Investment Rating - The report maintains a "BUY" rating for WuXi AppTec, with a target price (TP) revised down from RMB67.53 to RMB53.23, reflecting a 21.9% upside from the current price of RMB43.67 [1][2]. Core Insights - WuXi AppTec reported a 1Q24 revenue of RMB7,982 million, down 11.0% year-over-year (YoY), while the attributable recurring net profit increased by 7.3% YoY to RMB2,034 million. The adjusted non-IFRS net profit decreased by 18.3% YoY to RMB1,913 million [1]. - The company has upheld its revenue guidance for 2024, projecting a range of RMB38.3 billion to RMB40.5 billion, indicating a growth of 2.7% to 8.6% YoY, excluding revenues from COVID-19 commercial projects [1]. - The TIDES business segment showed significant growth, with revenue increasing by 43.1% YoY and a backlog growth of 110% YoY, with management expecting a 60% revenue growth for this segment in 2024 [1]. - The Clinical CRO&SMO segment also experienced a moderate recovery, with revenue growth of 11.0% YoY, driven by increased demand in China's clinical stage pharmaceutical R&D [1]. Financial Summary - For FY24E, revenue is projected at RMB38,074 million, a decrease of 5.6% YoY, with adjusted net profit expected to be RMB9,503 million, down 12.4% YoY. The company anticipates a recovery in FY25E and FY26E with revenue growth of 10.0% and 12.5% YoY, respectively [2][6]. - The adjusted EPS for FY24E is forecasted at RMB3.24, with a P/E ratio of 13.5x [2][10]. - The gross profit margin is expected to be 38.41% in FY24E, slightly declining from previous years, while the operating margin is projected at 25.00% [6][10]. Market Position - WuXi AppTec added over 300 new clients in 1Q24, maintaining client acquisition levels consistent with 1Q23. Revenue from the top 20 global pharmaceutical companies reached RMB2.7 billion, accounting for approximately 34% of total revenue, marking a 4.2% YoY increase [1]. - The company faces challenges in the US market due to the impact of the draft Biosecure Act on acquiring new clients and orders [1].

| RESEARCH 6 May, 2024 Nameson (01982.HK) Current Price HK$ 0.69 HKD, mn 2019/ Absolute 27.8% 38.0% 91.3% 63.3% TARGET PRICE HK$ - Expansion of cashmere yarn business: Nameson (01982.HK) entered into a JV agreement with its largest cashmere supplier, Hebei Yuteng, to engage in the manufacturing of cashmere yarn in Vietnam, the total production capacity per annum is designed to be 500 - 550 tonnes. Given the >80% utilization rate of cashmere yarn in Hebei, an increase in production capacity in Vietnam suppor ...

Investment Rating - The report maintains a "Buy" rating for EuroEyes (01846.HK) with a target price of HKD 6.92, indicating an upside potential from the current price of HKD 5.36 [4][11][20]. Core Insights - EuroEyes' overall performance in 2023 slightly fell short of expectations due to operational challenges at the London Vision Clinic and delayed clinic openings in Hong Kong and Germany. Despite this, demand for presbyopia correction treatments remained strong, leading to a 37.1% increase in lens exchange surgery revenue to HKD 371.8 million [7][11]. - The aging demographic is expected to drive demand for trifocal lens exchange surgery, which is anticipated to be a key growth driver for the company. The Knightsbridge clinic is projected to reach breakeven within 6 to 9 months, while the Hong Kong flagship clinic may take 1 to 2 years [8][11]. - The company plans to open new clinics in Kiel and Wiesbaden, Germany, by the end of the first half of 2024, and will also construct consultation centers in Beijing and Shanghai to enhance existing surgical center utilization [9][11]. - EuroEyes is pursuing an aggressive M&A strategy with a budget of HKD 500 million to acquire established practices in Europe, America, and Asia Pacific, aiming to complete these acquisitions within 24 months [11][19]. - The company has initiated a share buyback program to repurchase up to 3% of its outstanding shares, reflecting confidence in its future prospects [11]. Financial Performance - EuroEyes achieved a record turnover of HKD 714.3 million in 2023, marking a 17.0% year-on-year increase. Adjusted gross profit rose by 23.2% to HKD 339.4 million, with a gross profit margin of 47.5% [16][47]. - The adjusted net profit surged by 40.0% year-on-year to nearly HKD 141.7 million, resulting in a net profit margin of 19.8% [16][47]. - Revenue is projected to grow to HKD 842.7 million in 2024, with a year-on-year growth rate of 18.0% [47].

M N 30 Apr 2024 CMB International Global Markets | Equity Research | Company Update Weichai Power (000338 CH) 1Q24 net profit +40% YoY in line; solid growth outlook Target Price RMB20.40 While Weichai Power (Weichai)’s revenue growth of 6% YoY in 1Q24 is below (Previous TP RMB20.40) our expectation, net profit of RMB2.6bn (+40% YoY) accounted for 21.4% of our Up/Downside 15.0% full-year estimates (run rate in 1Q23: 20.5%), which is still in line with our Current Price RMB17.74 expectation. The earnings grow ...

Investment Rating - The report maintains a "BUY" rating for Weichai Power with a target price of HK$22.00, indicating a potential upside of 33.3% from the current price of HK$16.50 [4]. Core Insights - Weichai Power's net profit for 1Q24 increased by 40% year-on-year to RMB2.6 billion, driven by margin expansion in both its core business and KION Group [2]. - The revenue growth of 6% year-on-year to RMB56.4 billion in 1Q24 was below expectations, but the earnings growth was in line with forecasts [2]. - The company is positioned as a sector top pick due to its significant market share in natural gas engines and the expected structural growth from high-speed large-bore engines [2]. Financial Performance Summary - 1Q24 revenue was RMB56.4 billion, with a gross margin expansion of 3.4 percentage points year-on-year to 22.1% [2][6]. - Pre-tax profit surged by 58% year-on-year to RMB4.2 billion, with the core business and KION reporting growth rates of 45% and 93% respectively [2]. - Operating cash flow improved significantly to RMB1.6 billion in 1Q24, compared to an outflow of RMB471 million in 1Q23 [2]. KION Group Performance - KION, in which Weichai holds a 46.5% stake, reported an adjusted EBIT of EUR227 million in 1Q24, a 46% increase year-on-year, attributed to easing cost pressures [2][7]. - KION has set a full-year adjusted EBIT target of EUR790-940 million, reflecting a potential growth of 0-19% year-on-year [2][7]. Market Position and Sales - Weichai's multi-cylinder engine sales grew by 13% year-on-year to 206,000 units in 1Q24, outperforming the industry average, which saw a decline of approximately 1% [2][8]. - The company holds a market share of around 18% in the multi-cylinder engine segment, an increase of 2.3 percentage points year-on-year [2][8]. Earnings Forecast - Revenue projections for Weichai Power are as follows: FY24E at RMB236.3 billion, FY25E at RMB250.1 billion, and FY26E at RMB260.0 billion, with respective year-on-year growth rates of 10.4%, 5.8%, and 4.0% [3][13]. - Adjusted net profit estimates are RMB12.1 billion for FY24E, RMB13.1 billion for FY25E, and RMB13.8 billion for FY26E, reflecting growth rates of 34.4%, 7.7%, and 5.5% respectively [3][13].

Investment Rating - The report maintains a BUY rating for BYD with a target price of HK$262.00, indicating a potential upside of 21.1% from the current price of HK$216.40 [3][7]. Core Insights - Despite a net profit of RMB 4.6 billion in 1Q24 falling short of prior forecasts due to significant R&D spending of RMB 10.6 billion, BYD is still expected to meet the FY24E net profit forecast of RMB 33 billion [7]. - The report highlights that BYD's gross profit margin (GPM) in 1Q24 was better than expected, suggesting that price cuts implemented in February 2024 could be offset by cost reductions from suppliers [7]. - The forecast for FY24 sales volume growth of 20% remains achievable, supported by recent stimulus measures and overseas expansion [7]. Financial Summary - Revenue projections for FY24E are set at RMB 700,048 million, with expected growth to RMB 800,518 million in FY25E and RMB 884,971 million in FY26E [5][10]. - Net profit estimates for FY24E are RMB 33,109 million, increasing to RMB 40,173 million in FY25E and RMB 45,095 million in FY26E [5][10]. - The gross margin is projected to be 20.1% for FY24E, slightly decreasing to 19.5% in FY25E and 19.3% in FY26E [5][10]. Earnings and Valuation - The report indicates that BYD's earnings quality has not been prioritized in 1Q24, with expectations for more disciplined management of SG&A and R&D expenses in upcoming quarters [7]. - The net profit per vehicle in 1Q24 was RMB 7,300, which is lower than the previous quarter, reflecting the impact of price cuts on profitability [7]. - The report maintains FY24-25E net profit estimates largely unchanged while revising up both GPM and SG&A [7].

Economic Outlook - China's economy has bottomed, with easier year-over-year comparisons and a reduction in the 'scarring effect' from COVID-19[1] - Trade within Asia is increasing, with 58% of Asian trade occurring within the region by 2021, projected to rise another 10%[17] Growth Drivers - The New Economy, including the Green Economy, AI, and industrial automation, constitutes about 20% of China's economy but accounts for 55% of GDP growth[3] - The green economy is growing at approximately 20% year-over-year, despite being only 10% of China's GDP[51] Challenges - The real estate sector remains overbuilt, with housing starts down nearly 60% from their peak, indicating a significant correction still in progress[32] - Savings as a percentage of household income have increased to 32.5%, up from 29.1% before COVID, indicating a need for restored consumer confidence[37] Investment Sentiment - Many investors are considering reducing their exposure to China from 10-12% to 5-6% due to uncertainty, despite improving fundamentals[47] - The potential for significant capital market reforms exists, which could attract both domestic and foreign investment[79] Policy Recommendations - Emphasis on supply-side reforms, urbanization incentives, and improved clarity around housing market reform is crucial for economic stability[76] - Modernizing the asset management industry is necessary to lower the cost of capital and enhance competitiveness on the global stage[80]

29 Apr 2024 CMB International Global Markets | Equity Research | Company Update Alphabet (GOOG US) 1Q24 earnings beat on efficiency gain; GenAI development on track Alphabet announced 1Q24 results: total revenue grew by 15% YoY to US$80.5bn, in line with consensus estimate; GAAP net income was up 57% YoY to US$23.7bn, 21% ahead of consensus estimate, thanks to Alphabet's organization optimization which leads to greater velocity and efficiency. The company further raised its shareholder return, announcing a ...

Investment Rating - The report maintains a BUY rating for GAC Group with a target price of HK$5.50, indicating a potential upside of 69.2% from the current price of HK$3.25 [5][10]. Core Insights - GAC Group's 1Q24 earnings were largely in line with prior estimates, with a net profit of RMB1.2 billion, which was about RMB166 million lower than previous forecasts. The company maintains its FY24E net profit forecast at RMB5.4 billion [2][11]. - The report expresses a conservative outlook on Aion's sales volume and profitability, suggesting that quality growth through brand upscale and overseas expansion is crucial for long-term development [2][3]. - Trumpchi's PHEV sales growth is highlighted as a potential area of investor interest, with management expecting substantial year-on-year net profit growth in FY24E despite a competitive pricing environment [2][3]. Financial Performance Summary - GAC Group's 1Q24 revenue was RMB21.6 billion, reflecting an 18.8% year-on-year decline, while gross profit was RMB1.1 billion, showing an 85.5% increase year-on-year [7][11]. - The company reported a gross margin of 5.2% in 1Q24, which is an improvement of 2.9 percentage points year-on-year [7]. - For FY24E, revenue is projected at RMB139.57 billion, with a gross profit of RMB7.21 billion and a net profit of RMB5.41 billion, indicating a 22.1% growth in net profit year-on-year [8][9]. Valuation and Estimates - The report employs a sum-of-the-parts (SOTP) valuation, estimating Aion's value at HK$3.3 per share and valuing joint ventures and associates at HK$2.2 per share [10]. - The FY24E equity income forecast is maintained at RMB8.3 billion, with expectations for flat performance in FY24E without restructuring burdens [2][3]. - The report includes FY26E estimates, projecting revenue growth to RMB152.64 billion, with a gross profit margin of 8.4% [8][9].

Investment Rating - The report maintains a HOLD rating for SANY Heavy with a new target price of RMB14.80, revised from RMB12.30, based on a 24x 2024E P/E ratio [2][3]. Core Insights - SANY Heavy's net profit for 2023 was RMB4.53 billion, a 6% year-over-year increase, but 12% below estimates. The 1Q24 net profit grew only 5% year-over-year to RMB1.58 billion, attributed to a revenue decline of 1% year-over-year [2][3]. - Concerns persist regarding a potential slowdown in exports, particularly in Europe, impacting overall performance [2][3]. - The report anticipates a moderate recovery in the Chinese market, leading to an 8% increase in 2025E earnings estimates, although these remain 24% to 29% below consensus [2][3]. Financial Performance Summary - **2023 Results**: Revenue decreased by 17% year-over-year to RMB17.9 billion, with a gross margin contraction of 1.9 percentage points to 25.6%. Net profit fell by 29% year-over-year to RMB480 million [2][3]. - **1Q24 Results**: Revenue dropped 1% year-over-year, but gross margin improved by 0.5 percentage points to 28.4%. Operating cash flow significantly improved to RMB4.38 billion compared to -RMB1.6 billion in 1Q23 [2][3]. - **Overseas Revenue**: In 2H23, overseas revenue (62% of total) grew 4% year-over-year to RMB20.8 billion, with Europe showing a 15% increase to RMB8.1 billion [2][3][7]. Valuation and Market Outlook - The target price of RMB14.80 reflects a valuation that is 0.5 standard deviations above the average P/E of 20x since 2017, indicating initial signs of stabilization in excavator sales in China [2][3]. - Upside risks include stabilization in property investment in China, while downside risks involve further declines in overseas demand [2][3].