Investment Rating - The report assigns a "Buy" rating for BYD Co. with a 12-month price target of Rmb424 for A shares and HK$416 for H shares, indicating an upside potential of 11.3% for A shares and a downside of 2.2% for H shares [11][12]. Core Insights - The impact of BYD's "618" promotions on its sales may be less severe than initially feared, as the price reductions include existing government and OEM trade-in subsidies [2][3]. - The promotion affects 12 models with an average price reduction of Rmb10k, translating to a 9% discount, which could lead to an estimated Rmb2.6 billion impact on BYD's top line, equating to 5% of the projected net profit for 2025 [3][4]. - If competitors follow suit with similar pricing strategies, the potential impact on BYD could escalate to Rmb12.4 billion [4]. Summary by Sections Promotion Impact - BYD's "618" promotions involve discounts on 22 models, primarily priced below Rmb200k, with limited-time pricing until the end of June [1]. - The average blended ASP of the 12 models affected is Rmb114k, and these models accounted for significant portions of BYD's volume, revenue, and gross profit in Q1 2025 [3]. Financial Estimates - Following the promotion announcement, net profit estimates for 2025E-2027E have been reduced by 3%-5%, and target prices have been adjusted downwards by 3% [6]. - The report provides updated revenue forecasts, projecting Rmb777.1 billion for 2025, with a gradual increase to Rmb1.18 trillion by 2027 [11]. Competitive Landscape - The report highlights that traditional OEMs dominate the NEV sales volume mix in the below Rmb200k segment, indicating a competitive pricing environment [5][10]. - BYD's market position is reinforced by its strong competitive moat due to its vertical integration business model, positioning it as a leading global auto OEM [8].

Investment Rating - The investment rating for Huafeng is not explicitly stated in the provided documents, but there is a positive outlook on the company's performance and growth potential in the AI server market [2][4][8]. Core Insights - Huafeng's management is optimistic about the demand growth for high-speed line modules and backplane connectors for AI servers, expecting to ramp up production capacities in the second quarter of 2025 [1][4]. - The company is expanding its customer base to include more Chinese server brands and cloud service providers, indicating a strategic move to diversify its market presence [1][8]. - The positive outlook on Huafeng aligns with the broader positive sentiment regarding the China AI supply chain and advanced semiconductor nodes, suggesting a favorable environment for growth [2][4]. Summary by Sections Company Profile - Huafeng Tech (688629.SS) specializes in connectors and interconnection solutions for servers, industrial applications, and automotive sectors, with a focus on high-speed backplane connectors and line modules ranging from 10GB/s to 112GB/s [3][4]. Demand and Production Capacity - The demand for high-speed line modules is driven by the AI server market, with Huafeng's products currently in mass production for 56G and 112G applications, and development ongoing for 200G/224G products [4][9]. - The company has invested in six production lines for high-speed modules, with expectations for production to stabilize in the second half of the year as capacity ramps up [9]. Strategic Partnerships - Management sees potential for partnerships with Chinese server brands and cloud service suppliers, aiming to generate revenue from a more diversified customer base this year [8][9].

Investment Rating - The report assigns a "Buy" rating to GigaDevice, indicating a positive outlook for the company's stock performance [1][10][14]. Core Insights - GigaDevice is expected to enter a new growth cycle driven by product expansion into specialty DRAM, with strong EPS growth anticipated from market share gains in China [10]. - The NOR flash and MCU segments are projected to remain stable, with a modest recovery expected into 2025-2026 [10]. - The pricing for specialty DRAM has started to recover, driven by customer restocking and supply reductions as incumbents exit the legacy DRAM segment [4][10]. NOR Flash - Pricing for NOR flash is expected to be stable in 2025, with healthy near-term demand supported by consumption subsidies and increased content opportunities driven by AI [2]. - The automotive NOR flash market is projected to grow significantly, with a year-on-year increase of 40%-50%, although sales remain at a relatively low base [2]. MCU - MCU pricing is anticipated to remain largely stable in 2025, with growth driven by industrial customers' restocking demand and new market expansions [3]. - The automotive MCU sales are expected to take an additional year or two to reach meaningful scale due to the time required for product testing and qualifications [3]. Specialty DRAM - Specialty DRAM pricing has bottomed out and started recovering since March, with double-digit percentage increases observed in DDR4 8Gb and 4Gb products [4][7]. - Demand for specialty DRAM is expected to be bolstered by China's consumption subsidies on electronic products and new product expansions [7]. Customized DRAM - GigaDevice's customized DRAM leverages existing DDR4 production processes tailored to customer requirements, focusing on specialty applications such as automotive and industrial sectors [8]. - Revenue contribution from customized DRAM is expected to be limited in 2025 but could become more significant in the second half of 2026 to early 2027 [8]. Financial Projections - The revenue forecast for GigaDevice shows a growth trajectory from Rmb7,356 million in 2025 to Rmb14,200 million by 2027, indicating a compound annual growth rate [9]. - The expected EPS is projected to increase from Rmb1.65 in 2025 to Rmb5.17 by 2027, reflecting strong earnings growth [14].

Investment Rating - The report maintains a "Buy" rating for Shennan Circuits, with a 12-month target price of Rmb152, indicating a potential upside of 40% from the current price of Rmb108.6 [10][13]. Core Insights - Shennan Circuits is positioned as a key beneficiary of China's domestic AI infrastructure investments, expecting robust revenue and net profit growth as local equipment vendors increase their server and networking shipments [10]. - The overall PCB capacity utilization rate is reported at over 90%, with AI-related capacity running at full production due to strong demand from AI servers and networking [3][10]. - The company is facing rising raw material costs, particularly for gold and copper-related materials, but management plans to pass some of these costs onto customers due to high demand [2][3]. Summary by Sections Raw Material Costs - Gold-related raw materials prices are increasing, driven by rising gold prices, while copper-related materials also face high cost pressures [2]. - Gold-related materials account for less than 10% of total procurement at Shennan, allowing some flexibility in cost absorption [2]. PCB Outlook - The demand for PCBs is robust, particularly from local AI applications, including AI accelerators and high-speed optical transceivers [3]. - Management anticipates an improving gross margin outlook into Q2 and Q3 of 2025 due to a favorable product mix driven by AI demand [3]. ABF Business Status - The Guangzhou ABF plant incurred a pre-tax loss of Rmb550 million in 2024, but management expects losses to narrow in 2025 with improved cost control and revenue growth [4][7]. - Monthly depreciation costs at the Guangzhou ABF plant are projected to remain below Rmb30 million, with current costs at Rmb25 million [7]. Financial Projections - Revenue projections show a growth trajectory from Rmb17.9 billion in 2024 to Rmb26.7 billion by 2027, with net income expected to rise from Rmb1.9 billion to Rmb4 billion in the same period [8][10]. - The gross margin is expected to improve from 24.8% in 2024 to 27.2% by 2027, reflecting better operational efficiency and product mix [8].

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The U.S. tariff policy is impacting inventory and prices through supply shocks, leading to inflationary pressures in the short term and potential demand shocks in the long term. Current economic fundamentals in the U.S. remain stable, with manageable growth pressures [1] - Different industries are significantly affected by reciprocal tariffs, with companies facing increased costs, profit compression, and supply chain adjustments. Some firms are responding by enhancing product value, shifting to other markets, or optimizing production processes [1][5] - The industry capacity cycle is at a critical stage, with supply contraction providing investment opportunities for competitive firms that adapt to new conditions. A thorough analysis of the capacity cycle is essential for identifying potential investment opportunities [1][6] - Japan's rising government bond yields are raising concerns, potentially due to interest rate hikes by the Bank of Japan affecting yen arbitrage trading. Monitoring the trends in Japanese bond yields and related policy adjustments is crucial for assessing potential risks to global financial markets [1][7] Summary by Sections U.S. Tariff Policy and Economic Impact - The U.S. tariff policy's transmission logic involves supply shocks leading to inventory shortages and price increases, which subsequently affect monetary policy and economic growth. The current economic foundation in the U.S. is solid, suggesting that concerns about growth pressures may be overstated [8] - Analyzing U.S. inventory data is critical to understanding how long the economy can withstand tariff pressures, with estimates suggesting that overall inventory could last until around November if tariffs are reinstated [9][10] Industry Responses and Strategies - Companies are adopting technical measures and long-term strategies to cope with tariff uncertainties, including adjusting production layouts and expanding into non-U.S. markets. Low-value-added small enterprises are more adversely affected compared to larger firms [3][30] - The report highlights that the capital expenditure of non-financial enterprises has been in negative growth for four consecutive quarters, indicating a significant slowdown in fixed asset investment growth [3][33] Capacity Cycle and Investment Opportunities - The industry capacity cycle is currently in a critical phase, with supply-side adjustments creating investment opportunities for firms that can successfully navigate the challenges [6][32] - The report identifies that industries achieving supply-side clearing are performing better, with sectors like coal mining and industrial metals showing strong growth [32][39] Japanese Economic Situation - Japan's recent economic conditions have raised concerns, particularly regarding the significant rise in government bond yields, which may disrupt both domestic and global financial markets [7][40] - The report notes that the demand for long-term Japanese bonds has decreased, prompting the Japanese government to adjust its bond issuance strategy to better align with market demand [42]

Investment Rating - The report assigns a "Buy" rating to HG Tech with a 12-month price target of Rmb53, indicating an upside potential of 26.6% from the current price of Rmb41.86 [16][18]. Core Insights - HG Tech is expected to benefit from multiple growth drivers, including AI infrastructure demand for optical transceivers, overseas expansion in the sensors segment, and new product introductions in laser tools [1]. - The company anticipates robust revenue and profit growth across all three business segments in 2025-26, addressing investor concerns regarding non-AI business growth [1]. Segment Summaries Sensors Segment - The sensors segment contributed over 60% of the company's net profit in 2024, with key growth drivers identified as overseas expansion and new sensor product development [2]. - HG Tech has secured a US$100 million order from a European luxury car maker, marking a significant milestone in its overseas business [2]. - A production plant in Thailand has been established with an annual capacity of 2 million units for PTC heaters, complementing the 9 million units capacity in mainland China [2]. Laser Tools Segment - The laser tools segment includes high-power tools for various industries such as automotive, metal processing, and shipbuilding [3]. - Orders from shipbuilding customers have more than quadrupled, with current orders standing at Rmb700 million, compared to Rmb3.5 billion in total revenue for the laser tool segment in 2024 [6]. Optical Transceivers Segment - HG Tech primarily supplies optical transceivers to Chinese cloud companies, benefiting from increased AI spending [8]. - The company plans to ramp up production capacity to 1 million units per month by the end of 2025, up from 500,000 units in early 2025 [8]. 3D Printing Segment - The company has initiated a joint venture in 3D printing, which is seen as a long-term growth driver across various sectors including consumer electronics and automotive [7]. - HG Tech currently offers six 3D printing products capable of producing parts ranging from 100mm to 400mm in size [7].

Investment Rating - The report assigns a "Buy" rating to Huaqin Technology with a 12-month price target of Rmb81.80, indicating an upside potential of 19.9% from the current price of Rmb68.20 [9]. Core Insights - Huaqin Technology is expected to achieve double-digit revenue growth in 2025, driven by its data center business, consumer electronics, and new ventures in automotive electronics and robotics [1][2][3]. Summary by Sections Data Center Business - Huaqin's data center product lines include AI servers, general servers, and switches, primarily targeting China cloud service providers (CSPs). The company is optimistic about ramping up its AI server production, benefiting from market share gains and increased capital expenditures in AI infrastructure in China [2][3]. Consumer Electronics - The management anticipates double-digit year-over-year growth in its PC business for 2025. The smartphone segment is expected to benefit from growing market share in the Android ODM market. Additionally, there are growth opportunities in smart wearables, driven by brand customers expanding their market share and the introduction of AI-powered wearables [3][4]. New Business Ventures - Huaqin has made strategic moves into automotive electronics and robotics, including the acquisition of HCTRobot to enhance its robotics capabilities. The company has established an R&D team focused on developing industrial robotics prototypes and is working on a smart driving domain controller [4][7]. Financial Projections - The report projects Huaqin's revenue to grow from Rmb109.88 billion in 2024 to Rmb209.38 billion by 2027. EBITDA is expected to increase from Rmb3.28 billion in 2024 to Rmb8.43 billion in 2027, with EPS projected to rise from Rmb2.88 to Rmb6.31 over the same period [9].

Investment Rating - The report assigns a "Buy" rating to Lingyi (002600.SZ) with a 12-month price target of Rmb10.10, indicating an upside potential of 24.7% from the current price of Rmb8.10 [8]. Core Insights - Lingyi's management is optimistic about growth driven by the demand for precision components in consumer electronics and server cooling modules, particularly due to the shift in smartphone form factors and the rise of AI applications [1][2]. - The company is expanding its product offerings in foldable phones and AI glasses, targeting higher dollar content per device and anticipating increased shipments [3][6]. Summary by Sections Cooling / Thermal Modules for AI Smartphones - Lingyi provides over 200 SKUs of metal precision parts for major smartphone brands, focusing on high-end models using copper materials for 2025, with plans to introduce hybrid materials in 2026 [2]. - The company's factory in India is expected to meet client demand, contingent on the capacity expansion by assemblers in the region [2]. Foldable Phones - The company supplies metal middle frames and precision parts for foldable phones, with a positive outlook on the growing trend and plans to engage with global-tier smartphone brands [3]. AI Glasses - Lingyi manufactures structural parts and cooling components for AI/AR glasses, expecting significant upside as major global technology companies plan to launch their own versions [6]. Financial Projections - Revenue projections for Lingyi are Rmb44.21 billion in 2024, increasing to Rmb79.75 billion by 2027, with EPS expected to grow from Rmb0.25 in 2024 to Rmb0.73 in 2027 [8].

Investment Rating - The report maintains a Neutral rating for Maxscend with a 12-month target price of Rmb86, indicating an upside potential of 23.2% from the current price of Rmb69.81 [2][11]. Core Insights - Management is optimistic about the company's RF modules expansion, the ramp-up of in-house capacity utilization, and new growth opportunities in the long term [1][2]. - The smartphone market is anticipated to take time to transition to the next product cycle (6G), and the shift from fabless to fab-lite may also require time to enhance efficiency and profitability [2]. Summary by Sections 2025 Business Outlook - Management expects quarterly revenues and margins to increase sequentially in 2025, driven by RF modules expansion, improved smartphone seasonality in the second half of 2025, and normalizing depreciation as utilization rates rise [3]. - Inventory levels are projected to decline but remain relatively high due to geopolitical tensions [3]. Xinzhuo Project Development Progress - The 6" and 12" wafer production lines have commenced mass production, with the 12" production line currently achieving a capacity of 4,000 wafers per month, aiming for 5,000 wafers per month by the end of 2025 [4]. - As capacity increases, the depreciation cost per wafer is expected to decrease, leading to margin improvements [4]. New Growth Opportunities - Management is positive about the potential of LEO satellite direct-to-cell functions, which could create additional RF module opportunities for Maxscend [8]. - There are also long-term prospects in high-end markets such as AI and robotics, allowing the company to leverage its in-house capacity more effectively [8].

Investment Rating - The report assigns a "Buy" rating to several companies related to the foldable phone and AI device supply chain, including SZS, Fositek, Lingyi, AVC, AAC, and Huaqin [17]. Core Insights - The report highlights a positive outlook for Lens Technology Co. (300433.SZ) as it expands its product offerings from smartphone components to emerging markets such as AI glasses and automotive components, which is expected to enhance profitability through improved utilization rates and specification upgrades [1][4]. - There is an anticipated increase in global foldable phone shipments and a rising demand for AI devices driven by generative AI use cases, aligning with the company's optimistic view on AI glasses and foldable phones [2][4]. Summary by Sections 2025 Outlook - Management is optimistic about growth in 2025, supported by new smartphone model launches from major customers, which is expected to improve utilization rates during traditionally slow seasons [4][8]. Tariffs' Impact - Tariffs are expected to have a minor impact on growth due to the company's shipping practices and global production sites in Vietnam, Thailand, Mexico, and China, allowing for flexible capacity adjustments [8][9]. New Business Expansion - Lens Tech aims to penetrate the automotive components market, targeting major OEMs with higher dollar content per vehicle, and has formed a strategic partnership with Rokid in the AI glasses sector, anticipating growth as market demand increases [9][4].