Equity Research Report Queclink Wireless (300590 CH) Earnings Grew Rapidly in 1H24, Profitability on the Rise 1H24 earnings in line with profit alert, profitability improving Queclink Wireless reported 1H24 results, logging revenue of RMB480mn (+12.7% yoy), attributable net profit (NP) of RMB100mn (+59.2% yoy), and recurring attributable NP of RMB90mn (+31.9% yoy, in line with its profit alert). For 2Q24, revenue/attributable NP/recurring attributable NP were RMB270/60/60mn, up 7.1/ 48.4/7.5% yoy, slowing v ...

Investment Rating - Maintain BUY rating for Shenzhen MTC with a target price of RMB 6 90 [2] Core Views - Shenzhen MTC reported robust 1H24 revenue and net profit growth with revenue reaching RMB 9 520mn (+23 07% yoy) and net profit at RMB 911mn (+24 04% yoy) [2] - The company's dual growth driver strategy focusing on multimedia and LED businesses is effective with LED industry chain revenue reaching RMB 2 584mn (+29 4% yoy) [2][4] - TV output recovery and increased market share in COB direct-view display business contributed to the strong performance [3][4] Financial Performance - 1H24 revenue from multimedia audio-visual products and operation services was RMB 6 936mn (+21% yoy) with over 5 4mn units of smart display terminals shipped [3] - LED business revenue was driven by product-mix upgrades and increased penetration of Mini LED COB direct-view display products (1H24 revenue: RMB 432mn) [4] - Gross profit margin (GPM) for 2Q24 improved by 0 1pp yoy due to stable TV panel prices and higher contributions from high-margin LED products [5] Future Projections - Revenue is expected to grow to RMB 20 762mn in 2024E (+20 94% yoy) and RMB 25 308mn in 2026E (+9 28% yoy) [6] - Net profit is projected to increase to RMB 2 094mn in 2024E (+31 86% yoy) and RMB 2 678mn in 2026E (+10 64% yoy) [6] - EPS forecasts for 2024E/2025E/2026E are maintained at RMB 0 46/0 53/0 59 [2] Valuation - The stock is valued at 15x 2024E PE above the Wind consensus-based peers' average of 11 7x [2] - Potential upside of 46% based on the target price of RMB 6 90 and closing price of RMB 4 71 as of 7 Aug [8]

Investment Rating - The investment rating for Bank of Hangzhou is maintained at OVERWEIGHT with a target price of RMB14.42, indicating a potential upside of 12% from the closing price of RMB12.93 as of 7 August 2024 [6][28]. Core Insights - In 1H24, Bank of Hangzhou experienced a revenue growth of 5.4% year-on-year and attributable net profits increased by 20.1% year-on-year, reflecting a strong performance with stable asset quality [1][2]. - The bank's total assets, loans, and deposits grew by 13.8%, 16.5%, and 13.7% year-on-year respectively, with significant increases in loan and deposit amounts compared to the previous year [2]. - The non-performing loan (NPL) ratio remained low at 0.76%, with a provision coverage ratio of 545%, indicating strong risk management capabilities [3][4]. Financial Projections - Projected earnings per share (EPS) for 2024, 2025, and 2026 are RMB2.91, RMB3.47, and RMB4.13 respectively, with a book value per share (BVPS) of RMB18.02 for 2024 [1][5]. - Revenue is expected to grow from RMB36.6 billion in 2024 to RMB41.8 billion in 2026, while net profit attributable to the parent is projected to rise from RMB17.3 billion in 2024 to RMB24.5 billion in 2026 [11][12]. Market Position and Strategy - Bank of Hangzhou operates in economically vibrant regions and focuses on corporate loans, particularly to government credits and state-owned enterprises, which supports its growth strategy [2][4]. - The bank has established a diversified shareholder base and has been a pioneer in tech-innovation banking, enhancing its competitive edge [4].

Investment Rating - The report assigns a Buy rating to Kweichow Moutai with a 12-month price target of Rmb2,098 [3][4] Core Investment Thesis - Kweichow Moutai is the largest player in the China spirits industry with a 20% value share in 2022 [3] - The company benefits from strong fundamentals, high visibility, and upside from channel reforms [3] - Near-term earnings drivers include wholesale and direct sales growth, product portfolio enhancement, and price hikes [3] - Long-term growth is supported by supply-demand gap, market-driven pricing system, and growth of Moutai-flavor spirits [3] Financial Performance and Estimates - 2Q24 revenue was Rmb37.0bn, up 17% YoY, with net profit of Rmb17.6bn, up 16.1% YoY [35][55] - Moutai Spirits revenue grew 13% YoY to Rmb28.9bn, while Series spirits revenue accelerated to 43% YoY at Rmb7.2bn [35][36] - i-Moutai generated Rmb4.91bn in spirits sales in 2Q24, up 11% YoY, exceeding expectations [55] - The company aims for a 75% dividend payout ratio for 2024-26, implying total shareholder return of Rmb219bn [56] Valuation and Price Target - The 12-month price target of Rmb2,098 is based on a 29.4x 2026E P/E, discounted back to 2024E year-end using a 9.8% CoE [4] - The target P/E includes a 40% premium for Moutai's leading position in China's spirits industry and strong returns profile [4] - Moutai is trading at 21x/18x 2024E/2025E P/Es with a 12% earnings CAGR in 2024E-26E [63] Product and Channel Performance - Wholesale channel sales grew 27% YoY in 2Q24, supported by a price hike in November 2023 [55] - Direct sales grew 6% YoY in 2Q24, contributing 40% of total spirits sales [55][59] - i-Moutai contributed 14% of total sales in 2Q24, with 531k bottles released in July, down 60% YoY [60] Market Trends and Pricing - Feitian Moutai's wholesale price increased by Rmb180 for original case and Rmb130 for unpacked bottles in July [78] - Channel inventory stands below 1 month, with shipments expected to increase for the Mid-Autumn Festival [78] - Non-standard SKUs like Jingpin and Zodiac Moutai maintain decent channel profitability [79] Production and Supply - Base spirits production volume declined YoY in 1H24, with Moutai base spirits down 12.3% and Series base spirits down 5.4% [60] - The company has implemented active shipment controls, particularly for Moutai 1935 and Zodiac (500ml) [60]

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 ...

Equity Research Report New Hope Liuhe (000876 CH) Private Placement Advanced, Debt-to-Asset Ratio to Improve Huatai Research 12 August 2024│China (Mainland)Agribusiness Announcement Comment Rating (Maintain): B/S to improve on private placement and profit enhancement Following the release of a draft private placement (PP) plan in December 2023, New Hope Liuhe (NH) recently published a revised version, cutting the fundraising amount from RMB7.35bn to RMB3.8mn. We expect that if the plan is implemented, it co ...

Investment Rating - The report assigns a 12-month rating of "Buy" for Centre Testing International (CTI) with a price target of Rmb16.60, while the current price is Rmb11.60 [5][17]. Core Insights - Centre Testing International reported a revenue increase of 9% year-over-year (YoY) to Rmb2.79 billion and a recurring net profit (NP) increase of 5% YoY to Rmb0.4 billion in H124, aligning with market expectations [2][4]. - The gross profit margin (GPM) improved by 1.6 percentage points YoY to 52.7% in Q224, attributed to a low base in Q124 and improvements in specific segments [2][3]. - The life science segment contributed 45% to H1 revenue, growing 22% YoY, driven by the third soil census, while the industrial product testing segment grew 14% YoY, contributing 20% to H1 revenue [3]. - The company did not provide new guidance, and investor reaction is expected to be neutral [4]. Financial Performance - H1 revenue contributions by segment include: - Life Science: 45% with a 22% YoY increase - Industrial Product Testing: 20% with a 14% YoY increase - Trade Assurance: 13% with a 9% YoY increase - Consumer Goods Testing: 17% with a 4% YoY decline - Pharma and Clinical Services: 5% with a 34% YoY decline [3]. - Forecasted revenues are projected to grow from Rmb5.571 billion in 2023 to Rmb6.319 billion in 2024, with net earnings expected to rise from Rmb787 million in 2023 to Rmb908 million in 2024 [6]. Valuation Metrics - The report indicates a forecast price appreciation of 43.1% and a forecast dividend yield of 0.9%, leading to a total forecast stock return of 44.0% [7]. - The company's market capitalization is Rmb19.5 billion (approximately US$2.72 billion) with an average daily trading volume of 16,783,000 shares [5][6]. Company Overview - Established in 2003 and headquartered in Shenzhen, China, Centre Testing International is a leader in third-party testing, inspection, and certification (TIC) services, operating over 150 labs in more than 90 cities worldwide [8].

22 July 2024 | 6:28PM BST 公众平：永木论委 Precious Analyst China's Structurally Resilient Gold Demand ■ The gold price set a new all-time high of $2,483/toz on Wednesday (Julys17) as expected Fed cuts are poised to bring Western capital back into:the gold market. Following rising interest from Western investors, and ounanalysis of structurally higher demand from central banks, we dive into the third major component of global gold demand: Chinese households. Jaan Struyyen man Sachs & Co. LLC ■ Physical Demand Domin ...

Investment Rating - The report assigns a "Buy" rating for Kweichow Moutai (600519.SS) with a 12-month price target of Rmb2,244.00, indicating an upside potential of 52.9% from the current price of Rmb1,467.39 [80]. Core Insights - Recent volatility in wholesale prices is attributed to deeper seasonal discounts via online platforms, waning speculative demand, increased direct sales, and weak retail sentiment during the Dragon Boat Festival [105][106]. - Moutai's wholesale prices have historically rebounded after significant drawdowns, indicating resilience in consumer demand despite current price fluctuations [106]. - The report highlights that Moutai offers the highest distribution profits among Chinese baijiu brands, with channel gross profits exceeding Rmb1,000 per bottle compared to less than Rmb100 for other spirits [106]. - The affordability ratio of Moutai's original-case wholesale price is at 41% of urban disposable income, aligning with the 10-year average, suggesting long-term support for price levels as urban incomes grow [106]. Summary by Sections Wholesale Price Trends - Recent measures by Moutai, including ceasing the open-case policy and controlling shipments, have led to a 10% increase in wholesale prices for unpacked and original case Feitian Moutai [115]. - The report notes that Moutai's shares have declined by 9.3% in June, contrasting with MSCI China's decline of 2.7% and CSI300's decline of 3.3% [105]. Online Sales and Market Penetration - Online sales in the spirits category remain under-penetrated, accounting for approximately 11% of total spirits retail sales in 2023 [5][126]. - Moutai's online sales have increased significantly, contributing 16.1% of its total revenue, while other brands like Wuliangye and Laojiao have lower online sales percentages [126]. Channel Actions and Market Dynamics - Moutai has implemented various channel actions to stabilize prices, including suspending direct sales to enterprise group-buy channels and controlling prepayments [115][143]. - The report emphasizes that the current market dynamics, including the actions taken by Moutai, are expected to enhance its valuation and provide a better investment opportunity [108].

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