Investment Rating - The investment rating for SMIC is Equal-weight [7]. Core Insights - SMIC's 1Q25 revenue was US$2.25 billion, reflecting a 2% quarter-over-quarter (Q/Q) increase and a 28% year-over-year (Y/Y) increase, driven by a 15% Q/Q growth in shipments due to geopolitical concerns, rising demand from consumption subsidies, and restocking in industrial and automotive sectors [2][5]. - The guidance for 2Q25 indicates a revenue decline of 4-6% Q/Q and a gross margin (GM) of 18-20%, down 2.5-4.5 percentage points Q/Q, attributed to a decline in blended average selling price (ASP) due to yield issues and rising equipment depreciation [3][5]. - Management expects the pressure on blended ASP to persist until Q3, with new equipment debugging taking time [3][5]. Summary by Sections Financial Performance - 1Q25 GM was 22.5%, up 0.1 percentage points Q/Q, exceeding market expectations by 2.1 percentage points and 1.8 percentage points, driven by a utilization rate (UTR) of 89.6% [2]. - Revenue projections for the fiscal years ending in 2025, 2026, and 2027 are US$10.155 billion, US$11.620 billion, and US$12.505 billion respectively [7]. Market Dynamics - The strong demand for AI inference is expected to drive revenue growth for SMIC's advanced nodes, although GM erosion from yield decline may negatively impact earnings performance [5]. - Management noted that rush orders from US customers are being observed as they build inventory for 2025 and 2026, with limited financial impact on SMIC due to capacity constraints and logistics bottlenecks [9]. Capacity and Investment - SMIC plans to expand capacity at a rate of an additional 50 kilowatts per month (kwpm) per year, with 82-85% of the US$7.5 billion capital expenditure in 2025 allocated for equipment purchases [9]. - R&D expenses are expected to account for 8-10% of revenue in the long run, despite a temporary reduction in Q1 due to rush orders occupying capacity [9].

Investment Rating - The investment rating for SMIC is maintained as "Buy" [7][8][11] Core Views - SMIC's 1Q25 revenue reached US$2.2 billion, reflecting a 28% year-over-year increase and a 2% quarter-over-quarter increase, aligning closely with consensus expectations [1][2] - The gross margin for 1Q25 was reported at 22.5%, exceeding both management guidance and market expectations, attributed to improved utilization rates [1][2] - The company is expected to continue significant capital expenditures to expand capacity in response to increasing demand from local clients [1][7] Summary by Sections Financial Performance - 1Q25 revenue was US$2,247 million, a 28% increase year-over-year and a 2% increase quarter-over-quarter [6] - Gross profit was US$506 million, with a gross margin of 22.5%, significantly higher than the previous year's 13.7% [6] - Operating income was US$310 million, representing a 12777% increase year-over-year [6] - Net income for 1Q25 was US$188 million, a 162% increase year-over-year [6] Capacity and Utilization - SMIC's capacity increased to 973k wpm (8-inch equivalent) in 1Q25, up from 948k wpm in 4Q24 [2][6] - Utilization rates improved from 85.5% in 4Q24 to 89.6% in 1Q25 [2][6] Future Guidance - For 2Q25, SMIC expects revenues to decrease by 4% to 6% quarter-over-quarter, while still projecting a year-over-year growth of 11% to 13% [6][7] - The gross margin for 2Q25 is guided to be between 18% and 20% [7] Investment Thesis - SMIC is positioned as the largest foundry in China, covering a wide range of technology nodes and applications, with a positive long-term growth outlook driven by local demand [7][8] - The shares are considered attractively valued, trading below historical average P/E ratios, with expectations of gradual margin recovery [7][8]

Investment Rating - The report maintains an "Overweight" (OW) rating for Maoyan (1896.HK) and Ali Pictures (1060.HK) due to their strong ticketing business and market share gains in content [4][32] - The rest of the companies are rated "Equal Weight" (EW) or "Underweight" (UW) based on weaker growth outlooks and stretched valuations [4][32] Core Insights - The 2025 China film box office forecast has been reduced from Rmb57 billion to Rmb49 billion, reflecting a 15.5% year-over-year increase and a 76% recovery [2][17] - The non-holiday box office market remains weak, with a significant decline in revenue from Rmb30 billion in 2018/2019 to Rmb10-20 billion during 2022-2024 [3][23] - The report highlights a concentration among producers and distributors in the blockbuster-driven market, with holiday box office accounting for 58-60% of total box office from 2022 to 2024 [3][24] Summary by Sections Industry Outlook - The report forecasts a 16% growth in the film box office for 2025, indicating a recovery trend [17][18] - The first quarter of 2025 saw a box office of Rmb24 billion, a 49% increase year-over-year, largely driven by the success of Nezha 2 [8][19] - The second quarter is expected to decline by over 25% year-over-year, with significant drops during the May Golden Week [8][20] Company Analysis - Maoyan and Ali Pictures dominate the film ticketing business with over 60% and 30% market share, respectively, and are also key players in film distribution [36][42] - The report raises revenue forecasts for Beijing Enlight by 40% for 2025-2027, reflecting the success of Nezha 2 and its expansion into IP derivatives [33] - Huace Film is expected to see a 40% year-over-year revenue growth in 2025, driven by a strong content pipeline [37] Market Dynamics - The non-holiday market has shrunk significantly, with foreign films' box office dropping from Rmb26 billion in 2017 to Rmb10 billion in 2024 [23][25] - The report notes that domestic blockbusters are primarily released during holiday periods, exacerbating the imbalance in the market [24][23] - Tariffs are expected to further weaken the non-holiday box office, with a forecast of Rmb9 billion for foreign films in the base case scenario for 2025 [25][26]

Investment Rating - The report maintains a "Buy" rating on Nari Tech and other domestic China opportunities, while downgrading Sungrow to "Neutral" [3][24]. Core Views - The report indicates a preference for domestic China opportunities, particularly in the grid technology sector, with a strong outlook for 2025E grid investment [2][3]. - The overall sector results for 1Q25 were largely in-line, with a median revenue change of -0% and net profit change of -6% compared to Goldman Sachs estimates [1][10]. - The report revises target prices by -14% to +13% based on 1Q25 results and forward-looking trends, rolling over the valuation base year to 2026E [1][43]. Summary by Sections 1Q25 Results Summary - 1Q25 sector results were largely in-line with 14 companies missing earnings, 13 in-line, and 5 beating expectations [1][10]. - The median gross profit margin (GPM), operating profit margin (OPM), and net profit margin (NPM) were -0.9pp, -1.7pp, and -0.5pp compared to Goldman Sachs estimates [11]. Demand Outlook - The report expects a weaker demand outlook for industrial automation in 2H25, lowering the growth expectation from flat to -4% year-on-year due to tariff impacts and uncertainties [12][16]. - Despite the challenges, a deep decline in demand is not anticipated, with government policies potentially providing support [14][20]. Domestic Opportunities - Nari Tech is highlighted as a preferred investment due to its strong growth guidance of 12% year-on-year for 2025, attributed to a robust backlog and favorable market conditions [24][46]. - The report emphasizes the potential benefits from government stimulus and the structural needs for smart grid investments in China [3][25]. AI Beneficiaries - The report continues to favor AI beneficiaries, particularly in the AI Data Centre (AIDC) space, with companies like Kstar and Envicool rated as "Buy" due to strong demand growth [2][34]. - The humanoid robot sector is also noted for its rapid R&D advancements, with companies like Sanhua being preferred for their product certainty and reasonable valuations [38][39]. Target Price Revisions - Target prices for the sector have been revised downwards by an average of -14% to +13%, reflecting the 1Q25 results and anticipated market trends [1][43].

Investment Rating - The report has lowered the average 2025 net profit growth forecast for covered banks to -5%, reflecting a decrease of 1 percentage point from previous estimates [15]. Core Insights - Negative net profit growth in 1Q25 for large SOE banks and CMB has led to stock price declines, prompting a reassessment of profit forecasts and target prices [1]. - Despite negative net profit growth, banks may still attract long-term funds due to limited downside on dividend yields compared to government bond yields [2][3]. - The report emphasizes the increasing importance of net profit growth in 1Q25, as investors have heightened expectations for shareholder returns following two years of excess returns [3][4]. - The report indicates that banks are facing challenges in achieving positive net profit growth in 2025 due to lower-than-expected net interest income (NII) and loan growth [11][15]. Summary by Sections Net Profit Growth - The average net profit growth forecast for covered banks is now -5% for 2025, with small banks BONB and BONJ expected to achieve 7% growth [15]. - Most banks are still releasing provisions, but not sufficiently to drive positive profit growth, and the potential for further provision releases is limited [5][15]. Dividend Payout Ratios - Banks may need to increase their dividend payout ratios to maintain stable dividends per share (DPS) amidst negative EPS growth [22][30]. - The report suggests that banks have the capacity to increase dividends, but their willingness remains uncertain [22][26]. Loan Growth and NIM - Loan growth for major banks is projected to be lower than previously expected, with NIM also declining more than anticipated [11][13]. - The report notes that while credit growth is expected to accelerate, overall loan demand remains weak due to external factors such as tariffs [13][40]. Fee Income and Consumer Finance - Some banks have reported better-than-expected growth in fee income, driven by bancassurance and fund sales [33]. - A potential recovery in consumer finance is anticipated in the second half of 2025, influenced by low base effects and banks seeking new business opportunities [31][34]. Stock Selection and Recommendations - Among large and medium-sized banks, CMB is viewed as having the least EPS dilution and the lowest required increase in dividend payout ratio, making it more capable of maintaining stable DPS [41]. - BONB is favored for its high growth potential relative to larger banks, while BONJ is rated Neutral due to ongoing convertible bond conversion processes [41].

Investment Rating - The report does not provide a specific investment rating for Espressif (688018.SS) as it is categorized as "Not Covered" [1]. Core Insights - Espressif is a local Wi-Fi chipset firm focusing on AIoT, energy, and industrial clients, leveraging RISC-V architecture for its products. The company is optimistic about growth in 2025, driven by product diversification and strong software capabilities [1][3][10]. - The company is expanding its product line to include Wi-Fi 7 and AI edge chipsets, aiming to capture a larger market share. A recent private placement plan was announced to fund this development [1][11]. - Espressif's products are primarily based on RISC-V architecture, which allows for lower royalty costs and in-house IP development. This aligns with a broader positive outlook on the RISC-V ecosystem in China [2][9]. Summary by Sections Company Overview - Espressif (688018.SS) is a fabless company providing Wi-Fi chipsets/modules for various applications, including consumer electronics and smart home solutions. The company integrates Bluetooth functionality and offers a comprehensive range of Wi-Fi SoC solutions [3][4]. Product Development and Market Outlook - The management is positive about the growth outlook for 2025, with expectations of a gross margin above 40% and plans to increase headcount by 10% to 15% for new product development [10]. - The company is focusing on upgrading its product offerings towards Wi-Fi 7, which features high throughput and low latency, suitable for high-end applications like AR/VR and HD video [11]. Competitive Positioning - Espressif's RISC-V based architecture provides a competitive edge with a broad product line that offers high performance and a favorable price-to-performance ratio. The company is also expanding into high-end solutions [2][4].

Investment Rating - The report indicates a stable investment outlook for the wealth management market, with an expected growth rate of approximately 8% for 2025, consistent with 2024 [1][9]. Core Insights - The wealth management market has shown signs of recovery in Q2, with a year-to-date growth rate nearing 5%, although this is weaker compared to previous years. Short-term indicators are trending towards normalization [1][2]. - Fixed-income products dominate the market, accounting for 75% of the total, with a total value of approximately 21.7 trillion. Short-term fixed-income products have seen significant growth, now representing 40.2% of the total [1][5]. - Regulatory scrutiny on valuation smoothing mechanisms is increasing, with expectations for compliance and market-based valuation systems to be established by the end of 2025 [1][7]. - The concentration of the wealth management market is rising, with the top 15 institutions holding 88% of the market share, reflecting a trend towards dominance by a few key players [3][15]. Summary by Sections Market Performance - The overall performance of the wealth management market in 2024 is expected to show a trend of lower growth initially, followed by recovery in Q2 due to improved liquidity and a recovering bond market [2]. - The growth rate for state-owned banks' wealth management is projected at 16.6%, outpacing joint-stock banks, while regional banks are expected to achieve the highest growth rate of 19.6% [1][12]. Product Structure and Risk Management - The reliance on valuation smoothing mechanisms has helped stabilize product performance, with a recent improvement in net asset values following a peak in March [4][6]. - The market is witnessing a shift towards short-term fixed-income products, which are becoming more prevalent, while the sales of structured products are declining [5][10]. Regulatory Environment - Regulatory bodies are emphasizing the need for fair and market-based valuation practices, with a focus on reducing risks associated with shadow banking [7][8]. - The anticipated regulatory changes are expected to enhance transparency and accountability in the wealth management sector [6][8]. Client Preferences and Trends - There is a notable preference among investors for low-volatility, stable products, with a significant increase in the popularity of wealth management products compared to traditional savings [27][29]. - High-value clients are growing at a faster rate than retail clients, indicating a shift in focus towards wealthier segments [29][30]. Future Outlook - The wealth management sector is expected to continue evolving, with a focus on enhancing digital capabilities and personalized advisory services to meet client needs [35][36]. - The overall trend indicates a gradual recovery in the wealth management market, driven by regulatory improvements and a more favorable economic environment [9][26].

Investment Rating - The report maintains a "Buy" rating for Sanhua, Shuanghuan, and a "Neutral" rating for LeaderDrive, Best Precision, and Moons' Electric [1][42][45][46][49]. Core Insights - The humanoid robot industry is experiencing rapid product iterations and increased R&D focus across various players, indicating a strong long-term total addressable market (TAM) potential despite uncertainties in near-term technological breakthroughs [1]. - The report forecasts 20,000 units of humanoid robots to be shipped in 2025 and 1.4 million units globally by 2035 [1]. - Domestic players are accelerating commercialization efforts, with several auto OEMs like Tesla, XPENG, and Xiaomi testing humanoid robots in their factories, aiming for mass production by 2025-2026 [2]. - The shift in R&D focus from hardware to robotic AI development is evident, with startups introducing various AI models trained on real data to enhance performance [2]. Product Progress - A small scale of commercialization is expected in 2025, with domestic players speeding up public sales of humanoid robots [2]. - Companies like ENGINEAI have started selling humanoid robots at competitive prices, with some models priced below RMB 200,000 [2]. - Major players are establishing production lines with capacities ranging from 10,000 to 50,000 units annually, adjusting expansion based on actual customer orders [6]. Software Development - High-quality real data is crucial for training robotic AI models, with startups focusing on developing their own AI systems [2]. - UBTech is optimizing its training strategy by combining real and simulated data to improve efficiency and reduce costs [2]. Hardware Innovations - The report highlights the emergence of new players in the humanoid robot component market, focusing on product differentiation [7]. - Companies like LeaderDrive and Shuanghuan are developing new reducer products and enhancing their manufacturing capabilities [7][29][31]. Supply Chain Dynamics - The supply chain for humanoid robots is expanding, with various component manufacturers reporting progress in R&D and sample testing [10]. - Companies like Sanhua and Tuopu are preparing for mass production of actuators and other components, targeting significant market shares [26][27]. Market Outlook - The humanoid robot market is projected to grow significantly, with various companies aiming to capture substantial market shares in their respective segments [42][45][46]. - The report emphasizes the importance of continuous innovation and adaptation in the rapidly evolving humanoid robot industry [2][6].

6 May 2025 | 1:27AM HKT Cambricon (688256.SS): 2025 private placement on AI chips and Software platform; R&D commitment to support long term growth; Buy Cambricon announced a 2025 private placement on May 1 (link), aiming to issue within 21m shares, or no more than 5% of current shares in exchange of no more than Rmb4,980m (US$685m) cash, to develop: (1) AI chips for generative AI, 58% of the funding, (2) Software for generative AI, 32% of the funding, and (3) supplement working capital, 10% of the funding. ...

Investment Rating - The report maintains an "Overweight" rating for BYD, with a target price of 600.00 HKD for BYD-H and 560.00 CNY for BYD-A [3][7][13]. Core Insights - BYD's Q1 2025 performance exceeded expectations, with a projected average profit per vehicle of 10,500 CNY, higher than the management's guidance of 10,000 CNY and market consensus of 9,800 CNY [1][4]. - The report highlights a 36% year-on-year revenue growth driven by a 60% increase in sales volume in Q1 2025, with a resilient gross margin rising from 19.4% in 2024 to 20.1% in Q1 2025 [5][6]. - BYD's global delivery volume is expected to reach 6.5 million units by 2026, with overseas deliveries accounting for approximately 1.5 million units [7][13]. - The company aims to increase its market share in the global light vehicle market from 3% in 2023 to 7% by 2026, while maintaining a 22% share in the new energy vehicle market [7][13]. Summary by Sections Financial Performance - Q1 2025 revenue increased by 36% year-on-year, with net profit doubling compared to the previous year, reaching 9,155 million CNY [5][6]. - The average profit per vehicle, including BYD Electronics, was 9,148 CNY in Q1 2025 [5][6]. Market Strategy - BYD's strategy includes a focus on high-end models, with an expected 20% of domestic sales coming from vehicles priced above 200,000 CNY, up from 14% last year [4]. - The company plans to expand its production capacity with new factories in Thailand, Indonesia, Brazil, Hungary, and Turkey, which will collectively add over 500,000 units of capacity [4][7]. Future Projections - BYD's sales volume is projected to grow from 4.2 million units in 2024 to approximately 5.5 million units in 2025, representing a growth rate of about 30% [4][7]. - Long-term projections suggest that BYD could achieve global shipments of around 10 million vehicles by 2030, positioning itself as a leader in the global electric vehicle market [4][9].