Investment Rating - The report maintains a "BUY" rating for Weichai Power, with a revised target price of RMB20.40, up from RMB17.80, indicating a potential upside of 25.4% from the current price of RMB16.27 [2][3]. Core Insights - Weichai Power's net profit for 2023 increased by 84% year-on-year to RMB9 billion, aligning with earlier profit forecasts [2]. - The company declared a final dividend of RMB0.293 per share, raising the payout ratio to 50%, up from 45% in 2022 [2]. - The positive outlook is supported by factors such as the replacement cycle, increased sales of gas trucks, and export growth, which are expected to drive sales growth in the heavy-duty truck (HDT) industry in 2024 [2][3]. Financial Performance Summary - In 4Q23, Weichai's net profit rose 58% year-on-year to RMB2.5 billion, driven by a 20% increase in revenue to RMB53.6 billion and a gross margin expansion of 3.3 percentage points to 23.7%, the highest since 4Q18 [2][6]. - The engine segment saw a revenue increase of 55% year-on-year to RMB60.8 billion, with segment profit surging 1.7 times to RMB7.7 billion due to a 5.5 percentage point margin expansion [2][3]. - The automobiles and components segment turned profitable in the second half of 2023, recording a profit of RMB610 million compared to losses in previous periods [2]. - The forklift and supply chain solutions segment reported a tenfold increase in profit to RMB4.9 billion in 2023, reflecting a recovery [2][3]. - Agricultural machinery revenue decreased by 9% year-on-year to RMB16.2 billion, but the segment margin improved by 1 percentage point to 4.1%, resulting in a 23% increase in segment profit [2]. Earnings Forecast - The report revises the earnings forecast for 2024 and 2025 upwards by 19% and 20%, respectively, primarily due to higher margin assumptions across various segments [2][3]. - Revenue projections for 2024E and 2025E are set at RMB236.3 billion and RMB250.1 billion, respectively, with expected adjusted net profits of RMB12.1 billion and RMB13.1 billion [3][18]. Valuation - The SOTP-based target price for Weichai Power is set at HK$22/RMB20.4, reflecting a valuation methodology based on EV/EBITDA multiples [10]. - The report highlights that Weichai's core business is valued at an EV/EBITDA multiple of 6.5, contributing significantly to the overall equity value [10].

Investment Rating - The report maintains a "BUY" rating for FIT Hon Teng with a target price (TP) raised to HK$2.42, reflecting a 19.3% upside from the current price of HK$2.03 [5][19]. Core Insights - The report highlights opportunities in the US$1.7 billion server connector and cable market, driven by increased demand for next-generation high-speed connectivity in AI servers for FY24/25E [2][3]. - Management expects a 15-20% year-over-year growth in the networking/server segment for FY24E, with AI server-related revenue projected to reach 8-10% of FY24E sales, up from 1% in FY23 [2][3]. - The report anticipates FIT's net profit to grow by 55% and 27% year-over-year in FY24 and FY25, respectively, supported by the ramp-up of AI server connectivity products and consolidation of the Voltaira auto business [2][3]. Financial Summary - Revenue is projected to increase from US$4.196 billion in FY23 to US$4.715 billion in FY24, representing a 12.4% year-over-year growth [18][22]. - Net profit is expected to rise from US$170.3 million in FY23 to US$200 million in FY24, reflecting a 55.4% increase [18][22]. - Earnings per share (EPS) is forecasted to grow from 2.42 US cents in FY23 to 2.83 US cents in FY24 [18][22]. Market Position - FIT Hon Teng is positioned as a global leader in the server connector market, alongside competitors such as Amphenol, TEL, and Molex [2][3]. - The company is expected to capture a 20-30% market share in the global server connector and cable market, aiming for US$500 million in sales by FY25E [2][3]. Valuation Metrics - The report notes that FIT is trading at 9.2x/7.2x FY24/25 P/E, which is attractive compared to the historical average of 15x [3][19]. - The new target price of HK$2.42 is based on an 11x FY24E P/E, reflecting a 33% discount to the 5-year historical average [19].

M N 25 Mar 2024 CMB International Global Markets | Equity Research | Company Update Henlius Biotech (2696 HK) Anticipating sustained profitability  Profit turnaround driven by core business operations. Henliu’s FY23 revenue Target Price HK$18.67 increased 67.8% YoY to RMB5.40bn, driven by strong sales of HANQUYOU (Previous TP HK$18.67) (trastuzumab biosimilar) and serplulimab (PD-1). HANQUYOU recorded Up/Downside 31.8% RMB2.74bn revenue in FY23, +58% YoY. We think HANQUYOU may be free from Current Price HK ...

M N 25 Mar 2024 CMB International Global Markets | Equity Research | Company Update AAC Tech (2018 HK) Solid outlook for PSS merger & optics margin recovery; Maintain HOLD on fair valuation Target Price HK$22.44 AAC reported FY23 revenue of RMB20.4bn (-1.0% YoY) and net income of RMB740mn (-9.9% YoY), above consensus estimates mainly due to exchange (Previous TP HK$14.04) gains and other income. FY23 GPM came in at 16.9%, largely in line, and 2H23 Up/Downside (10.2%) GPM recovered to 19.2% (+1.4ppts YoY/+5. ...

M N 25 Mar 2024 CMB International Global Markets | Equity Research | Company Update Baozun (BZUN US) GAP revitalization making good progress Target Price US$4.93 Baozun delivered mixed 4Q23 results with in-line revenue (+9% YoY) but soft (Previous TP US$6.90) bottom line. For 1Q24E, we expect a low-single-digit YoY decline in revenue, with Up/Downside 113.0% a net loss position, for slower BEC (Baozun E-commerce) recovery with soft Current Price US$2.30 consumption sentiment. Despite that, BBM (Baozun Brand ...

Investment Rating - The report maintains a "BUY" rating for Intron (01760.HK) with a target price of HKD 2.85 per share, down from HKD 6.13 [2][10]. Core Insights - Intron reported a year-on-year revenue increase of 20.1% to RMB 5,802.3 million for FY 2023, but the gross margin fell by 2.9 percentage points to 18.7%, which was lower than estimates [3][4]. - The company experienced a significant decline in net profit, retreating by 23.0% year-on-year, attributed to increased R&D expenses and a competitive pricing environment [4][10]. - The revenue growth was driven primarily by NEV Solutions, but competition led to manufacturers opting for lower-cost solutions, impacting growth in advanced driver-assistance systems (ADAS) [4][10]. - A shift in pricing strategy was noted, with a gross margin of 17.1% in the second half of 2023, indicating adjustments to cope with market pressures [4][10]. - The report anticipates continued challenges in 2024, with profit margins expected to remain under pressure due to lower gross margins and high R&D expenses [4][10]. Financial Summary - Revenue projections for the next few years are as follows: RMB 6,840.5 million in 2024, RMB 7,524.0 million in 2025, and RMB 8,174.4 million in 2026, reflecting a year-on-year growth rate of 17.9%, 10.0%, and 8.6% respectively [15]. - The gross profit is projected to increase from RMB 1,083.6 million in 2023 to RMB 1,247.8 million in 2024, with gross margins expected to stabilize around 18.8% in 2026 [15][17]. - The net profit is forecasted to decline significantly in 2024, with estimates of RMB 219.4 million, before recovering to RMB 301.3 million in 2025 and RMB 398.7 million in 2026 [15]. Operational Outlook - The report indicates a cautious operational outlook, with estimates cut by 51% to 58% due to ongoing difficulties, including lower gross margins and increased financial expenses [4][10]. - The company is expected to face a tightening working capital situation due to a longer cash conversion cycle and high R&D expenses [13][17].

Investment Rating - The report maintains a "BUY" rating for Greentown Management with a target price of HK$ 9.37, reflecting a 13x 2024E PE [2][4]. Core Insights - Greentown Management achieved a net profit growth of +31% YoY in FY23, with a maintained dividend payout ratio of 100%, resulting in an 8% dividend yield [2][5]. - The company is expected to guide industry-leading growth with a revenue CAGR of +20% and net profit CAGR of +25% over the next three years, potentially outperforming the broader property market [2][8]. - The company's adaptability in business restructuring has been highlighted as a key factor in its strong performance despite a sluggish property market [2][8]. Financial Performance Summary - FY23 results showed revenue of RMB 3,302 million, a 24.3% increase YoY, and attributable net profit of RMB 974 million, up 31% YoY [3][5]. - Gross profit margin remained stable at 52%, with a slight decrease in commercial project management (PJM) margin to 52% and an improvement in government PJM margin to 45% [5][12]. - The company reported a net margin of 29.5% in FY23, reflecting a 1 percentage point increase from the previous year [5][12]. Future Projections - Revenue is projected to reach RMB 4,048 million in FY24, with a YoY growth of 22.6%, and net profit is expected to be RMB 1,250.9 million, reflecting a 28.5% increase [3][7]. - The company has a billable contract value of RMB 25 billion, with an expected annual increase of approximately RMB 10 billion [2][8]. - The forecast for net profit in FY26 is RMB 1,897.3 million, indicating a continued growth trajectory [3][12]. Market Position and Strategy - Greentown Management has expanded its business into non-residential projects, which accounted for 15% of new contracts in FY23, in response to a contracting residential market [2][8]. - The company has successfully maintained its market share in the property management sector, with newly contracted gross floor area (GFA) increasing to 35.3 million square meters in FY23 [10][11]. - The report emphasizes the company's asset-light model and high cash flow as significant advantages in the current market environment [2][8].

Investment Rating - The report maintains a "BUY" rating for Zhejiang Dingli with a target price of RMB70, representing an upside of 24.8% from the current price of RMB56.10 [2]. Core Insights - Zhejiang Dingli plans to invest RMB1.7 billion to build a new production base for 20,000 units of new energy aerial work platforms (AWP), which is expected to enhance its global competitiveness [2]. - The new capacity is projected to contribute approximately RMB2.5 billion in annual sales once operational, with completion expected in 36 months [2]. - The company has sufficient internal resources to finance the capital expenditure without needing equity financing [2]. Financial Performance Summary - Revenue is expected to grow from RMB5,445 million in FY22 to RMB6,267 million in FY23, and further to RMB7,508 million in FY24, reflecting a year-on-year growth of 15.1% and 19.8% respectively [9]. - Net profit is projected to increase from RMB1,257 million in FY22 to RMB1,693 million in FY23, and RMB1,963 million in FY24, indicating a growth rate of 34.7% [9]. - The earnings per share (EPS) is forecasted to rise from RMB2.48 in FY22 to RMB3.34 in FY23, and RMB3.88 in FY24, showing a year-on-year growth of 34.7% [9]. Capacity Expansion and Market Position - The new production base will add 30% capacity by 2026-27, focusing on scissors lifts to meet rising demand for electric and advanced models in overseas markets [2]. - Dingli currently operates five production bases, and the new facility will require acquiring additional land in Deqing, Zhejiang [2]. - The company is positioned to benefit from the increasing demand for aerial work platforms, particularly in international markets [2]. Revenue Breakdown and Growth Projections - The revenue from core business segments is expected to grow significantly, with boom lifts projected to generate RMB2,250 million in FY24 and scissor lifts expected to reach RMB4,419 million [4]. - The average gross margin for the core business is anticipated to improve from 29.4% in FY22 to 36.5% in FY24 [4]. - The overall revenue growth rate is projected to stabilize around 15.2% in FY25, indicating sustained demand and operational efficiency [12].

Market Outlook - Upbeat market sentiment is expected to continue, with inflation perceived to be slowing and growth holding steady[18] - The risk of resurgent inflation could eventually impact market sentiment negatively[18] Macro Risk Management - Sticky inflation and higher interest rates are key factors in managing macro risks, necessitating a dynamic portfolio approach[15] - Market pricing of future Fed policy rates indicates expectations for rate cuts, but deeper cuts may not materialize in the long term[23] Economic Growth Trends - U.S. economic activity remains below pre-COVID trend growth rates, indicating a lower growth trajectory[29] - Japan's economic recovery is characterized by rising wages and mild inflation, supporting a cautious policy pivot from the Bank of Japan[35] Investment Strategies - Overweight positions in U.S. and Japanese equities are favored due to strong earnings growth and supportive monetary policies[42][67] - Preference for short-term bonds is advised due to uncertain inflation and market volatility, while long-term U.S. Treasuries are viewed neutrally[43][48] Sector Insights - The technology sector's growth, particularly in AI, is expected to drive above-benchmark returns in U.S. equities[59] - Private credit is seen as a potential growth area as banks retreat from lending, offering attractive returns relative to credit risk[46]

M N 22 Mar 2024 CMB International Global Markets | Equity Research | Company Update Innovent Biologics (1801 HK) More than obesity  Strong product sales in FY23. In FY23, Innovent recorded total revenue of Target Price HK$55.00 RMB6.21bn, including RMB5.73bn product sales revenue (+38.4% YoY), in line with (Previous TP HK$57.35) our expectation. Innovent had a strong 2H23, with product sales +33.1% HoH vs the Up/Downside 44.4% first half. As per Eli Lilly, total sales of sintilimab in FY23 reached US$393.3 ...