Investment Rating - The investment rating for Hundsun Technologies is "Buy" with a target price of Rmb40.7, implying an expected share price return of 37.7% and a total expected return of 38.5% [6]. Core Insights - Future growth for Hundsun Technologies is anticipated to be driven by strong demand for software localization due to US-China geopolitical tensions and the deadline for state-owned enterprises to localize software [2][4]. - The management noted that while brokers experienced improved earnings in the first half of 2025 and third quarter of 2025, asset managers are under pressure due to fully implemented fee cuts and declining assets under management [2]. - An employee share compensation scheme was launched in August 2025, embedding a target of 10% growth in recurring net profit, although management did not provide guidance for 2026 revenue and net profit growth due to uncertainties in project rollout [3]. - The competitive landscape is expected to become more benign, as many listed peers reported net losses in 2024, and smaller unlisted peers may shift strategies away from rapid expansion [4]. Summary by Sections Market Outlook - The demand for software localization is robust, driven by geopolitical factors and regulatory deadlines for state-owned enterprises [2]. - Management expressed confidence in the long-term outlook, focusing on product development and innovation to navigate market downturns [4]. Financial Performance - Brokers have seen improved earnings in 1H25 and 3Q25, while asset managers face challenges due to fee cuts and declining AUM [2]. - The newly launched employee share compensation scheme targets a 10% growth in recurring net profit [3]. Competitive Landscape - The market competition is likely to become more benign, with many listed peers suffering losses and smaller players potentially changing their growth strategies [4]. Valuation - The target price of Rmb40.7 is based on a discounted cash flow (DCF) valuation, projecting free cash flows up to 2034E with a terminal growth rate of 5.5% [8].

Investment Rating - The report maintains a "Buy" rating for Giant Network with a target price of Rmb42, indicating an expected share price return of 15.7% and a total return of 16.8% [5]. Core Insights - The report highlights a stronger tone on the monetization of Supernatural Action, with monthly grossing reaching Rmb600 million in August and a record DAU of nearly 7 million in October, suggesting significant growth potential [2][3]. - Upcoming promotions, particularly around Chinese New Year, are expected to further enhance user engagement and monetization, with management anticipating DAU could exceed 10 million [3]. - The unique positioning of Supernatural Action is noted for attracting young female gamers, which is expected to drive sustained demand and profitability [7]. - Management plans to expand Supernatural Action into overseas markets, targeting regions like Hong Kong, Macau, Taiwan, and Korea for effective localization [8]. - The game pipeline includes a new card game, Ming Jiang Sha, which is set for a soft launch in December, alongside two new MMORPGs [9]. Summary by Sections Monetization and Performance - Supernatural Action's grossing has shown a significant increase, with management noting a full-year run-rate expectation of approximately Rmb6 billion based on September's performance [2]. - The game has successfully optimized content and graphics, contributing to its record performance during peak seasons [2]. Promotions and User Engagement - The next major promotional push is planned for the Chinese New Year, with expectations of increased DAU and improved retention rates [3]. - Management's strategy includes maintaining a weekly content update to keep user engagement high [3]. Unique Positioning and Market Strategy - Supernatural Action's design de-emphasizes combat elements, focusing instead on social gameplay, which appeals to its target demographic [7]. - The selective distribution strategy on iOS and a controlled marketing spend are designed to maximize profitability while minimizing competition risks [7]. Overseas Expansion - Plans for an overseas version of Supernatural Action are in place, with a focus on cultural fit and localization for initial markets [8]. Game Pipeline and Shareholder Returns - The company is preparing for the launch of new titles, including a card game and MMORPGs, which are expected to follow a similar operational strategy as Supernatural Action [9]. - Giant Network aims to maintain a steady cash dividend payout of 35-37% through bi-annual distributions [10].

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Investment Rating - The report maintains a non-pessimistic outlook on the US stock market, with an adjusted target for the S&P 500 index set at 6,700 points, despite high valuations and strong earnings growth [1][9]. Core Insights - The Federal Reserve's interest rate cut is primarily a response to unexpectedly low non-farm employment data, with a cautious approach reflecting a balance between short-term stimulus and long-term stability [3][4]. - The cessation of balance sheet reduction by the Federal Reserve is aimed at alleviating liquidity tensions in the financial system, which is beneficial for overall market liquidity [6]. - The anticipated interest rate cuts are expected to positively impact the real estate and manufacturing sectors, with new home sales reaching a three-year high and manufacturing PMI showing signs of recovery [1][7][8]. - The new Federal Reserve chairperson's policies will significantly influence future monetary policy directions, with potential for slight increases in easing measures without losing independence [5]. Summary by Sections Federal Reserve Actions - The Federal Reserve's decision to stop balance sheet reduction is intended to prevent liquidity shortages and maintain financial stability [4][6]. - The cautious stance of the Federal Reserve reflects a need to balance economic stimulus with financial stability, especially in light of recent employment data [3]. Market Reactions - The market's recent pullback following the Federal Reserve's interest rate cut and US-China tariff negotiations is attributed to profit-taking and a strong dollar, which has increased liquidity tensions [2][11]. - The anticipated increase in liquidity from the cessation of balance sheet reduction and government funding releases is expected to support market stability [6]. Sector-Specific Insights - The real estate sector is benefiting from lower interest rates, with significant increases in new home sales and a recovering manufacturing PMI, indicating positive trends in related sectors [1][7][8]. - The semiconductor industry is poised for growth due to China's focus on technological self-reliance, despite existing gaps in advanced manufacturing capabilities [19][22]. Future Outlook - The report suggests that the US stock market remains a viable investment opportunity, with strong earnings growth mitigating risks associated with high valuations [9]. - The anticipated growth in the semiconductor and AI sectors is expected to create substantial investment opportunities, particularly as domestic capabilities improve [20][22].

Investment Rating - The report maintains a "BUY" rating for Pharmaron (3759.HK) since January 1, 2020, with a 12-month price target of HK$30.00, indicating an upside potential of 20.2% from the current price of HK$24.96 [1][12]. Core Insights - Pharmaron reported a 3Q25 revenue of Rmb3.65 billion, reflecting a year-over-year increase of 13.4% and a quarter-over-quarter increase of 9.1%, slightly exceeding Goldman Sachs estimates of Rmb3.48 billion. This growth was driven by strong performance in the CMC and bioscience segments, particularly from the top 20 large pharmaceutical clients [1][2]. - The management has raised the full-year revenue growth guidance to 12-16% year-over-year, up from the previous guidance of 10-15%, suggesting a potential growth of 6-20% year-over-year in 4Q25. The management is optimistic about further margin improvements in 4Q25 compared to the first nine months of 2025 [1][2]. - The report highlights robust new project order momentum, particularly in the CMC segment, where new project orders increased by 13% year-over-year for the first three quarters, with a notable 20% year-over-year rise in CMC new orders driven by large pharmaceutical demand [2][20]. Summary by Sections Earnings Review - 3Q25 revenue: Rmb3.65 billion, up 13.4% y/y and 9.1% q/q, slightly above GSe of Rmb3.48 billion [1]. - Non-IFRS adjusted net profit margin improved to 12.9%, up from 11.3% in 1Q25 and 12.2% in 2Q25, supported by higher utilization rates [1]. Revenue Growth and Guidance - Full-year revenue growth guidance raised to 12-16% y/y from 10-15% y/y, implying 4Q25 growth of 6-20% y/y [1]. - Continued investment in biologics and strategic acquisitions positions Pharmaron for sustained growth in the CDMO space [1][20]. Segment Performance - CMC revenue reached Rmb903 million, up 12.7% y/y and 29.6% q/q, with a gross margin of 34.6% [2]. - Clinical development revenue was Rmb501 million, up 8.2% y/y, but gross margin declined to 10.8% due to project mix and competitive pressures [3][19]. Strategic Acquisitions - The acquisition of Biortus is expected to enhance Pharmaron's biologics service offerings, particularly in structural biology data supporting drug discovery [20]. Financial Projections - Revenue projections for 2025E are Rmb14,066.7 million, with EBITDA of Rmb3,532.9 million and EPS of Rmb0.91 [6][17]. - The report anticipates a 3-year earnings CAGR of 15% [21].

Investment Rating - The investment rating for Victory Giant Tech is "Buy" with a target price of Rmb407.0, indicating an expected share price return of 19.6% and a total expected return of 19.9% [5][9]. Core Insights - Victory Giant Tech (VGT) reported 3Q25 results that missed CitiE expectations, with revenue of Rmb5.1 billion, which is 10% below expectations. The gross profit was Rmb1.8 billion, also missing expectations by 12% [2][3]. - The fluctuation in 3Q25 results is attributed to the largest customer's product transition and a mismatch between new capacity coming online and the mass production of new AI orders. It is anticipated that 4Q25 will see a return to sequential growth supported by normalized production and order ramp-up [4][3]. Summary by Sections Financial Performance - 3Q25 revenue was Rmb5.1 billion, an 8% increase QoQ but 10% below CitiE estimates. Gross profit was Rmb1.8 billion, down 2% QoQ, with a gross margin of 35.2%, which is 3.6 percentage points lower QoQ [2][7]. - Operating profit for 3Q25 was Rmb1.3 billion, a decrease of 6% QoQ, with an operating margin of 26.2%, missing expectations by 12% [2][7]. - Net profit printed at Rmb1.1 billion, down 10% QoQ, with a net margin of 21.7%, hitting the low-end of investor expectations [2][7]. Market Outlook - The report suggests that the 2026 growth theme remains intact, driven by robust demand for GenAI-related PCB and potential improvements in average selling price and gross margin due to a favorable product mix [9]. - The expected earnings CAGR from 2025 to 2027 is projected at 96%, supported by growth in AI-related products and opportunities in datacenter switches and ASICs [9].

Investment Rating - The report indicates a positive outlook for the industry, suggesting potential investment opportunities due to favorable macroeconomic conditions and policy directions. Core Insights - The report highlights the likelihood of a short-term compromise in US-China tariff negotiations, which could alleviate market pressures [1][5] - Continuous foreign capital inflow into A-shares is noted, with an increasing allocation from active foreign investors [1][6] - The US CPI data falling below expectations strengthens the Federal Reserve's rate cut outlook, potentially leading to a positive market impact [1][7] - The trend of "deposit migration" into the market is evident, although a slight decline in September indicates that wealth effects have yet to materialize [1][8] - The report emphasizes the need to address structural issues to ensure sustainable capital market inflows, focusing on debt pressure resolution, technological innovation, and social security improvements [1][11][12] Summary by Sections Section: Market Impact of Policies - The Fourth Plenary Session and the upcoming Fifteen Plan are expected to significantly influence both short-term and long-term market trends, particularly in modern industries, technology, domestic demand, and employment [2] - The Fifteen Plan emphasizes technological autonomy, real estate adjustments, and geopolitical changes, with a focus on innovation and domestic demand expansion [4][17] Section: Foreign Capital Inflow - Active foreign capital allocation to China is increasing, with a notable reduction in the gap between active and passive funds [6] Section: Economic Indicators - The US CPI data has diminished inflation concerns, leading to a near 100% probability of rate cuts in October and December, which may positively affect the market [7] Section: Deposit Migration Trends - The trend of deposit migration into the market has been significant since July, although a slight decline in September suggests that the wealth effect is not yet fully realized [8] Section: Structural Issues and Policy Directions - Current policy directions aim to resolve structural issues, including debt pressure, promoting technological innovation, and enhancing social security systems to facilitate sustainable market inflows [11][12][13] Section: Real Estate Market Dynamics - The real estate market is in the early stages of stabilizing, with a focus on improving transaction volumes and price expectations to create a positive cycle [29][31][33] Section: Future Industry Focus - Future investment opportunities are identified in high-end manufacturing, digital technology, space economy, and biotechnology, alongside new consumer models and product upgrades [26][20] Section: Long-term Market Outlook - The long-term outlook for the capital market remains positive, supported by government focus on market development and favorable macroeconomic conditions [27]

Investment Rating - The report maintains a "Buy" rating for CMOC Group (3993.HK) with a 12-month price target of HK$19.00, representing an upside of 17.3% from the current price of HK$16.20 [1][2]. Core Insights - CMOC reported a net profit of Rmb5.61 billion for 3Q25, reflecting a year-on-year increase of 96%, with earnings per share (EPS) rising to Rmb0.262, up 98% year-on-year [1]. - The recurring profit growth is expected to continue, driven by rising copper prices and volume growth, with a projected compound annual growth rate (CAGR) of 38% for 2025-26E [2]. - The company has revised its earnings estimates upward by 8-32% for 2025-27E, reflecting a positive outlook on copper prices and the impact of new cobalt export quotas from the DRC [2]. Financial Performance - For the first nine months of 2025, CMOC's recurring net profit reached Rmb14.1 billion, accounting for 75% of the full-year estimate [1]. - The company expects to achieve a copper output target of 1 million tons by 2028, supported by the Cangrejos gold/copper project, which is anticipated to further enhance earnings growth [2][29]. - The report indicates that CMOC's current H-share price implies a copper price of US$8,500/t, which is lower than the spot price of US$10,900/t, suggesting potential for price appreciation if targets are met [2]. Production and Operations - CMOC's copper output in the DRC reached 543kt in 9M25, a 14% increase year-on-year, while cobalt output was 88kt, up 3.8% year-on-year [26]. - The DRC government has introduced a cobalt export quota system, allowing CMOC to export 6.5kt for the remainder of 2025 and 31.2kt annually for 2026-27E, which is expected to improve gross profit for cobalt significantly despite lower sales volume [27]. - The acquisition of Lumina Gold for C$581 million is expected to enhance CMOC's net profit by 13.1% by 2030, with significant gold and copper reserves identified at the Cangrejos project [28]. Valuation Metrics - The report provides updated revenue and earnings estimates, with total revenue projected at Rmb213,028.7 million for 2024 and Rmb192,354.5 million for 2025E [6]. - The price-to-earnings (P/E) ratio is forecasted to be 9.2 for 2024 and 15.5 for 2025E, while the price-to-book (P/B) ratio is expected to be 1.8 for 2024 and 3.7 for 2025E [12]. - The report indicates a free cash flow yield of 19.6% for 2024, which is expected to decrease to 6.6% in subsequent years [12].

CHINA METALS & MINING Growth outlook reiterated - feedback from Zijin and CMOC in LME Week GS Global Metals & Mining Conference We hosted Zijin Mining and CMOC C-level management fireside chats and investors groups on Oct 14-15th in London, during the LME week GS Global Metals & Mining Conference. The discussions were centered around 1) production growth outlook for copper and gold, 2) thoughts around their M&A strategy and preference, and 3) factors driving their operational strength. Zijin and CMOC has de ...

Investment Rating - The report rates Han's CNC Technology (HC) as "Buy/High Risk" due to its strong positioning to benefit from the AI PCB super cycle [20]. Core Insights - Han's CNC reported a significant earnings surprise in 3Q25, with net profit reaching Rmb228 million, representing a 282% year-over-year increase and a 56% quarter-over-quarter increase, driven by higher contributions from AI-related products [1][2]. - The target price for Han's CNC has been raised to Rmb140, reflecting a 13% increase, based on a 50x P/E ratio for 2026E, which is considered not aggressive given the company's projected earnings CAGR of 98% for 2025-26E [4][21]. - The company is expected to continue benefiting from strong demand for AI PCB equipment, with forecasts indicating net profit growth of 134% and 67% for 2025 and 2026, respectively [20]. Summary by Sections Earnings Performance - In 3Q25, Han's CNC achieved record revenue of Rmb1.52 billion, a 95% increase year-over-year and a 7% increase quarter-over-quarter, with a gross profit margin (GPM) of 34.0%, up 8.6 percentage points year-over-year [2][11]. - The revenue contribution from AI-related PCB equipment increased from approximately 15% in 1H25 to over 30% in 3Q25, significantly impacting profitability [1][2]. Forecasts - For 4Q25, net profit is estimated to reach Rmb213 million, reflecting a 117% year-over-year increase, driven by a 64% year-over-year sales growth and GPM expansion of 5.8 percentage points [3]. - Earnings forecasts for 2025 and 2026 have been revised upward by 16% and 13%, respectively, indicating strong growth potential [1][12]. Valuation - The target price of Rmb140 is based on a 50x P/E for 2026E, which aligns with the average P/E over the past three years, suggesting a favorable valuation given the expected earnings growth [4][21]. - The report highlights a positive implication for Han's Laser (HL), which owns 83.6% of Han's CNC, due to the strong performance of HC [4].