Investment Rating - The report maintains a positive outlook on the semiconductor industry, with a focus on four main investment themes: Artificial Intelligence, Semiconductor Supply Chain Autonomy, High Dividend Defensive Strategy, and M&A Opportunities [1][3][21]. Core Insights - The semiconductor industry is expected to benefit from the ongoing AI boom, with significant growth in AI-related business revenues driven by increased investment in computing infrastructure [1][3]. - The report highlights the importance of domestic semiconductor supply chain autonomy in China, driven by geopolitical risks and the need for supply chain security [8][9]. - High dividend yield companies, particularly in the telecommunications sector, are expected to attract conservative investors as long-term bond yields decline [17]. - M&A activity in the semiconductor sector is anticipated to increase, leading to high-quality consolidations that will enhance market competitiveness and profitability [21]. Summary by Sections Investment Theme 1: Artificial Intelligence - The report maintains a positive long-term growth outlook for the AI industry, with core beneficiaries expected to perform well due to substantial increases in computing infrastructure investments [1][3]. - Major cloud service providers are projected to increase capital expenditures significantly, with a forecasted growth of 42% in 2024 and an additional 18% in 2025, reaching $250 billion [1][3]. Investment Theme 2: Semiconductor Supply Chain Autonomy - The trend towards semiconductor supply chain autonomy in China is expected to enhance domestic market share, driven by geopolitical tensions and export restrictions from the U.S. government [8][9]. - The report notes that several Chinese semiconductor companies have been affected by U.S. export restrictions, but the overall impact on the industry is expected to be limited as domestic capabilities improve [9][10]. Investment Theme 3: High Dividend Defensive Strategy - Major Chinese telecom operators are highlighted as attractive investments due to their stable operations, strong free cash flow, and high dividend yields, with China Mobile at 6.86%, China Unicom at 6.14%, and China Telecom at 5.93% [17]. - The report suggests that as long-term bond yields are expected to decline, investors may shift their focus towards high dividend yield companies as a risk mitigation strategy [17]. Investment Theme 4: M&A Opportunities - The report indicates a growing trend in M&A activities within the semiconductor industry, with a 41.46% increase in disclosed M&A events compared to the previous year [21]. - M&A activities are expected to help companies expand their customer base, enhance product offerings, and improve competitive positioning [21].

Industry Investment Rating - The report suggests that the fuel cell heavy-duty truck industry may reach an inflection point between 2026 and 2027, driven by cost competitiveness and infrastructure development [1] Core Views - Fuel cell heavy-duty trucks are expected to achieve cost parity with diesel trucks by 2026, with a 75% reduction in fuel cell system costs over the next 5-10 years [1] - The key to achieving cost competitiveness lies in reducing hydrogen refueling costs and improving infrastructure, with government support playing a crucial role in the short term [1][2] - Fuel cell heavy-duty trucks are projected to have a 10% lower total cost of ownership compared to diesel trucks by 2026, assuming hydrogen costs drop to 25 RMB/kg [1][2] Cost Analysis - The total cost of ownership for fuel cell heavy-duty trucks is expected to decrease from 745,000 RMB in 2023 to 509,000 RMB by 2026, driven by reductions in hydrogen costs and improvements in fuel efficiency [6][25] - By 2026, fuel cell heavy-duty trucks are projected to have a 10% lower total cost of ownership compared to diesel trucks, with upfront cost premiums being offset within 3 years [24][25] Hydrogen Production and Transportation - Grey hydrogen (produced from coal or natural gas) currently dominates the market due to its lower cost (13 RMB/kg) compared to green hydrogen (30-40 RMB/kg) [27][32] - Transportation costs for hydrogen could be significantly reduced by adopting Type III long-tube trailers, which could cut costs by 50% compared to Type I trailers [42][43] - Pipeline transportation of hydrogen could further reduce costs to 2.3 RMB/kg, but requires significant government planning and investment [44][47] Fuel Cell System Cost Reduction - The fuel cell system cost is expected to decrease by 75% in the medium to long term, from 1,500 RMB/kW to 390 RMB/kW, driven by technological advancements and economies of scale [56][68] - Key components such as bipolar plates, membrane electrodes, and catalysts are projected to see cost reductions of 58-81% over the next decade [67][68] Market Potential - Fuel cell heavy-duty trucks accounted for only 0.3% of the Chinese market in 2023, but with long-haul transportation making up half of the heavy-duty truck demand, there is significant potential for exponential growth [3][72] - The report anticipates that fuel cell heavy-duty trucks could achieve cost parity with diesel trucks by 2026, with infrastructure development being a critical factor for long-term competitiveness [74][75]

Investment Rating - The report maintains a positive outlook on the semiconductor industry, with a focus on four main investment themes: Artificial Intelligence, Semiconductor Supply Chain Autonomy, High Dividend Defensive Strategy, and M&A Opportunities [1][3]. Core Insights - The semiconductor industry is expected to benefit from the ongoing AI boom, with significant growth in related sectors driven by increased investment in computing infrastructure [1][3]. - The report highlights the importance of domestic semiconductor supply chain autonomy in China, driven by geopolitical risks and the need for supply chain security [8][9]. - High dividend yield companies, particularly in the telecommunications sector, are expected to attract conservative investors as long-term bond yields decline [17]. - M&A activities in the semiconductor sector are anticipated to increase, leading to high-quality consolidations that will enhance market competitiveness and profitability [21]. Summary by Sections Investment Theme 1: Artificial Intelligence - The report maintains a positive long-term growth outlook for the AI sector, with core beneficiaries expected to perform well due to substantial increases in computing infrastructure investments [1][3]. - Major cloud service providers are projected to increase capital expenditures significantly, with a forecasted growth of 42% in 2024 and an additional 18% in 2025, reaching $250 billion [1][3]. Investment Theme 2: Semiconductor Supply Chain Autonomy - The trend towards supply chain autonomy in China's semiconductor industry is expected to enhance domestic market share, driven by geopolitical tensions and export restrictions from the U.S. [8][9]. - The report notes that several Chinese semiconductor companies have been added to the U.S. entity list, which may impact their operations but also highlights the potential for domestic growth [9][10]. Investment Theme 3: High Dividend Defensive Strategy - Major Chinese telecom operators are highlighted as attractive investments due to their stable operations, strong free cash flow, and high dividend yields, with China Mobile at 6.86% and China Telecom at 5.93% [17]. - The report suggests that as long-term bond yields are expected to decline, investors may shift their focus towards high dividend yield companies as a risk mitigation strategy [17]. Investment Theme 4: M&A Opportunities - The report indicates a growing trend in M&A activities within the semiconductor sector, with a 41.46% increase in disclosed M&A events compared to the previous year [21]. - M&A activities are expected to help companies expand their customer base, enhance product offerings, and improve competitive positioning [21].

Investment Rating - The report maintains a positive outlook for the technology sector, suggesting high growth potential driven by AI computing demand and innovation in edge AI applications [1][15]. Core Insights - The technology sector is expected to sustain high prosperity in 2025, with a focus on two main themes: expansion of AI computing demand and rapid innovation in edge AI applications across various devices [1][15]. - The global economy is anticipated to recover moderately, leading to a rebound in smartphone and PC demand, alongside continued growth in general and AI server markets [1][15]. Summary by Sections AI Servers - The AI server market is projected to see significant growth, with shipments expected to increase by 109% in 2025, reaching 2.07 million units [2][28]. - The introduction of new architectures like GB200 and ASIC AI servers will further drive demand for ODM and related components [2][28]. Smartphones - The global smartphone market is forecasted to grow by 3% in 2025, reaching 1.25 billion units, driven by AI applications enhancing user experience [3][15]. - Innovations in components such as optics, acoustics, and thermal management are expected to continue, improving profitability for domestic supply chains [3][15]. AR/VR - AI glasses are anticipated to become a key platform for AI applications, with a peak in product launches expected in 2025 [3][15]. - Companies deeply involved in the supply chain, such as Sunny Optical and AAC Technologies, are expected to benefit significantly from this trend [3][15]. Automotive Electronics - The rapid development of electric and intelligent vehicles is driving the growth of the automotive electronics market, with a penetration rate of 53% for new energy vehicles in China as of October [4][15]. - The demand for L3 and above autonomous vehicles is expected to rise, leading to growth in the market for onboard cameras and displays [4][15]. General Servers - The general server market is expected to grow by 8% in 2025, with a total shipment of 14.83 million units, driven by strong capital expenditure from cloud service providers [24][15]. - The demand for traditional enterprise servers is anticipated to remain weak due to macroeconomic factors and the ongoing shift from private to public cloud [24][15].

Investment Rating - The report maintains a "BUY" rating for Adobe, with a target price of US$634.50, reflecting a potential upside of 15.4% from the current price of US$549.93 [2][17]. Core Insights - Adobe's total revenue for 4QFY24 grew by 11% YoY to US$5.61 billion, aligning with consensus estimates, while non-GAAP net income increased by 9% YoY to US$2.13 billion [1]. - The company is experiencing a deceleration in Digital Media net new ARR growth, which was up 2% YoY to US$578 million in 4QFY24, raising investor concerns about the monetization pace of AI applications [1]. - Adobe plans to accelerate AI monetization in FY25 by introducing higher-priced AI services, with management guiding total revenue growth of 8-10% YoY to US$23.30-23.55 billion for FY25E [1][5]. Financial Performance - For FY25E, Adobe's revenue is projected to reach US$23.5 billion, with adjusted net profit expected at US$8.86 billion, translating to an adjusted EPS of US$19.83 [1][10]. - The company reported a stable non-GAAP operating profit margin (OPM) of 46% in 4QFY24, with guidance for a similar margin in FY25E [1][4]. - Digital Experience revenue grew by 10% YoY to US$1.4 billion in 4QFY24, driven by Adobe Experience Manager and Adobe Journey Optimizer [1]. Growth and Valuation - Adobe's revenue growth is expected to slow, with projections of 9.4% for FY25E and further declines in subsequent years [14]. - The valuation of Adobe is set at US$284 billion, based on a target P/E of 32x for FY25E, which is below the sector average of 41x [5][6]. - The company has a strong cash position, with cash and equivalents expected to reach US$11.88 billion by the end of FY25E [12].

Investment Rating - The report maintains a positive outlook for the internet industry, suggesting a focus on companies with strong business moats and growth potential, particularly in mature sectors and overseas expansion [1][12][14]. Core Insights - The report emphasizes that the introduction of substantial consumption-boosting policies will be a key driver for structural valuation improvement in the sector, while the industry may experience volatility before these policies are enacted [1][12]. - It identifies three main investment themes: 1) Companies with strong business moats and new growth opportunities, such as Tencent, NetEase, Alibaba, and Meituan; 2) Sectors with rapid profit growth that may see valuation recovery, including OTA, short video, and education, with a focus on Ctrip, Kuaishou, and New Oriental; 3) Companies with overseas expansion potential, particularly in e-commerce and OTA [1][12][14]. Summary by Sections Consumption Boost and AI - The report anticipates that the main growth drivers for 2025 will include consumption-boosting policies, generative AI opportunities in cloud and advertising, and overseas market expansion [1][12][14]. - It highlights that the online travel agency (OTA) sector is expected to maintain strong revenue growth due to low overseas online penetration and established supply chains [1][12]. Shareholder Returns - The average net cash to market value ratio for Chinese internet companies has reached 26%, indicating a strong focus on sustainable shareholder returns as a support for valuation [1][12][14]. - Companies like Alibaba, Tencent, and NetEase are recommended for their robust shareholder return strategies [1][12]. Sector Performance Expectations - Local services, online gaming, and online travel are favored sectors due to their resilience and growth potential, while the e-commerce sector faces challenges from weak retail sales [1][12][14]. - The online advertising sector is expected to see differentiated performance across platforms, with short video platforms maintaining revenue growth [1][12][14]. Specific Company Insights - Tencent and NetEase are expected to benefit from new game releases and overseas revenue growth, with projected revenue increases of 8% and 7% respectively for FY25 [22]. - The report projects a 10% growth in domestic tourism revenue, with OTA revenue expected to grow even faster due to increased online penetration [22]. - E-commerce is projected to grow by 7.1% in 2025, driven by consumption recovery and potential policy support [23]. Profit Elasticity - Companies such as Bilibili, New Oriental, and Beike are noted for their high profit elasticity, indicating that they could see significant profit increases with revenue growth [17][18].

Investment Rating - The report maintains a "Buy" rating for several companies including Geely Automobile, Xpeng Motors, and others, while holding a "Hold" rating for NIO [4][41]. Core Insights - The Chinese passenger car market is expected to show resilience in 2025, with retail sales projected to decline by 2% to 23.08 million units due to demand being pulled forward by the trade-in subsidy policy in 2024 [45][48]. - The wholesale sales of passenger cars in China are anticipated to increase by 3.8% in 2025, supported by rising overseas sales and inventory replenishment [45]. - The market share of new energy vehicles (NEVs) is expected to reach 57.8% in retail sales by 2025, with a significant increase in the number of new models from domestic brands [1][3]. Summary by Sections 2025 Outlook - The report predicts that the retail and wholesale sales of NEVs in China will grow by 22% year-on-year, reaching 13.35 million and 14.90 million units respectively in 2025 [3]. - Domestic brands are expected to significantly outnumber foreign brands in new vehicle launches, with NEVs accounting for 84% of new car sales [3]. Investment Strategy - The report emphasizes that 2024 will be a year of maturation for the NEV industry in China, with price competitiveness and brand strength becoming crucial as differentiation strategies become harder to implement [2][37]. - Recommended stocks include Geely and Xpeng, which have shown potential for successful new model launches and improved profitability [41][42]. Market Dynamics - The report highlights that the penetration rate of NEVs in lower-tier cities has reached 38%, indicating a broadening market base [2][37]. - The competitive landscape is expected to intensify, with a focus on profitability and a reduction in tolerance for losses among investors [2][38]. Key Company Projections - Geely is projected to achieve a 10% increase in wholesale sales to 2.38 million units in 2025, with 55% being NEVs, and a core net profit growth of 36% to 12.5 billion RMB [41][42]. - Xpeng is expected to see a significant sales increase of 110% in 2025, reaching 390,000 units, with a path to profitability anticipated by 2026 [42].

2024 年 12 月 12 日 招银国际环球市场 | 睿智投资 | 行业研究 互联网 2025 展望：逆风前行，但可以有更多期待 三条投资主线：关注成熟业务护城河及新发展空间、估值提升空间、出海。展 望 2025，增量实质性促消费政策的出台或仍是板块估值结构性提升的关键驱动 因素，而在此之前板块或维持震荡，股东回报水平、盈利增速及确定性或为估 值的关键支撑。我们建议关注三条主线：1）成熟业务的护城河及新发展空 间，或有望驱动业绩及估值的双升：如受益新游发布的游戏板块、核心业务仍 有进一步线上渗透空间的本地生活、AI 技术赋能下广告效果提升及 GPU 云业 务带来新增量的广告和云、变现率有提升空间且有望受益于增量促消费政策的 电商；建议关注腾讯、网易、阿里巴巴、美团；2）盈利快速增长已较为充分 被预期、但估值或有望进一步修复带来投资机会的板块：如 OTA、短视频、教 育，建议关注携程、快手、新东方；3）出海有望在中长期带来盈利和估值增 量的板块，如电商、OTA。 观存量：确定性或仍为短期重点。回顾 2024，宏观逆风仍存的情况下，市 场的主要关注点聚焦核心业务盈利增速和确定性、股东回报水平、及新业 务扩张带来 ...

Investment Rating - The report maintains a "Buy" rating for the company, with a target price raised to HKD 22.88, reflecting a potential upside of 24.2% from the current price of HKD 18.42 [3][21]. Core Insights - The report anticipates that the Biosecurity Act is likely to fail in legislation, which would benefit the company by providing a more stable operating environment for continued performance growth [1]. - The global biopharmaceutical financing is showing signs of recovery, which is expected to drive the company's valuation and performance recovery [1]. - The company is expanding its global production network to mitigate geopolitical risks and enhance its ability to meet diverse global client needs [1]. - The management aims to add 110 new projects in 2024, benefiting from the resurgence in financing and increased demand for early-stage clinical research [1]. - Milestone revenues are expected to significantly enhance the company's net profit, with projected milestone income reaching approximately RMB 500 million in the second half of 2024 [1]. Financial Summary - For FY24E, the company expects sales revenue of RMB 18,236 million, a year-on-year growth of 7.1% [2]. - Adjusted net profit for FY24E is projected at RMB 4,739 million, reflecting a slight increase of 0.8% year-on-year [2]. - The adjusted earnings per share for FY24E is estimated at RMB 1.15, with a non-IFRS P/E ratio of 14.8 times [2][18]. - The company anticipates revenue growth of 12.4% and 13.9% for FY25E and FY26E, respectively [2]. Market Context - The report highlights a 1.1% year-on-year increase in global healthcare financing for the first 11 months of 2024, indicating a recovery from a 21% decline in 2023 [1][9]. - The company has secured significant contracts, including four Phase 3 clinical and commercialization production contracts with a multinational pharmaceutical company [1]. - The expansion of production capacity in Germany and the upcoming factory in Singapore are part of the company's strategy to meet increasing overseas client demands [1].

Investment Rating - Maintains a **Buy** rating for SenseTime with a target price of **HK$2.00**, up from HK$1.36, based on a 9.0x EV/Sales multiple for FY25E [1][18] Core Views - SenseTime has completed a strategic reorganization, adopting a "1+X" structure to focus on its core AI cloud services, large models, and AI applications, while other ecosystem businesses (smart cars, home robots, smart healthcare, smart retail) operate independently with flexible incentives and financing [1] - The reorganization is expected to accelerate SenseTime's path to breakeven, with breakeven now projected in FY26E (previously expected adjusted net loss of RMB 1.7 billion) [1] - The core AI cloud and Gen AI businesses grew 256% YoY in H1 2024, contributing 60% of total revenue, with significant cost reductions expected as core business headcount is reduced to less than 2,000 (50% of pre-reorganization total) [2] - SenseTime's Gen AI business is expected to grow at a 68% CAGR from FY24 to FY26, driven by increasing computing power and strong demand for AI computing [5] - SenseTime's total operational computing power reached over 20,000 PetaFLOPS in August 2024 (up 233% YoY), with management targeting over 25,000 PetaFLOPS by the end of FY24 [5] Financial Summary - Revenue is projected to grow from RMB 4,541 million in FY24E to RMB 7,498 million in FY26E, with adjusted net profit turning positive at RMB 84.1 million in FY26E [4] - Gross margin is expected to improve from 42.8% in FY24E to 39.0% in FY26E, while adjusted net profit margin is forecasted to turn positive at 1.0% in FY26E [15] - Operating cash flow is expected to improve significantly, turning positive at RMB 199 million in FY24E and reaching RMB 2,798 million by FY26E [25] Valuation - SenseTime's target EV/Sales multiple of 9.0x for FY25E is higher than the industry average of 7.8x, reflecting its leading position in China's Gen AI cloud services market and strong AI infrastructure [18] - The company's EV/Sales multiple is expected to decline from 9.8x in FY24E to 6.8x in FY26E, indicating improving profitability and valuation [25] Market Position - SenseTime ranks third in China's Gen AI IaaS market with a 15% market share as of Q2 2023 [5] - The company's strong AI infrastructure positions it to benefit from the growth of Gen AI, with significant investments in computing power and large models [5]