Investment Rating - The report maintains a "Buy" rating for Cambricon with a 12-month target price of Rmb1,223, implying an upside of 73.8% from the current price of Rmb703.60 [9][11]. Core Insights - Cambricon announced a private placement aiming to raise no more than Rmb4,980 million (US$685 million) to develop AI chips and software for generative AI, with 58% of the funding allocated to AI chips, 32% to software, and 10% for working capital [1]. - The company's R&D spending is projected to increase significantly, with a 52% CAGR expected from 2025 to 2030, reaching Rmb17 billion (US$2.4 billion) by 2030 [1]. - Cambricon's AI chips are designed for various applications, including training foundation models and supporting multimodal AI tasks across multiple industries such as internet, cloud computing, and healthcare [2]. Summary by Sections AI Chips Development - The company plans to develop multiple types of AI chips, including those for training foundation models and large language model inferencing, highlighting its experience in commercializing AI chips [2]. - Current AI chips support mainstream open-source AI models, enabling tasks in vision, audio, and natural language processing [2]. Software Platform for Generative AI - Cambricon aims to create a software platform that enhances the adaptability and user experience of its AI chips, focusing on software-hardware co-optimization [3][7]. - The platform will include a flexible coding system, training, and inferencing capabilities, and will be compatible with major AI programming frameworks like TensorFlow and PyTorch [3][7]. Financial Projections and Dividends - The private placement is expected to result in no more than a 5% increase in shares, while net income is projected to grow at a 77% CAGR from 2025 to 2030 [8]. - Cambricon has outlined a cash dividend plan for 2025-2027, with payout ratios increasing from 20% to 80% as the company matures and capital expenditures change [8].

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].

Investment Rating - The investment rating for China TransInfo Technology is "Sell" with a target price of Rmb5.1, indicating an expected share price return of -39.5% and a total return of -39.2% [3][7]. Core Insights - The company reported a mixed performance in 1Q25, with revenue increasing by 2% year-over-year to Rmb1.6 billion, which was 18% above Bloomberg consensus estimates. However, the operating profit missed expectations, resulting in an operating loss of Rmb77 million [1][2]. - The gross margin expanded by 0.6 percentage points year-over-year to 29.7%, but this was still 4.6 percentage points below consensus estimates. Operating expenses were flat year-over-year at Rmb555 million, which was 34% higher than expected [1][2]. - Net profit for 1Q25 was Rmb221 million, significantly exceeding consensus estimates by 101%, primarily due to a gain from a fair value change in investments amounting to Rmb302 million [1][2]. Summary by Sections Financial Performance - 1Q25 revenue was Rmb1.609 billion, 17.9% higher than consensus estimates and 1.8% higher year-over-year. Gross profit was Rmb478 million, reflecting a 4% increase year-over-year [2][5]. - The operating loss of Rmb77 million resulted in an operating margin of -4.8%, which was 8.7 percentage points below consensus expectations [2][5]. - The net income of Rmb221 million marked a significant recovery from a net loss of Rmb58 million in the same quarter last year [2][5]. Valuation - The target price of Rmb5.1 is based on a price-to-earnings ratio of 19.0x for the second half of 2024 to the first half of 2025, aligning with the five-year sector average [7].

Investment Rating - The report maintains an Overweight (OW) rating for Zhejiang Supor with a price target (PT) of Rmb61, revised down from Rmb63 [2][20][21]. Core Insights - Supor's 1Q25 sales and earnings increased by 7.6% and 5.8% year-over-year, respectively, aligning with market expectations. The company is expected to outperform peers due to lower US sales exposure, a diversified production base, and fixed profit margins for OEM orders from Groupe SEB [2][10][20]. - The small appliance industry in China is anticipated to face uncertainties in both domestic and overseas demand in 2025. However, Supor's sales and earnings growth is forecasted to be 3.9% and 5.8% year-over-year, respectively, for 2025 [2][10][20][16]. Summary by Sections Financial Performance - Supor's 1Q25 results showed domestic sales growth of approximately 3% year-over-year, driven by an extended trade-in policy for small appliances. Export sales increased by 16% year-over-year due to front-loaded orders ahead of US tariff increases [7]. - The gross profit margin improved by 0.1 percentage points year-over-year to 23.9%, while the operating profit margin increased by 0.4 percentage points to 9.9% [7][9]. 2025 Outlook - Supor aims for positive growth in both revenue and earnings in 2025, targeting a stable net margin despite weak domestic consumption demand. The company anticipates a slowdown in export sales growth starting from 2Q25, maintaining a full-year growth target of around 5% [7][10]. - The impact of US tariffs is expected to be limited, as most products exported to the US are now produced in Vietnam, which benefits from a 90-day waiver period for tariff hikes [7][10]. Valuation - The report employs a DCF model to derive a price target of Rmb61, implying an 18x forward P/E ratio, with an assumed WACC of 8.0% and a terminal growth rate of 1.0% [11][21][22]. - Supor's strong cash-generating capability and low capital expenditure requirements (<1% of sales) support a high dividend payout ratio, estimated to be over 90% for 2025-26, translating to a 5% dividend yield [10][20].

Investment Rating - The investment rating for Ming Yang Smart Energy is Overweight, with an industry view classified as Attractive [6]. Core Insights - The financial results for 2024 showed a net profit of Rmb346 million, representing an 8.1% year-over-year decline, primarily due to gross profit margin pressure, lower-than-expected wind turbine generator (WTG) shipments, and reduced wind farm sales [2][4]. - The guidance for 2025 includes total shipments expected to reach 20GW, with 16GW onshore and 4GW offshore, alongside a projected recovery in WTG gross profit margin by 5-10 percentage points due to improved average selling prices (ASP) and cost reductions [4][8]. Financial Performance Summary - In 2024, the gross profit margin (GPM) was 7.5%, down 0.5 percentage points year-over-year, with recurring net profit decreasing by 14.3% to Rmb175 million [2]. - Revenue for 2024 was Rmb27.2 billion, down 3.4% year-over-year, while total WTG shipments were 10.8GW, which was below guidance [2][8]. - The net loss for the fourth quarter of 2024 was Rmb462 million, compared to a net profit of Rmb148 million in the third quarter of 2024 [3]. Future Outlook - The company anticipates new orders to exceed the 2024 level of 27GW, with offshore projects accounting for 20% and overseas projects for 40% [4][8]. - The expected earnings per share (EPS) for 2025 is projected at Rmb2.36, with revenue forecasted to increase to Rmb76.244 billion [6].

Investment Rating - The investment rating for Luzhou Lao Jiao Co. Ltd is Equal-weight [5] Core Insights - The company reported 1.8% sales growth and 0.4% net profit growth year-over-year in 1Q25, which aligns with estimates [8] - The dividend payout ratio increased to 65% in 2024 from 60% in 2023, with targets of 70% and 75% for 2025 and 2026 respectively [8] - The company aims for steady revenue growth in 2025, despite a challenging market environment [8] Revenue and Profitability - Mid-high end liquor sales rose 3% year-over-year, accounting for 88.4% of total liquor sales, while low-end liquor sales increased by 6% in 2024 [2] - Operating profit margin (OPM) declined by 1.0 percentage points year-over-year in 1Q25, with a narrowed gross profit margin (GPM) due to a lower product mix [2] - In 2024, OPM contracted by 0.7 percentage points, driven by a 2.8 percentage point decrease in GPM, partially offset by savings in operating expenses [2] Financial Position - Customer advances were Rmb3.1 billion in 1Q25, down from Rmb4.0 billion in 4Q24 and Rmb2.5 billion in 1Q24 [3] - The net cash position improved to Rmb31.4 billion in 1Q25 from Rmb29.0 billion in 4Q24 and Rmb21.4 billion in 1Q24 [3] - Cash from selling products decreased by 7% year-over-year in 1Q25 to Rmb9.9 billion [3] Future Projections - The company projects net profit growth of 1.7% year-over-year in 2024, which is 4% below consensus estimates [8] - The price target for the stock is set at Rmb122.00, indicating a downside of 3% from the closing price of Rmb125.36 on April 25, 2025 [5] - Earnings per share (EPS) estimates for the fiscal years ending in 2024, 2025, and 2026 are Rmb9.58, Rmb10.10, and Rmb10.74 respectively [5]

J P M O R G A N Asia Pacific Equity Research 27 April 2025 This material is neither intended to be distributed to Mainland China investors nor to provide securities investment consultancy services within the territory of Mainland China. This material or any portion hereof may not be reprinted, sold or redistributed without the written consent of J.P. Morgan. Wuliangye - A 2024 sales up 7.1% yoy at expense of relaxing credit & rising rebates to distributors; 2025 sales target of c5% (in line with GDP growth) ...

Investment Rating - The report rates Yonyou Network as Neutral with a price target of Rmb12.00 for December 2025, down from a previous target of Rmb13.00, indicating a potential downside of 12% from the current share price [2][12][13]. Core Insights - Yonyou experienced another earnings shock in Q1 2025, reporting a 21% year-over-year revenue decline, the worst in over 30 years, and a net loss of Rmb736 million, resulting in a net profit margin of -53% [8][11]. - Despite the poor financial results, Yonyou's share price has increased by 35% year-to-date and 17% over the past 12 months, contrasting with the SHCOMP index performance [8]. - The company has been adjusting its workforce, reducing staff by 25% over two years, with current employment at 19,600 [8]. - The report suggests that Yonyou's aggressive R&D capitalization policy, which exceeds 50% of total spending, raises concerns about the quality of its earnings [11]. Summary by Sections Financial Estimates - Adjusted EPS for FY25 is revised down to -Rmb0.34 from -Rmb0.22, and for FY26 to -Rmb0.12 from Rmb0.01 [3]. - Revenue forecasts for FY25-26 have been reduced by approximately 4% [8]. Quarterly Forecasts - The adjusted EPS for FY24 is projected at -Rmb0.62, with expectations of gradual improvement leading to a positive EPS of Rmb0.07 by FY27 [4][10]. Performance Metrics - Yonyou's revenue for FY24 is estimated at Rmb9,153 million, with a projected growth of 2.9% in FY25 and 7.5% in FY26 [10]. - The company reported a significant decline in gross profit margin to 39.1% in Q1 2025, down from 41.5% in the previous year [18]. Market Position - Yonyou holds a mid-30% market share in the ERP sector in China, primarily serving state-owned enterprises and government organizations [11]. - The report recommends considering rival Kingdee for ERP investments due to better execution and growth metrics [12].

Investment Rating - The investment rating for Chongqing Changan Automobile is Overweight [7]. Core Insights - The report highlights a resilient performance in Q1 2025, with a net profit after tax (NPAT) of Rmb1.35 billion, reflecting a year-on-year growth of 16.8%, despite a revenue decline of 7.7% to Rmb34.1 billion [1][2]. - The report anticipates a notable narrowing of losses in the NEV (New Energy Vehicle) segment, as indicated by a reduction in minority interest losses [1]. - Gross margin improved modestly by 1.1 percentage points year-on-year to 13.9%, although it remains below the previous year's margin of 14.9%, suggesting ongoing pricing pressures [2]. - The investment thesis is strengthened by the visibility of profit growth driven by advancements in NEV technology [2]. Summary by Sections Financial Performance - Q1 2025 NPAT: Rmb1.35 billion, YoY growth of 16.8% [1]. - Revenue decreased by 7.7% to Rmb34.1 billion [1]. - Gross margin increased by 1.1 percentage points YoY to 13.9% [2]. NEV Business Outlook - Expected significant reduction in losses related to the NEV business, with minority interest losses decreasing from Rmb302 million in Q1 2024 to Rmb137 million in Q1 2025 [1]. - The report emphasizes improving profit growth visibility into 2025 due to NEV advancements [2]. Market Position - The price target for Chongqing Changan Automobile is set at Rmb17.90, indicating a potential upside of 45% from the current price of Rmb12.35 [7]. - The company has a market capitalization of Rmb105.43 billion [7].

Investment Rating - The investment rating for Pharmaron is Equal-weight [4] Core Insights - The industry view is considered Attractive, with a price target set at Rmb27.40, indicating a 3% upside from the current price of Rmb26.61 [4] - In 1Q25, Pharmaron reported revenue of Rmb3,099 million, reflecting a 16% year-over-year growth, aligning with the 2025 guidance of 10-15% growth [7] - The revenue streams from North America, EU, and China showed year-over-year growth of 16.8%, 26.6%, and 13.1%, respectively, contributing approximately 65%, 18%, and 15% to total revenue [2] - The customer base saw revenue from the top 20 pharmaceutical customers grow by 29% year-over-year, while other customers grew by 14% [2] - Adjusted non-IFRS net profit for 1Q25 was Rmb349 million, a 3.1% increase year-over-year, with softer growth attributed to depreciation and amortization costs from biologics capacity launch [7] Summary by Sections Financial Performance - 1Q25 revenue was Rmb3,099 million, up 16% year-over-year, consistent with the guidance for 2025 [7] - Net operating cash flow increased by 14.4% to Rmb853 million, with capital expenditures of Rmb556 million, up 11.4% year-over-year [2] Customer and Market Dynamics - Revenue from the top 20 pharma customers increased by 29% year-over-year, while other customers saw a 14% growth [2] - New order growth for both Lab services and CMC was over 10%, although it decelerated from over 20% in 2024 due to a higher order base in 1Q24 [7] Valuation Metrics - The company has a market capitalization of Rmb29,328.6 million and an enterprise value of Rmb33,234.4 million [4] - The projected EPS for the fiscal years ending in 2024, 2025, and 2026 are Rmb0.97, Rmb1.26, and Rmb1.00, respectively [4]