Industry Insights - The domestic demand for cranes in the Chinese engineering machinery industry continues to recover, with sales of truck-mounted cranes and crawler cranes increasing by 42% and 54% year-on-year in October, respectively, driven by energy projects and wind power installations [2] - Exports of various types of engineering machinery also performed strongly in October, except for aerial work platforms and truck-mounted cranes, confirming the previous view that non-earthmoving machinery demand is recovering and will act as a catalyst for the industry [2] - The report maintains a "Buy" rating for companies such as Zoomlion (1157 HK / 000157 CH), Sany Heavy Industry (600031 CH), and Hengli Hydraulic (601100 CH), while adopting a cautious stance on Zhejiang Dingli (603338 CH) due to the continued weakness in aerial work platform sales, which fell by 39% year-on-year in October [2] Company Insights - Pinduoduo (PDD US) reported a 9.0% year-on-year revenue growth in Q3 2025, reaching 108.3 billion RMB, slightly above Bloomberg consensus expectations, primarily driven by a 7% increase in transaction service fees [6] - Baidu (BIDU US) reported a core revenue of 24.7 billion RMB in Q3 2025, a 7.0% year-on-year decline, but slightly above market expectations, with non-GAAP operating profit showing a 67% year-on-year decline [7] - Trip.com Group (TCOM US) achieved a total revenue of 18.4 billion RMB in Q3 2025, a 15.5% year-on-year increase, exceeding both internal and market expectations, driven by strong operational leverage [8] - BOSS Zhipin (BZ US) reported a 13% year-on-year revenue growth to 2.16 billion RMB in Q3 2025, with non-GAAP net profit increasing by 34% to 999.2 million RMB, benefiting from effective control of sales and R&D expenses [10] - Xiaomi Group (1810 HK) saw a 22% year-on-year revenue growth in Q3 2025, driven by the rapidly growing smart electric vehicle business and resilient internet segment, despite pressures from rising memory costs [11] - Luckin Coffee (LKNCY US) anticipates continued revenue growth in FY26, driven by store expansion and new product strategies, despite a cautious outlook on same-store sales growth due to high base effects [12][13] - Guosheng Tang (2273 HK) is entering a phase of overseas expansion with the acquisition of a 100% stake in a Singapore-based TCM clinic, aiming for significant revenue growth in the overseas market by 2026 [17][18]

Investment Rating - The report maintains a "Buy" rating for the company [7][3][8] Core Views - The company has completed the acquisition of 100% of the shares of a Singapore-based TCM clinic, marking the beginning of its overseas expansion [7][8] - The company plans to increase its store count in Singapore and expand into markets such as Hong Kong and Malaysia, with expected overseas revenue of 200-300 million RMB by 2026 [7][8] - The domestic policy environment is stabilizing, which is expected to benefit leading companies in the sector [7][8] - The management's confidence is reflected in significant share buybacks and a commitment to maintain a 50% dividend payout ratio [7][8] Financial Summary - Sales revenue is projected to grow from 3,022 million RMB in FY24 to 4,099 million RMB in FY26, representing a growth rate of 30.1% and 21.9% respectively [2][12] - Adjusted net profit is expected to increase from 400 million RMB in FY24 to 555 million RMB in FY26, with growth rates of 31.4% and 23.8% respectively [2][12] - The adjusted earnings per share (EPS) is forecasted to rise from 1.64 RMB in FY24 to 2.40 RMB in FY26 [2][12] Valuation - The target price is set at 44.95 HKD, with a potential upside of 50.3% from the current price of 29.90 HKD [3][7] - The adjusted price-to-earnings (PE) ratio for FY26 is estimated at 11.5x [7][10] Shareholder Structure - The largest shareholder holds 35.1% of the company, indicating a concentrated ownership structure [4]

Group 1: Stock Recommendations - Geely Automobile (175 HK) has a target price of 25.00, indicating a potential upside of 47% with a PE ratio of 9.50[5] - Luckin Coffee (LKNCY US) has a target price of 44.95, suggesting a potential upside of 12% with a PE ratio of 30.00[5] - Alibaba (BABA US) has a target price of 209.40, indicating a potential upside of 33% with a PE ratio of 22.50[5] Group 2: Market Performance - The basket of 24 long positions had an average return of -3.4%, while the MSCI China Index returned -0.8%[9] - Among the 24 stocks, only 5 outperformed the benchmark[9] Group 3: Analyst Ratings - New additions include companies like Bosideng (3998 HK) and Futu Holdings (FUTU US), both rated as "Buy"[6] - The report indicates a focus on sectors such as technology, insurance, and consumer goods, with multiple stocks receiving "Buy" ratings[5][6]

Report Industry Investment Rating - No information provided Core Viewpoints - The Asia IG space was 1 - 2bps wider this morning, with better selling on KR/JP/HK T2s [4]. - Tactical buyers continued to pick up cheaper offers in higher - yielding LGFV names in preparation for next year, while lower - yielding CNH issues remained under selling pressure [3]. - The report maintains a buy rating on PCORPM 7.35 Perp due to better carry, trading liquidity, smooth access to diverse funding channels, and notably lower refinancing pressure [11]. Summary by Relevant Catalogs Trading Desk Comments - There was better selling on Japanese names such as NOMURA/JERA/KUB/MITCO/MIZUHO/MUFG. Small selling on the BBLTB curve occurred due to news of new USD issues. PBs were buying Asia/Yankee FRNs with wider spreads. Mixed two - way flows were seen on AU/KR lower - spread names. Chinese onshore accounts were buying FRNs of leasing/security houses. Macau gaming names had price changes ranging from unchanged to 0.2pt lower, LIHHK 26 was 0.5pt higher, the NWDEVL complex was unchanged to 0.9pt lower, LASUDE 26 was down by 0.7pt. In Chinese properties, VNKRLE 27 was 0.2pt lower while VNKRLE 29 was 0.2pt higher, and some other property papers had price drops [2]. Analyst Comments - PCORPM's net leverage improved due to lower net working capital. Its revenue declined by 10% yoy in 9M25, mainly due to lower sales volume and selling price. However, gross profit increased by 15% yoy, EBITDA grew by 11% yoy, and net profit surged 37% yoy. Free cash flow jumped 361% from 9M24 to PHP47bn. The report maintains a buy on PCORPM 7.35 Perp [8][9][11]. - WESCHI proposes to issue a new USD bond to fund a tender offer for WESCHI 26 at 101.238. Holders of WESCHI 26 who subscribe to the new bond may get priority in the tender offer and preferential allocation. The offer expires on 28 Nov '25 5pm CET, and WESCHI 26 was 0.4pt higher this morning [4]. Top Performers and Underperformers - Top performers include PTTTB 4 1/2 10/25/42 (price 88.7, change 0.6), CRNAU 9 1/4 10/01/29 (price 92.4, change 0.6), CQSXGU 6.95 08/07/28 (price 99.1, change 0.6), LIHHK 4.8 06/18/26 (price 94.9, change 0.5), ROADKG 6 03/04/29 (price 19.5, change 0.5) [5]. - Top underperformers include NWDEVL 5 1/4 PERP (price 45.1, change - 0.9), TENCNT 3.68 04/22/41 (price 85.5, change - 0.9), NWDEVL 6 1/4 PERP (price 44.7, change - 0.8), LASUDE 5 07/28/26 (price 68.1, change - 0.7), NWDEVL 10.131 PERP (price 48.3, change - 0.6) [5]. Macro News Recap - On Monday, S&P (-0.92%), Dow (-1.18%), and Nasdaq (-0.84%) were lower, and UST yield was lower. The 2/5/10/30 - year yield was at 3.60%/3.72%/4.13%/4.73% [7]. Offshore Asia New Issues - Priced: Guilin ETDZ Holding Group issued a 3 - year USD40mn bond with a 5.0% coupon at 5.0% and is unrated [15]. - Pipeline: Sichuan Kaizhou Development Holding plans a 3 - year bond with a 6.5% coupon and is unrated; The Hong Kong Mortgage Corporation plans a 5 - year bond at T + 50 with a rating of Aa3/AA+/- [16]. News and Market Color - 98 credit bonds were issued onshore yesterday with an amount of RMB120bn. Month - to - date, 1,027 credit bonds were issued with a total amount of RMB1,115bn, a 27.9% yoy increase. S&P upgraded Bharti Airtel to BBB from BBB - and Del Monte Pacific 2QFY26 sales rose 10% yoy to USD234.9mn [17]. - Danantara will restore all grounded Garuda Indonesia aircraft by next year. Geely Automobile seeks a USD1.5bn - equivalent one - year loan for ZEEKR take - private. S&P downgraded Longfor to BB - from BB. NWD announced early tender results of its USD bonds and perps. Rio Tinto pauses a AUD215mn (cUSD140mn) BioIron green steel project. Transurban launches tender offers for TCLAU 3.375 03/22/27 and EUR bonds due 2028 and 2030 [23].

Group 1: Semiconductor Industry - The analog semiconductor industry is experiencing a clear internal differentiation, with power management ICs (PMIC) and signal chain markets stabilizing and entering a cyclical recovery phase after a deep downturn [2] - The mobile radio frequency front-end (RFFE) is still under pressure, while the automotive RFFE is becoming a new strategic growth area [2] - Global analog market recovery is indicated by Texas Instruments' price increases, with WSTS forecasting a 3% growth in global analog revenue in 2025 and 5% in 2026, although growth lags behind AI-driven sectors [6] Group 2: Automotive Companies - Geely Automobile (175 HK) reported a robust performance in Q3 2025, with revenue up 48% year-on-year, driven by resilient pricing of its Zeekr models [9] - Geely's gross margin improved to 16.6%, with expectations for continued growth in sales and margins due to new high-margin models and accelerated exports of new energy vehicles [8][9] - XPeng Motors (XPEV US/9868 HK) is expected to turn profitable in Q4 2025, with a projected 36% year-on-year sales growth in 2026, driven by new models and increased average selling prices [10][11] - Leap Motor (9863 HK) is also expected to see strong sales momentum, with a projected 52% year-on-year increase in total sales in 2026, supported by new model launches [12][13]

Investment Rating - The report rates the Chinese life sciences upstream industry as "outperforming the market" [38]. Core Insights - The Chinese life sciences upstream industry is experiencing an upward trend, benefiting from increased R&D spending in the pharmaceutical sector, a recovery in financing for innovative drugs, and a surge in domestic innovative drug exports [1][4]. - There is significant potential for domestic substitution, which is expected to drive long-term growth in the domestic upstream industry [1][4]. - Domestic companies are narrowing the technological gap with international giants through continuous investment in technology, gaining customer recognition and market share [1]. Summary by Sections Industry Overview - The report highlights that the pharmaceutical industry is the most important client for the life sciences upstream sector in China, with R&D demand maintaining growth despite fluctuations [4]. - Key indicators of recovery include sustained growth in R&D spending by large pharmaceutical companies and biotech firms post-COVID-19, a significant increase in domestic innovative drug export transactions, and a resurgence in financing for innovative drugs [4][18]. Domestic Companies - Domestic companies are leveraging technological barriers, cost advantages, and policy opportunities to increase market share [4]. - The average R&D expense ratio for leading domestic upstream companies was 13.0% in the first half of 2025, exceeding levels during the pandemic [4]. - Notable domestic companies include Nanwei Technology, Nuoviz, and Aopumai, which have shown strong revenue growth and technological advancements [1][4][29]. Market Trends - The report indicates that the domestic market for life sciences is characterized by a fragmented structure, with significant growth opportunities arising from the need for domestic substitution due to geopolitical risks and supply chain disruptions [4]. - The report provides data on the increasing domestic market share of various products, such as culture media and chromatography materials, with notable growth in their localization rates [28][30].

Macro Economic Overview - China's economy is experiencing a comprehensive slowdown in October, but is expected to achieve an annual growth target of 5%. Real estate prices are declining rapidly, and retail sales growth has dropped to a one-year low due to the phasing out of old-for-new subsidy policies [5][6] - Fixed asset investment has seen a significant decline, the second largest since February 2020, with fiscal expansion slowing down and anti-involution measures suppressing infrastructure and manufacturing investments. However, due to a strong economic growth rate in the first half of the year, a GDP growth rate of only 4.5% is needed in the fourth quarter to meet the annual target [5][6] Industry Insights - The Chinese life sciences upstream industry is benefiting from several positive trends, including increased R&D spending by downstream pharmaceutical companies, a recovery in financing for innovative drugs, and a continued surge in the export of Chinese innovative drugs. Domestic companies are narrowing the technological gap with international giants through sustained investment [6][7] - The domestic upstream industry is expected to see considerable growth driven by domestic substitution, with companies like Nanwei Technology, Novozymes, and Aopumai being highlighted as key players [6][7] - The domestic pharmaceutical industry has maintained growth momentum in R&D demand, with significant increases in financing for innovative drugs, which surged by 443.6% year-on-year in Q3 2025 [6][7] Company Analysis - Baidu is focusing on accelerating AI application deployment, having launched the Wenxin large model 5.0 and new Kunlun chips. The company aims to enhance its core products and expand its global services, with a target price set at $148.40, maintaining a "Buy" rating [8]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $148.40, indicating a potential upside of 23.0% from the current price of $120.65 [2][3]. Core Insights - The report highlights the acceleration of AI applications through the launch of Baidu's Wenxin 5.0 model, which supports multimodal understanding and generation, and the introduction of new products and upgrades in various sectors [2][9]. - Baidu's Kunlun chips have been successfully deployed across multiple industries, with detailed updates on future product launches, including the M100 and M300 chips [2][9]. - The report emphasizes the growth of Baidu's autonomous driving service, "Luobo Kuaipao," which has expanded to 22 cities globally, achieving significant operational metrics [2][9]. Company Overview - Market capitalization stands at approximately $41.35 billion, with an average trading volume of $255.7 million [4]. - The stock has shown a 52-week high of $144.91 and a low of $76.86 [4]. Financial Performance - For FY23A, the company reported sales revenue of 134,598 million RMB, with a year-on-year growth of 8.8% [10]. - Adjusted net profit for FY23A was 28,747 million RMB, reflecting a significant increase of 39.0% compared to the previous year [10]. - The report projects a decline in sales revenue for FY24A to 133,125 million RMB, with an expected adjusted net profit of 27,002 million RMB [10]. Shareholder Structure - Handsome Reward Limited holds a 16.1% stake in the company, while BlackRock, Inc. owns 4.6% [5]. Stock Performance - Over the past month, the stock has returned 0.6%, while over the past three months, it has increased by 36.0% [6].

Macroeconomic Insights - China's social financing scale has contracted for three consecutive months, indicating a slowdown in economic growth[2] - M1 and M2 growth rates are declining, suggesting weakening economic momentum[2] - The central bank may lower the reserve requirement ratio by 50 basis points and interest rates by 10 basis points by the end of March next year[5] Market Performance - The Hang Seng Index closed at 27,073, up 0.56% for the day and 34.96% year-to-date[2] - The Shenzhen Component Index rose 1.53% to 2,546, with a year-to-date increase of 30.08%[2] - The US Dow Jones fell 1.65% to 47,457, with a year-to-date increase of 11.55%[2] Sector Performance - In Hong Kong, materials, healthcare, and consumer discretionary sectors led gains, while energy, telecommunications, and utilities sectors declined[4] - A-share lithium battery sector surged due to increased demand driven by AI applications[4] Company Highlights - Tencent reported a 15% year-on-year revenue increase to RMB 192.9 billion, exceeding Bloomberg consensus by 2%[5] - Bilibili's revenue grew 5% year-on-year to RMB 7.69 billion, meeting consensus expectations[6] - Alibaba plans to revamp its AI application to compete with ChatGPT, aiming for a more integrated user experience[4]

Core Insights - The report highlights a mixed performance in the Chinese stock market, with Hong Kong stocks rising, particularly in healthcare, conglomerates, and real estate, while consumer discretionary, industrials, and materials lagged behind [3] - Southbound capital saw a net inflow of HKD 4.286 billion, with notable net purchases in Xiaomi Group, Xpeng Motors, and Pop Mart, while Alibaba, Hua Hong Semiconductor, and SMIC experienced the most significant net sales [3] - The report anticipates a trend of style switching in the Chinese stock market, with undervalued sectors like chemicals, consumer goods, and banks leading the gains, expected to continue at least until mid-December when policy stimulus clarity increases [3] Market Performance Summary - The Hang Seng Index closed at 26,923, up 0.85% for the day and 34.21% year-to-date [1] - The Hang Seng Tech Index closed at 5,934, with a slight increase of 0.16% for the day and a year-to-date increase of 32.81% [1] - The Shanghai Composite Index closed at 4,000, down 0.07% for the day but up 19.34% year-to-date [1] Sector Performance Summary - The Hang Seng Financial Index closed at 49,396, up 1.20% for the day and 40.58% year-to-date [2] - The Hang Seng Real Estate Index closed at 19,533, with a significant increase of 3.34% for the day and 30.98% year-to-date [2] - The Hang Seng Utilities Index closed at 38,428, up 1.17% for the day and 7.75% year-to-date [2] Company Analysis - Tencent Music reported a 21% year-on-year revenue growth to RMB 8.46 billion for Q3 2025, with Non-IFRS net profit increasing by 33% to RMB 2.41 billion, exceeding Bloomberg consensus estimates by 3% and 4% respectively [4] - The report projects a slowdown in revenue growth to 12% year-on-year for Q4 2025, primarily due to normalization of offline performance revenue [4] - The target price for Tencent Music has been adjusted from USD 29.5 to USD 28.0, maintaining a "Buy" rating [4]