1 Apr 2026 CMB International Global Markets | Equity Research | Company Update Meidong Auto (1268 HK) Expect profit growth in FY26-27 following 2H25 new-car GPM recovery, new HIMA stores | Target Price | HK$2.20 | | --- | --- | | (Previous TP | HK$2.80) | | Up/Downside | 57.1% | | Current Price | HK$1.40 | China Auto Ji SHI, CFA (852) 3761 8728 Maintain BUY. Despite continued industry headwinds, Meidong has maintained healthy cash flow and balance sheet, which could help it survive longer. Its 2H25 new-car ...

Macro Commentary - China's manufacturing PMI rebounded significantly in March, partly due to the later and longer Spring Festival holiday in 2026, although it remains in a contraction state based on the three-month moving average. Both supply and demand have improved significantly, with inventory cycles and import/export orders showing recovery [2] - The non-manufacturing PMI slightly increased, indicating a return to expansion in the service sector, while the construction sector remains in contraction. The price indices for both manufacturing and services suggest that upstream input inflation may lead to a positive PPI in the coming months [2] - The overall resilience of the RMB is maintained, fluctuating around 6.9 against the USD despite a strong dollar backdrop [4] Company Analysis Sunny Optical Technology (2382 HK) - The company is expected to achieve a revenue and net profit growth of 21% and 85% year-on-year in the second half of 2025, reaching RMB 23.6 billion and RMB 3 billion respectively. The net profit aligns with previous positive forecasts and exceeds market consensus by 44% due to a one-time investment gain from GoerTek [5] - Management guidance for 2026 indicates revenue and net profit growth of no less than 7% each, driven by a 5-10% increase in smartphone revenue and a 60% increase in IoT revenue, offsetting weakness in XR business [5] Yongda Automobile (3669 HK) - The company anticipates a significant impairment in 2025, with revenue expected to decline by 15% to RMB 27.5 billion in the second half of 2025, leading to a historical low overall gross margin of 7.0%. A total impairment of approximately RMB 4.9 billion is expected, resulting in a net loss of RMB 1.7 billion in the second half of 2025 [5] - Management plans to close 15-20 stores in 2026, with most related asset impairments already accounted for in 2025, suggesting no major impairments in 2026 [6] Sanofi Pharmaceutical (1530 HK) - The company is projected to achieve a revenue of RMB 17.7 billion in 2025, a 94.3% year-on-year increase, primarily due to a RMB 9.4 billion licensing income from Pfizer. However, product sales are expected to decline by 10.3% to RMB 8 billion due to national procurement policies [7] - The company is expected to maintain high levels of R&D investment to accelerate pipeline progress, with significant clinical advancements anticipated from the collaboration with Pfizer [8] Kanglong Chemical (300759 CH) - The company reported a 14.8% year-on-year revenue growth to RMB 14.1 billion in 2025, with adjusted net profit increasing by 13.0% to RMB 1.82 billion, both exceeding previous forecasts [10] - Management expects a revenue growth of 12-18% in 2026, with currency fluctuations negatively impacting growth guidance by 3 percentage points [11] Zhongji Xuchuang (300308 CH) - The company reported a strong FY25 performance with a revenue growth of 60% to RMB 38.2 billion and a net profit increase of 109% to RMB 10.8 billion, aligning with market expectations [14] - The gross margin improved significantly from 34.7% in FY24 to 42.6% in FY25, driven by strong shipments of high-speed optical modules and an increase in the proportion of silicon photonics products [14] OmniVision Technologies (603501 CH) - The company achieved a revenue growth of 12.1% to RMB 28.9 billion in FY25, with a net profit increase of 21.7% to RMB 4 billion, although slightly below market expectations [15] - The gross margin improved from 29.4% in FY24 to 30.6% in FY25, primarily due to the optimization of CIS product structure and increased contributions from automotive CIS revenue [15]

Investment Rating - The report maintains a "BUY" rating for Sunny Optical, with a new target price of HK$82.99, implying a 55.3% upside from the current price of HK$53.45 [3][16]. Core Insights - Sunny Optical's revenue and net profit for 2H25 grew by 21% and 85% year-over-year, respectively, largely in line with prior positive profit alerts and estimates, but significantly above consensus estimates due to a one-off investment gain [1][9]. - For 2026, management guided for revenue and net profit growth of not less than 7% year-over-year, driven by a 5-10% increase in smartphone revenue and a 60% increase in IoT revenue, despite challenges in the XR segment [1][9]. - The focus on high-end specifications and a strong IoT product pipeline are expected to be major growth drivers in 2026, even amid near-term headwinds in the smartphone and automotive industries [1][9]. Financial Summary - Revenue projections for FY25E are set at RMB43.23 billion, with a year-over-year growth of 12.9%, and for FY26E at RMB45.91 billion, with a growth of 6.2% [2][24]. - Net profit for FY25E is estimated at RMB4.64 billion, reflecting a 71.9% increase year-over-year, while FY26E net profit is projected at RMB4.15 billion, a decrease of 10.4% [2][24]. - The report indicates an adjusted forecast for FY26-27E, reflecting better-than-expected results and guidance for FY25 [1][12]. Segment Performance - The handset segment is expected to see revenue growth of 5-10% year-over-year, with improvements in gross profit margins [9][15]. - The vehicle segment is projected to grow by 15% year-over-year, driven by advancements in ADAS and other automotive technologies [9][15]. - The XR segment is anticipated to decline by 16% year-over-year due to client transitions, although growth in optical engines and AR systems is expected to commence in FY27 [9][15]. Valuation - The target price of HK$82.99 is derived from a sum-of-the-parts (SOTP) valuation, applying different P/E multiples to various business segments, reflecting Sunny's diversified growth profiles [16][18]. - The handset business is assigned a P/E of 20x, the vehicle segment 23x, the XR products 25x, and other products 15x, indicating a strategic approach to valuation based on market leadership and growth potential [17][18].

1 Apr 2026 | Earnings Summary | | | | | | | --- | --- | --- | --- | --- | --- | | (YE 31 Dec) | FY24A | FY25A | FY26E | FY27E | FY28E | | Revenue (RMB mn) | 12,276 | 14,095 | 16,410 | 19,019 | 21,855 | | YoY growth (%) | 6.4 | 14.8 | 16.4 | 15.9 | 14.9 | | Adjusted net profit (RMB m | 1,607 | 1,816 | 2,156 | 2,537 | 2,955 | | YoY growth (%) | (15.6) | 13.0 | 18.7 | 17.7 | 16.5 | | EPS (Adjusted) (RMB) | 0.91 | 1.03 | 1.17 | 1.38 | 1.61 | | Consensus EPS (RMB) | na | na | 1.19 | 1.45 | 1.78 | | P/E (Adjusted ...

Investment Rating - The report maintains a BUY rating for Innolight, with a target price of RMB707, indicating a potential upside of 24.2% from the current price of RMB569.41 [3][4]. Core Insights - Innolight reported strong FY25 earnings, with revenue increasing by 60% YoY to RMB38.2 billion and net profit rising by 109% YoY to RMB10.8 billion, reflecting robust demand and effective execution [1][2]. - The gross profit margin (GPM) improved significantly to 42.6% from 34.7% in FY24, driven by high-speed optical module shipments and a higher silicon photonics (SiPh) mix [1][2]. - The company is positioned as a key beneficiary in the domestic AI sector, supported by enhanced supply-chain readiness and leadership in pluggable modules [1]. Financial Summary - Revenue projections for FY26E are set at RMB84.1 billion, with a YoY growth of 119.8%, and net profit is expected to reach RMB28.0 billion, reflecting a 159.7% increase [2][10]. - The gross margin is anticipated to further improve to 45.6% in FY26E and 48.5% by FY28E, indicating ongoing operational efficiency [2][19]. - The earnings per share (EPS) is projected to grow from RMB9.80 in FY25A to RMB25.24 in FY26E, with a P/E ratio decreasing from 58.1 in FY25A to 22.6 in FY26E [2][19]. Growth and Capacity - Capacity expanded by 34% YoY in FY25, with shipments growing by 45%, highlighting strong demand and effective ramp execution [9]. - Utilization rates improved from 74% in FY24 to 85% in FY25, with overseas sales constituting 92% of revenue [9]. - The company expects 800G to remain a primary shipment driver, while 1.6T technology is anticipated to significantly contribute to revenue and GPM growth [9]. Market Position and Future Outlook - Innolight's product roadmap is considered one of the strongest in the sector, with management focusing on 800G and 1.6T as core demand pillars for FY26 [9]. - The company is also preparing for future optical interconnect demand, with plans to introduce 3.2T pluggable modules by FY28E [9]. - The report indicates an optimistic earnings outlook, driven by sustained growth in 800G volumes and increased contributions from 1.6T technology [9].

1 Apr 2026 CMB International Global Markets | Equity Research | Company Update 3SBio (1530 HK) 3SBio (1530 HK) - Short-term Short-term pressure on product sales; ASCO 2026 in focus 3SBio reported revenue of RMB17.7bn (+94.3% YoY) in 2025, driven by the RMB9.4bn out-licensing income from Pfizer for 707. However, product sales declined by 10.3% YoY to RMB8.0bn amid China's VBP and reimbursement control headwinds. Excluding the licensing income, R&D and administrative expense ratios rose ~4ppts and ~2ppts, res ...

1 Apr 2026 Recover gradually Yongda Automobiles (3669 HK) Maintain BUY. We believe further deterioration in new-car GPM is limited as luxury OEMs lower MSRPs and explore agency models. While the auto dealer industry remains in a "survival of the fittest" phase, we expect established leaders like Yongda to become long-term survivors. Since most brands will continue to rely on dealers, we view Yongda's expertise in NEV dealership as a key competitive advantage. Earnings Summary | (YE 31 Dec) | FY23A | FY24A | ...

Investment Rating - The report maintains a "Buy" rating for OmniVision with a target price adjusted to RMB 136, based on a forecasted P/E ratio of 33.0x for FY26, consistent with the company's historical average P/E ratio over the past two years [1][3]. Core Insights - OmniVision reported a revenue increase of 12.1% year-on-year to RMB 28.9 billion for FY25, which was below both the report's estimates and Bloomberg consensus by 5%. Net profit grew by 21.7% year-on-year to RMB 4.0 billion, also falling short of expectations by 2% and 9% respectively. The gross margin improved to 30.6% from 29.4% in FY24, primarily due to a richer CIS product mix and increased contributions from automotive CIS [1][2][3]. - The core CIS business continues to achieve structural mixed upgrades, with growth increasingly driven by high-value automotive, emerging/IoT, and medical applications rather than solely mobile devices. Core CIS revenue grew by 10.7% year-on-year, with automotive, emerging, and IoT/medical contributing 35%, 11%, and 5% respectively to departmental sales, up from 31%, 4%, and 3.5% in FY24 [2][3]. - The management anticipates a revenue range of RMB 6.2 billion to RMB 6.5 billion for Q1 FY26, indicating a year-on-year decline of 2.3% and a quarter-on-quarter decline of 11%. The expected gross margin is projected to be between 28.7% and 29.6%, impacted by rising component costs, particularly related to memory inflation [1][2]. Financial Summary - For FY25, OmniVision's revenue was RMB 28.9 billion, with a year-on-year growth of 12.1%. The projected revenues for FY26, FY27, and FY28 are RMB 34.1 billion, RMB 40.1 billion, and RMB 47.1 billion respectively, reflecting growth rates of 18.0%, 17.7%, and 17.6% [4][17]. - The net profit for FY25 was RMB 4.0 billion, with a year-on-year growth of 21.7%. The projected net profits for FY26, FY27, and FY28 are RMB 4.98 billion, RMB 6.75 billion, and RMB 8.86 billion respectively, indicating growth rates of 23.1%, 35.6%, and 31.3% [4][17]. - The gross margin is expected to improve from 30.6% in FY25 to 31.8% in FY26, and further to 34.6% by FY28 [4][17].

Company Insights - Jitu Express (1519 HK) is expected to achieve a 112% year-on-year increase in adjusted net profit to USD 425 million in 2025, exceeding previous estimates by 22% and 16% respectively, with a strong performance in the second half of 2025 [2] - Zoomlion (1157 HK) anticipates a 36% year-on-year increase in net profit to RMB 4.8 billion in 2025, with a significant 60% increase in overseas revenue in Q4 2025 [5] - Zhengli New Energy (3677 HK) expects a 50% year-on-year increase in revenue to RMB 4.9 billion in the second half of 2025, with a gross margin reaching a historical high of 18.7% [5][6] - Angelalign (6699 HK) reported a 37.8% year-on-year increase in revenue to USD 370 million for the 2025 fiscal year, driven by strong overseas market expansion [8][9] - BYD Electronics (285 HK) anticipates stable revenue growth in 2026, primarily driven by high-end smartphone components and AI server products [11] - China Life (2628 HK) reported a 44.1% year-on-year increase in net profit to RMB 154 billion for 2025, with a significant increase in new business value [21][22] Industry Trends - The Southeast Asian market is showing strong growth potential, with Jitu Express expanding its market share significantly [2][5] - The electric vehicle battery market is expected to see increased demand, with Zhengli New Energy projecting a rise in battery shipment volumes [6][7] - The Chinese insurance market is experiencing a shift towards improved underwriting profitability, as evidenced by China Life's performance [21][22] - The smart cockpit industry is projected to grow at a CAGR of 18.4% from 2024 to 2029, with companies like Botai leading the charge [15][16] - The biopharmaceutical sector is witnessing a surge in innovative drug approvals, with China Biopharmaceuticals expanding its product pipeline significantly [17][18]

Investment Rating - The report maintains a "Buy" rating for InnoScience with a target price adjusted to HKD 75, based on a projected P/E ratio of 35 times for 2030 [1][3]. Core Insights - InnoScience reported a revenue growth of 46.4% year-on-year to RMB 1.2 billion for fiscal year 25, which was below the analyst's estimate of 9% and the Bloomberg consensus of 11% [1]. - The gross margin improved from -19.5% in fiscal year 24 to 7.3% in fiscal year 25, although it was still below the analyst's estimate by 3.3 percentage points [1]. - The company achieved a positive adjusted EBITDA for the first time, indicating a significant operational turning point [1]. - Key milestones for fiscal year 25 included collaborations with leading AI clients like Nvidia and Google, entry into humanoid robotics, and progress in automotive applications [1][2]. Revenue and Market Segmentation - The consumer market accounted for approximately 50% of total sales in fiscal year 25, down from 60% in fiscal year 24, while the industrial market rose to 43% from about 30% [2]. - Data center revenue grew by 50.2% year-on-year to RMB 63 million, representing 5.2% of total sales, and automotive business revenue more than doubled to RMB 58 million, accounting for 4.8% of total sales [2]. - The product mix is shifting, with wafer sales declining by 10% to represent 21% of total sales, while revenue from chips + ICs and modules grew by 41% and 143%, contributing 42% and 37% respectively [2]. Capacity Expansion and Strategic Positioning - The report emphasizes that capacity scale is crucial for the company's technological leadership and long-term profitability [3]. - InnoScience plans to achieve a production capacity of 80k wafers per minute by 2028, which is expected to enhance profitability through better utilization and reduced unit costs [3]. - The company is well-positioned to expand its adoption in higher-value applications due to limited competition in the pure-play GaN sector [3]. Financial Projections - Revenue projections for fiscal years 26 to 28 are RMB 2.08 billion, RMB 3.05 billion, and RMB 4.45 billion, respectively, with year-on-year growth rates of 71.5%, 46.6%, and 46.0% [4]. - Gross profit margins are expected to improve significantly, reaching 22.5% in fiscal year 26, 33.4% in fiscal year 27, and 40.5% in fiscal year 28 [4]. - The company is projected to reach a net profit of RMB 590 million by fiscal year 28, with a corresponding EPS of RMB 0.67 [4].