Investment Rating - The report does not explicitly state an investment rating for the industry or specific companies within it [2]. Core Insights - The report highlights a positive trend in property transactions, with primary sales volume increasing by 33% week-over-week (wow) and 29% year-over-year (yoy), while secondary transactions rose by 23% wow and 72% yoy [7][42]. - The easing measures implemented have led to a significant improvement in new home searches, with the heat index for new home searches up by 1.5% wow and 6% above pre-easing levels [4][19]. - The report indicates that the average inventory balance has decreased by 0.1% wow and 0.4% from the end of 2024, with inventory months at 25.5 [11][55]. Summary by Sections Policy Developments - The China Securities Regulatory Commission (CSRC) proposed coordinated support for property developer financing to mitigate bond default risks, aligning with the National Association of Financial Regulators' (NAFR) recommendations [3]. - The Ministry of Housing and Urban-Rural Development (MOHURD) has requested an accelerated development of a wait-list system for affordable housing participants and expanded affordable housing supply [3]. Market Performance - In the primary market, tier-1 cities saw an average sales volume increase of 34% wow and 43% yoy, while the Pearl River Delta (PRD) cities experienced a 48% wow and 72% yoy increase [25][27]. - Secondary market performance showed a 72% yoy increase in sales volume, with agents and homeowners expressing negative price appreciation expectations [42]. Sales and Completions - Year-to-date (YTD) primary gross floor area (GFA) sold was up 10% yoy, while secondary GFA sold was up 12% yoy [39][44]. - The report anticipates a 20% yoy decline in completions for January 2025, with a projected 3% yoy increase for the full year [60][63]. Valuations - Offshore developers are trading at an average 34% discount to end-2025 estimated net asset value (NAV) and 0.4 times 2025 estimated price-to-book (P/B) ratio [68]. - Onshore developers are trading at a 20% discount to end-2025 estimated NAV and 0.5 times 2025 estimated P/B ratio [68].

Investment Rating - The report reinitiates coverage of copper with a medium-run price forecast range of $10,500 to $11,500 per tonne, with average price forecasts of $9,740 per tonne for 2025 and $11,175 per tonne for 2026, indicating a bullish outlook for the copper market [3][10]. Core Insights - The copper market is expected to experience deficits of 180,000 tonnes in 2025 and 250,000 tonnes in 2026, driven by strong electrification demand, China stimulus, and supply constraints [3][10][49]. - Electrification demand is projected to account for all copper demand growth through 2030, with significant contributions from grid investments, which are expected to add over 300,000 tonnes annually to global copper demand [3][12][17]. - China’s stimulus measures are anticipated to contribute 35% to global copper demand growth in 2025, outweighing the negative impact of tariffs [27][28]. Summary by Sections Electrification Demand - The electrification megatrend is reshaping copper demand, with a notable 4% year-on-year increase in refined copper demand in China despite a 10% drop in the construction sector [3][10]. - Grid investment is expected to rise significantly, with the US utilities capex forecasted to increase from an average of $103 billion (2020-2023) to $145 billion (2024-2027), a 40% increase [16][17]. China Copper Stimulus - China’s stimulus is projected to add 2 percentage points to copper demand growth, while tariffs are expected to reduce it by only 0.8 percentage points [27][28]. - The report forecasts a 4% growth in China’s refined copper demand in 2025, driven by structural electrification and stimulus measures [3][10]. Supply Constraints - The report highlights that copper demand will require substantial growth in mine and scrap supply, with a forecasted increase of 4 million tonnes by 2030 [3][10]. - The price of $10,500 per tonne is deemed necessary for the development of new mine capacity to avoid significant deficits by the early 2030s [3][42]. Price Forecast - The copper price is expected to rise above $10,500 per tonne in Q1 2026, with a cap at $11,500 per tonne due to substitution effects with aluminum [3][10][42]. - The report indicates that the copper price will establish a new floor of $10,500 per tonne by 2026, driven by rising capital and operational expenditures in mining [42][43]. Market Balance - The copper market is projected to shift from a surplus in 2024 to deficits in 2025 and 2026, with refined production expected to increase while consumption outpaces production [49][59]. - The report anticipates a record high annual average copper price in 2025 and 2026, with higher prices leading to an acceleration in scrap supply and firmer mine supply growth through 2030 [49].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - China's export dominance has strengthened from 2017 to 2024, with its share of global exports rising from 12.9% to 14.8% and its trade surplus more than doubling from approximately USD 420 billion to nearly USD 1 trillion [4][26][27] - The annual average growth rate of China's nominal exports was 6.7% during 2017-2024, significantly higher than the 5.1% growth rate of imports [7][13] - The shift in trade patterns indicates a growing reliance on emerging market (EM) economies, with their share in Chinese exports increasing from 46% in 2017 to 55% in 2024, and imports from EM economies rising from 39% to 51% [13][22] Summary by Sections Trade Growth and Trends - Between 2017 and 2024, China's nominal goods exports grew by 58%, while imports increased by 42%, highlighting a significant disparity in growth rates [7][30] - The strength in Chinese export growth was broad-based, including upstream materials and downstream products, while import growth was concentrated in commodities and basic materials [17][30] Bilateral Trade Dynamics - China's trade balance improved against most major economies, with notable increases in trade surpluses with the US, rising from USD 276 billion in 2017 to USD 361 billion in 2024 [27][28] - The report highlights a marked shift in China's trade from developed markets (DM) to emerging markets (EM), with exports to countries like Russia and ASEAN growing over 10% per year [13][18] Geopolitical Influences - The report identifies a strong correlation between geopolitical closeness to China and changes in trade patterns, with countries that are geopolitically aligned with China increasing their trade with it [23][24] - The analysis indicates that geopolitical factors have become increasingly important in shaping bilateral trade relations, particularly in the context of the US-China trade tensions [30][47] Product-Specific Insights - Chinese exports of transportation equipment, chemicals, and machinery showed robust growth, while imports of transportation equipment declined [17][31] - The trend of import substitution is evident, with Chinese exports of autos and machine tools significantly exceeding imports by 2024 [40][42]

Investment Rating - The report maintains an Overweight rating for both China A and H shares, indicating a positive outlook for both markets [39][39][39] Core Insights - The launch of DeepSeek-R1 has led to increased investor optimism regarding Chinese growth and equity performance, with MSCI China rallying 26% since January, while A shares gained 7% [1][7][39] - The return gap between A and H shares has expanded to 15%, which is historically significant and suggests a potential market leadership rotation [8][16][27] - The A-H market rotation model predicts a 2% outperformance for A shares in the next three months, driven by less stretched valuations and potential macroeconomic policy stimulus [3][17][19] Summary by Sections Market Performance - MSCI China has outperformed A shares significantly, with HSTECH rising 31% and STAR50 Index increasing by 13% since the launch of DeepSeek-R1 [1][7][39] - The report notes that the historical average return gap typically remains within +/-10%, and exceeding 15% has a high probability of reversal [8][16][27] Valuation and Economic Factors - Current trading valuations are 11.5x for MSCI China and 13.1x for CSI300, with the A-H valuation premium narrowing from 34% to 14% [19][25][27] - The upcoming "Two Sessions" are expected to reiterate an expansionary fiscal policy stance, which could favor A shares due to their higher sensitivity to domestic policy announcements [19][39] Sector and Index Preferences - Small/mid-cap A-share indices such as STAR50, ChiNext, and CSI1000 are expected to outperform due to their higher exposure to AI-related sectors [39][40] - Among large-cap indices, CSIA500 is preferred for its greater exposure to technology and innovative sectors, while HSTECH is anticipated to continue performing well due to upward earnings revisions driven by AI adoption [39][40]

Research +65-6889-1199 | timothy.moe@gs.com 高盛(新加坡) 私人公司 干丰丰. CFA 2025年2月23日 | 8:19PM HKT 中国市场寻思: 计划A股投资正当时 DeepSeek-R1的推出点燃了投资者对于中国经济增长和股市表现的乐观情绪。MSCI中 国指数自1月份触底以来已上涨26%，离岸互联网板块领涨（恒生科技指数上涨 31%），而A股涨幅为相对温和的7%。过去三个月，A股和港股的回报差距扩大至 15%,处于历史区间的第99百分位,是2018年以来第二大回报差距,仅低于2022年 11月至2023年2月重新放开反弹初期的MSCI中国指数跑赢沪深300指数30%的表现。 我们的A-H市场轮动模型显示，未来三个月市场的领先地位可能发生轮动，并预测A股 将跑赢2%。经验表明，当A股和港股的回报差距超过15%时，市场主导地位逆转的后 验概率为95%。我们在模型中考虑了六个关键宏观和市场因素（经济增长、宏观政 策、监管/地缘政治、公司基本面、估值以及流动性/市场情绪），预计估值未处高位 以及潜在的宏观刺激政策将是推动A股迎头赶上的关键因素。当前MSCI中国指数和 ...

Investment Ratings - Sanhua is rated as Buy, LeaderDrive and Moons' Electric are rated Neutral, and Best Precision is downgraded to Neutral from Buy [2][4][5][20]. Core Insights - The report updates market share expectations for key humanoid robot supply chain stocks, reflecting a more optimistic outlook for Sanhua, while indicating increased competition for Best Precision [1][4]. - Sanhua is expected to achieve a market share of 70% in the high-spec humanoid robot actuator assembly business by 2025E-30E, up from a previous estimate of 50% [2]. - LeaderDrive's net income forecasts for 2024E-30E have been revised up by up to 21% due to its entry into the PRS business, projecting a 5% global market share [4]. - Best Precision's long-term global PRS market share forecast has been revised down to 10% from 15% due to anticipated competition [4][21]. - Moons' Electric is expected to see an 8% increase in net income forecasts for 2024E-30E, driven by potential upgrades in content value [5]. Company Summaries Sanhua - Sanhua is a leader in HVAC control and thermal management components, with a strong growth potential in the auto/EV sector [33]. - The 12-month target price for Sanhua is set at Rmb36.5, based on a 21x 2030E P/E [34]. LeaderDrive - LeaderDrive is recognized as a domestic leader in China's harmonic reduction gear market, with a focus on expanding its applications [41]. - The 12-month target price for LeaderDrive is Rmb134.6, based on a 45x 2030E P/E [42]. Best Precision - Best Precision aims to become a competitive supplier of planetary roller screws for humanoid robots, with a projected 10% global market share starting in 2027E [37]. - The 12-month target price for Best Precision is Rmb28.2, based on a 32x 2030E P/E [38]. Moons' Electric - Moons' Electric is positioned to become a key player in the humanoid robot coreless motor supply chain, with expectations for increased revenues from coreless motor applications [45]. - The 12-month target price for Moons' Electric is Rmb53.3, based on a 37x 2030E P/E [46].

Investment Rating - The report maintains a "Buy" rating for selected stocks in the China property sector, specifically mentioning COLI, CRL, Greentown, and Longfor, which are currently trading at the lower end of their trading range, reflecting an average pricing in of a 15-20% decline in property prices from current levels [1][7]. Core Insights - The report indicates that there are signs of a bottoming industry outlook for 2025, with the need for better policy execution to support market stabilization and increase household confidence [1][8]. - It highlights that the physical markets and developers' liquidity are showing incremental positive developments, which could lead to a recovery in the sector [1][40]. - The report emphasizes the importance of effective execution of previously announced government policies, including funding support and inventory reduction measures, to enhance market stability [8][10]. Summary by Sections Market Overview - The report notes that high-tier cities are likely to continue outperforming in transaction volumes, with a 20%+ improvement in QTD transaction volume compared to pre-easing levels [16][18]. - The average price index for 70 cities showed slight declines of -0.1% in primary and -0.3% in secondary markets month-over-month [22][22]. Policy Execution - Key policies include a "whitelist program" with Rmb5.6 trillion in funding support approved by mid-January 2025, and an inventory reduction initiative that has begun to yield results at the local level [8][10]. - The report anticipates further details on funding support and potential RRR cuts, which could lead to lower mortgage rates and stimulate market activity [8][10]. Developer Liquidity - Incremental positive developments in developer liquidity are noted, including Greentown's issuance of US$350 million in senior notes, marking a recovery in investor confidence [40]. - Vanke is expected to benefit from a new government liquidity injection plan to address its funding gap, which includes local government mobilization of Rmb20 billion to acquire unsold projects [40]. Valuation and Market Sentiment - The report suggests that evidence of market stabilization will support higher valuations for the covered developers in the coming months [1][7]. - The sentiment in the primary and secondary markets is improving, with positive year-over-year trends in new project launches observed in February 2025 [16][18].

Investment Rating - The report initiates coverage on Yuneng with a Buy rating, indicating a positive outlook for the company within the LFP cathode sector [3][14]. Core Insights - The report highlights a cyclical recovery in China's LFP cathode sector, forecasting utilization to increase from 71% in 2024E to 86% in 2026E, driven by a robust demand outlook and disciplined capacity expansion [2][19]. - LFP cathode demand is projected to grow at a CAGR of 34% from 2024E to 2026E, supported by strong demand from both Battery Energy Storage Systems (BESS) and New Energy Vehicles (NEV) [12][22]. - The report emphasizes Yuneng's strong market position, with a projected EPS CAGR of approximately 187% from 2024E to 2026E, benefiting from volume growth and margin expansion [4][14]. Summary by Sections Demand Outlook - The demand for LFP cathodes is expected to grow significantly, with NEV demand growing at a CAGR of 27% and BESS demand at 44% from 2024E to 2026E [22][24]. - The cost advantages of LFP batteries over NCM batteries are projected to expand to approximately 30% in 2025E, enhancing LFP's market penetration [21][35]. Supply Dynamics - Capacity growth for LFP cathodes is estimated to decelerate to a CAGR of 19% from 2024E to 2026E, following a substantial 75% reduction in CAPEX from the peak in 2Q23 [39][42]. - The report notes that the LFP cathode sector is experiencing disciplined capacity expansion, which is expected to lag behind the demand growth [39][44]. Company-Specific Insights - Yuneng is positioned to capture significant volume growth and margin recovery, with a market share of approximately 34% globally [3][14]. - The report forecasts Yuneng's unit gross profit to increase from Rmb2.4k/t in 2024E to Rmb6.0k/t in 2026E, reflecting strong operational efficiency [14]. Inventory and Utilization Trends - The report anticipates a rebound in LFP cathode utilization to 86% in 2026E, supported by a positive demand outlook and potential inventory cycle tailwinds [50]. - Early signs of positive inventory momentum are noted, with lithium carbonate prices appearing to reach a bottom, which could further support utilization rates [50].

Investment Rating - The report assigns a "Buy" rating for Xiaomi Corp. (1810.HK) [1] Core Insights - The report highlights Xiaomi's strong positioning to enhance its AI technology capabilities and expand its "Human x Car x Home" ecosystem, aiming to drive sales and improve its market position in the long term [2] - Revenue forecasts for 2025-26E have been raised by 4%-7%, primarily due to a more optimistic outlook for AIoT and EV segments, with projected revenue CAGRs of 17% and 99% respectively from 2024-27E [10][19] - The target price has been increased to HK$58 from HK$38, reflecting a more favorable growth outlook and strong performance in the AIoT and EV segments [20][22] Financial Forecasts - Revenue projections for Xiaomi are as follows: - 2023: Rmb 270,970.2 million - 2024E: Rmb 362,259.2 million - 2025E: Rmb 470,957.6 million - 2026E: Rmb 606,969.4 million [5][16] - EPS estimates have been revised upward for 2025-26E, with new projections of Rmb 1.37 and Rmb 2.02 respectively, indicating a significant profit growth trajectory [10][19] - The report anticipates a 30% year-over-year group revenue growth in 2025E, aligning with management guidance [10] Market Position and Competitive Advantage - Xiaomi is expected to leverage its native AI interface, Xiaoai, embedded in Xiaomi HyperOS, to enhance customer acquisition and interaction within its hardware and software IoT ecosystem [2] - The company is projected to have approximately 900 million connected AIoT devices by 2024E, positioning it as a leader in the global AIoT ecosystem [2] Valuation Metrics - The report provides the following valuation ratios for Xiaomi: - P/E (2025E): 33.5 - P/B (2025E): 5.5 - EV/EBITDA (2025E): 24.5 [12][16] - The report indicates a significant increase in the valuation of Xiaomi's core business, with a 57% higher 12-month forward valuation at Rmb 921 billion [20][21] Growth Projections - The report forecasts a 26% revenue CAGR for Xiaomi from 2024-27E, indicating one of the fastest growth rates among major Asian TMT companies [21] - The net profit is expected to grow at a CAGR of 36% during the same period, driven by strong performance in the AIoT and EV segments [32]

Investment Rating - Envicool and Kehua are rated as Buy, while Kstar is rated as Neutral [2][12][22] Core Insights - Alibaba's significant increase in capital expenditures, amounting to Rmb31.8 billion (approximately US$4.35 billion) in Q4 2024, reflects a 260% year-over-year growth and an 80% quarter-over-quarter growth, primarily driven by cloud infrastructure investments [2][7] - The anticipated increase in cloud revenue and capital expenditures from Alibaba, a leading hyperscaler in China, is expected to positively impact the demand and supply dynamics within the Chinese data center industry [2][12] - Envicool and Kehua are highlighted as having substantial revenue exposure to data center and server markets, with 54% and 37% of their total revenue in 2024E coming from these sectors, respectively [2][12] - Kstar's revenue exposure to data centers is 62%, but it is split between domestic and international markets, leading to a Neutral rating due to lower exposure to internet and cloud customers [2][12] Summary by Company Envicool - Envicool specializes in precision cooling technology for data centers and energy storage systems, benefiting from the digital economy and carbon reduction trends in China [14] - The company is expected to see strong revenue growth driven by the adoption of liquid cooling technologies, particularly in the context of increasing investments in generative AI [14][16] - The 12-month target price for Envicool is set at Rmb30.2, based on a 2025E P/E of 25x [16] Kehua - Kehua is a leader in the Uninterruptible Power Supply (UPS) market in China, with a 13% domestic market share and a 3% global market share as of 2022 [18] - The company is expected to achieve revenue and net income CAGRs of 20% and 25% respectively from 2023E to 2025E, driven by growth in the energy storage system sector [18][19] - The 12-month target price for Kehua is Rmb22.2, based on a 2025E P/E of 15x [19] Kstar - Kstar focuses on electric power conversion technology, holding the largest UPS shipment in China for 21 years, with a 9% domestic and 3% global market share in 2022 [22] - The company is projected to deliver revenue and net income CAGRs of 17% and 9% respectively from 2023E to 2025E, primarily driven by growth in PV inverters and residential energy storage systems [22][23] - The 12-month target price for Kstar is Rmb18.2, based on a 2025E P/E of 15x [23]