Investment Rating - The report initiates coverage on the company with a "Buy" rating [6][27]. Core Insights - The company is a pioneer in luxury fragrance management in China, having introduced high-end perfumes systematically since 1980. It operates through a brand authorization model, providing comprehensive services from market access to consumer education [6][10]. - The Chinese perfume market is projected to be the fastest-growing segment in the cosmetics industry, with a compound annual growth rate (CAGR) of 9-14% over the next 4-5 years. The company is positioned as a key beneficiary of this growth, with 81% of its revenue derived from fragrance sales [6][10][15]. - The company has a strong market presence, ranking third in market share in China (including Hong Kong and Macau) with 9.3% [9][11]. Financial Overview - The company’s projected financials indicate a steady increase in sales revenue from RMB 1,864 million in FY24A to RMB 3,134 million in FY28E, reflecting a CAGR of 15% [6][8]. - Net profit is expected to grow from RMB 206.5 million in FY24A to RMB 370.3 million in FY28E, with a notable increase of 32% in FY26E [6][8]. - The target price is set at HKD 3.49, representing a potential upside of 72.8% from the current price of HKD 2.02 [2][6]. Market Dynamics - The report highlights the increasing penetration of perfumes in China, with per capita spending on perfumes significantly lower than in developed markets. In 2023, the per capita spending in China was RMB 16 compared to RMB 423 in the US [15][17]. - The growth in the perfume market is supported by rising consumer demand in lower-tier cities and a significant increase in male fragrance spending, which saw a 1151% year-on-year growth in 2023 [18][19]. Business Model and Strategy - The company operates a multi-brand strategy, managing over 70 international brands and providing a wide range of products across various price points, which enhances its negotiation power with distribution channels [22][25]. - The company has established a robust supply chain and distribution network, covering 400 cities and 7,800 sales terminals, which allows for precise matching of brands to sales channels [24][25]. Competitive Landscape - The company faces competition from both international luxury brands and emerging domestic brands. However, the report suggests that the threat from domestic brands is currently limited as they primarily serve to cultivate potential customers for high-end brands [27]. - The company has long-term contracts with key suppliers, reducing the risk of losing core brand operating rights, which is a concern among investors [27].

Global Market Overview - The Hang Seng Index closed at 26,344, down 0.76% for the day but up 31.33% year-to-date [1] - The S&P 500 and Nasdaq in the US saw increases of 0.44% and 0.70% respectively, with year-to-date gains of 13.81% and 18.01% [1] - The Shanghai Composite Index rose by 0.22%, reflecting a year-to-date increase of 14.23% [1] Sector Performance - In the Hong Kong market, the Hang Seng Financial Index fell by 0.85%, while the Hang Seng Industrial and Commercial Index decreased by 0.68% [2] - The Hang Seng Property Index dropped by 1.25%, indicating a year-to-date increase of 23.48% [2] - The energy and consumer staples sectors in the Chinese stock market experienced declines, while materials, healthcare, and information technology sectors saw gains [3] Monetary Policy and Economic Outlook - The People's Bank of China is expected to continue a loose monetary policy, with potential reserve requirement ratio cuts of 50 basis points and interest rate cuts of 10 basis points in Q4 [3] - The steel industry in China will implement capacity controls, prohibiting new capacity additions from 2025 to 2026, with an expected annual growth of around 4% in value added [3] Company Focus - Geely Automobile (175 HK) is rated as a buy with a target price of 25.00, representing a 34% upside potential [4] - Luckin Coffee (LKNCY US) is also rated as a buy, with a target price of 44.95, indicating a 20% upside [4] - Tencent (700 HK) has a target price of 705.00, suggesting a 10% upside potential [4] Technology Sector Insights - Nvidia plans to invest $100 billion to support OpenAI in building a 10GW data center, leading to a nearly 4% increase in its stock price [3] - The semiconductor sector is highlighted with companies like Horizon Robotics (9660 HK) and North Huachuang (002371 CH) rated as buy, with target prices indicating significant upside potential [4] Investment Opportunities - The report identifies several companies with strong growth potential, including BYD Electronics (285 HK) and Salesforce (CRM US), both rated as buy with substantial upside targets [4] - The healthcare sector is represented by companies like BeiGene (ONC US) and 3SBio (1530 HK), both rated as buy, indicating confidence in their future performance [4]

Core Insights - The report highlights a positive outlook for the Chinese internet and software sectors, particularly focusing on the valuation enhancement opportunities within the Chinese internet software segment [4] - The report emphasizes the strong liquidity trends in the A+H stock market and a more optimistic narrative surrounding AI applications, suggesting that AI software applications may match the growth of hardware sectors in the medium to long term [4] Market Performance - The Hang Seng Index closed at 26,545, showing a year-to-date increase of 32.33%, while the Hang Seng Technology Index rose by 40.87% [1] - The report notes mixed performance in the Chinese stock market, with Hong Kong stocks in materials, energy, and consumer discretionary leading gains, while healthcare, utilities, and conglomerates saw declines [3] Sector Analysis - The report identifies key companies in the internet and software sectors that are expected to drive growth, including Alibaba, Baidu, Microsoft, Tencent, and Kuaishou, due to their strong cloud business growth and AI-driven revenue potential [4] - It also suggests that companies like Datadog and Kingdee International have room for valuation improvement and should be monitored for substantial progress in AI monetization [4] Stock Recommendations - The report provides a list of stocks with buy ratings, including Geely Automobile (target price 25.00, current price 18.96), Li Auto (target price 80.00, current price 65.15), and Tencent (target price 705.00, current price 642.00), indicating potential upside [5] - Specific recommendations include companies in various sectors such as healthcare (BeiGene, target price 359.47), consumer staples (Proya, target price 129.83), and technology (Xiaomi, target price 62.96) [5]

Investment Rating - The report maintains a positive long-term investment outlook for the Chinese internet and software sectors, suggesting structural opportunities for valuation improvement [3][5][14]. Core Insights - The Chinese stock market liquidity is improving, and the narrative around AI is becoming more optimistic, which is expected to drive growth in the internet and software sectors [3][5]. - The report highlights the strong growth potential of cloud services and AI applications, with companies like Alibaba, Baidu, and Tencent expected to benefit significantly from these trends [3][5][27]. - The valuation of Chinese internet companies is currently at a discount compared to their overseas counterparts, indicating potential for recovery and growth [5][14]. Summary by Sections Market Trends - The report notes that the performance of Chinese internet companies is expected to improve due to better-than-expected revenue growth in cloud services and AI applications [5][27]. - AI-related revenue growth is projected to continue, with significant contributions from both consumer and enterprise applications [27][28]. Company Performance - Alibaba's cloud revenue grew by 26% year-on-year, driven by AI-related products, which have maintained triple-digit growth for eight consecutive quarters [27][28]. - Tencent's advertising revenue increased by 20% year-on-year, supported by AI-driven improvements in platform traffic and ROI [27][28]. - Baidu's AI search capabilities have significantly enhanced user experience, covering 64% of mobile search results [27][28]. Valuation Comparisons - The current trading PE for Chinese internet and software sectors is 22x FY25E, compared to 29x for overseas counterparts, indicating a substantial valuation gap [14][19]. - The report suggests that the domestic sector's EPS growth rate of 17% for 2026, while slightly lower than the 21% for overseas, still presents an attractive investment opportunity [14][19]. AI Commercialization - AI applications are expected to play a crucial role in supporting valuation levels, with significant revenue contributions from both cloud computing and advertising sectors [27][28]. - Companies like Salesforce and Kuaishou are highlighted for their strong growth in AI-related revenues, with Kuaishou's AI revenue projected to reach 950 million yuan for FY25 [27][28]. Chip Development - Major Chinese internet companies are increasingly investing in self-developed chips to meet the growing demand for AI computing power, with Alibaba's PPU chip expected to outperform NVIDIA's offerings [19][20][24]. - Baidu and Tencent are also making significant strides in chip development, enhancing their competitive positions in the AI landscape [19][20][24].

Macro and Industry Commentary - The global stock markets showed mixed performance, with the Hang Seng Index down by 1.35% and the Shanghai Composite Index down by 1.15%, while the US markets saw slight gains, particularly the Nasdaq which rose by 0.94% [1][3] - In the Chinese market, sectors such as energy, materials, and information technology faced declines, while healthcare and online education performed well. Southbound capital saw a net inflow of HKD 6.288 billion [3] - The Japanese economy is expected to support a rate hike by the Bank of Japan in October, despite political uncertainties surrounding potential leadership changes [3] - The Bank of England maintained its interest rates, showing caution towards further cuts due to rising inflation concerns [3] - The US Federal Reserve cut rates by 25 basis points to a range of 4.0%-4.25%, indicating a more dovish stance and acknowledging rising risks in the labor market [5] Industry Insights - The technology sector is witnessing innovation driven by Meta's recent product launches, including new smart glasses that integrate advanced display technology and gesture controls. This is expected to boost demand for AI glasses in the coming years [6] - The semiconductor industry is highlighted with companies like Intel and Nvidia collaborating on chip development, indicating a strong market for semiconductor stocks [3][6] - The consumer discretionary sector is showing potential with companies like Luckin Coffee and various food brands receiving buy ratings, reflecting optimism in consumer spending [7] Company Focus - Geely Automobile is rated as a buy with a target price of HKD 25.00, indicating a potential upside of 33% from its current price of HKD 18.81 [7] - Luckin Coffee is also rated as a buy with a target price of USD 44.95, suggesting a 16% upside from its current price of USD 38.83 [7] - Tencent and Alibaba are both rated as buys, with target prices of HKD 705.00 and USD 158.80 respectively, reflecting confidence in their growth potential [7]

Monetary Policy Changes - The Federal Reserve lowered the policy interest rate by 25 basis points to a range of 4.0%-4.25% due to a shift in risk balance, emphasizing rising employment market risks[1] - The dot plot forecast for rate cuts in 2025 was raised from 50 basis points to 75 basis points, indicating a potential year-end federal funds rate of 3.75%-4%[2] - The Fed's statement removed the characterization of the labor market as "still robust," highlighting slowing job growth and a slight increase in the unemployment rate[2] Economic Forecast Adjustments - The Fed raised its GDP growth forecast for 2025 from 1.4% to 1.6%, and for 2026 and 2027 to 1.8% and 1.9% respectively[2] - The unemployment rate forecast for 2026 and 2027 was lowered by 0.1 percentage points to 4.4% and 4.3% respectively, while the inflation forecast for 2026 increased from 2.4% to 2.6%[2] - The September CPI growth rate is expected to rebound to around 3.1% due to energy and commodity inflation pressures[3] Market Implications - The yield curve is expected to steepen, with the 10-year Treasury yield projected to rise to approximately 4.1% by year-end[3] - The dollar index may weaken, potentially dropping to around 95, as the Fed is expected to continue cutting rates while the ECB's rate-cutting cycle nears its end[3] - Lower dollar interest rates are likely to encourage capital expenditure in AI and benefit interest-sensitive sectors such as healthcare and consumer goods[3]

Investment Rating - The report maintains a "Buy" rating for Tencent Holdings with a target price of HKD 705.0, indicating a potential upside of 6.6% from the current price of HKD 661.50 [3]. Core Insights - Tencent Cloud is focusing on two strategic directions: "intelligentization" and "globalization," with AI-enabled customer solutions and international business growth as key priorities [1][8]. - The company has accelerated the deployment of AI applications across both consumer (C-end) and business (B-end) sectors, showcasing significant growth in user engagement and application usage [7][10]. - Tencent Cloud's international business has seen high double-digit growth over the past year, with the number of overseas customers doubling, positioning it as a preferred choice for over 90% of internet companies and 95% of leading gaming companies going global [1][20]. Financial Summary - For FY23A, Tencent's revenue is reported at RMB 609,015 million, with an adjusted net profit of RMB 157,688 million. Projections for FY24A and FY25E show revenues of RMB 660,257 million and RMB 736,804 million, respectively, with adjusted net profits of RMB 222,703 million and RMB 252,172.5 million [2][27]. - The adjusted earnings per share (EPS) for FY24A is projected at RMB 23.96, increasing to RMB 27.17 in FY25E, reflecting a positive growth trajectory [2][27]. Strategic Developments - Tencent Cloud has launched a comprehensive AI application matrix, with over a hundred applications upgraded to include AI capabilities, enhancing user experience across platforms like WeChat and Tencent Meeting [8][10]. - The company has introduced the "Agent Runtime" solution to support intelligent agents, significantly improving deployment speed and operational efficiency [13][18]. - Tencent Cloud's mixed 3D model has improved modeling accuracy by three times compared to previous versions, facilitating faster production cycles for 3D assets [22][23].

每日投资策略 公司点评 全球市场观察 全球市场观察 招银国际研究部 邮件：research@cmbi.com.hk 2025 年 9 月 18 日 招银国际环球市场 | 市场策略 | 招财日报 | 环球主要股市上日表现 | | | | | --- | --- | --- | --- | | | 收市价 | | 升跌（%） | | | | 单日 | 年内 | | 恒生指数 | 26,908 | 1.78 | 34.14 | | 恒生国企 | 9,597 | 2.24 | 31.64 | | 恒生科技 | 6,334 | 4.22 | 41.77 | | 上证综指 | 3,876 | 0.37 | 15.65 | | 深证综指 | 2,511 | 0.83 | 28.26 | | 深圳创业板 | 3,147 | 1.95 | 46.96 | | 美国道琼斯 | 46,018 | 0.57 | 8.17 | | 美国标普 500 | 6,600 | -0.10 | 12.22 | | 美国纳斯达克 | 22,261 | -0.33 | 15.28 | | 德国 DAX | 23,359 | 0.13 | 17.33 ...

Global Market Overview - The Hang Seng Index closed at 26,439, up 0.19% for the day and up 31.80% year-to-date [2] - The Southbound capital recorded a net inflow of HKD 3.189 billion [2] - The Chinese stock market showed mixed results, with sectors like consumer discretionary and industrial technology rising, while materials, healthcare, and real estate fell [2] Economic Indicators - China's Ministry of Commerce plans to promote orderly opening in the internet and cultural sectors [2] - Japan's government is expected to increase fiscal expansion, with potential tax cuts for households and inflation subsidies [2] - The U.S. retail sales increased by 0.6% month-on-month in August, marking the third consecutive month of exceeding expectations [3] Sector Performance - The automotive sector shows strong potential with companies like Geely Automobile and XPeng Motors rated as "Buy" with target prices indicating significant upside [4] - The equipment manufacturing sector, including companies like SANY International and Zoomlion, is also rated as "Buy" with positive growth forecasts [4] - The consumer discretionary sector, particularly Luckin Coffee and Green Tea Group, is highlighted for its growth potential, with target prices suggesting substantial upside [4] Investment Recommendations - Geely Automobile (175 HK) is rated "Buy" with a target price of HKD 25.00, indicating a 31% upside [4] - SANY International (631 HK) is rated "Buy" with a target price of HKD 8.90, suggesting a 29% upside [4] - Luckin Coffee (LKNCY US) is rated "Buy" with a target price of USD 44.95, indicating a 14% upside [4]

Group 1: Stock Recommendations - Recommended stocks include Geely Automobile (175 HK), Li Auto (9863 HK), Zoomlion (1157 HK), Sany International (631 HK), and Luckin Coffee (LKNCY US) with "Buy" ratings[5] - Target price for Geely Automobile is set at 25.00, indicating a potential upside of 36%[5] - Luckin Coffee has a target price of 44.95, representing a potential upside of 16%[5] Group 2: Financial Metrics - Geely Automobile has a market capitalization of $24.0 billion and a P/E ratio of 10.50 for FY24A[5] - Li Auto's market cap is $11.0 billion with a projected P/E ratio of 9.90 for FY25E[5] - The average dividend yield for the recommended stocks ranges from 0.0% (Luckin Coffee) to 5.2% (Green Tea Group)[5] Group 3: Performance Overview - The basket of 25 stocks listed in the previous report achieved an average return of 2.5%, compared to the MSCI China Index return of 6.8%[10] - Out of the 25 stocks, 10 outperformed the benchmark index[10] Group 4: Recent Changes - New addition to the recommended stocks is Guoquan Food (2517 HK) with a "Buy" rating[7] - Jiangnan Buyi (3306 HK) has been removed from the recommended list[7]