Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company's performance in Q3 2024 continues to be under pressure, but improvement is expected in 2025 [2] - The company reported a revenue of 508 million yuan for the first three quarters of 2024, a year-on-year decrease of 35.84%, and a net profit attributable to the parent company of 61 million yuan, down 66.14% year-on-year [2] - The decline in revenue and profit is attributed to the impact of centralized procurement policies affecting the company's ex-factory prices, leading to a significant drop in gross margin [2] - The company is enhancing its R&D efforts and expanding into new fields and products, with R&D expenses reaching 32 million yuan in Q3 2024, representing a 24.98% R&D expense ratio, an increase of 9.00 percentage points year-on-year [2] Financial Performance Summary - For 2024, the company is projected to have revenues of 775 million yuan, with a year-on-year decline of 35.9%, followed by a recovery with expected growth rates of 31.5% in 2025 and 27.8% in 2026 [5] - The net profit attributable to the parent company is expected to be 117 million yuan in 2024, down 57.7% year-on-year, with subsequent increases to 204 million yuan in 2025 and 274 million yuan in 2026 [5] - The gross margin is projected to decrease to 69.1% in 2024, stabilizing at that level through 2026 [5] - The company holds 174 product registration certificates or filing certificates in China, with nearly 20 obtained in Q3 2024, indicating a diversified product portfolio [2]

Group 1 - The report indicates that A-shares are expected to experience fluctuations with a slight upward trend, driven by both valuation increases and profit digestion, supported by dual easing of fiscal and monetary policies [7][8] - The core conclusion emphasizes that if profit improvements are significant, it could lead to a bull market characterized by a "Davis Double Play" [7] - The report highlights the importance of internal policies that ensure stable growth, with fiscal policies taking the lead to guarantee necessary spending intensity and continued liquidity [7][8] Group 2 - The report suggests that the growth sector, particularly technology, will be a primary focus, while economic recovery should not be overlooked [8] - It outlines a favorable outlook for growth sectors over consumption, finance, and cyclical industries, with specific emphasis on electronics, communications, and computing benefiting from a continued easing of monetary policy [8] - The real estate sector is expected to stabilize, with policies likely to support sales and related demand in home decoration and appliances [8] Group 3 - The report discusses the anticipated fiscal policy for 2025, predicting a significant increase in fiscal spending, with a narrow estimate of at least 2 trillion yuan in new spending [28][31] - It notes that the fiscal deficit rate is expected to exceed 3%, likely falling between 3.5% and 4%, which will contribute to the overall economic recovery [28][31] - The report emphasizes that the fiscal policy will focus on enhancing public services and supporting consumption, particularly in the context of urbanization and the integration of migrant workers into cities [46]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The report highlights that Q3 revenue was 167.19 billion (YoY +8.1%, QoQ +3.8%), slightly below consensus expectations [2] - Gross profit reached 88.83 billion (YoY +16.1%, QoQ +3.4%), also slightly below consensus [2] - Net profit was 53.23 billion (YoY +47.1%, QoQ +11.8%), exceeding consensus by 17.4% [2] - The report emphasizes stable growth in domestic long-term games and incremental growth from overseas games, with domestic game revenue at 37.3 billion (YoY +14%) driven by titles like "Valorant" and "Honor of Kings" [2] - Marketing business revenue was 30 billion (YoY +16.6%), surpassing consensus expectations [2] Summary by Sections Financial Performance - Q3 revenue was 167.19 billion, slightly missing consensus by 0.4% [2] - Gross profit was 88.83 billion, missing consensus by 0.8% [2] - Net profit was 53.23 billion, beating consensus by 17.4% [2] - The company expects net profits (Non-IFRS) for 2024/25/26 to be 220.80 billion, 238.91 billion, and 260.27 billion respectively [2] Business Segments - Value-added services (VAS) showed a gross margin of 57.5%, exceeding Bloomberg consensus of 56.7% due to growth in gaming revenue [2] - Marketing business gross margin was 53%, below Bloomberg consensus of 56% [2] - Financial technology revenue was 53.1 billion (YoY +2%), slightly below consensus of 54.06 billion [2] Future Outlook - The report anticipates continued growth in gaming and advertising, maintaining a "Buy" rating based on the company's long-term competitive advantages [2]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The gaming business has exceeded expectations, with a focus on new game launches at the end of the year [2] - The company achieved revenue of 26.21 billion yuan in Q3 2024, a year-over-year decrease of 3.9% but a quarter-over-quarter increase of 2.8% [2] - The gaming and related value-added services outperformed expectations with 20.9 billion yuan compared to the 20.7 billion yuan consensus [2] - The company’s long-term games continue to perform well, with significant contributions from titles like "Identity V" and "Naraka: Bladepoint" [2] - New games expected to launch in December, including Marvel IP licensed titles, are anticipated to drive revenue growth [2] Financial Performance Summary - Q3 2024 gross profit was 16.48 billion yuan, with a gross margin of 62.9%, showing a year-over-year decrease of 2.9% [2] - Adjusted net profit for Q3 2024 was 7.5 billion yuan, a year-over-year decrease of 13.3% [2] - The company forecasts adjusted net profits for CY 2024/25/26 to be 31.82 billion, 34.94 billion, and 38.32 billion yuan respectively [2][4] - The company’s revenue growth rates are projected at 2.2% for 2024, 7.1% for 2025, and 6.0% for 2026 [4][8] Key Financial Indicators - The company’s operating income for 2023 is projected at 103.47 billion yuan, with a year-over-year growth of 7.2% [4] - The return on equity (ROE) is expected to decline from 25% in 2023 to 21% by 2026 [4] - The price-to-earnings (P/E) ratio is projected to decrease from 16.1 in 2023 to 10.5 by 2026 [4][8]

Investment Rating - Industry Rating: Overweight [2] Core Views - The report highlights the acceleration of AI product iterations both domestically and internationally, emphasizing the potential of AI technology providers that can reduce workforce redundancies [2][4] - The report notes that the AI industry has seen significant growth, with Baidu's Wenxin model achieving a daily call volume exceeding 1.5 billion, a 7.5-fold increase from earlier this year [4] - The report suggests that sectors such as e-commerce, digital marketing, and finance are leveraging AI for labor substitution and cost-effective promotion, indicating ongoing development opportunities for related technology providers [4] Summary by Sections 1. Weekly Market Review - From November 11 to November 15, 2024, the Shanghai Composite Index decreased by 3.52%, the ChiNext Index by 3.36%, and the CSI 300 Index by 3.29% [3][31] - The media index increased by 1.27%, while the Hang Seng Technology Index fell by 7.29% [3][31] 2. AI+ Sector Overseas AI - Google announced the launch of a standalone Gemini app for iPhone users, expected to enhance AI functionalities [5][51] - Apple released Final Cut Pro 11 and other updates, introducing significant new features [5][51] Domestic AI - Tencent launched version 2.0 of its Yuanbao app, featuring an upgraded interface and new AI application sections [8][52] - Alibaba introduced the conversational AI search engine Accio overseas, which has shown a 20%-30% increase in conversion rates during trials [8][52] - ByteDance unveiled the SeedEdit image editing model, which is currently in testing [8][52] 3. AI Hardware - Baidu launched the Xiaodu AI glasses, claiming it to be the world's first native AI glasses equipped with a Chinese large model [9][53] 4. Overseas Technology - CINNO Research reported that the domestic XR market saw a total sales volume of 108,000 units in Q3 2024, a 35% decline from the previous quarter [10] 5. Gaming - Tencent reported Q3 revenue of 167.193 billion yuan, an 8% year-on-year increase, with a gross profit of 88.828 billion yuan, up 16% [12]

Investment Rating - The industry investment rating is "Overweight" [2] Core Views - The report highlights that the price of white feather chicken seedlings remains high, while domestic pet brands performed well during the Double Eleven shopping festival [2] - The report indicates a slowdown in the replenishment enthusiasm for pigs, with a 14.6% month-on-month increase in the output of listed pig companies [2][5] - The report predicts that pig prices will receive strong support in 2025, with a projected average decrease of 4.5% in the breeding sow inventory compared to 2023 [5] Summary by Sections 1. Weekly Market Review - The agricultural sector fell by 6.06% this week, underperforming the CSI 300 index by 2.77 percentage points [25][26] - The agricultural sector's absolute PE and PB are 30.41 times and 2.54 times, respectively, which are significantly lower than historical averages [36][38] 2. Industry Weekly Data 2.1 Primary Agricultural Products - Corn spot price is 2208.04 CNY/ton, down 1.12% week-on-week, and soybean spot price is 4012.11 CNY/ton, up 0.43% week-on-week [44] 2.2 Livestock - The average weight of pigs sold nationwide is 126.46 kg, up 0.56 kg week-on-week [2] - The price of pigs is currently 16.03 CNY/kg, down 4.3% week-on-week [2] 2.3 Poultry - The price of white feather chicken seedlings is 56.03 CNY/set, down 1.3% week-on-week, but up 15.2% year-on-year [5] - The price of yellow feather chicken has shown slight fluctuations, with the average price of black chicken at 23 CNY/kg [5] 3. Market Dynamics - The report notes that the sales of pig vaccines have increased, with the growth rates for various vaccines ranging from 8.3% to 83.3% [5] - The report emphasizes the strong performance of domestic pet food brands during the Double Eleven shopping festival, with significant year-on-year growth in sales [5]

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Investment Rating - The industry investment rating is "Buy" [2] Core Views - The report focuses on British American Tobacco's (BAT) strategy to promote its high-end Glo series and accelerate its transition to a smoke-free future. The new tobacco audience is expanding, driven by health trends and product transformation. The number of vaping e-cigarette users is expected to reach 101 million by 2030 [2][26] - The report highlights that the nicotine product revenue is projected to grow at a CAGR of 4.6% from 2024 to 2035, surpassing the previous growth rate of 3.8% from 2017 to 2023 [2][26] - BAT plans to launch the Glo Hilo, a high-end heated tobacco device, by the end of 2024, with further market expansion expected in 2025 [2][34] Summary by Sections Weekly Focus - The report discusses BAT's high-end Glo series and its strategy for a smoke-free future, emphasizing the growth of new tobacco consumers, particularly among younger demographics in Europe [2][26] Weekly Market Review - From November 11 to November 15, 2024, the Shanghai Composite Index fell by 3.52%, with the light industry manufacturing sector down 3.68% and textile and apparel down 3.38% [2][38] Key Data Tracking Home Furnishing - The report notes a significant decline in real estate transactions, with a 28.31% decrease in the transaction area of commercial housing in major cities [5] - Furniture sales in October 2024 reached 15.2 billion yuan, a year-on-year increase of 7.4% [5] Packaging and Paper - The report tracks prices of various paper products, noting fluctuations in prices for wood pulp and recycled paper [5] Textile and Apparel - Cotton prices in China are reported at 15,368 yuan per ton, with retail sales of clothing and textiles in October 2024 amounting to 134.7 billion yuan, reflecting an 8% year-on-year increase [6][8] Industry News - The report indicates that BAT's revenue from non-combustible products has reached 18% of total revenue, with a higher percentage of 27% when excluding traditional combustible tobacco products in the U.S. [2][32]

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