Company Analysis - SANY International is expected to return to a growth trajectory in 2025, driven by stable demand for tunneling machines, strong growth in large port equipment, and better-than-expected performance in domestic wide-body vehicles [5] - The emerging business segments, including photovoltaic, lithium energy, and intelligent mining, are projected to have manageable losses, estimated at approximately 200 to 250 million RMB this year, alleviating market concerns [5] - The target price for SANY International has been raised to HKD 8.7, maintaining a 2025 P/E ratio of 11 times, consistent with the average since 2017, indicating an attractive buying point at the current valuation of 8 times [5] - BYD's management emphasizes that all business operations are under the listed company, with controllable liquidity risks regarding accounts payable totaling 244 billion RMB for FY24 [6] - The company aims for overseas sales to exceed 900,000 units this year, with total sales expected to maintain over 20% growth [6] - BYD's long-term sales targets include 4-6 million units overseas and 6-7 million units domestically, with a market share of 30% in the domestic new energy vehicle market [6] Industry Analysis - The semiconductor industry is witnessing strong performance, with Broadcom reporting record revenue of USD 15 billion for Q2 2025, a year-on-year increase of 20.2% [4] - The revenue guidance for Q3 2025 is set at USD 15.8 billion, with semiconductor business expected to grow by 25% to USD 9.1 billion, driven by AI semiconductor and software infrastructure [4] - The Asian markets are experiencing a resurgence in foreign investment, with net inflows of USD 10.65 billion in May, the highest monthly net inflow since February of the previous year [3]

Macro Overview - The impact of tariffs on the Chinese economy is less than expected, with GDP growth projected to decline from 5.4% in Q1 to 4.9% in Q2 and 4.7% in the second half of the year [9][10] - The Chinese economy shows resilience, with stock and currency markets expected to remain stable during the US-China trade negotiation window [11] - The US economy is experiencing slight stagflation, with GDP growth forecasted to drop from 2.8% last year to 1.5% this year due to tariff impacts [12] Technology Sector - The technology sector remains cautiously optimistic, with leading companies in the domestic and overseas supply chains reporting better-than-expected Q1 performance, driven by domestic subsidies and stable demand for smartphones and PCs [1][2] - For Q2, revenue and gross margin guidance are mixed, with a slowdown in overseas demand for consumer electronics, but a strong outlook for AI server shipments [1] - Key companies to watch include Xiaomi, Apple, and Qualcomm, with expected revenue growth of 5-15% for Apple’s supply chain and 10-15% for Android brands [1] Semiconductor Industry - The trend of domestic substitution in the semiconductor industry is expected to accelerate, with a focus on AI-related self-sufficiency [1] - Major cloud providers are maintaining high capital expenditures for AI infrastructure, indicating strong growth potential for AI applications and semiconductor companies [1] - Recommended stocks include Horizon Robotics, Hezhong Technology, and Weir Group, which are expected to benefit from the AI demand surge [1][8] Internet Sector - Most internet companies reported Q1 earnings that met or exceeded expectations, although competition in transaction-based platforms is raising concerns about profit growth visibility [2] - Companies with strong business models and high barriers to entry are likely to outperform in a competitive environment [2] - Recommended stocks include NetEase and Tencent Music, which are expected to see stable profit growth [2] Automotive Sector - Several automakers reported strong Q1 earnings, with Geely's net profit nearing the upper limit of forecasts and XPeng turning profitable for the first time [3] - The automotive sector is experiencing a new price war, but the impact on overall profitability is expected to be manageable [5] - Recommended stocks include Geely and XPeng, which are anticipated to benefit from new product cycles and strong sales [5][8] Real Estate Sector - The real estate sector shows optimism, with major developers reporting contract sales that align with expectations [5] - Policy support is expected to release pent-up demand, with a stable housing sentiment observed since March [5] - Recommended stocks include China Resources Land and Longfor Group, which are expected to benefit from improved market conditions [5][8] Insurance Sector - The insurance sector is expected to see stable growth in new business value, driven by improvements in value rates [6] - The property and casualty insurance sector is experiencing a slowdown in premium growth, particularly in auto insurance [6] - Recommended stocks include China Pacific Insurance and AIA Group, which are expected to perform well due to their strong fundamentals [7][8] Consumer Goods - The essential consumer goods sector is expected to see marginal improvements, with consumer behavior becoming more cautious yet slightly more willing to spend [4] - Recommended stocks in the food and beverage sector include Nongfu Spring, which is expected to benefit from a rebound in consumer spending [4][8] - The discretionary consumer sector is showing strong performance, particularly in tea, coffee, and travel-related industries [4]

Macro Commentary - The US economy is facing stagflation risks as the May services PMI unexpectedly contracted, indicating a significant drop in demand and the highest inflation rate in 22 years [5][4] - The manufacturing PMI also showed a widening contraction, with delivery times lengthening and tariffs disrupting both demand and supply chains [5] - A slight stagflation is expected in the US economy in the second half of the year, with the policy environment remaining unfriendly for the next three months [5][4] Industry Commentary - In the Chinese automotive industry, the average discount rate in May expanded by 0.7 percentage points to approximately 15%, primarily driven by German brands [5] - Major Chinese brands maintained relatively stable average discounts, with the exception of NIO, which saw an increase in its discount rate [6] - BYD's average discount rate in May increased by 1.9 percentage points to 8.2%, raising concerns about its promotional activities amid high inventory levels [6] Company Commentary - DualityBio is positioned to become a global leader in ADC (Antibody-Drug Conjugate) technology, with a diverse product pipeline and strategic collaborations [11][12] - The company has established multiple strategic partnerships, with total transaction amounts exceeding $6 billion, enhancing its global market presence [11] - The projected total revenue for DualityBio is expected to reach RMB 2 billion, RMB 1.5 billion, and RMB 1.5 billion in 2025E, 2026E, and 2027E respectively, primarily from licensing and collaboration income [12] Company Commentary (Continued) - Innovent Biologics' IBI363 shows significant potential as a next-generation immunotherapy, with promising survival benefits in NSCLC [12][13] - IBI363 demonstrated a median progression-free survival (mPFS) of 9.3 months in squamous NSCLC, outperforming other candidates in the same category [12] - The company plans to initiate a Phase III clinical trial for IBI363 in the second half of 2025, targeting IO-treated squamous NSCLC [13]

Economic Indicators - The US Services PMI unexpectedly contracted in May, dropping from 51.6 in April to 49.9, below market expectations of 52[2] - The Manufacturing PMI decreased by 0.2 to 48.5, also below the expected 49.5, indicating a continued contraction in the manufacturing sector[2] - The New Orders Index for services plummeted from 52.3 to 46.4, reflecting a significant decline in demand[2] Inflation and Price Pressures - The Prices Index for services surged from 65.1 to 68.7, marking the highest expansion rate since late 2022, indicating inflationary pressures[2] - The Manufacturing Prices Index remained high at 69.4, despite a slight decrease from 69.8, suggesting persistent inflation in goods[2] Economic Growth Projections - The projected GDP growth rates for the US are expected to decline from 2.1% in Q1 to 1.8% in Q2, 1.3% in Q3, and 1% in Q4 of this year[2] - The PCE inflation rate is anticipated to rise from 2.5% in Q1 to 3% in Q3 and 2.9% in Q4[2] Policy Environment - The policy environment is expected to remain unfavorable in the next three months, with the White House likely to continue pressuring trade partners and the Federal Reserve possibly pausing interest rate cuts[1] - Improvement in the policy environment is anticipated in Q4, with potential agreements with major trading partners and a return to interest rate cuts by the Federal Reserve[1]

Economic Indicators - The US services PMI unexpectedly contracted in May, dropping from 51.6 in April to 49.9, below the market expectation of 52[2] - The manufacturing PMI decreased by 0.2 to 48.5, also below the market expectation of 49.5[2] - The new orders index for services plummeted from 52.3 to 46.4, indicating a significant weakening in demand[2] Inflation and Price Pressures - The price index for services rose from 65.1 to 68.7, marking the highest expansion rate since late 2022[2] - The manufacturing price index remained high at 69.4, indicating persistent inflationary pressures in the US[2] Economic Growth Projections - The projected GDP growth rates for 2023 are expected to decline from 2.1% in Q1 to 1.8% in Q2, 1.3% in Q3, and 1% in Q4[2] - The PCE inflation is forecasted to rise from 2.5% in Q1 to 3% in Q3 and 2.9% in Q4[2] Policy Environment - The policy environment is expected to remain unfriendly in the next three months, with the White House likely to continue pressuring trading partners and the Federal Reserve possibly pausing interest rate cuts[2] - Improvement in the policy environment is anticipated in Q4, with potential agreements with major trading partners and a return to interest rate cuts by the Federal Reserve[2]

Market Performance - The Hang Seng Index closed at 23,654, up 0.60% for the day and 38.75% year-to-date [1] - The Hang Seng Tech Index rose by 0.57%, with a year-to-date increase of 38.65% [1] - The Shanghai Composite Index increased by 0.42%, reflecting a 13.49% rise year-to-date [1] Sector Performance - The Hang Seng Financial Index increased by 0.36% with a year-to-date gain of 38.86% [2] - The Hang Seng Industrial Index rose by 0.88%, showing a year-to-date increase of 44.95% [2] - The Hang Seng Real Estate Index decreased by 0.74%, with a year-to-date decline of 9.95% [2] Company Analysis - China General Nuclear Power Corporation (中广核矿业) announced a new pricing mechanism for its uranium sales, reducing the fixed price proportion from 40% to 30% and setting the 2026 fixed price at $94.22 per pound, significantly higher than the previous year's price of $61.78 per pound [4] - The new pricing mechanism is expected to alleviate market concerns regarding pricing uncertainty, leading to a 17% and 23% upward revision in profit forecasts for 2026 and 2027, respectively [4] Investment Focus - Geely Automobile (吉利汽车) is rated as a "Buy" with a target price of 24.00 HKD, representing a potential upside of 30% [5] - Xpeng Motors (小鹏汽车) is also rated as a "Buy" with a target price of 28.00 USD, indicating a potential upside of 37% [5] - Luckin Coffee (瑞幸咖啡) is rated as a "Buy" with a target price of 40.61 USD, showing a potential upside of 14% [5]

Investment Rating - The report maintains a "BUY" rating for CGN Mining, with a target price revised to HK$2.61 from HK$2.18, indicating a potential upside of 57.5% from the current price of HK$1.66 [1][3]. Core Insights - CGN Mining has introduced a new pricing mechanism for its off-take agreement with its parent company, reducing the fixed pricing proportion from 40% to 30%. The fixed price for 2026 is set at US$94.22/lb, significantly higher than the current price of US$61.78/lb for 2023, which is expected to increase by 3.5% annually [1][7]. - The new pricing is approximately 18% higher than the latest industry contract price published by Cameco, which is seen as a positive development that alleviates market concerns regarding pricing uncertainty [1]. - Following the adjustment in the pricing mechanism, the earnings forecast for 2026E and 2027E has been revised upwards by 17% and 23%, respectively [1]. Financial Summary - Revenue projections show significant growth, with FY23A at HK$7,363 million, expected to rise to HK$12,371 million by FY27E, reflecting a year-on-year growth of 101.8% in FY23A and 11.4% in FY27E [2][20]. - Adjusted net profit is forecasted to increase from HK$497.1 million in FY23A to HK$985.7 million in FY27E, with a notable growth of 71.2% in FY26E [2][20]. - The report indicates a P/E ratio decline from 25.4 in FY23A to 12.8 in FY27E, suggesting improved valuation metrics over the forecast period [2][20]. Share Performance - The market capitalization of CGN Mining is reported at HK$12,617.1 million, with a 52-week high of HK$2.94 and a low of HK$1.24 [3][4]. - The stock has shown a 1-month absolute performance of 11.4% and a 3-month performance of 16.1% [5]. Valuation Methodology - The valuation of CGN Mining is based on a Net Present Value (NPV) methodology, applying a target multiple of 3x NPV to reflect the potential conversion from resources to reserves amid rising uranium prices [18][19]. - Long-term assumptions include a 1.5% annual increase in uranium prices from US$91/lb during 2027-31, stabilizing at US$96 thereafter [18]. Shareholding Structure - The major shareholder is China General Nuclear Power Corporation, holding 56.9% of the shares, followed by China Chengtong Holding Group with 10.0% [4].

Investment Rating - The report assigns a "Buy" rating to several companies in the pharmaceutical sector, indicating a potential upside of over 15% in their stock prices over the next 12 months [31]. Core Insights - The MSCI China Healthcare Index has increased by 27.6% since the beginning of 2025, outperforming the MSCI China Index by 14.5% [2]. - The international competitiveness of Chinese innovative drugs is being demonstrated through significant overseas licensing deals, reflecting a strong market presence [2]. - The report anticipates a valuation recovery in the pharmaceutical industry by 2025, driven by factors such as overseas licensing transactions, optimization of domestic procurement policies, and the implementation of new medical insurance categories [5]. Summary by Sections 1. **Industry Research - Medical Insurance Negotiations** - Continued support for innovation and recovery in overseas R&D demand [5]. 2. **Industry Research - Medical Equipment** - Expected recovery in bidding for medical devices and fruitful outcomes from innovative drug overseas transactions [5]. 3. **Industry Research - Medical Insurance Directory** - The results of adjustments to the medical insurance directory are expected to continuously support innovation [5]. 4. **Industry Research - Ongoing Policy Efforts** - Positive outlook for valuation rebound due to sustained policy support [5]. 5. **Industry Research - New Medical Insurance Categories** - The introduction of new medical insurance categories is expected to open up domestic payment space for innovative drugs [5]. 6. **Industry Research - Valuation Recovery** - The industry is poised for a valuation recovery, with several companies recommended for purchase [5]. 7. **Industry Research - Drug Pricing Policies** - Drug pricing policies are expected to be optimized, with accelerated commercialization of medical AI [5]. 8. **Industry Research - Anticipated Drug Procurement Policy Optimization** - Expectations for the implementation of an "innovative drug directory" [5]. 9. **Industry Research - 2024 Performance Review** - Innovative drugs are expected to dominate the market [5].

Company Analysis - NIO's 1Q25 performance fell short of expectations, with revenue 2% lower than predicted and a gross margin of 7.6%, which is 0.7 percentage points below forecast due to lower vehicle gross margins [2] - The operating loss for 1Q25 was 6.4 billion, which was 1 billion better than expected, primarily due to higher sales and management expenses [2] - The net loss for 1Q25 reached 6.9 billion, widening by 1.3 billion compared to expectations [2] - NIO's 4Q25 breakeven target appears overly optimistic, requiring sales of 150,000-160,000 units and a gross margin of 17%, which is deemed difficult to achieve [6] - Despite the launch of new models, the 2025 sales forecast has been reduced by 30,000 units to 350,000, implying a need for significant sales growth in the latter half of the year [6] - The projected net loss for 2025 is expected to be 16.2 billion [6] - For 2026, even with a sales target of 500,000 units, NIO is still projected to incur a net loss of 9.4 billion [7] Industry Insights - The Chinese stock market saw gains, particularly in healthcare, utilities, and materials sectors, while industrials and telecommunications lagged [5] - The US job openings data indicated economic resilience, boosting market confidence and leading to increases in US stocks, the dollar, and oil prices [5] - The Eurozone's May CPI growth rate fell to 1.9%, below the ECB's 2% target, supporting further rate cuts [5] - The new pricing mechanism for CGN Mining is significantly above market expectations, alleviating long-standing concerns about pricing uncertainty [8] - The new contract pricing for uranium has increased from $61.78 to $94.22 per pound, which is substantially higher than the current market contract price of $80 [8][9]

Investment Rating - Maintain HOLD rating for NIO Inc. with a target price of US$4.00, down from the previous target of US$5.00, indicating a potential upside of 13.3% from the current price of US$3.53 [4][9]. Core Views - NIO's management targets breakeven in 4Q25, but the assumptions are viewed as unrealistic due to heavy investments in battery swap and sales channels, which require significantly higher sales volumes to achieve breakeven [1][9]. - The FY25E sales volume forecast has been cut by 30,000 units to 350,000 units, implying a sales volume of 235,000 units in 2H25E, or an average monthly volume of about 40,000 units [2][9]. - NIO is projected to incur a net loss of RMB16.2 billion in FY25E, which is RMB0.2 billion higher than the prior forecast due to the reduction in sales volume [2][9]. Financial Summary - Revenue projections for FY25E are set at RMB92,972 million, with a YoY growth of 41.4%, and gross margin expected to be 13.0% [3][11]. - The company is expected to continue facing operating losses, with projected operating profit of RMB(15,561.4) million in FY25E and net profit of RMB(16,241.9) million [3][11]. - The adjusted net profit for FY25E is projected at RMB(14,042.6) million, indicating ongoing challenges in profitability [3][11]. Earnings Summary - NIO's 1Q25 revenue was 2% lower than prior forecasts, with a gross profit margin of 7.6%, which is 0.7 percentage points lower than projected [9][10]. - The operating loss for 1Q25 was RMB6.4 billion, missing forecasts by RMB1.0 billion, primarily due to higher-than-expected SG&A expenses [9][10]. - Management's assumptions for achieving breakeven in 4Q25 include a sales volume of 150,000-160,000 units and a gross profit margin of 17%, which are considered overly optimistic [9][10]. Share Performance - NIO's market capitalization stands at approximately US$7.93 billion, with a 52-week high of US$7.21 and a low of US$3.14 [4][5]. - The stock has experienced a decline of 12.4% over the past month and 23.3% over the past six months [6][9]. Valuation - The target price revision reflects a lower price-to-sales (P/S) multiple of 0.7x for FY25E revenue estimates, indicating a more conservative valuation approach compared to peers [9][10]. - NIO's profitability is considered worse than that of competitors like Li Auto and Xpeng, which justifies the lower P/S multiple [9][10].