin Mining operates in the non-ferrous metals/industrial metals sector and is positioned as a global leader with significant resource and production capabilities [3][5] - The company's strategic acquisitions and development projects are expected to strengthen its market position and resource base [5][17]

Investment Rating - The report maintains an "Outperform" rating for the sector [3]. Core Insights - The retail sales growth in the social service sector continues to show weakness, with cumulative growth rates for social retail, catering, and commodity retail sales declining to 3.3%, 6.2%, and 3.0% respectively by September 2024 [4][10]. - Despite the overall consumption slowdown, companies with competitive advantages are expected to sustain their performance better than in the past, with a focus on high-quality leading companies such as Huazhu Group, Miniso, Beijing Human Resources, and Tuhu [4][5]. Summary by Sections 1. Industry Overview: Weak Consumption, Awaiting Turning Point - Social service retail and catering consumption continue to weaken, with cumulative growth rates dropping from 3.7% and 7.9% in June to 3.3% and 6.2% by September [10]. - The performance of limited-scale catering and commodity retail has lagged behind the overall industry growth, with growth rates of 3.6% and 2.2% respectively for the first nine months of 2024 [10]. 2. Performance: Operational Pressure, Steady Leaders - Cross-border e-commerce shows high revenue growth but weakened profit margins due to increased shipping costs and competition, with the China Export Container Freight Index (CCFI) rising by 126.61% year-on-year [5][26]. - The tourism sector remains a bright spot, with outbound travel increasing by 30.1% year-on-year in Q3 2024, although domestic scenic areas have seen a decline in revenue growth [5][10]. - The human resources service sector demonstrates resilience, with major companies reporting stable revenue growth and positive net profit growth despite overall operational pressures in the retail service industry [5][10]. 3. Investment Recommendations: Focus on Leading Companies - The report suggests focusing on high-quality leading companies such as Huazhu Group, Miniso, Beijing Human Resources, and Tuhu, as the sector faces pressure but shows potential for improvement in expectations [4][5].

Investment Rating - The report maintains a "Buy" rating for Yili Group (600887) [1][2] Core Views - Yili Group's 2024 Q3 revenue was 290.37 billion yuan, down 6.66% YoY, while net profit attributable to shareholders was 3.337 billion yuan, up 8.53% YoY [1][4] - The company's profit performance is strong despite weak dairy demand, benefiting from completed channel adjustments, cost advantages, and expense control [1][6] - With stabilizing raw milk prices and demand, Yili is expected to continue improving its operations [1][6] Financial Performance Revenue and Profit - 2024 Q1-Q3 revenue: 887.33 billion yuan, down 8.61% YoY [1][4] - 2024 Q1-Q3 net profit: 10.868 billion yuan, up 15.87% YoY [1][4] - 2024 Q3 liquid milk revenue: 206.37 billion yuan, down 10.31% YoY but up 24.12% QoQ [4] - 2024 Q3 milk powder revenue: 68.21 billion yuan, up 6.56% YoY [4] - 2024 Q3 ice cream revenue: 10.21 billion yuan, down 16.65% YoY [4] Profitability - 2024 Q3 gross margin: 34.85%, up 2.48 pct YoY [6] - 2024 Q3 net margin: 11.45%, up 1.63 pct YoY [6] - 2024 Q3 sales expense ratio: 19.02%, up 1.09 pct YoY [6] - Gross margin-sales expense ratio difference: up 1.39 pct [6] Industry and Market Position - Yili Group is a leading dairy products company in China [1][6] - The dairy industry is facing weak demand, but Yili's channel adjustments have improved product distribution [1][4] - The company benefits from cost advantages and has strong control over expenses [1][6] Future Projections - 2024-2026 revenue forecast: 1.18855 trillion yuan, 1.21403 trillion yuan, 1.26437 trillion yuan [7] - 2024-2026 net profit forecast: 12.079 billion yuan, 11.281 billion yuan, 12.234 billion yuan [7] - 3-year CAGR for net profit: 5.47% [7] Valuation Metrics - Current price: 30.20 yuan [2] - 2024E P/E: 15.9x [7] - 2024E P/B: 3.4x [7] - 2024E EV/EBITDA: 10.2x [7]