Investment Rating - The report maintains a "Buy" rating for Lingyi, with a 12-month price target of Rmb11.40, indicating an upside potential of 28.1% from the current price of Rmb8.90 [18][13]. Core Insights - Lingyi's revenues are expected to grow by 23% year-over-year in 2Q25, reaching Rmb11.5 billion, driven by new project contributions and improved seasonality in the second half of 2025 [1][3]. - The gross margin (GM) is projected to improve to 15.7% in 2Q25, up from 15.2% in 1Q25, although still below the 2022/2023 levels of 20.7% and 19.9% respectively [1][3]. - Lingyi's diversification into foldable phones, servers, and AI/AR glasses components is expected to increase revenue contributions to 14% and 18% in 2025 and 2026 respectively [1][2]. Revenue and Earnings Estimates - Revenue estimates for 2025 remain unchanged at Rmb54.5 billion, with net income expected to grow by 43% year-over-year [3][9]. - Earnings revisions indicate a decrease in net income estimates by 11% for 2025, primarily due to lower GM from the automotive and server segments [3][7]. - The report anticipates a compound annual growth rate (CAGR) of 21% in revenues from 2025 to 2027 [3][9]. Financial Metrics - The report projects gross margins to expand from 15.8% in 2024 to 16.6% and 18.2% in 2025 and 2026 respectively [3][11]. - Operating profit margins (OPM) are expected to improve from 6.0% in 2025 to 8.1% in 2027 [3][11]. - The net margin is forecasted to increase to 4.6% and 5.7% in 2025 and 2026 respectively [3][11]. Market Position and Competitive Landscape - Lingyi is expanding its business in foldable phones, servers, robotics, and AI/AR glasses components to reduce concentration risk and capture a larger market share [2][3]. - The company has established partnerships to provide comprehensive manufacturing solutions, which are expected to lower the bill of materials (BOM) costs for clients [2][3]. Valuation - The target price of Rmb11.4 is based on a target P/E multiple of 21.2x 2026E EPS, reflecting a positive correlation between P/E and EPS growth among peers [11][17]. - Lingyi is currently trading at a P/E of 17x for 2026E, which is considered attractive [13][17].

Investment Rating - The report does not explicitly provide an investment rating for the industry discussed Core Insights - The Trump administration has extended the tariff deadline from July 9 to August 1, with potential higher tariff rates on 14 countries unless trade policy concessions are made [1][2] - The proposed tariff rates range from 25% to 40%, which could increase the US effective tariff rate (ETR) by approximately 1.4 percentage points if implemented [3][4] - The expectation is that these proposed rates will not take effect on August 1, although there is a risk that some countries may face higher rates temporarily [5] Summary by Sections Tariff Extensions and Proposals - President Trump signed an executive order delaying the tariff deadline to August 1, indicating that it is unlikely for US tariffs to rise in the interim [2] - Letters were sent to various countries, including Bangladesh, Japan, and South Korea, outlining potential tariff increases unless trade concessions are made [3] Impact on Effective Tariff Rate - The report estimates a baseline expectation of a 14 percentage point increase in the ETR this year, with about 9 percentage points already implemented [1] - The proposed tariff increases would replace the current 10% baseline tariff for the affected countries, leading to an overall increase in the ETR [3] Trade Partner Dynamics - The report notes that the Trump administration did not send similar letters to major trading partners like the European Union and India, suggesting these partners may be in a better position to negotiate [4] - There is an anticipation of sectoral tariffs being announced soon, particularly in industries such as pharmaceuticals and electronics [5]

Investment Rating - The report maintains a positive outlook on the eCommerce industry, highlighting several "Buy" rated stocks as secular winners, including Amazon.com (AMZN), JD.com (JD), Coupang (CPNG), Sea Ltd. (SE), MercadoLibre (MELI), Zalando (ZAL), and Eternal (ETEA) [7]. Core Insights - Global eCommerce sales are projected to grow at a +6% CAGR from 2025 to 2030, reaching approximately $6.4 trillion by 2030, driven by modest increases in online penetration rates and significant growth in regions with lower current penetration [5][16]. - The report identifies the Food and Beverage category as a key driver of eCommerce growth, with expectations of a +10% CAGR in this segment from 2025 to 2030 [33]. - The eCommerce market is expected to continue consolidating, with the largest platforms gaining market share, particularly in the global ex-China market where the top five platforms accounted for 50% of total online sales in 2024 [38]. Summary by Sections Global eCommerce Opportunity - The report estimates global eCommerce sales at $4.3 trillion in 2024, growing to $4.7 trillion in 2025, with a long-term growth forecast of +6% CAGR through 2030 [16]. - Global eCommerce penetration is expected to rise from 23% in 2025 to 26% by 2030, indicating a gradual shift towards online shopping [16]. Economic Outlook - The report anticipates a slowdown in global real GDP growth in 2025, particularly in the US and Asia, which may impact eCommerce sales [10]. - Tariffs and the evolving global trade environment are highlighted as significant risk factors for the industry [10]. Valuation Insights - Current global eCommerce valuation multiples are below long-term averages, reflecting a slower growth profile, although growth-adjusted multiples remain at historical norms [10]. - The report includes a refreshed DCF-based intrinsic value framework for GMV-based platforms [10]. Regional Insights - The report emphasizes that regions with lower online penetration, such as India, Latin America, and ASEAN, present the highest growth potential for eCommerce [10][16]. - In the US, eCommerce sales are projected to grow to nearly $1.7 trillion by 2030, with an average annual increase in online penetration of 70 basis points [50]. Market Dynamics - The report notes that the largest eCommerce platforms are capturing a majority of incremental sales, driven by competitive advantages such as low prices and fast delivery [100]. - Essential product categories are outperforming discretionary categories, with platforms focused on staples seeing stronger growth [100].

Investment Rating - The report maintains a Neutral rating for Yonyou with a 12-month target price of Rmb13.37, indicating a potential upside of 2.1% from the current price of Rmb13.09 [9][8]. Core Insights - Yonyou management anticipates a sequential recovery in client spending, particularly from mid to large-scale clients, following a challenging first quarter where revenues declined by 21% year-over-year [1][2]. - The company is focusing on AI-driven solutions to enhance internal efficiency and client decision-making, with new AI agents under development to improve productivity [1][3]. - The shift to a subscription model is expected to lower clients' total costs, which may support revenue recovery in the upcoming quarters [2][1]. Summary by Sections 1. Enterprise Clients' IT Spending Outlook - Despite ongoing macroeconomic challenges, there remains a demand for enterprise cloud platforms and new AI features among clients, who are seeking solutions with a better price-to-performance ratio [2]. - Yonyou's revenues in the first quarter of 2025 were down 21% year-over-year, but management expects improvement in the second quarter, supported by order recovery and a 25% year-over-year increase in contract liabilities to Rmb2.3 billion [2][1]. 2. Gen-AI and AI Agent Monetization - Yonyou has initiated AI monetization, charging clients Rmb100,000 or more per year for modular services, and is offering customized solutions based on in-house data for large-scale clients [3]. - The introduction of AI Copilot and AI Agent tools aims to assist management in decision-making and reduce time spent on repetitive tasks, thereby enhancing overall efficiency [3]. 3. Headcount Outlook and Efficiency Improvement - The total number of employees at Yonyou decreased from approximately 23,000 at the end of 2024 to around 21,000 by the end of the first quarter of 2025, with expectations for headcount to remain stable [4]. - Management is focused on improving revenue per employee and leveraging AI tools for specific tasks, which is anticipated to enhance profitability in the long term [4][7].

8 July 2025 | 11:02PM HKT China: Reported nationwide childbirth subsidy – potentially a modest boost to H2 growth Bottom line: Recent media reports suggest that the Chinese government will launch a nationwide childbirth subsidy program soon (RMB 3,600 per year for each child until they turn three years old), although this has yet to be officially announced. In our view, the subsidy program reflects China's new policy thinking and long-term planning to counteract cyclical and structural growth headwinds. Bas ...

Investment Ratings - Kuaishou: Buy rated, share price increased by 55% YTD and 28% post 1Q result [3] - Tencent Music: Buy rated, share price increased by 80% YTD and 37% post 1Q result [5] - NetEase: Buy rated, share price increased by 52% YTD and 25% post 1Q result [11] - Focus Media: Buy rated, share price increased by 11% YTD and 8% post 1Q result [14] - Bilibili: Buy rated, share price increased by 31% YTD and 22% post 1Q result [18] Core Insights - The report highlights a strong rally in major games and entertainment names post 1Q25 results, driven by resilient growth profiles, disciplined competition, AI applications potential, and rising expectations on game pipelines [1] - Key focus areas for the upcoming earnings season include advertising outlook, game momentum into the summer peak season, AI applications monetization, and pricing strategies [2] - The report anticipates that further upside in share prices will require continued earnings delivery or new growth engines contributing to revenue growth in future years [1] Kuaishou - Kuaishou is expected to deliver in-line results for 2Q25 with a 12% year-over-year growth in ads and a 13% growth in GMV, with a 3Q25 outlook of 14% ads growth [3][4] - The company is positioned to improve sequential ads from 2Q onwards due to higher monetization efforts, despite competition from peers [4] - The revenue target for Kling AI has been raised from US$100 million to over US$140 million for FY25 [4] Tencent Music - Tencent Music is projected to achieve a 17% year-over-year growth in music revenue for 2Q25, with an ARPU increase of 9% [8] - The company is expected to maintain good momentum in ARPU due to lower discounts on SVIP subscriptions and new content initiatives [9] - Long-term growth visibility remains strong, with expectations of mid-teen year-over-year music revenue growth [10] NetEase - NetEase is expected to report a 15% year-over-year growth in game revenue for 2Q25, with operating profit increasing by 20% [11][12] - The company is focusing on updates for its 2026 game pipeline, with expectations of stable performance from legacy titles [13] - The stock is trading at 16X 2025E PE, with potential for further EPS upgrades [13] Focus Media - Focus Media's revenue is expected to increase by 1% year-over-year in 2Q25, with operating profit up by 3% [14] - The company anticipates a 6% year-over-year sales increase in 2H25 due to rising ad demand from internet and selective consumer players [15] - The collaboration with Alipay aims to target 400K devices across tier 1/2 locations [17] Bilibili - Bilibili's game sales are projected to increase by 58% year-over-year in 2Q25, with ads up by 18% [18] - The company is expected to face a high comparison in 2H24 but has reset market expectations lower, with potential catalysts from new game approvals [19] - Despite valuation concerns, Bilibili is expected to deliver faster than industry growth in ads and livestreaming [20] Price Targets and Estimates - For NetEase, revenue estimates for 2025-27E have been slightly adjusted downwards, while net profit estimates have been raised [21] - Focus Media's revenue estimates have been trimmed slightly, but the price target has been revised up to Rmb8.3 [21] - Across game coverage, price targets and estimates for XD have been raised due to solid new game releases and better profit margins [21]

Investment Rating - The report downgrades four stocks: Fen Wine, Luzhou Laojiao, ZJLD to Neutral from Buy, and Anhui Gujing to Sell from Neutral, while maintaining Buy on Kweichow Moutai and Wuliangye [9][36]. Core Insights - The current cycle for the spirits industry is likely prolonged due to the impact of the new austerity policy, with uncertainties on when the cycle will bottom out [1][14]. - The report anticipates policy headwinds to persist from 2Q25 to 2Q26, followed by a modest impact in 2H26 as improper dining restrictions for civil servants normalize [2][14]. - The spirits industry is expected to see a decline in total addressable market (TAM) by 10% to 14% in 2025-27E, with a forecasted decline of over 6% in 2025 and a -2% decline in 2026 [2][14]. Summary by Sections Risk Profiling - A policy impact ranking analysis indicates that upper mid-end and commercial banquet-focused products will face greater pressure, while Moutai is expected to remain resilient due to its gifting demand and limited exposure to government-related banquet consumption [2][12]. Earnings and Valuation Analysis - The report projects +1%/+5% aggregated topline growth for 2025/26E, down from previous estimates of +6%/+9%, with high-end spirits expected to grow by +5%/+5% and upper-mid-high end spirits facing declines of -10%/+2% [2][14]. - A bear case analysis suggests potential earnings downside risks of 6% to 18% for most spirits names compared to the base case [2][14]. Industry Growth Forecast - The spirits industry growth forecast has been revised down to a greater than 6% decline in 2025 and a -2% decline in 2026, compared to prior forecasts of +4%/+3% growth [2][14]. - The report highlights that the spirits industry has been consolidating, with leading players gaining market share, particularly in the super premium segment [2][25]. Company-Specific Insights - Moutai's wholesale price stability is supported by various measures, and the report suggests that a price below RMB 1,800 could hurt distributor profits, leading to market volatility [8][14]. - The report revises down sales and net profit estimates for various companies, including a 1% to 19% reduction for most names, reflecting the impact of the new policy [36][37].

Investment Rating - The report assigns a "Buy" rating to Midea, Gree, Haier, and Hisense, indicating a positive outlook for these companies in the white goods sector [27][28]. Core Insights - The white goods industry is expected to show resilience with a projected revenue growth of +9% and net profit growth of +11% year-over-year for the covered companies in 2Q25, driven by domestic demand and trade-in programs [1][25]. - Midea is highlighted as the leading player in the market, benefiting from a diversified revenue base and strong profitability, while facing manageable competition from smaller players [1][6]. - The report anticipates that domestic demand will become a more significant growth driver, particularly supported by trade-in programs and promotional events like "618" [1][5]. Summary by Sections Domestic Market Dynamics - Domestic demand is expected to accelerate in 2Q25, following a brief slowdown earlier in the year, with trade-in programs resuming and promotional events boosting sales [1][5]. - The National Development and Reform Commission (NDRC) plans to disburse trade-in subsidies starting in July, which is expected to stabilize funding and support growth [1][5]. Competitive Landscape - Increased competition in the online channel is noted, particularly from smaller players like Xiaomi, which may impact revenue growth and margins for these companies [1][4]. - Despite the competition, the report suggests that the risk of a full-blown pricing war is limited, as premium products continue to grow faster than entry-level offerings [1][4]. Company Performance Expectations - Midea, Haier, and Gree are expected to report approximately 10% revenue growth and 10%-12% net profit growth in 2Q25, while Hisense is projected to face more challenges due to a slowdown in its central AC business [4][24]. - The report fine-tunes earnings forecasts for the covered companies, adjusting estimates by -6% to 2% to reflect recent operational data [4][21]. Price Target Revisions - Price targets for the covered companies have been revised down by -11% to 2% to reflect changes in earnings per share (EPS) and target multiples [21][27]. - Midea is expected to maintain its leading position due to its diversified revenue streams and strong market presence, while Gree is anticipated to benefit from strong domestic demand for air conditioning [6][27].

Investment Rating - The report maintains a tactical Neutral (N) rating for equities over a 3-month horizon and an Overweight (OW) rating for equities over a 12-month horizon [5][9]. Core Insights - The current market sentiment has shifted towards a 'Goldilocks' narrative, characterized by a resilient macro backdrop and expectations of dovish monetary policy, despite potential headwinds from tariffs and a mixed growth/inflation outlook [4][15]. - The report identifies three potential risks ('bears') for the second half of the year: a significant negative growth shock, a large rate shock affecting long-duration bonds, and a deepening bear market for the Dollar [5][62]. - There is an emphasis on diversification across asset classes and regions, with specific recommendations for shorter-duration bonds, low volatility stocks, infrastructure, Gold, financials, and selective emerging market exposure [5][63]. Summary by Sections Market Sentiment and Risk Appetite - The Risk Appetite Indicator (RAI) has rebounded to somewhat bullish levels after a rapid re-risking phase, indicating a shift in investor sentiment towards riskier assets [4][27]. - Despite the bullish sentiment, the report warns of elevated valuations and a modestly negative asymmetry for equities in the near term, suggesting a higher probability of drawdowns compared to rallies [47][52]. Asset Allocation Strategy - The report recommends a tactical asset allocation of Overweight in cash and equities, Neutral in bonds and credit, and Underweight in commodities for the next 3 months [5][7]. - For the 12-month horizon, the strategy remains Overweight in equities and Neutral in cash, credit, and bonds, while continuing to Underweight commodities [5][7]. Economic Outlook - The macroeconomic environment is expected to face challenges in the second half of the year, with a deteriorating growth/inflation mix primarily driven by tariff impacts [15][67]. - The report highlights that while hard data has shown some negative surprises, the labor market remains resilient, and inflation pressures have not significantly materialized [19][67]. Sector and Asset Class Insights - The report suggests that equities may face headwinds from potential tariff impacts and a slowdown in corporate profitability, particularly in the US [66][71]. - Gold is highlighted as a key safe haven asset, with price forecasts raised to $3,700 per ounce by the end of 2025, supported by strong central bank buying [13][71]. Diversification Opportunities - The report emphasizes the importance of diversification in multi-asset portfolios, particularly in light of the current market dynamics and potential risks [58][62]. - Specific diversification strategies include focusing on shorter-duration bonds, quality stocks, and safe-haven assets like Gold and the Swiss Franc [71][82].

Investment Rating - The report maintains a "Buy" rating for CATL A/H shares with a 12-month price target of Rmb 323.00 for A-shares and HK$ 411.00 for H-shares, indicating an upside of 19.3% and 6.8% respectively [8][15]. Core Insights - The report highlights three key focuses for CATL: unit gross profit (GP) expansion, upward trend in capital expenditures (CAPEX), and progress in the US market which may enhance the total addressable market (TAM) [15][16]. Summary by Sections Earnings Preview - CATL is expected to report revenue of Rmb 104.7 billion and net profit of Rmb 15.6 billion in 2Q25, with unit GP anticipated to increase to Rmb 150/kWh from Rmb 147/kWh in 1Q25, driven by strong overseas shipments [1][41]. Unit GP Expansion - The blended battery unit GP is projected to expand due to improved product mix, with overseas EV sales in Europe showing a 28% year-over-year growth in the first five months of 2025 [1][19]. CATL is estimated to account for about 70% of Europe's battery imports from China [1][20]. CAPEX Trends - The report revises up CAPEX forecasts for 2025-2027 by 25%-5%, expecting CATL's relative CAPEX share to rise from approximately 13% in 2024 to around 24% in 2025, which is expected to drive market share gains [16][30]. US Market Progress - Recent developments regarding Ford's Michigan LFP battery factory, which utilizes CATL's technology, suggest improved market access for CATL in the US, potentially increasing its TAM [16][19]. Financial Projections - Revenue projections for CATL are set at Rmb 362 billion for 2024, Rmb 436 billion for 2025, and Rmb 532 billion for 2026, with EBITDA expected to grow significantly over the same period [3][13]. EPS is forecasted to increase from Rmb 11.58 in 2024 to Rmb 22.45 by 2027 [3][13]. Market Position - CATL's market capitalization is noted at Rmb 1.2 trillion, with a strong enterprise value of Rmb 972.5 billion, indicating robust financial health and market positioning within the battery industry [3][5].