Equity Research Report Strategy Midstream Capital/Traded Goods, New Infrastructure Outperformed Huatai Research 13 August 2024 | China (Mainland) Monthly Midstream capital/traded goods, new infrastructure outperformed According to our model, in July 2024, the business climate of all sectors and all non-financial sectors in the A-share market picked up slightly, while some still saw increased sales volume but decreased selling prices, with demand yet to improve, consistent with China's July PMI data. Specifi ...

Equity Research Report Strategy Market Dynamics Post Carry Trade Reversal Huatai Research 13 August 2024 | China (Mainland) Weekly Market to remain volatile in short run, with focus on high-low rotation Weak M1 data in yoy terms, low expectations for the long-term credit cycle, and foreign capital outflow due to election trading have rapidly driven up market risk premiums since June. Strengthened expectations for Fed rate cuts and RMB appreciation have unlocked room for domestic monetary policy, in our view ...

Investment Rating - The investment rating for Sunny Optical Technology Group is maintained as BUY with a target price of HKD60.00 [8][9][12]. Core Views - The report indicates that handset lens shipments grew robustly, while CCM shipments fell due to a shift in product mix. The auto lens shipment volume expanded due to increased client demand [3][4]. - The management noted that the growth in handset lens shipments was primarily due to a low base last year, and the decline in handset CCM shipments was mainly due to decreased low-end handset shipments [3][4]. - A better product mix is expected to boost gross profit margin (GPM), and monitoring of potential restocking by Apple and Android clients is suggested for the upcoming quarters [3][4]. Summary by Sections Handset Lenses - In July, Sunny shipped 115 million handset lenses, representing a year-on-year increase of 20.7% and a month-on-month increase of 6.1% [4]. - Shipments of handset CCMs were 43.90 million, up 5.5% month-on-month but down 19.5% year-on-year, attributed to decreased low-end handset shipments [4]. Auto Lenses - Auto lens shipments increased by 9.0% year-on-year and 15.3% month-on-month, totaling 8,811k units in July, driven by increased demand [5]. - The report highlights the weak auto demand overseas and suggests monitoring the impact on Sunny's auto lens business [5]. Financial Forecasts - The attributable net profit forecasts for 2024, 2025, and 2026 are RMB2,317 million, RMB2,767 million, and RMB3,357 million respectively [3][19]. - Revenue projections for 2024, 2025, and 2026 are RMB38,433 million, RMB41,447 million, and RMB44,186 million respectively, indicating a growth trajectory [19][21]. Valuation - The target price of HKD60 is derived from a sum-of-the-parts (SOTP) analysis, implying a 2024E PE of 26x [12][13]. - The valuation breakdown includes HKD20.8 per share for auto products, HKD10.1 for AR/VR, HKD19.9 for handsets, and HKD9.3 for other businesses [12][13].

Equity Research Report Jafron Biomedical (300529 CH) Earnings Grew Strongly in 2024 Huatai ResearchInterim Results Review 13 August 2024 | China (Mainland)Medical Devices Earnings growth continued to pace up in 2Q24; maintain BUY Jafron Biomedical (Jafron) registered 1H24 revenue/attributable net profit (NP) of RMB1,496/553mn (up 47.8/99.1% yoy) and 2Q24 revenue/attributable NP of RMB751/268mn (up 70.9/230.6% yoy), which further picked up from the growth rates in 1Q24 (revenue/attributable NP: up 30/44.9% y ...

Investment Rating - The investment rating for Canmax Technologies is maintained at OVERWEIGHT with a target price of RMB 17.94, reflecting an expected upside of 8% from the closing price of RMB 16.59 as of August 9, 2024 [7][8]. Core Insights - Canmax Technologies reported a significant decline in its financial performance for 1H24, with attributable net profit down 39.26% year-on-year to RMB 835 million, and revenue down 44.09% year-on-year to RMB 3,713 million [2][3]. - The decline in revenue is primarily attributed to a substantial decrease in lithium ore prices, with the average selling price of lithium hydroxide falling 73.8% year-on-year to RMB 92,300 per tonne [3][5]. - Despite the challenges, Canmax's revenue decline was less severe than the drop in lithium ore prices, largely due to capacity expansion efforts [3]. Financial Performance - For 1H24, Canmax's revenue from lithium-ion battery materials decreased by 47.08% year-on-year to RMB 3,316 million, with a gross profit margin of 17.91%, down 12.59 percentage points year-on-year [3]. - The company's projected book value per share (BVPS) for 2024, 2025, and 2026 is RMB 15.74, RMB 17.07, and RMB 19.24 respectively [2]. - The financial outlook shows a recovery in revenue expected in 2025 and 2026, with projected revenues of RMB 11,602 million and RMB 17,671 million respectively [6]. Industry Dynamics - The lithium ore market is currently experiencing oversupply, leading to continued price declines in 1H24, although there are signs of potential capacity cuts from major producers [5]. - The report suggests that while lithium ore prices are expected to remain on a downward trend, the pace of supply-side de-capacity should be monitored as it may lead to improved supply-demand dynamics in the future [5].

Equity Research Report Fixed Income Reviewing Bond Market Volatility in Terms of Financial Security Huatai Research 13 August 2024 | China (Mainland) Weekly Analyst SAC No. S0570518110002 SFC No. AMB145 +(86) 10.6321.1166 Our core views The financial system exhibits pro-cyclical characteristics, and central bank regulation plays a crucial role in maintaining financial stability and policy credibility. However, given the current economic fundamentals and the pace of fiscal efforts, the PBoC is unlikely to ma ...

Equity Research Report Strategy Prospects for Export Chain Trade Huatai Research 13 August 2024 | China (Mainland) Themes Analyst SAC No. S0570520060001_wangyi012893@htsc.com SFC No. BMQ373 +(86) 21 2897 2228 Our core views: export chain to stay resilient, upside to weaken In this report, we analyze the excess return outlook for China's export chain in terms of environment and fundamentals. 1) The win rate of the export chain is 100% amid an increased manufacturing PMI overseas, with excess returns averagin ...

Equity Research Report Strategy Behind Shifts in Large and Small Cap Styles Huatai Research 13 August 2024 | China (Mainland) Weekly Our core views While the market underwent a pulsed rebound due to policy-driven trading in the middle of last week, sustainability remains to be seen. Recession trading has intensified recently in external markets, yet there has been no sign of inflow into China assets from allocation-oriented foreign capital, necessitating further observation on foreign capital reallocation. ...

Investment Rating - Maintain BUY rating for Shenzhen MTC with a target price of RMB 6 90 [2] Core Views - Shenzhen MTC reported robust 1H24 revenue and net profit growth with revenue reaching RMB 9 520mn (+23 07% yoy) and net profit at RMB 911mn (+24 04% yoy) [2] - The company's dual growth driver strategy focusing on multimedia and LED businesses is effective with LED industry chain revenue reaching RMB 2 584mn (+29 4% yoy) [2][4] - TV output recovery and increased market share in COB direct-view display business contributed to the strong performance [3][4] Financial Performance - 1H24 revenue from multimedia audio-visual products and operation services was RMB 6 936mn (+21% yoy) with over 5 4mn units of smart display terminals shipped [3] - LED business revenue was driven by product-mix upgrades and increased penetration of Mini LED COB direct-view display products (1H24 revenue: RMB 432mn) [4] - Gross profit margin (GPM) for 2Q24 improved by 0 1pp yoy due to stable TV panel prices and higher contributions from high-margin LED products [5] Future Projections - Revenue is expected to grow to RMB 20 762mn in 2024E (+20 94% yoy) and RMB 25 308mn in 2026E (+9 28% yoy) [6] - Net profit is projected to increase to RMB 2 094mn in 2024E (+31 86% yoy) and RMB 2 678mn in 2026E (+10 64% yoy) [6] - EPS forecasts for 2024E/2025E/2026E are maintained at RMB 0 46/0 53/0 59 [2] Valuation - The stock is valued at 15x 2024E PE above the Wind consensus-based peers' average of 11 7x [2] - Potential upside of 46% based on the target price of RMB 6 90 and closing price of RMB 4 71 as of 7 Aug [8]

Investment Rating - The investment rating for Bank of Hangzhou is maintained at OVERWEIGHT with a target price of RMB14.42, indicating a potential upside of 12% from the closing price of RMB12.93 as of 7 August 2024 [6][28]. Core Insights - In 1H24, Bank of Hangzhou experienced a revenue growth of 5.4% year-on-year and attributable net profits increased by 20.1% year-on-year, reflecting a strong performance with stable asset quality [1][2]. - The bank's total assets, loans, and deposits grew by 13.8%, 16.5%, and 13.7% year-on-year respectively, with significant increases in loan and deposit amounts compared to the previous year [2]. - The non-performing loan (NPL) ratio remained low at 0.76%, with a provision coverage ratio of 545%, indicating strong risk management capabilities [3][4]. Financial Projections - Projected earnings per share (EPS) for 2024, 2025, and 2026 are RMB2.91, RMB3.47, and RMB4.13 respectively, with a book value per share (BVPS) of RMB18.02 for 2024 [1][5]. - Revenue is expected to grow from RMB36.6 billion in 2024 to RMB41.8 billion in 2026, while net profit attributable to the parent is projected to rise from RMB17.3 billion in 2024 to RMB24.5 billion in 2026 [11][12]. Market Position and Strategy - Bank of Hangzhou operates in economically vibrant regions and focuses on corporate loans, particularly to government credits and state-owned enterprises, which supports its growth strategy [2][4]. - The bank has established a diversified shareholder base and has been a pioneer in tech-innovation banking, enhancing its competitive edge [4].