Tianfeng Securities·2025-07-03 06:15Group 1: Core Insights - The report highlights that the Hong Kong market, particularly the Hang Seng Index and Hang Seng Tech Index, shows significant valuation advantages, with a TTM P/E ratio of 10.68 and a dividend yield of 3.93% as of July 1, 2025, indicating attractive investment opportunities [3][18]. - The report emphasizes that China's AI capabilities are becoming globally competitive, with domestic internet companies expected to narrow the gap with leading global firms, particularly in AI technology, which is not yet fully reflected in current valuations [4][19]. - The gaming industry is experiencing a positive trend with a 17.99% year-on-year increase in actual sales revenue in Q1 2025, supported by a stable policy environment and a growing number of game approvals [5]. - The advertising industry is facing a slowdown in growth due to macroeconomic fluctuations, but certain companies are still outperforming the market through improved advertising efficiency and AI-driven innovations [6]. - The local lifestyle sector is exploring new growth avenues through flash sales and international expansion, with significant cost savings anticipated from the adoption of unmanned delivery systems [7]. - The e-commerce sector is characterized by intense competition but is expected to stabilize as platforms return to their core strengths, with a focus on rational consumer spending and promotional activities [8]. Group 2: Industry Trends - The gaming industry is projected to maintain high single-digit growth in revenue, supported by a solid supply foundation from increased game approvals and improving consumer sentiment [5]. - The advertising sector is expected to benefit from AI technologies that enhance targeting and return on ad spend (ROAS), potentially leading to increased revenue despite overall industry growth slowing [6]. - The local lifestyle market is anticipated to grow significantly, particularly in the Middle East, with a projected market size increase to $2.77 billion by 2028, driven by high mobile internet penetration and favorable demographics [7]. - The e-commerce industry is expected to see a gradual increase in online penetration rates, with platforms focusing on high-demand products and improving service quality to enhance user experience [8]. - The report notes that the overall capital expenditure (Capex) among major Chinese internet companies is likely to increase, reflecting a commitment to AI and cloud infrastructure investments [65][68].