12 Aug 2024 CMB International Global Markets | Equity Research | Company Update Hua Hong Semi (1347 HK) Slowly but surely, gradual recovery is in play Hua Hong Semi announced 2Q24 results. Revenue was down 24.2% YoY but up 4.0% QoQ to US$479mn, slightly missing Bloomberg consensus by 2.0% and our estimates by 1.6%. The moderate sequential growth was a result of growing wafer shipments (+8.4% QoQ) partially offset by continued downward ASP (-3.5% QoQ). GPM increased QoQ to 10.5% (vs. 6.4%/27.7% in 1Q24/2Q23) ...

12 Aug 2024 CMB International Global Markets | Macro Research | Economic Perspectives China Economy Deflation alleviated, yet demand remains soft CPI growth rebounded and beat market expectations in July as food price notably surged amid supply disruptions caused by high temperature and flooding in some regions. Consumer demand remained soft as core CPI growth declined. Tourism service price sharply rebounded amid vigorous travel demand in the summer holiday, but vehicle and clothing prices continued to dec ...

Investment Rating - The report indicates a stable investment rating for the Sydney CBD office market, with prime yields unchanged for the first time since Q1 2022, holding firm at 6.0% in the core CBD precinct [1]. Core Insights - Prime net face rents increased by 2.1% in Q2 2024, with the Midtown precinct leading growth at 3.6%. Effective rents saw a slight increase of 0.3% due to rising incentives from 35% to 36% [1]. - Tenant demand is primarily driven by professional and financial services, which accounted for 67% of leasing activity, with core precincts representing 76% of lease volumes in H1 2024 [1]. - New supply in 2024 is projected to reach 188,771 sqm, with over-station developments making up the majority at 154,705 sqm, of which 80% is pre-committed [1]. Market Data Summary - **Core Market Data**: - Net face rent in the core precinct is $1,477/sqm, with a quarterly change of 2.5% and an annual change of 5.0%. The net effective rent stands at $888/sqm, with a 34% incentive and a vacancy rate of 10.5% [6]. - **Leasing Activity**: - Significant leasing deals include Link Market Services at $1,550/sqm in Midtown and Grant Thornton at $1,800/sqm in the Core precinct [9]. - **Recent Sales**: - Notable sales include 55 Pitt Street at $1,300 million with a yield yet to be determined and 5 Martin Place at $296.2 million with a yield of 6.0-6.25% [10]. - **Major Developments**: - Key projects under construction include Parkline Place in Midtown (47,565 sqm) and Metro Martin Place North Tower in the Core (75,000 sqm), both expected to complete in H2 2024 [11].

Industry Investment Rating - The report maintains an "Outperform" rating for Onto Innovation (ONTO US) and raises the target price by 6% [3] - Array Technologies (ARRY US) maintains an "Outperform" rating but cuts the target price by 6% due to project delays [3] - Bloom Energy (BE US) maintains an "Outperform" rating with strong execution and confidence in FY2024 guidance [4] - Quanta Services (PWR US) maintains an "Outperform" rating but cuts the target price by 6% [5] - Wharf Holdings (4 HK) is upgraded from "Underperform" to "Neutral" and raises the target price by 30% [7] Core Views - Onto Innovation is expected to benefit from GAA adoption and CoWoS/HBM expansion, with revenue forecasted to grow 31.9% YoY in 2025 [3] - Array Technologies faces significant project delays, leading to a 30-40% reduction in FY2024 guidance [3] - Bloom Energy has strong execution and expects larger business share in H2 2024, with data center-related power capacity agreements exceeding 300MW [4] - Quanta Services shows double-digit growth in multiple indicators in Q2 2024, driven by renewable generation and power grid infrastructure updates [5] - Wharf Holdings sees better recovery prospects in Hong Kong compared to Mainland China, with underlying profit up 9% YoY [7] Sector Summaries Technology - Onto Innovation's GAA orders are accelerating, with GAA expected to represent 50%/70% of advanced logic revenue in Q3/Q4 2024 [3] - Array Technologies' Q3 2024 revenue guidance is significantly below consensus due to project delays, with a backlog of over $2 billion [3] - Bloom Energy's Q2 2024 revenue exceeded expectations, driven by strong performance in product and service segments [4] Energy - Quanta Services' Electric Power Infrastructure segment performed well in Q2 2024, with a backlog of $17.2 billion, driven by AI adoption [5] - Bloom Energy continues to focus on domestic markets, with 83% of Q2 2024 revenue coming from domestic sales [5] Real Estate - Wharf Holdings' revenue from investment properties declined 5% YoY, with contracted sales in Mainland China dropping 48% YoY [7] - The company's gearing ratio remains low at 6.2%, with average interest costs declining from 4.9% in H1 2023 to 3.9% in H1 2024 [7] Financials - The report highlights the importance of building a financial system that supports technological innovation, with a focus on early-stage and long-term investments [11][12] - The Chinese government is accelerating the construction of a financial system that aligns with technological innovation, emphasizing the need for diversified financial services [11][12] Healthcare IT - Medical IT orders in Q2 2024 showed significant growth, with large orders frequently appearing, driven by policy support for healthcare informatization [16] - The "Public Medical Institutions Economic Management Year" activity is expected to further boost medical IT construction [16] Low-altitude Economy - Local governments in China are actively promoting the low-altitude economy, with Shenzhen aiming to build over 1,000 low-altitude aircraft takeoff and landing points by the end of 2025 [15] - Shanghai plans to develop a low-altitude economy industrial system, with a core industry scale exceeding 50 billion yuan by 2027 [15]

Equity Research Report Yum China (9987 HK) (%) Yum China HSI (48) (35) (23) (10) 3 Aug-23 Dec-23 Apr-24 Aug-24 Source: S&P Key data Target price (HKD) 359.30 Closing price (HKD as of 9 Aug) 263.20 Potential upside -/+ (%) 37 Mkt cap (HKDmn) 101,397 6m avg daily val (HKDmn) 147.52 52wk price range (HKD) 225.20-459.80 BVPS (USD) 15.00 Share performance | --- | --- | |--------------------------------|------------------------------| | Analyst SAC No. S0570524050001 | FAN Junhaofanjunhao@htsc.com | | SFC No. BDO ...

Investment Rating - Investment Rating: BUY [2] - Target Price: HKD 14.06 [2] Core Insights - Super Hi International is expected to maintain a steady revenue growth trajectory, with projected revenues of USD 686.36 million in 2023, increasing to USD 1,075 million by 2026, reflecting a compound annual growth rate (CAGR) of approximately 14.71% [4][11] - The company is experiencing operational improvements, with a notable increase in table turnover rate (TTR) to 3.8x in 1H24, up from 3.3x in 1H23, indicating enhanced efficiency in restaurant operations [5][8] - Despite facing forex losses and increased expenses, the company is expected to achieve a low single-digit net profit margin (NPM) in 1H24, with an adjusted net profit estimated at USD 12 million [5][6] Financial Performance - Revenue for 2022 was USD 558.23 million, with a projected increase to USD 686.36 million in 2023, representing a year-over-year growth of 22.95% [4][11] - The net profit attributable to the parent company is expected to turn positive in 2023 at USD 25.65 million, following a loss of USD 41.25 million in 2022 [4][11] - The diluted earnings per share (EPS) is projected to improve from a loss of USD 0.07 in 2022 to a profit of USD 0.04 in 2023, with further growth anticipated in subsequent years [4][11] Store Expansion and Strategic Developments - As of 1Q24, Super Hi operated 119 stores, with plans for accelerated expansion, indicating a commitment to increasing market presence [6][7] - The appointment of a new CEO, previously from Haidilao International, signals a strategic focus on enhancing earnings growth and operational efficiency [6][7] - The company is diversifying its offerings with new restaurant formats, such as Muslim hotpot and noodle restaurants, which may contribute to a second growth curve [6][7]

Equity Research Report Foxconn Industrial Internet (601138 CH) AI Server Revenue Multiplied, 1H24 Earnings Hit Record High Huatai Research Announcement Comment Rating (Maintain): BUY Target price (RMB): 30.00 12 August 2024 │ China (Mainland) Consumer Electronics 1H24: revenue/NP hit record high on robust AI server demand growth FII has released its preliminary earnings results, with 1H24 revenue/attributable net profit (NP) of RMB266,091/8,739mn (up 28.7/22.0% yoy), which put the figures for 2Q24 at RMB147 ...

Investment Rating - The investment rating for New Hope Liuhe is maintained at OVERWEIGHT with a target price of RMB10.55, indicating an expected outperformance compared to the benchmark [1][6][7]. Core Insights - The report highlights that the private placement plan, revised to raise RMB3.8 billion, aims to enhance biosecurity at pig farms and repay bank debts, which is expected to improve the company's debt-to-asset ratio and support high-quality growth [2][3]. - The company has seen a reduction in pig farming costs and improved profitability in its feed operations, leading to an upward revision of the profit forecast for 2024 to RMB1.14 billion [1][3]. - The anticipated recovery in the balance sheet is supported by strategic investments and divestments from non-core segments, contributing significantly to profits [2][3]. Summary by Sections Financial Performance - Revenue for 2024 is projected at RMB120.13 billion, reflecting a decrease of 15.22% from 2023, while net profit is expected to rise to RMB1.14 billion, a significant increase of 356.27% compared to 2023 [5][12]. - The earnings per share (EPS) is forecasted to be RMB0.25 for 2024, with a return on equity (ROE) of 4.49% [5][12]. Cost Management - The total breeding cost is estimated to decrease to RMB15.5 per kilo in 2Q24, down RMB1.9 per kilo quarter-on-quarter, driven by lower feed prices and improved farming performance [3][12]. - The domestic feed segment is expected to contribute RMB700-1,000 million in annual profit over the next two years, with overseas feed output projected to exceed 6 million tonnes [3][12]. Market Position - The company is strategically focusing on hog and feed segments, aiming for high-quality growth, which is expected to yield good profits in pig farming for the second half of 2024 [3][12]. - The stock is valued at 1.85 times the estimated book value for 2024, which is above the average of its peers at 1.22 times [1][6].

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The report highlights a mixed economic outlook for China, with higher Consumer Price Index (CPI) but weaker export growth and property sales [3][4][5] - The People's Bank of China (PBC) is expected to implement further monetary policy support to stimulate credit demand and economic activity [5][6] Economic Activity - New property sales in 30 major cities declined by 19% year-on-year in the first 10 days of August, indicating continued weakness in the real estate sector [2][9] - The full month of July saw auto retail sales decline narrow to 2% year-on-year, while steel production fell by 6.5% year-on-year [2][12] Inflation and Prices - CPI increased to 0.5% year-on-year in July, driven by food inflation, while Producer Price Index (PPI) remained unchanged at -0.8% year-on-year [3][15] - Food prices, particularly pork and vegetables, saw significant increases, contributing to the overall rise in CPI [3][15] Trade and Balance of Payments - Export growth slowed to 7% year-on-year in July, while import growth surged to 7.2% year-on-year, indicating a shift in trade dynamics [4][19] - The current account surplus expanded to $55 billion in Q2, with a notable increase in the goods surplus [4][19] Policy Developments - The PBC plans to enhance counter-cyclical policy measures and is likely to cut policy rates and reserve requirement ratios further [5][6] - The PBC is also focusing on improving the transmission of monetary policy to support economic recovery [5][6]

ab 12 August 2024 Global Research and Evidence Lab What's happening to Quant? Factor Performance and Valuations Factor Performance In this weekly publication, we show how factors have been performing at a regional level and globally. The purpose of this report is to provide an up-to-date snapshot of how factors have been performing on a short-term horizon based off our daily factor returns database, and to track what styles are and are not working during this turbulent period in markets. Styles We look at f ...