Investment Rating - The report maintains a "Buy" rating for Great Wall Motors with a target price of HKD 22.5 [1] Core Insights - Great Wall Motors reported a revenue of RMB 222.79 billion for the previous year, representing a year-on-year growth of 10.2%. However, net profit decreased by 21.7% to RMB 9.912 billion, primarily due to the costs associated with direct sales channel development and the preemptive investment in new products and branding [1] - In Q4 of the previous year, the company achieved a record revenue of RMB 69.21 billion, but net profit fell to RMB 1.277 billion, a quarter-on-quarter decline of 44%. This decline was mainly attributed to a one-time provision for year-end bonuses (RMB 4.6 billion) along with increased expenditures on direct sales and advertising, as well as the ramp-up costs of new stores [1] - Looking ahead to 2026, the report suggests that the profitability of Great Wall Motors will depend on efficiency improvements, with overseas challenges expected to reach 600,000 units, which, along with enhanced direct sales efficiency, could drive profit recovery [1]

Investment Rating - The report assigns a "Buy" rating to several companies in the automotive sector, indicating an expectation of total returns exceeding the relevant industry over the next 12 months [8]. Core Insights - The automotive market in January 2026 experienced a seasonal downturn, with a notable decline in demand due to the impact of subsidy policies and adjustments in purchase tax. Most new energy vehicle manufacturers saw a significant month-on-month sales drop of 43.9% [3][4]. - Despite the overall weak performance in the first quarter of 2026, the continuation of the vehicle replacement policy is expected to support market recovery as local subsidy details are finalized [4]. - Companies to watch include: - Xpeng Motors (9868 HK/XPEV US) with new models launching and increasing overseas production [4]. - Geely Automobile (175 HK) focusing on internal resource integration post-privatization of Zeekr [4]. - BYD (1211 HK) benefiting from increased overseas production capacity and high growth in international sales [4]. Summary by Relevant Sections Sales Performance - BYD's January sales were 205,518 units, down 30.7% year-on-year and 50.4% month-on-month. However, exports surged by 43.3% to 100,009 units, with overseas sales accounting for 47.6% of total sales [6][7]. - NIO delivered 27,182 vehicles in January, a 96.1% year-on-year increase but a 43.5% month-on-month decline. The introduction of new financing options is expected to ease purchasing barriers [6][7]. - Xpeng delivered 20,011 vehicles, down 34.1% year-on-year and 46.6% month-on-month, with the new X9 model showing significant growth [6][7]. - Li Auto's deliveries were 27,668 units, reflecting a slight decline due to product cycle impacts [6][7]. - Xiaomi's deliveries exceeded 39,000 units, marking a 95% year-on-year increase [6][7]. Company Ratings and Price Targets - The report includes various companies with their respective ratings and target prices, indicating potential upside: - BYD (1211 HK) with a target price of 133.00, representing a 36.06% upside [8]. - NIO (9866 HK) with a target price of 62.75, indicating a 62.48% upside [8]. - Xpeng (9868 HK) with a target price of 134.69, suggesting an 87.98% upside [8].

Investment Rating - The report maintains a "Buy" rating for the company 瑞浦兰钧 (666 HK) with a target price of HKD 15.46, indicating a potential upside of 33.9% from the current closing price of HKD 11.54 [1][2][8]. Core Insights - The company is expected to achieve profitability in 2025, with a projected net profit of RMB 632 million, a significant turnaround from a loss of RMB 1.353 billion in 2024. This improvement is attributed to economies of scale and refined operational management [5]. - The global energy transition is anticipated to sustain high demand in the energy storage sector, with global energy storage battery shipments expected to reach 640 GWh in 2025, a year-on-year increase of 82.9% [5]. - The company plans to expand its production capacity to 90 GWh by 2025 and further to approximately 120 GWh and 150 GWh in 2026 and 2027, respectively, which is expected to enhance its economies of scale [5]. Financial Projections - Revenue projections for 2025 are set at RMB 22.372 billion, a 3% decrease from previous estimates, while 2026 revenue is expected to rise by 12% to RMB 30.502 billion [4]. - Gross profit for 2025 is forecasted at RMB 2.169 billion, with a gross margin of 9.7%, and is expected to improve to RMB 3.267 billion and a gross margin of 10.7% in 2026 [4]. - The net profit margin is projected to improve significantly, with a net profit of RMB 1.039 billion in 2026, translating to a net profit margin of 3.4% [4][5]. Market Position and Strategy - The company is strategically positioned in the household energy storage market, with a strong focus on high-value projects and a shift towards system integration products, which is expected to enhance the overall gross margin of the storage segment [5]. - The report highlights the importance of dynamic pricing mechanisms to mitigate the impact of rising raw material costs, particularly lithium carbonate, which has affected battery cell costs [5]. Valuation - Based on a DCF model, the company's equity value is estimated at RMB 36.444 billion, translating to a per-share value of HKD 17.33, with the target price set at HKD 15.46 corresponding to a 1.0x sales multiple for 2026 [6].

Market Overview - The market is transitioning from strong expectations to a "data verification" phase as the Spring Festival approaches, with a focus on marginal improvements in fundamental data[3] - Southbound capital continues to flow into the market, supporting Hong Kong stocks, which are expected to experience a "stock-heavy, index-light" structural market[3] Key Variables for February - Attention will be on post-Spring Festival consumption data, including tourism, dining, and real estate sales, which may reflect the effectiveness of the "resident income increase plan" and domestic demand expansion[4] - The upcoming "Two Sessions" will provide insights into fiscal policies, particularly regarding long-term special bonds and "new productivity," which could influence market sentiment towards infrastructure and technology sectors[4] - The market's confidence in the Fed's interest rate cuts may be affected by resilient U.S. inflation data, necessitating close monitoring of the dollar index's impact on Hong Kong stock liquidity[4] Sector Focus - Consumer and internet sectors are expected to benefit from positive Spring Festival data, with a focus on policy-driven areas like hospitality and food and beverage[5] - Hard technology and overseas manufacturing sectors are promising, particularly in semiconductors and consumer electronics, as well as leading companies in engineering machinery and home appliances[5] - Upstream resource products, such as copper and aluminum, are anticipated to perform well due to a recovering global manufacturing PMI and post-holiday inventory replenishment expectations[5] Stock Recommendations - **Cheung Kong Property Trust (778HK)**: Target price of HKD 5.92, potential upside of 15.9%, with a strong dividend yield over 7%[9] - **NVIDIA (NVDAUS)**: Target price of USD 245.00, potential upside of 27.3%, driven by sustainable AI demand[13] - **Hesai Technology (2525HK)**: Target price of HKD 269.66, potential upside of 35.0%, benefiting from L3 autonomous driving advancements[20] - **Sangfor Technologies (1530HK)**: Target price of HKD 39.50, potential upside of 65.1%, with strong growth prospects from core products[27] - **Midea Group (000333CH)**: Target price of HKD 96.20, potential upside of 23.5%, supported by robust market leadership and dividend policies[32] - **GCL-Poly Energy (3800HK)**: Target price of HKD 1.54, potential upside of 37.5%, benefiting from developments in perovskite technology and commercial aerospace[38]

Investment Rating - The report indicates a positive outlook for the snack wholesale industry, transitioning from rapid expansion to a focus on operational efficiency and high-quality growth [6][10]. Core Insights - The snack wholesale industry is experiencing a transformation from a land-grabbing phase to a deep operational phase, driven by a hard discount model that effectively reconstructs the value chain [6][11]. - The market size of the snack wholesale industry has surged from 7.3 billion RMB in 2019 to an estimated 129.7 billion RMB in 2024, reflecting a compound annual growth rate (CAGR) of 77.9% [19][24]. - The competitive landscape is dominated by two major players, "Mingming Hen Mang" and "Wancheng Group," which together hold over 70% market share, indicating a stable "dual strong" market structure [8][10]. Market Size and Growth Potential - The overall snack market in China is projected to grow from 3.2 trillion RMB in 2019 to 4.0 trillion RMB in 2024, with a CAGR of 5.0% [19][24]. - The snack wholesale segment is expected to reach a market size of 6.1 trillion RMB by 2029, with a continued CAGR of 36.5% from 2024 to 2029 [24][30]. - The potential number of stores in the snack wholesale market is estimated to reach 67,000, indicating over 30% growth potential from current levels [30][31]. Competitive Landscape and Key Players - The industry has formed a high concentration "dual strong" structure, with "Mingming Hen Mang" focusing on southern China and "Wancheng Group" dominating the eastern regions [8][10]. - Both companies have rapidly expanded their store networks, with each surpassing 15,000 stores by September 2025, leveraging economies of scale and digital operations to enhance profitability [10][44]. Operational Strategies - The snack wholesale industry emphasizes efficiency through a streamlined supply chain, reducing the markup rate significantly compared to traditional retail channels [11][54]. - The operational model relies on a franchise-driven expansion strategy, which has enabled rapid scaling while maintaining low closure rates [44][48]. - Digital tools are utilized for precise site selection and operational support, enhancing the success rate of new stores and ensuring consistent service quality across locations [52][55]. Product Strategy - The product strategy involves a layered approach, combining traffic-driving products with high-margin items and differentiated offerings, including private label products [37][42]. - The average store carries approximately 1,800 to 2,000 SKUs, with a high turnover rate facilitated by frequent product updates [38][39]. Future Trends - The industry is expected to evolve towards community-based all-category discount supermarkets, expanding product offerings beyond snacks to include essential goods [9][35]. - Innovations in product categories and private label development are anticipated to enhance revenue potential and profitability [10][35].

Group 1: Core Insights - The snack wholesale industry is undergoing a transformation driven by efficiency, with a hard discount model that effectively restructures the value chain, significantly reducing terminal markup rates by 20-30% compared to traditional channels, aligning with consumer trends for value-for-money [1] - Future growth in the snack wholesale sector will shift from store expansion to enhancing single-store value, with a projected national store ceiling of approximately 67,000, indicating over 30% growth potential from current levels, primarily sourced from lower-tier markets and untapped areas [1] Group 2: Industry Dynamics - The industry has established a relatively stable "dual strong" structure with high concentration, where leading companies are expected to see improved profitability due to scale effects, with net profit margins having considerable upward potential driven by procurement cost optimization, increased high-margin private label share, and digital operational efficiency improvements [2] - Investment strategies should focus on companies with strong supply chain integration capabilities, digital operational barriers, and cross-category management skills, particularly leading snack wholesale firms and manufacturers closely tied to the wholesale channel benefits [2]

Investment Rating - The report maintains a Neutral rating for Li Ning (2331 HK) with a target price adjusted to HKD 19.50, indicating a potential downside of 0.3% from the closing price of HKD 19.55 [2][5][8]. Core Insights - The fourth quarter saw a narrowing decline in retail sales, but recovery momentum remains uncertain. The overall operations are still in a bottoming phase, with management indicating that the previously provided guidance for slight revenue growth and high single-digit net profit margin for 2025 is expected to be achieved [3][8]. - The company is benefiting from effective cost control and government subsidies, which support the maintenance of profit forecasts for 2025-2027. The upcoming sports events in 2026 are expected to enhance brand marketing and market attention, potentially increasing long-term brand value [8]. - Offline channels continue to face pressure, with discount levels deepening to around 60%, reflecting competitive industry dynamics. The e-commerce channel's growth has weakened compared to previous quarters [8]. Financial Overview - Revenue projections for Li Ning are as follows: - 2023: RMB 27,598 million - 2024: RMB 28,676 million (7.0% YoY growth) - 2025E: RMB 28,929 million (3.9% YoY growth) - 2026E: RMB 30,286 million (0.9% YoY growth) - 2027E: RMB 31,206 million (4.7% YoY growth) [4][10]. - Net profit estimates are: - 2023: RMB 3,187 million - 2024: RMB 3,013 million - 2025E: RMB 2,664 million - 2026E: RMB 3,007 million - 2027E: RMB 3,370 million [4][19]. - The company’s earnings per share (EPS) are projected to be: - 2023: RMB 1.23 - 2024: RMB 1.17 - 2025E: RMB 1.03 - 2026E: RMB 1.17 - 2027E: RMB 1.31 [4][21]. Market Position and Strategy - As of the end of Q4 2025, the inventory turnover ratio has returned to a healthy level of 4-5 months, achieving the company's target. The total number of Li Ning stores (excluding Li Ning YOUNG) decreased by 41 to 6,091 [8]. - The company is actively optimizing its store network, with the first "Dragon Store" model launched in December [8].

Industry Rating - The report rates the pharmaceutical industry as "Leading" [1] Core Insights - The report highlights a concentrated trend of domestic innovative drug collaborations and transactions as the year ends, with expectations for value recovery in 2026 [1][4] - The overall market performance shows a decline, with the Hang Seng Index down 0.8% and the Hang Seng Healthcare Index down 4.3% during the week [4][7] - The report emphasizes the importance of stock selection logic returning to fundamentals and valuations, focusing on stocks that are currently undervalued with expected fundamental improvements [4] Valuation Summary - The report provides a detailed valuation overview of various companies, indicating target prices and earnings per share estimates for FY25E and FY26E, along with their respective price-to-earnings ratios [3] - Notable companies with "Buy" ratings include AstraZeneca, BeiGene, and Hansoh Pharmaceutical, with target prices significantly above current trading prices [3] Market Trends - The report notes a slight decrease in domestic institutional holdings through the Hong Kong Stock Connect, while foreign holdings remain stable [33] - The report identifies a trend of increasing positions in leading innovative pharmaceutical companies by domestic investors, particularly in companies like Heng Rui Medicine and Rongchang Bio [36] Investment Insights - The report mentions several significant business development (BD) transactions exceeding $1 billion, indicating a robust pipeline for innovative drugs [4][5] - It recommends focusing on specific segments such as innovative drugs and CXO companies that are expected to benefit from downstream recovery and high market demand [4]

Group 1: Technology Industry - The outlook for 2026 suggests that the artificial intelligence (AI) supercycle may continue, with strong growth in AI infrastructure expected at least until 2026, driven by significant capital expenditure increases from major cloud providers, projected to grow over 30% in 2026 following over 60% growth in 2024 and 2025 [1][2] - The report highlights a persistent supply-demand imbalance in computing acceleration and network communication chips, with overall demand remaining high despite potential increases in supply [1] - The "15th Five-Year Plan" is expected to accelerate domestic substitution opportunities in key industrial chains, supported by favorable policies during this period [1] Group 2: Semiconductor and AI Infrastructure - The recovery in terminal demand is noted to be moderate, with strong demand for servers closely related to AI, while global consumer electronics demand for 2026 is viewed with caution due to the prolonged price increases in memory chips [2] - Investment recommendations include overseas chip design and foundry companies such as NVIDIA (NVDA US), Broadcom (AVGO US), and TSMC (TSM US), which are expected to benefit from AI infrastructure development [2] - Domestic AI and substitution opportunities are also highlighted, with companies like Northern Huachuang (002371 CH), OmniVision (603501 CH), Zhongwei Company (688012 CH), and Huahong Semiconductor (1347 HK) recommended for investment [2] Group 3: Pharmaceutical Industry - The report indicates that the transition to an inquiry-based procurement model for the 1-8 batch of national procurement may limit overall price reductions, suggesting a smaller-than-expected impact on Hong Kong prescription drug companies [3] - The healthcare sector's performance is noted, with the Hang Seng Healthcare Index rising by 0.5%, although it underperformed the broader market [3] - Investment insights suggest a focus on innovative drugs and stable traditional companies, with a positive outlook on the innovation theme in the long term [3][6] Group 4: Economic Data and Market Performance - The report includes key economic data releases from the US and China, with manufacturing and non-manufacturing PMI figures indicating varying market expectations [7] - The performance of major global indices is summarized, with the Hang Seng Index closing at 25,936, reflecting a year-to-date increase of 29.05% [4] - Commodity prices and foreign exchange rates are also provided, showing significant fluctuations in various markets, which may impact investment strategies [5]

Group 1: Pharmaceutical Industry - The pharmaceutical sector is expected to maintain a stable upward trend in 2026, driven by undervaluation and catalysts that could further enhance overall valuations [3][4] - Key recommendations include companies like 3SBio, Eucure Biopharma, and BeiGene, which have rich catalysts and limited impact from centralized procurement [4] - The focus will shift back to fundamentals and valuations, particularly for stocks that are currently undervalued with expected positive fundamental differences [3][4] Group 2: Real Estate Industry - The real estate sector in mainland China is projected to explore new development models under strong policy support, with expected sales area between 900-950 million square meters and sales value around 10-11 trillion RMB in 2026 [5] - In Hong Kong, key factors for market recovery include improved macro uncertainty, significant policy easing, and the return of fundamental demand drivers, with residential rental levels expected to grow by approximately 3% annually [5] - Investment preferences are ranked as state-owned enterprises with low valuations, private sector leaders with land reserves in first and second-tier cities, followed by other private developers [5] Group 3: Retail and Office Market - The retail rental market in Hong Kong is expected to see moderate growth, with community mall rents increasing by about 3-5%, while office vacancy rates have peaked, setting the stage for a rebound in 2026 [7] - The intrinsic value of the Hong Kong physical market is anticipated to gradually release, with New World Development recommended as a high-quality proxy for residential recovery [7]