Investment Rating - The report maintains a "BUY" rating for SenseTime, with a target price raised to HK$2.00, reflecting a potential upside of 17.0% from the current price of HK$1.71 [3][10]. Core Insights - SenseTime has completed a strategic organizational restructuring to focus on its generative AI business, which is expected to accelerate its path to breakeven by FY26E [1]. - The revenue from the core AI Cloud and generative AI businesses grew by 256% year-over-year, accounting for 60% of total revenue in 1H24 [1]. - The restructuring is anticipated to lead to significant expense reductions, with the core business headcount reduced to below 2,000, representing less than 50% of the total group headcount prior to restructuring [1]. Financial Summary - Revenue projections for FY24E, FY25E, and FY26E are RMB4,541 million, RMB5,955 million, and RMB7,498 million respectively, indicating a growth trajectory [2][13]. - Adjusted net profit is expected to improve from a loss of RMB3,615.9 million in FY24E to a profit of RMB84.1 million in FY26E [2][13]. - The adjusted net margin is forecasted to improve from -79.6% in FY24E to +1.1% in FY26E, driven by robust growth in the generative AI business and a significant decline in operating expenses [1][2]. Market Position - SenseTime is positioned as the third largest generative AI IaaS service provider in China, holding a market share of 15% as of 2H23 [1]. - The company’s total operating computing power exceeded 20,000 PetaFLOPS in August 2024, with expectations to surpass 25,000 PetaFLOPS by the end of FY24 [1]. Valuation - The target price of HK$2.00 is based on a valuation of 9.0x FY25E EV/Sales, which is at a premium to the sector average of 7.8x, reflecting SenseTime's leadership in the generative AI cloud services market [10].

Investment Rating - The report maintains a "Buy" rating for WuXi AppTec, with a target price raised to 78.51 RMB, reflecting a potential upside of 42.2% from the current price of 55.22 RMB [2][6]. Core Insights - The failure of the Biosecure Act to be included in the 2025 NDAA indicates significant legislative hurdles, reducing the likelihood of its passage in the near term. This is expected to positively impact WuXi AppTec's competitive position in the global pharmaceutical R&D industry [1][6]. - The company is anticipated to maintain its leading position in the global chemical drug CDMO market, with overseas competitors lagging significantly in revenue and capacity [1][6]. - A recovery in global biopharmaceutical financing is expected to drive rapid growth in orders for WuXi AppTec, with a reported 35% year-on-year increase in backlog orders as of September, including a remarkable 196% increase in TIDES orders [1][6]. Financial Summary - Revenue projections for WuXi AppTec are as follows: 38,906 million RMB in FY24E, 43,332 million RMB in FY25E, and 49,225 million RMB in FY26E, with expected year-on-year growth rates of -3.6%, +11.4%, and +13.6% respectively [1][9]. - Adjusted net profit is projected to be 10,427 million RMB in FY24E, 11,668 million RMB in FY25E, and 13,474 million RMB in FY26E, with corresponding growth rates of -3.9%, +11.9%, and +15.5% [1][9]. - The adjusted earnings per share are forecasted to be 3.61 RMB in FY24E, 4.04 RMB in FY25E, and 4.67 RMB in FY26E, with growth rates of -3.9%, +11.9%, and +15.5% respectively [1][9]. Valuation Metrics - The report utilizes a DCF model with a WACC of 9.42% and a perpetual growth rate of 2.0%, resulting in a calculated equity value of 226,740 million RMB and a per-share value of 78.51 RMB [6][9]. - The adjusted P/E ratio is projected to decrease from 15.3 in FY24E to 11.8 in FY26E, indicating an improving valuation as earnings grow [13].

Investment Rating - The report maintains a "Buy" rating for the company, with a target price raised to HKD 26, indicating a potential upside of 24.7% from the current price of HKD 20.85 [4][18]. Core Insights - The company is positioned to benefit from the increasing average vehicle age in China and a shift towards more rational consumer spending habits. Its proprietary systems enhance supply chain and store management, leading to standardized products and services that cater to younger consumers, resulting in lower customer acquisition costs and higher user retention [1][2]. - The company is expected to capture market share from traditional 4S dealerships as consumers downgrade their spending. Its self-controlled products offer high cost-performance ratios, potentially yielding higher gross margins than branded products, thus creating a positive cycle for customer acquisition and profit growth [2]. - The expansion of the store network is anticipated to offset potential growth pressures at individual store levels. The management reported a 22% year-on-year increase in new store applications in the first half of the year, with expectations to grow from approximately 6,300 stores to about 7,000 by year-end and around 7,900 next year [2][3]. Financial Summary - Revenue projections for the current and next year have been adjusted upwards by 1-2% to RMB 14.936 billion and RMB 17.127 billion, respectively, with gross margins improving to 26.0% and 26.8% [2][10]. - Adjusted net profit estimates have been raised by 3-5% to approximately RMB 634 million and RMB 1.029 billion for the current and next year [2][10]. - The company’s financial metrics indicate a significant recovery, with a projected net profit margin of 4.2% for FY24E and 6.0% for FY25E, alongside an increase in return on equity to 18.4% by FY25E [12][15].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 9.81, representing a potential upside of 54.5% from the current price of HKD 6.35 [4][30]. Core Insights - The company is expected to experience rapid growth in its key product, Tevazo, with projected revenues of RMB 5.11 billion in 2024, accounting for 58% of total revenue. The penetration rate of Tevazo among CTIT patients is anticipated to increase from 29% in 2023 to 35% in 2024 [8][9]. - The company has successfully renewed multiple products in the national medical insurance directory, including Tevazo and HER2 monoclonal antibody, which will help stabilize prices and support steady growth [2][3]. - The company has a robust pipeline with several innovative products entering NDA or Phase III clinical trials, expected to be approved between 2025 and 2027, providing new growth momentum [2][3]. Financial Summary - Revenue is projected to grow by 12.8% in 2024 and 12.2% in 2025, with corresponding revenues of RMB 8.82 billion and RMB 9.89 billion respectively [3][20]. - The net profit attributable to shareholders is expected to increase by 23.7% in 2025, reaching RMB 2.18 billion, with a basic earnings per share of RMB 0.90 [3][20]. - The current market capitalization corresponds to a PE ratio of 6.6 times for 2025, indicating an attractive valuation [2][3]. Pipeline and Product Development - The company is advancing its pipeline with several products, including long-acting EPO and IL-17, which are expected to be submitted for approval in 2025 [2][17]. - The introduction of new products, such as the oral solution of paclitaxel and other late-stage clinical products, is anticipated to become significant growth drivers starting in 2026 [2][17]. - The company is also expanding its product offerings in dermatology and hair loss, with promising products like Winlevi and semaglutide in Phase III clinical trials [16][17]. Market Position and Competitive Advantage - The company has established a strong marketing team and channel advantages in the autoimmune field, which will help capture market share for new autoimmune drugs post-launch [15][17]. - Tevazo is positioned as a leading treatment option for chemotherapy-induced thrombocytopenia (CIT), with evidence supporting its efficacy over competitors [10][13].

Investment Rating - The report maintains a "Buy" rating with a target price of HKD 9.81 [4] Core Insights - The company has successfully renewed multiple products in the 2024 National Medical Insurance Directory, including Tevizo and HER2 monoclonal antibody, and has added a new indication for Tevizo in pediatric ITP [1][2] - The company is expected to see stable pricing for renewed products due to ongoing support from the medical insurance fund for innovative drugs, which will contribute to steady growth [1][2] - The company’s revenue is projected to grow by 12.8% in 2024 and 12.2% in 2025, with a corresponding net profit growth of 13.6% in 2025 [4] Summary by Sections - **Product Renewals and New Additions**: Tevizo and HER2 monoclonal antibody have been successfully renewed, with Tevizo gaining a new indication for pediatric ITP. The newly approved drug, sodium naftifine oral disintegrating tablet, has also entered the medical insurance directory [1][2] - **Pipeline Development**: The company is advancing its pipeline with several innovative products entering NDA or Phase III clinical trials, expected to be approved between 2025E and 2027E, providing new growth momentum [1][3] - **Sales and Market Expansion**: The company has established a robust sales capability across various channels, including blood, oncology, nephrology, and rheumatology, and is continuously enriching its innovative pipeline [3] - **Valuation Metrics**: The current market capitalization corresponds to 6.6 times the estimated PE for 2025, indicating an attractive valuation. The expected dividend payout ratio is 30%, with a projected dividend yield of 4.5% for 2025 [1][4]

Investment Rating - Maintain BUY rating with a target price of US$410.0 based on 24x FY25E EV/EBITDA, up from the previous target of US$336.5 [1][7] Core Views - Salesforce reported inline 3QFY25 results with total revenue of US$9.44bn, up 8% YoY, and non-GAAP net income of US$2.32bn, up 12% YoY, both in line with consensus estimates [1] - cRPO grew 10% YoY on a constant currency basis, beating previous guidance of 9% YoY, driven by early renewals, strong booking performance, and momentum from Agentforce [1] - For 4QFY25E, Salesforce guided total revenue growth of 7-9% YoY to US$9.90-10.10bn, in line with consensus estimates of US$10.05bn [1] - The company raised FY25E non-GAAP OPM guidance to 32.9% from 32.8%, driven by efficiency improvements and expense control [1] Financial Performance - Salesforce's revenue is expected to grow from US$37.9bn in FY25E to US$44.2bn in FY27E, with adjusted net profit increasing from US$9.7bn to US$12.3bn over the same period [5][10] - Non-GAAP operating margin improved by 1.9ppt YoY to 33.1% in 3QFY25, with FY25E guidance raised to 32.9% [1] - Gross margin is expected to improve from 77.0% in FY25E to 78.3% in FY27E, while non-GAAP OPM is projected to rise from 32.9% to 35.9% over the same period [5] Growth Drivers - Agentforce, Salesforce's AI agent platform, saw strong demand with over 200 deals closed in 3QFY25, and the launch of Agentforce 2.0 in Dec is expected to further expand monetization opportunities [1] - AI-related deals more than tripled YoY to 2,000 in 3QFY25, with multi-cloud adoption continuing to show strong momentum, averaging over 5 clouds per top 25 deal [1] - Data Cloud, a foundation for AI implementation, was included in one-third of all deals over US$1mn and 8 of the top 10 deals in 3QFY25 [1] Valuation - Salesforce is valued at US$410.0 per share based on 24x FY25E EV/EBITDA, a discount to the sector average of 31x, reflecting its more mature earnings growth stage [7][8] - The target EV/EBITDA multiple implies a target equity valuation of US$397.7bn, with net cash of US$14.1bn factored into the valuation [8]

Investment Rating - The industry investment rating is "Outperform the Market," indicating that the industry is expected to perform better than the market benchmark over the next 12 months [22]. Core Insights - The report discusses two self-regulatory initiatives aimed at optimizing the management of non-bank interbank deposit rates and introducing "interest rate adjustment clauses" in deposit service agreements, effective from December 1, 2024. These initiatives are expected to enhance the efficiency of monetary policy transmission and reduce financial arbitrage [1][2]. - The initiatives are projected to positively impact banks by lowering funding costs and easing net interest margin (NIM) pressures. The estimated impact on listed banks' NIM is between 1.5 to 1.8 basis points [1][6]. Summary by Sections Section 1: Initiatives Overview - The initiatives establish a benchmark for interbank demand deposit pricing linked to the excess reserve rate (currently 0.35%) and the 7-day reverse repo rate (currently 1.50%) [2]. - They also standardize the pricing reference for early withdrawal of time deposits, ensuring that the early withdrawal rate does not exceed the excess reserve rate [2]. Section 2: Impact on Banks - The linkage of interbank demand deposit rates to policy rates is expected to reduce arbitrage opportunities and enhance transparency in pricing, which has been low due to market liquidity influences [3]. - The average interest cost for state-owned and joint-stock banks' interbank and other financial institution deposits increased by 10.6 basis points year-on-year, indicating a growing reliance on interbank deposits for funding [3]. Section 3: NIM Impact Assessment - The report estimates that the adjustment of interbank demand deposit rates could save interest expenses by approximately 40 to 480 million yuan, leading to an increase in NIM by 1.5 to 1.8 basis points [6][7]. - As of Q3 2024, the total balance of interbank deposits among 42 A-share listed banks was 26.9 trillion yuan, with interbank demand deposits potentially accounting for 50-60% of this total [6][7]. Section 4: Beneficiaries - The report identifies potential beneficiaries of the initiatives, particularly state-owned banks such as Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank, and Bank of China, which are expected to benefit more significantly from reduced funding costs [7].

2 Dec 2024 CMB International Global Markets | Equity Research | Company Update Meituan (3690 HK) 3Q results beat; driving earnings growth in a more holistic perspective Meituan reported (29 Nov) its 3Q24 results: revenue was RMB93.6bn, up 22% YoY, 2% higher than both our estimate and Bloomberg consensus estimate. Adj. NP reached RMB12.8bn, 4%/10% better than our estimate/consensus, due to both better-than-expected operating profit (OP) generated from core local commerce (CLC) business, aided by subsidy opti ...

Investment Rating - The target price for the company is HK$199.20, representing an 18.1% upside from the current price of HK$168.70 [10] - The investment rating is based on a DCF valuation, with the target price revised upward by 26% to HK$199.20, reflecting improved earnings forecasts and an extended valuation horizon to 2025 [25] Core Views - The company's Q3 2024 revenue reached RMB 93.6 billion, a 22% YoY increase, surpassing both the analyst's and Bloomberg consensus expectations [6] - Adjusted net profit for Q3 2024 was RMB 12.8 billion, exceeding expectations by 4% and 10%, driven by better-than-expected performance in the Core Local Commerce (CLC) segment and reduced losses in new initiatives [6] - The company is focusing on operational integration within the CLC segment and expanding its food delivery (FD) business in the Middle East, which may slightly offset short-term earnings growth but supports long-term ecosystem development [6] Financial Performance Core Local Commerce (CLC) - CLC revenue and operating profit for Q3 2024 were RMB 69.4 billion and RMB 14.6 billion, respectively, growing 20% and 44% YoY, both exceeding expectations [7] - CLC operating margin improved by 3.5 percentage points to 21.0%, driven by increased delivery service revenue per order and optimized user subsidies [18] - CLC revenue and operating profit for Q4 2024 are expected to grow 18% and 44% YoY, reaching RMB 65.2 billion and RMB 11.6 billion, respectively [7] New Initiatives - New initiatives revenue in Q3 2024 grew 29% YoY to RMB 24.2 billion, with operating losses narrowing to RMB 1.0 billion, better than expected [8] - Meituan Select's operating losses narrowed to RMB 1.7 billion in Q3 2024, significantly better than the RMB 5.0 billion loss in Q3 2023 [8] - Excluding Meituan Select, other new initiatives achieved an operating profit of RMB 70 million in Q3 2024 [8] International Expansion - The company is investing in FD expansion in the Middle East, with expected operating losses of RMB 5.55 billion in Q4 2024 due to this expansion [9] - The financial impact of international FD expansion is expected to fully materialize in 2025, with higher gross transaction value (GTV) margins compared to domestic FD due to higher average order values (AOV) and delivery fees [9] Forecast and Valuation Adjustments - Revenue forecasts for 2024 and 2025 were revised upward by 0.2% and 0.4%, respectively, reflecting better-than-expected FD revenue growth [23] - Operating profit forecasts for 2024 and 2025 were raised by 14.0% and 6.2%, respectively, due to improved unit economics in the FD segment [23] - Non-IFRS net profit forecasts for 2024-2026 were increased by 5% to 9%, with the target price raised to HK$199.20 based on a DCF valuation [6] Valuation Methods - The DCF valuation assumes a WACC of 11.0% and a terminal growth rate of 2.5%, resulting in a target price of HK$199.20 [25] - A sum-of-the-parts (SOTP) valuation cross-check suggests a per-share valuation of HK$230.0, with FD and ISHT segments valued at 20.0x and 17.0x 2025E PE, respectively [28] Financial Summary - Revenue for 2024E is projected at RMB 336.97 billion, with a YoY growth of 21.8%, while adjusted net profit is expected to reach RMB 45.04 billion, a 93.7% YoY increase [13] - The company's ROE is forecasted to improve to 23.0% in 2024E, up from 9.9% in 2023A [13] - The P/E ratio for 2024E is 25.5x, declining to 18.1x by 2026E, reflecting strong earnings growth [37]

Investment Rating - The report maintains a "BUY" rating for Chow Tai Fook with a target price (TP) cut by 31% to HK$10.00, reflecting lower net profit forecasts [1][3]. Core Insights - Chow Tai Fook reported a 1H FY25 revenue decline of 20.4% YoY to HK$39.4 billion, with net profit dropping 44.4% YoY to HK$2.5 billion, which was 20% below consensus estimates. This was attributed to weak consumer sentiment and fair value loss of gold loans due to rising gold prices [1][2]. - The company has announced a share buyback plan of HK$2 billion and declared a dividend of HK$0.2 per share, despite the significant decline in net profit [1][2]. Financial Performance Summary - Revenue for FY25E is projected at HK$91,057 million, reflecting a YoY decline of 16.2%. For FY26E and FY27E, revenue is expected to decrease by 2.4% and increase by 3.2%, respectively [2][5]. - Net profit estimates for FY25E, FY26E, and FY27E are HK$4,994 million, HK$6,396 million, and HK$6,829 million, indicating a YoY change of -23.2%, +28.1%, and +6.8%, respectively [2][5]. - The gross profit margin is expected to improve slightly to 25.1% in FY25E, while the EBIT margin is projected at 10.5% [5][7]. Shareholder Returns - Chow Tai Fook has increased its payout ratio from 55% in 1HFY24 to 79% in 1HFY25, reflecting its commitment to shareholder returns despite the decline in net profit [1][2].