Investment Rating - The report maintains a "BUY" rating for Meituan, with a target price of HK$141.10, reflecting a potential upside of 62.7% from the current price of HK$86.70 [3][10]. Core Insights - Meituan's 4Q25 results showed revenue of RMB92.1 billion, a 4.1% year-over-year increase, aligning with Bloomberg consensus. The adjusted net loss was RMB15.1 billion, at the lower end of the previously guided range [1]. - The Core Local Commerce (CLC) business is believed to be bottoming out, supported by regulatory guidance promoting healthier development in the food delivery sector and a focus on core competencies by in-store players [1]. - The report anticipates a further narrowing of CLC operating losses by 58% quarter-over-quarter in 1Q26 to RMB4.2 billion, following a 29% reduction in 4Q25 [1]. - Revenue from new initiatives reached RMB27.3 billion in 4Q25, up 18.9% year-over-year, indicating an acceleration in growth supported by business expansion [7]. - The forecast for CLC revenue in 1Q26 is RMB64.2 billion, flat year-over-year, with expectations of a 9% increase in in-store and a 25% increase in Instashopping businesses, despite a 9% decline in food delivery [7]. Financial Summary - For FY24A, FY25A, FY26E, FY27E, and FY28E, revenue is projected to be RMB337,592 million, RMB365,982 million, RMB408,564 million, RMB464,754 million, and RMB517,386 million respectively, with year-over-year growth rates of 22.0%, 8.4%, 11.6%, 13.8%, and 11.3% [2]. - The adjusted net profit for FY24A is expected to be RMB43,772.4 million, with losses of RMB18,648.0 million in FY25A and RMB4,703.1 million in FY26E, before recovering to RMB33,682.8 million in FY27E and RMB48,726.3 million in FY28E [2]. - The report revises the revenue forecast for 2026E down by 3% to reflect a strategic shift towards higher-quality growth in the food delivery business, while also reducing operating loss and non-IFRS net loss forecasts by 32% and 51% respectively [9].

Investment Rating - The report maintains a BUY rating for Binjiang Service with a target price of HK$32.06, reflecting a slight increase of 0.9% from the previous target price of HK$31.79 [1][3]. Core Insights - Binjiang Service's FY25 revenue increased by 14.1% year-on-year to RMB 4.1 billion, which is 2% and 4% below Bloomberg consensus and CMBI estimates respectively. Net profit grew by 12.1% year-on-year to RMB 880 million, also falling short by 4% compared to consensus and CMBI estimates [1]. - The company has reduced its reliance on parent company contributions, with only 36% of newly added GFA under management coming from related parties, down from 51% in FY24. This indicates a strong advantage in third-party expansion [9]. - Binjiang Service's collection rate improved by 0.29 percentage points, contrasting with the industry trend of declining collection rates. The average property management fee rose to RMB 4.2 per square meter per month, with 14 projects signing fee hike contracts in FY25 [9]. - The gross profit contribution from the 5S VAS segment reached a record high of 37%, driven by a significant gross margin improvement of 4.6 percentage points to 28.5% [9]. Financial Summary - FY25 revenue: RMB 4,101 million, with a year-on-year growth of 14.1% [2]. - FY25 net profit: RMB 596 million, reflecting a year-on-year growth of 9.0% [10]. - EPS for FY25: RMB 2.15, an increase of 8.7% year-on-year [10]. - Dividend payout ratio increased to 75% in FY25, up by 5 percentage points from the previous year [1][10]. Earnings Forecast - Revenue projections for FY26E are set at RMB 4,534 million, with a growth rate of 10.6% [2]. - Net profit for FY26E is forecasted at RMB 634 million, indicating a growth of 6.5% [2]. - The P/E ratio is projected to decrease from 9.3x in FY25 to 8.7x in FY26E [2]. Market Performance - The current market capitalization of Binjiang Service is approximately HK$6,252.3 million [4]. - The stock has shown a 1-month absolute performance of 0.8% and a 3-month performance of -7.8% [6].

Investment Rating - The report maintains a BUY rating for BaTeLab, with a target price revised to HK$57.00 from HK$93.00, reflecting a 39.0% upside potential from the current price of HK$41.00 [1][3]. Core Insights - BaTeLab reported FY25 results showing revenue growth of +0.9% YoY, while net profit declined by 26.8% YoY to RMB122 million, primarily due to share-based compensation and forex losses. Adjusted net profit, excluding these items, grew by 18.5% YoY [1]. - The gross margin decreased to 51.7% in FY25 from 53.0% in FY24, attributed to an inventory impairment of approximately RMB35 million. The company is balancing growth and profitability amid channel optimization and rising raw material costs [1][9]. - Looking forward, BaTeLab is expected to achieve a revenue CAGR of 12.4% from 2025 to 2028, with gross margins stabilizing around 52% [1]. Financial Summary - FY25 revenue was RMB584 million, with projections for FY26 at RMB700 million, FY27 at RMB782 million, and FY28 at RMB829 million, indicating a YoY growth of 19.8%, 11.7%, and 6.0% respectively [2]. - The net profit for FY25 was RMB122 million, with forecasts of RMB186 million for FY26, RMB222 million for FY27, and RMB243 million for FY28, reflecting growth rates of 52.3%, 19.5%, and 9.4% respectively [2]. - The gross margin is projected to recover slightly to 52.2% in FY26 and stabilize at 52.6% in FY27 and FY28 [2][10]. Strategic Developments - The company is focusing on SKU expansion, having added approximately 150 SKUs in 2025, bringing the total to over 1,000. This is part of a strategy to shift from distributor sales (66% of FY25 revenue) towards direct sales to enhance profitability and customer relationships [9]. - BaTeLab's medium-term strategy includes expanding its analog product portfolio and improving supply-chain control, with plans to advance its wafer fab buildout targeted for completion by the end of 2027 [9].

Company Insights - Pinduoduo (PDD US) reported Q4 2025 revenue growth of 12.0% year-on-year, reaching 123.9 billion RMB, driven by a 5% increase in transaction service fees, primarily from the Temu business [2] - Pinduoduo's operating profit for Q4 2025 was 27.7 billion RMB, a year-on-year increase of 8.3%, while non-GAAP net profit was 26.3 billion RMB, falling short of market expectations by 16% due to higher-than-expected tax expenses [2] - The target price for Pinduoduo has been raised by 5% to 161.7 USD, reflecting a non-GAAP P/E ratio of 8 times based on 2026 forecasts, with expected non-GAAP net profit growth of 16% in 2026 [5] Market Performance - The Hang Seng Index closed at 25,336, up 1.09% for the day but down 1.15% year-to-date, while the Hang Seng Tech Index rose 1.91% [2] - The Shanghai Composite Index increased by 1.30%, and the Shenzhen Composite Index rose by 1.96%, indicating a recovery in A-shares [4] - The U.S. markets saw the S&P 500 and Nasdaq rise by 0.54% and 0.77%, respectively, with small-cap stocks performing even better [4] Sector Analysis - Kuaishou (1024 HK) reported a 12% year-on-year revenue increase to 39.6 billion RMB in Q4 2025, with adjusted net profit growing 16% to 5.5 billion RMB, driven by strong growth in core business [5] - Hesai Group (HSAI US) achieved a 39% year-on-year revenue growth in Q4 2025, reaching 1 billion RMB, although it was 8% below Bloomberg consensus due to a shift in revenue structure [5] - Stone Pharmaceutical (1093 HK) expects a 10.4% year-on-year revenue decline in FY25 to 26 billion RMB, but anticipates stabilization in FY26 as the impact of centralized procurement diminishes [6][8] Growth Projections - Nongfu Spring (9633 HK) reported a 22.5% year-on-year revenue increase to 52.6 billion RMB in FY25, with net profit rising 30.9% to 15.9 billion RMB, driven by recovery in packaged water and strong performance in tea and juice segments [10] - Nanwei Medical (688029 CH) is projected to achieve a revenue CAGR of 14.6% and net profit CAGR of 13.6% from 2025 to 2028, supported by international expansion and product innovation [13] - China Hongqiao (1378 HK) plans to repurchase shares worth 5 billion RMB annually over the next 1-2 years, benefiting from global aluminum supply constraints [13]

Investment Rating - The report maintains a BUY rating for Nongfu Spring, with a target price raised by 5% to HK$60.88, reflecting a potential upside of 31.1% from the current price of HK$46.42 [1][3]. Core Insights - Nongfu Spring's FY25 revenue increased by 22.5% YoY to RMB 52.6 billion, exceeding Bloomberg consensus by 4%, while net profit rose by 30.9% YoY to RMB 15.9 billion, beating consensus by 6% [1]. - The company aims for double-digit revenue growth in FY26 but has not provided guidance on gross margin or net profit due to uncertain market conditions [1]. - The forecast for revenue and earnings CAGR from 2026 to 2028 is approximately 11% [1]. Financial Performance Summary - FY25 revenue: RMB 52,553 million, with a YoY growth of 22.5% [2]. - FY25 net profit: RMB 15,868 million, with a YoY growth of 30.9% [2]. - EPS for FY25 reported at RMB 1.41, with a projected EPS of RMB 1.57 for FY26 [2]. - P/E ratio for FY25 is 28.9x, projected to decrease to 26.0x in FY26 [2]. Business Segment Performance - Tea business revenue grew by 29% YoY in FY25, with a notable acceleration in 2H25 [9]. - Water business revenue increased by 17% YoY, with a 25% growth in 2H25 [9]. - Juice business revenue rose by 27% YoY, with 2H25 growth accelerating to 33% [9]. Market and Competitive Landscape - The report highlights intensified competition in the packaged water and beverage sector, which may pose challenges to sustaining high growth rates [1][9]. - Concerns over raw material price volatility due to geopolitical factors are noted, impacting future profitability [1][9]. Valuation Metrics - The target P/E multiple has been cut by 20% to 32x, reflecting market concerns [1]. - The company is positioned as an industry leader, attracting liquidity concentration despite potential sector sentiment challenges [1].

Investment Rating - The report maintains a "BUY" rating for WuXi Biologics, indicating a potential return of over 15% over the next 12 months [18]. Core Insights - WuXi Biologics reported a revenue increase of 16.7% year-over-year (YoY) for 2025, with adjusted attributable net profit rising by 17.9% YoY, both figures exceeding estimates [1]. - The company's backlog grew by 28.3% YoY, reaching US$23.7 billion, marking the second consecutive year of accelerated growth [1]. - Management has provided guidance for 2026, projecting revenue growth of 13% to 17%, with higher growth expected when excluding foreign exchange impacts [1]. - The company added 209 new projects in 2025, a 38.4% YoY increase, with pre-clinical projects up 42% YoY, indicating strong demand for early-stage R&D services [1]. - Revenue from bi- & multi-specific antibody and XDC businesses grew significantly, with bi- & multi-specifics revenue increasing by 120% YoY, contributing nearly 20% of total revenue [1]. - The XDC segment also maintained rapid growth, with revenue increasing by 46.7% YoY [1]. - WuXi Bio aims to expand its manufacturing capacity from 300,000 liters to 370,000 liters by 2029 to meet increasing demand [1]. Financial Summary - For FY25, revenue was reported at RMB 21,790 million, with an adjusted net profit of RMB 5,640 million [2]. - Revenue is projected to grow to RMB 24,974 million in FY26, with adjusted net profit expected to reach RMB 6,697 million [2]. - The adjusted EPS for FY26 is forecasted at RMB 1.62, with a P/E ratio of 18.5 [2]. Target Price - The target price has been raised from HK$35.60 to HK$39.00, reflecting an upside potential of 17.7% from the current price of HK$33.14 [3].

Report Industry Investment Rating - Not provided in the report. Core Viewpoints - Maintain neutral on BTSDF 28 due to its stronger FY25 results and improving credit profile [4][8] - Maintain buy on XIAOMI 30 - 31 considering Xiaomi's solid credit profile, sizeable net cash position, less vulnerability to geopolitical risk, and potential benefit from government measures to stimulate domestic consumption [4][18] Summary by Directory Trading Desk Comments - Yesterday, WESCHI 28 - 29 leaked 0.7 - 1.0pt. West China Cement reported a 15.3% yoy increase in revenue in FY25 but weaker 2H25 results [2] - In Chinese IG space, XIAOMI 30 - 51 closed 1 - 4bps wider. Xiaomi's FY25 revenue was up 25% yoy to RMB457.3bn [2] - 5 - 10yr MEITUA tranches faced better - selling pressure and closed 3bps wider. ZHOSHK 28 was down another 0.8pt [2] - Selling flows were concentrated in the FRN space across Chinese financial names, EU/AU banks and Korean corporates [2] - In Chinese properties, LNGFOR 27 - 32 gained 0.6 - 1.1pts. VNKRLE 27 was 0.7pt higher, while VNKRLE 29 was 0.2pt lower [2] - In HK, HYSAN 4.85 Perp was down 1.3pts, while HYSAN 7.2 Perp gained 0.3pt [2] - In SE Asian space, VEDLN 28 - 33s recovered up to 1.1pts higher. The NCLAT allowed Adani Enterprises to proceed with the resolution process for Jaiprakash Associates, even after Vedanta's appeal [2] - GLPSPs/GLPCHI edged 0.1 - 0.9pt higher [2] - In the Middle East, PB accounts were buying long - end KSAs and aoyr ARAMCOs. The space stabilized compared to the previous lows and traded 0.2pt lower to 0.5pt higher [2] - Yankee and Japanese AT1s and insurance subs leaked 0.3pt during Asia session as PB and AM clients sought to trim risks, before gaining 0.3 - 0.5pt with short covering and buying from London [2] - Overall balanced two - way flows were seen with better buying concentrated in less than 5yr - to - call, and better selling in longer dated issues [2] - In LGFV space, increased better selling from AMs in higher - grade USD issues yielding 4% was observed, which closed 20bps wider. Higher - yielding papers remained largely well digested thanks to demand from RMs, especially for papers with shorter - duration [3] - This morning, the new KOROIL 29 - 31s tightened 10bps from RO at T + 65 and T + 70, respectively. The new KOROIL Float 29s tightened 10bps from RO at SOFR + 80. The new fixed - rate and floating CBAAU 29s were unchanged from RO at T + 43 and SOFR + 63, respectively [4] - LGENSO 26 - 35s widened 10bps, as LG Energy Solution proposes to issue USD bonds in four tranches [4] - ZHOSHK 28 gained 1.0pt [4] - BTSDF had a stronger set of FY25 results with an improving credit profile. BTSDF 28 was 0.1pt higher this morning, and maintain neutral on it [4][8] - Chinese TMT names were 2 - 4bps tighter this morning [4] Top Performers and Underperformers | Top Performers | Price | Change | Top Underperformers | Price | Change | | --- | --- | --- | --- | --- | --- | | TSINGH 6 1/2 01/31/28 | 87.8 | 1.1 | HYSAN 4.85 PERP | 74.9 | - 1.3 | | VEDLN 9.85 04/24/33 | 101.5 | 1.1 | WESCHI 9.9 12/04/28 | 92.4 | - 1.0 | | LNGFOR 3.95 09/16/29 | 77.9 | 1.1 | TELPM 3.45 06/23/50 | 70.7 | - 1.0 | | VEDLN 11 1/4 12/03/31 | 105.8 | 1.1 | ZHOSHK 5.98 01/30/28 | 93.1 | - 0.8 | | LNGFOR 4 1/2 01/16/28 | 88.3 | 1.0 | WESCHI 10 1/2 11/11/29 | 92.1 | - 0.7 | [5] Macro News Recap - On Tuesday, S&P (-0.37%), Dow (-0.18%) and Nasdaq (-0.84%) were lower. S&P Global Mar'26 Manufacturing PMI was 52.4, higher than the market expectation of 51.5. S&P Global Mar'26 Services PMI was 51.1, lower than the market expectation of 52.0 [7] - UST yield was higher on Tuesday. 2/5/10/30 year yield was at 3.90%/4.03%/4.39%/4.94% [7] Desk Analyst Comments - BTSDF had a stronger set of FY25 results with an improving credit profile. H&H's credit profile is improving, supported by active liability management and IMF recovery. Maintain neutral on BTSDF 9.125 07/24/28 on current valuation. In Chinese HY space, FOSUNI 8.5 05/19/28 is favored, which offers c120bps pick - up over BTSDF 28 and c2 months earlier to maturity. At 100.2, FOSUNI 8.5 05/19/28 is trading at YTM of 8.4% [8] - XIAOMI had stronger FY25 results despite softening in 4Q25. Maintain buy on XIAOMI 30 - 31, considering Xiaomi's solid credit profile with a sizeable net cash position, less vulnerability to geopolitical risk, and potential benefit from government measures to stimulate domestic consumption. At 95.5 and 91.7, XIAOMI 3.375 04/29/30 and XIAOMI 2.875 07/14/31 are both trading at YTM of 4.6% [18] BTSDF Analysis - H&H's revenue rose 10.0% yoy to RMB14.4bn in FY25, with all business segments recording growth. Gross profit increased 13.2% yoy to RMB9.0bn, with GPM expanded to 62.4%, primarily driven by improved margins within the ANC and PNC segments and sourcing costs optimization [9] - Adj. EBITDA rose 5% yoy to RMB2.1bn, though adj. EBITDA margin contracted slightly to 14.3% due to higher revenue mix from the lower - margin BNC segment, higher SG&A on increased investment for ANC and PNC expansion in the Southeast Asia [9] - H&H met its revised FY25 guidance of high - single - digit to low - double - digit revenue growth. Adj. EBITDA margin and adj. net profit margin of 14.3% and 4.6%, respectively, were broadly in line with its targets of c15% and c5% [10] - China continued to be H&H's largest market with strong revenue growth of 17.5% yoy to RMB10.2bn in FY25, primarily driven by robust IMF revenue growth of 28.3% yoy in the BNC segment. Its market share in super - premium IMF segment rose to 17.1% as of Dec'25 from 13.3% a year earlier, while Biostime retained its No.1 position in the paediatric probiotic market. ANC revenue also recorded healthy growth of 13.3% yoy, and Swisse ranked No. 1 in the overall VHMS market [11] - Revenue growth in North America was steady at 7.8% yoy to RMB1.7bn, supported by Zesty Paws in the PNC segment. Zesty Paws' revenue grew 12.8% yoy on a LFL basis, while Solid Gold recorded 13.1% yoy decline in revenue on a LFL basis under H&H's product premiumisation strategy. Revenue from ANZ markets contracted 21.8% yoy to RMB1.6bn owning to decline in corporate daigou business in the ANC segment, through Swisse became the No.1 VMS brand in Australia on both volume and value basis [12] - As of Dec'25, H&H's cash balance increased to RMB1.7bn, supported by positive FCF. The cash conversion cycle was also shorter to 88 days from 109 days in FY24. H&H has been proactive in managing its debt maturity profile throughout 2025, including a tender offer and concurrent new USD bond issuance and prepayment of USD term loan. Debt maturities are more concentrated in 2027, and it is expected to refinance these obligations given its good access to diversified funding channels. Management reiterated its target to lower the leverage ratio to below 3x by end - 2027 and below 2x by end - 2028, from 3.45% as of Dec'25, through a combination of debt reduction and EBITDA growth [13] - The review of H&H's objection by the Australian Tax Office (ATO) remains ongoing, and expects to receive an official reply from ATO on the objection by Jun'26. There is no need to be overly concerned about the ongoing tax audit of H&H's subsidiary Biostime Healthy Australia Pty (BHA) materially impacting its near - term liquidity. No further deposit is required until the case reaches a final conclusion [14] Xiaomi Analysis - Xiaomi's revenue increased by 25.0% yoy to RMB457.3bn in FY25, driven by a 223.8% yoy revenue growth in the Smart EV, AI and other new initiatives, as well as a steady 5.4% yoy revenue growth in the segment of Smartphone x AIoT [20] - Within the Smartphone x AIoT segment, Xiaomi's smartphones revenue declined by 2.8% yoy in FY25 due to lower ASP and shipment volumes. The ASP fell by 0.8% yoy to RMB1,129 per unit in FY25. The higher ASP of smartphone in China was more than offset by the lower ASP overseas. In FY25, the shipment volumes of Xiaomi's smartphones decreased 2.0% yoy to 165.2mn units, compared to 168.5mn in FY24. Decline of shipments in India was partially offset by increased shipments of premium smartphones in the China, Latin America and Africa. Xiaomi remained as the world's 3rd largest smartphone manufacturer (after Samsung and Apple) by shipments with 13.3% market shares in FY25 [21] - In FY25, revenue of IoT and lifestyle products grew 18.3% yoy, primarily supported by tablets, smart large home appliances and wearables. Smart EV segment revenue rose 223.8% yoy and reached RMB106.1bn in FY25, driven by a 200.4% yoy growth in vehicle deliveries and 7.1% yoy increase in ASP, primarily due to the introduction of Xiaomi SU7 Ultra and Xiaomi YU7 Series. The growing contribution from smart EV should help to mitigate the softened smartphone market [22] - The GP margin of Xiaomi in FY25 improved to 22.3%, compared to 20.9% in FY24, driven by higher gross margin in both the Smartphone x AIoT segment and Smart EV segment. The margin expansion was attributable to an increase in GP margin of certain products, as well as higher revenue contribution of those products, namely wearables and certain lifestyle products. EBITDA rose 34.9% yoy to RMB37.6bn in FY25, with EBITDA margin improved 0.6 pct. pt. to 8.2% [23] - Xiaomi's operating performance softened in 4Q25, primarily due to the decrease of revenue from smartphones as well as IoT and lifestyle products, partly offset by solid growth in the smart EV segment. The decline of smartphones revenue in 4Q25 was attributable to reduced promotions in the overseas markets. Lower revenue from IoT and lifestyle products was a result of reduced national subsidies and increased competition in the Chinese mainland [24] - As of Dec'25, Xiaomi had net cash (unrestricted cash and short term investments minus total debts) of RMB71.6bn, representing an 2.4% increase from RMB69.9bn as of Dec'24. Xiaomi's operating cash flows, after R&D of RMB33.1bn, decreased by 13.1% yoy to RMB34.1bn. In FY25, Xiaomi invested RMB18.2bn in capex (73% yoy increase). Xiaomi expects to spend over RMB40bn in R&D in FY26 and over RMB200bn over the next five years. Xiaomi has a strong liquidity profile with unrestricted cash to ST debts ratio at 2.0x [25] - Xiaomi's FY26 outlook includes: 1) deeply integrate AI in Xiaomi's ecosystem and invest RMB60bn in AI over the next three years; 2) expand the overseas market from 450 stores in FY25 to 1k stores in FY26 for higher sales of IoT products; and 3) reach 550,000 vehicle deliveries (compared to 410,000 units in FY25). It is expected that Xiaomi will maintain a sizeable net cash position over the medium term as increasing R&D expenses and capex will be largely covered by internal resources and strong operating cash inflow, which, in turn, will be supported by the growing contribution from the Smart EV segment [26] Offshore Asia New Issues Priced | Issuer/Guarantor | Size | Tenor | Coupon | Priced | Issue Rating | | --- | --- | --- | --- | --- | --- | | Commonwealth Bank of Australia | 1100/900 | 3yr/3yr | 4.355%/SOFR + 63 | T + 43/SOFR + 63 | Aa2/AA - /AA | | | 400 | 3yr | 4.5% | T + 65 | | | Korea National Oil Corporation | 500/300 | 3yr/5yr | SOFR + 80/4.625% | SOFR + 80/T + 70 | Aa2/AA - | [30] Pipeline | Issuer/Guarantor | Currency | Size (USD mn) | Tenor | Pricing | Issue Rating (M/S/F) | | --- | --- | --- | --- | --- | --- | | LG Energy Solution | USD | - | 3yr/5yr/5yr/10yr | T + 150/T + 165/SOFR Equiv/T + 200 | Baa2/BBB - | | Nippon Life Insurance | USD | - | 5yr/7yr | T + 120/T + 135 | A2/A - | [31] News and Market Color - Regarding onshore primary issuances, there were 192 credit bonds issued yesterday with an amount of RMB136bn. As for month - to - date, 2,037 credit bonds were issued with a total amount of RMB1,680bn raised, representing a 8.8% yoy increase [32] - [BCDHGR] Beijing Capital Development plans up to USD517mn bond offering to refinance BCDHGR 3.25 07/15/26 [32] - [CHJMAO] China Jinmao FY25 revenue rose 0.5% yoy to RMB59.4bn (cUSD8.6bn); mulls offshore issuance to refinance CHJMAO 3.2 04/09/26 of USD600mn [32] - [CWAHK] China Water Affairs repurchased USD25mn of CWAHK 4.85 05/18/26, outstanding amount is reduced to USD325mn [32] - [FRIDPT] Freeport Indonesia expects to resume operations at its Grasberg Block Cave underground mine in 2 - 3 weeks after being hit by a landslide [32] - [HAIDIL] Haidilao International FY2

Investment Rating - The report maintains a "BUY" rating for WuXi AppTec, with a target price raised to RMB133.00, indicating a potential upside of 42.0% from the current price of RMB93.68 [3][18]. Core Insights - WuXi AppTec reported a revenue growth of 15.8% YoY for 2025, with adjusted non-IFRS net profit increasing by 41.3% YoY, both figures surpassing estimates [1][2]. - Management projects 2026 revenue to reach RMB51.3-53.0 billion, with continuing operations expected to grow by 18-22% YoY [1]. - The backlog for continuing operations grew by 28.8% YoY to RMB58.0 billion, indicating strong demand for CDMO services [9]. - The company plans to increase capital expenditure to RMB6.5-7.5 billion in 2026, reflecting a commitment to global capacity expansion [9]. Financial Performance - Revenue projections for FY26E are RMB51,695 million, with a YoY growth of 13.7% [2]. - Adjusted net profit for FY26E is expected to be RMB17,930 million, reflecting a 19.9% YoY increase [2]. - The adjusted net profit margin is anticipated to remain stable, contributing to a robust financial outlook [1][9]. Valuation Metrics - The P/E ratio is projected to decrease from 17.9 in FY25A to 15.6 in FY26E, indicating improved valuation attractiveness [2][15]. - The gross profit margin is expected to improve to 48.5% in FY26E, up from 47.6% in FY25A [16]. Market Position - WuXi AppTec's market capitalization stands at RMB279,518.4 million, with a significant shareholding structure that includes 23.7% held by HK investors and 16.4% by Ge Li and concerted parties [4][5]. - The company has shown resilience in early-stage business recovery, with revenue growth in the Testing and Biology segments [9].

Market Overview - Global markets showed mixed performance, with the Hang Seng Index closing at 25,064, up 2.79% for the day but down 2.21% year-to-date [1] - The Shanghai Composite Index rose by 1.78%, while the Shenzhen Composite Index increased by 2.17% [1] - In the U.S., the S&P 500 and Nasdaq fell by 0.37% and 0.84% respectively, reflecting ongoing concerns about inflation and economic growth [3] Sector Performance - The Hang Seng Financial Index dropped by 4.80%, while the Hang Seng Real Estate Index decreased by 3.83% [2] - The energy sector saw declines, contrasting with gains in materials and healthcare sectors [3] Company Insights WuXi AppTec (药明康德) - WuXi AppTec reported a 15.8% year-on-year revenue growth for 2025, with adjusted net profit increasing by 41.3% [4] - The company anticipates revenue for 2026 to reach between 51.3 billion to 53 billion RMB, with a projected growth of 18-22% in continuous operations [5] - The backlog for continuous operations grew by 28.8% year-on-year, indicating strong demand for CDMO services [5] WuXi Biologics (药明合联) - WuXi Biologics achieved a 46.7% revenue growth in 2025, with adjusted net profit rising by 69.9% [7] - The backlog increased by 50.3% to $1.49 billion, with new orders growing by 41% [8] - The company expects over 40% revenue growth in 2026, driven by strong demand for iCMC projects [8] Kelun-Biotech (科伦博泰) - Kelun-Biotech transitioned to commercialization in 2025, reporting total revenue of 2.06 billion RMB, a 6.5% increase [11] - The company’s key assets have been included in the national medical insurance directory, supporting future sales growth [11] - Despite a net loss of 382 million RMB, the company has a strong cash position with 4.6 billion RMB in cash and financial assets [11] SenseTime (商汤科技) - SenseTime's FY25 revenue grew by 33% to 5.01 billion RMB, driven by strong performance in generative AI [14] - The adjusted net loss narrowed by 54% to 1.96 billion RMB, outperforming market expectations [14] - Future revenue growth is expected to be driven by continued advancements in generative AI capabilities [14] Tongcheng Travel (同程旅行) - Tongcheng Travel reported a 14.2% year-on-year revenue increase in Q4 2025, with adjusted net profit rising by 18% [15] - The core OTA business showed resilience, with expectations for a 15% increase in operating profit in 2026 [15] Xiaomi Group (小米集团) - Xiaomi's Q4 2025 performance exceeded expectations, with revenue growing by 7% [16] - The company is focusing on high-end strategies and expanding its IoT business, despite facing short-term challenges in the smartphone and automotive sectors [16] Minth Group (敏实集团) - Minth Group's revenue increased by 12% in 2H25, with net profit growing by 13% [17] - The company aims for a 23% compound annual growth rate over the next five years, driven by both automotive and AI robotics sectors [17]

Investment Rating - The report maintains a "BUY" rating for SenseTime, indicating a potential return of over 15% over the next 12 months [16]. Core Insights - SenseTime's FY25 results exceeded expectations, with total revenue growing by 33% YoY to RMB5.01 billion, driven by the strong performance of its Generative AI business [1][2]. - The adjusted net loss for FY25 narrowed by 54% YoY to RMB1.96 billion, outperforming the consensus estimate, primarily due to effective operating expense control [1]. - The company expects total revenue to grow by 27% YoY to RMB6.39 billion in FY26E, supported by a 35% YoY increase in Generative AI revenue [1][9]. - The target price has been raised to HK$2.50 based on a 12x FY26E EV/sales multiple, reflecting the company's leadership in China's Generative AI cloud services market [3][11]. Financial Performance - FY25 revenue from the Generative AI business increased by 51% YoY to RMB3.63 billion, accounting for 72% of total revenue [8]. - The Computer Vision business revenue grew by 3% YoY to RMB1.08 billion, driven by overseas market growth and domestic demand recovery [8]. - The adjusted net margin improved by 75 basis points YoY to -39% in FY25, supported by operating leverage and a reduction in operating expenses by 11% YoY [8]. Revenue Forecasts - Revenue projections for FY26E and FY27E have been revised upwards by 3-6%, with expected revenues of RMB6.39 billion and RMB7.68 billion respectively [1][9]. - The report anticipates a breakeven on adjusted EBITDA level in FY26E, with adjusted net loss expected to narrow by 66% YoY [8]. Valuation - SenseTime is valued at US$2.50 per share based on a 12x FY26E EV/sales, which is at a premium to the sector average of 5x [11].