Group 1: Impact of U.S. Investment Policy - Trump's "America First" investment policy emphasizes national security, increasing restrictions on cross-border investments in sensitive industries, which may weaken international investor confidence[1] - The policy is expected to reduce U.S. cross-border investment activities with non-allied countries, slightly lowering U.S. GDP growth from 2.8% in 2024 to 2.3% in 2025 and 2% in 2026[3] - The restrictions may lead to a decrease in U.S. foreign direct investment (FDI) and outward direct investment (ODI), which have historically accounted for 1%-1.5% of GDP over the past decade[1] Group 2: Effects on China - The policy will negatively impact China’s cross-border investment activities, potentially reducing China's GDP growth, particularly in the outward-oriented sectors, with FDI and securities investment flows between China and the U.S. averaging 0.5%-1% of GDP from 2014 to 2023[3] - China is likely to increase domestic demand support and accelerate technological self-reliance, while enhancing trade and investment ties with non-U.S. regions[1] - Despite short-term negative impacts on market confidence, China's GDP growth is projected to remain around 5% for the year, with Q4 2024 expected to rise to 5.4%[3]

Investment Rating - The report maintains a "BUY" rating for NetEase Cloud Music, with a target price raised to HK$202.5 from the previous HK$115.0, indicating an upside potential of 18.6% from the current price of HK$170.70 [1][3][8]. Core Insights - NetEase Cloud Music reported a total revenue of RMB7.95 billion for FY24, reflecting a 1% year-over-year increase, which aligns with consensus estimates. Adjusted net profit surged by 108% year-over-year to RMB1.70 billion, exceeding consensus by 20%, primarily due to enhanced profitability in the online music segment and effective operational expense control [1][2]. - The company plans to focus on improving user experience to unlock long-term growth opportunities in FY25E, with expectations of a 15% year-over-year growth in online music services revenue driven by subscriber growth [1][5]. - The gross profit margin (GPM) improved significantly, rising by 3.6 percentage points year-over-year to 32.4% in the second half of FY24, with forecasts indicating further GPM expansion to 35.4% in FY25 [5][6]. Financial Performance Summary - **Revenue Growth**: FY24 revenue was RMB7.95 billion, with projections of RMB8.08 billion for FY25E and RMB8.77 billion for FY26E, indicating a gradual recovery and growth trajectory [2][11]. - **Profitability Metrics**: Adjusted net profit is expected to grow from RMB1.70 billion in FY24 to RMB1.88 billion in FY25E, with adjusted net margins improving from 21.1% in 2H24 to 23.3% in FY25E [2][6][11]. - **Valuation Metrics**: The report values NetEase Cloud Music at a P/E of 21x for FY25E, which is at a discount compared to global peers, reflecting the competitive landscape in China's online content sector [8][9]. User Engagement and Market Strategy - The company has seen steady growth in monthly active users (MAUs) and user engagement, attributed to a distinctive content ecosystem and improved personalized recommendations [5]. - Key initiatives for FY25E include enriching the content library, fostering community development, enhancing user experience to drive payment willingness, and improving operational efficiency [5][6]. Market Position and Competitive Landscape - NetEase Cloud Music's online music services revenue increased by 20% year-over-year in the second half of FY24, with membership subscriptions growing by 19% year-over-year [5][6]. - The company has adopted a more prudent operational approach, particularly in social entertainment, leading to a 33% year-over-year decline in related revenue as it focuses on its core music business [5].

24 Feb 2025 CMB International Global Markets | Equity Research | Company Update AIA Group Ltd. (1299 HK) FY24 preview: OPAT back to growth trajectory; resilient VNB despite modest slowdown in 2H AIA's share price underperformed the market and CN insurers despite resilient VNB growth and a solid financial position underpinning attractive shareholder returns. The stock price fell 17.3% in FY24, lagging behind key benchmarks as HSI (+18%), CSI 300 (+15%) and FTSE APAC ex-Japan (+7%) (Fig.1). We attribute the m ...

Investment Rating - The report maintains a "Buy" rating for NetEase Cloud Music, with a target price set at HKD 202.5, based on a 21x P/E ratio for FY2025 [1][10]. Core Insights - NetEase Cloud Music reported a total revenue of RMB 7.95 billion for FY2024, reflecting a 1% year-over-year growth, in line with expectations. Adjusted net profit surged by 108% to RMB 1.7 billion, exceeding expectations by 20%, primarily due to improved profitability in the online music segment and effective cost control [1][2]. - The company aims to enhance user experience to unlock long-term growth opportunities, focusing on content library expansion, community development, user payment willingness, and operational efficiency [2][3]. Financial Performance Summary - For FY2024, the overall gross margin increased by 3.6 percentage points to 32.4%, driven by improved revenue monetization and prudent cost management. The gross margin is projected to further increase to 35.4% in FY2025 [3][4]. - The online music service revenue for the second half of FY2024 grew by 20% year-over-year, reaching RMB 2.8 billion, with subscription revenue increasing by 19% to RMB 2.3 billion [2][4]. - The adjusted net profit margin for FY2024 was 21.1%, up by 8.8 percentage points year-over-year [3][4]. Revenue and Profit Forecast - Revenue is expected to reach RMB 8.08 billion in FY2025, with a year-over-year growth rate of 1.6%, and projected to grow to RMB 9.28 billion by FY2027 [4][14]. - The adjusted net profit is forecasted to be RMB 1.88 billion in FY2025, reflecting a 10.7% year-over-year growth [4][14]. Valuation and Market Comparison - The target price of HKD 202.5 is based on a lower P/E ratio compared to global peers, reflecting the competitive landscape in China's online content sector [10][11]. - The report highlights that the stock has shown significant price performance, with a 51.5% increase over the past month and an 82.5% increase over the past six months [5].

Investment Rating - The report maintains a "Buy" rating for Yancoal Australia (YAL) with a target price adjusted to HK$36 from HK$38 [1][32]. Core Insights - YAL's net profit for 2024 reached A$1.2 billion, a 33% decline year-on-year, but exceeded expectations by 8% due to unexpected foreign exchange gains of A$149 million [1][2]. - The company announced a final dividend of A$0.52 per share, aligning with its dividend policy and expected to boost investor confidence [1]. - YAL's production guidance for 2025 remains similar to 2024, with an increase in capital expenditure anticipated [1][2]. - The average selling price of coal has decreased, impacting revenue forecasts, leading to a downward revision of earnings estimates for 2025E and 2026E by 13% and 12% respectively [1][32]. Financial Performance Summary - Revenue for 2024 decreased by 12% to A$6.86 billion, despite a 14% increase in coal sales volume to 37.7 million tons, offset by a 24% drop in average selling price to A$176 per ton [2][4]. - The company reported a stable unit cash cost of A$86 per ton in the second half of 2024, with a significant cash balance of A$2.35 billion, representing 30% of its current market capitalization [2][4]. - The earnings forecast for 2025E is A$1.016 billion, reflecting a 16.4% decline from 2024, with a projected revenue of A$6.55 billion [4][35]. Operational Guidance - YAL's 2025 production guidance is set between 35 million to 39 million tons, with operating cash costs expected to range from A$89 to A$97 per ton [2][35]. - Capital expenditure is projected to be between A$750 million to A$900 million, indicating a year-on-year increase of 6% to 28% [2][35]. Valuation Metrics - The report indicates that YAL's valuation is not overly inflated, with a projected P/E ratio of less than 8 times for 2025E and a yield exceeding 6% [1][32]. - The company's market capitalization is approximately HK$37.9 billion, with a current share price of HK$28.70 [5].

Investment Rating - The report maintains a "Buy" rating for the company, with an updated target price of $26.40 per ADS, up from the previous target of $22.00 [1][5][27]. Core Insights - The company reported a total revenue of RMB 77.3 billion for Q4 2024, a year-on-year increase of 22%, and an adjusted net profit of RMB 4.53 billion, surpassing expectations by 15% [1][2]. - The growth in revenue is primarily driven by strong performance in mobile gaming and advertising sectors, with mobile game revenue increasing by 79% year-on-year [2][3]. - The management has reiterated its long-term operating profit margin target of 15-20%, which is expected to boost investor confidence [1][3]. Summary by Sections Financial Performance - For FY24, total revenue is projected to grow by 19% to RMB 268 billion, with an adjusted net loss reduced by 99% to RMB 2.21 billion [1][4]. - The company expects Q1 2025 total revenue to increase by 22% year-on-year, with mobile gaming, advertising, and value-added services (VAS) revenues expected to grow by 73%, 19%, and 10% respectively [2][3]. Revenue Breakdown - VAS revenue grew by 8% to RMB 30.8 billion, accounting for 40% of total revenue in Q4 2024, driven by increased premium membership and fan payment revenues [2]. - Advertising revenue increased by 24% to RMB 23.9 billion, representing 31% of total revenue, attributed to strong growth in performance advertising [2]. - Mobile gaming revenue surged by 79% to RMB 18 billion, making up 23% of total revenue, mainly due to new contributions [2]. Profitability Metrics - Gross profit margin (GPM) improved by 10 percentage points to 36.1% in Q4 2024, while adjusted operating profit margin (OPM) rose by 17 percentage points to 6.0% [3]. - For Q1 2025, adjusted OPM is expected to grow by 12 percentage points to 3.3% despite content investments for the Spring Festival Gala [3]. Valuation and Estimates - The report provides a sum-of-the-parts (SOTP) valuation, estimating the advertising business at $1.05 billion, VAS at $800 million, and mobile gaming at $800 million, with a total valuation of approximately $8.06 billion [16][17]. - The projected revenue for FY25 is RMB 30.42 billion, with a gross profit margin of 37.3% and an adjusted net profit of RMB 1.75 billion [12][22].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $125.50, reflecting an expected return exceeding 15% over the next 12 months [2][26]. Core Insights - The company reported a stable performance in Q4 2024, with total revenue decreasing by 1.4% year-on-year to RMB 26.7 billion, aligning with market expectations. Operating profit increased by 13.9% year-on-year to RMB 7.8 billion, surpassing market expectations by 8% due to cautious control of sales and marketing expenses, which decreased by 33% year-on-year [1][2][3]. - For FY25, the company anticipates the launch of several new game titles to drive revenue growth, although total revenue forecasts for FY25-26 have been adjusted downwards by 2-3%. However, due to prudent operational expense control, the non-GAAP net income forecast for FY25-26 has been revised upwards by 2-3% [1][2][3]. Financial Summary - The company’s revenue is projected to grow from RMB 105.3 billion in FY24 to RMB 110.7 billion in FY25, representing a year-on-year growth of 7.5%. Adjusted net profit is expected to increase from RMB 33.5 billion in FY24 to RMB 36.0 billion in FY25, reflecting a growth rate of 7.5% [4][21]. - The operating profit margin is expected to improve, with a forecast of 30.4% for FY25, up from 29.1% in FY24, driven by effective control of sales and marketing expenses [3][11]. Segment Valuation - The report employs a Sum-of-the-Parts (SOTP) valuation method, estimating the online gaming business at $11.05 billion, accounting for 88% of the total valuation. Other segments include Youdao at $1 million, Cloud Music at $380 million, and innovation and other businesses at $1.8 million, with net cash valued at $8.5 million [14][15].

Investment Rating - The report maintains a "BUY" rating for NetEase, with a target price of US$125.50, indicating a potential upside of 20.5% from the current price of US$104.17 [3][12]. Core Insights - NetEase's 4Q24 performance showed total revenue of RMB26.7 billion, down 1.4% YoY, but operating profit increased by 13.9% YoY to RMB7.8 billion, exceeding consensus estimates due to effective control of selling and marketing expenses [1][2]. - For FY25E, new game titles such as Marvel Rivals and Where Winds Meet are expected to drive revenue growth, despite a slight reduction in total revenue forecasts for FY25-26E by 2-3% [1][9]. - The company is focusing on prudent operational expense control, which is anticipated to support operating profit margin (OPM) improvement in FY25E [1][8]. Financial Summary - FY24 total revenue was RMB105.3 billion, with a gross margin of 62.5% and adjusted net profit of RMB33.5 billion, reflecting a YoY growth of 2.8% [2][19]. - Revenue projections for FY25E are set at RMB110.7 billion, with adjusted net profit expected to reach RMB36.0 billion, indicating a 7.5% growth [9][19]. - The company reported a significant improvement in OPM, which rose by 3.9 percentage points YoY to 29.2% in 4Q24 [1][8]. Business Segments - The online gaming segment remains the primary revenue driver, contributing 88% to the total valuation, with a projected valuation of US$110.5 billion based on a 15x EV/EBIT multiple [12][13]. - Non-gaming businesses, including Youdao and Cloud Music, are focusing on quality growth, although revenues in these segments have seen declines [1][8]. - The innovative businesses segment is valued at US$1.8 billion, reflecting a cautious approach to customer acquisition and prioritizing higher ROI engagements [12][13]. Market Position - NetEase's market capitalization stands at approximately US$66.7 billion, with a strong share performance over the past months, showing a 19% increase over the last three months [3][5]. - The company has a solid shareholder return strategy, having returned RMB20.0 billion to shareholders through dividends and share buybacks in FY24 [1][8].

Investment Rating - The report maintains a "BUY" rating for Bilibili, with a target price raised to US$26.4 from the previous US$22.0, indicating a potential upside of 19.4% from the current price of US$22.11 [3][11]. Core Insights - Bilibili's 4Q24 earnings exceeded expectations, driven by strong growth in mobile games and advertising, with total revenue increasing by 22% year-over-year to RMB7.73 billion [1][6]. - The company reported an adjusted net income of RMB453 million, a significant improvement from an adjusted net loss of RMB556 million in 4Q23, reflecting a narrowing of the adjusted net loss for FY24 to RMB22.1 million [1][2]. - Management has set a long-term operating profit margin (OPM) target of 15-20%, up from 6% in 4Q24, which is expected to enhance investor confidence [1][6]. Financial Performance Summary - For FY24, total revenue reached RMB26.8 billion, marking a 19% year-over-year growth, while the adjusted net loss narrowed by 99% year-over-year [1][2]. - Revenue projections for FY25E and FY26E are set at RMB30.4 billion and RMB32.6 billion, respectively, with expected growth rates of 13.4% and 7.1% [2][7]. - The gross margin is anticipated to improve to 37.3% in FY25E, with adjusted net profit expected to reach RMB1.75 billion [2][7]. Revenue Breakdown - The revenue from mobile games surged by 79% year-over-year to RMB1.80 billion in 4Q24, contributing 23% to total revenue [6]. - Advertising revenue grew by 24% year-over-year to RMB2.39 billion, driven by a 40% increase in performance ad revenues and a 30% rise in the number of advertisers [6]. - Value-added services (VAS) revenue increased by 8% year-over-year to RMB3.08 billion, accounting for 40% of total revenue, supported by premium membership and the Fan Charging program [6]. Margin and Profitability Outlook - The gross profit margin (GPM) improved by 10 percentage points year-over-year to 36.1% in 4Q24, with adjusted operating profit margin (OPM) rising by 17 percentage points to 6.0% [6]. - For FY25E, the adjusted OPM is expected to expand to 5.8%, with long-term targets set at 40-45% for GPM and 15-20% for OPM [6][11]. Valuation Metrics - The SOTP valuation indicates a target price of US$26.4 per ADS, with the advertising business valued at US$10.5, VAS at US$8.0, and mobile games at US$8.0 [11][12]. - The report highlights that the target price reflects a 2.6x price-to-sales (P/S) ratio for 2025E [11].

Investment Rating - The report maintains a "BUY" rating for Yancoal Australia (YAL) with a target price revised down to HK$36 from HK$38, indicating a potential upside of 25.4% from the current price of HK$28.70 [3][29]. Core Insights - YAL's net profit for 2024 was A$1.2 billion, a decrease of 33% year-on-year, but 8% above estimates due to a significant foreign exchange gain of A$149 million. The company declared a final dividend of A$0.52 per share, with a pay-out ratio of 56%, aligning with its dividend policy and boosting investor confidence [1][9]. - The guidance for 2025 indicates stable output and unit costs compared to 2024, although capital expenditures are expected to increase. Earnings forecasts for 2025 and 2026 have been revised down by 13% and 12% respectively, primarily due to lower coal average selling prices (ASP) and slightly higher cost assumptions [1][29]. Financial Performance Summary - Revenue for FY24 was A$6.86 billion, down 12% year-on-year, with coal sales volume increasing by 14% to 37.7 million tonnes, offset by a 24% decline in blended coal ASP to A$176 per tonne. Other income surged fivefold to A$159 million, driven by the aforementioned FX gain [9][10]. - The company achieved a unit cash cost of A$86 per tonne in 2H24, remaining stable year-on-year, while net cash at the end of 2024 stood at A$2.35 billion, representing 30% of the current market capitalization [9][10]. Earnings Forecast - The earnings forecast for FY25 is A$1.016 billion, reflecting a 16.4% decline from FY24, with a projected EPS of A$0.77. For FY26, net profit is expected to rise slightly to A$1.075 billion, with an EPS of A$0.81 [2][32]. - The report outlines a gradual recovery in revenue growth, with projections of -4.5% for FY25, followed by slight increases of 0.8% and 2.2% in FY26 and FY27 respectively [2][32]. Valuation Metrics - The current P/E ratio is approximately 6.3x for FY24, with a projected decrease to 7.6x for FY25. The dividend yield is expected to decrease from 9.0% in FY24 to 6.6% in FY25 [2][32]. - The report emphasizes that despite the earnings cut, the current valuation remains attractive, with a yield exceeding 6% and a P/E ratio below 8x for FY25 [1][29].