Investment Rating - The report assigns a "Buy" rating to Kingsoft Office, Kingdee, and Empyrean [5][31]. Core Insights - The momentum of AI-native applications and software with AI features remains strong, particularly in the areas of agentic AI and multi-modal AI models [1][4]. - AI agents are expected to become the new user interface for enterprises, enhancing productivity through proactive responses to environmental changes [4][12]. - The release of upgraded multi-modal AI models focuses on generating and editing various content types with improved quality and lower costs [4][13]. - There is a solid project pipeline for enterprise application wins, particularly in AI model deployment, indicating a larger scale of AI projects compared to traditional ERP or system upgrades [21][4]. Summary by Sections AI Agents and Applications - AI agents are being adopted by enterprises to complete tasks independently, with companies like Manus launching general AI agents and Kingdee introducing multiple specialized AI agents [4][12]. - The report highlights the potential of AI agents to improve user experiences in various sectors, including finance and travel [4][12]. Multi-modal AI Models - Recent upgrades in multi-modal AI models have been made by vendors, focusing on high-quality content generation across different media types [4][13]. - Companies like Stepfun and Wondershare are developing advanced tools for image and video editing, enhancing user capabilities [4][13]. Software Project Wins - The report reviews enterprise application project wins, noting a solid momentum in AI model deployments from late April to the present [21][4]. - The scale of AI projects is generally larger due to the inclusion of integrated solutions, which often require higher computing hardware costs [21][4]. EDA and IP Software Expansion - Local EDA suppliers are accelerating product launches to capture localization opportunities, with new tools being introduced for mixed-signal SoC and digital simulation [4][21].

Investment Rating - The report maintains a Neutral rating for Desay SV with a 12-month target price of Rmb122, indicating a potential upside of 20.1% from the current price of Rmb101.62 [10][8]. Core Insights - Management is optimistic about the smart driving trend and the growth of domain controllers, with expectations for shipments of their latest chipset-powered domain controllers to begin in the second half of 2025 [2][4]. - Desay SV is focusing on full-stack solutions by investing in automotive software to develop customer-tailored algorithms, aiming to enhance the adoption of smart driving technologies [3][4]. - The company plans to expand its capacity in smart cockpit and smart driving solutions, with a private placement plan of Rmb4.5 billion approved for this purpose [4][10]. Summary by Sections Smart Driving Outlook - Management is positive about the smart driving trend and is collaborating closely with leading chipset suppliers, aiming to sustain gross margins through increased scale and improved cost control [2][4]. Full Stack Solutions - Desay SV is investing in automotive software to create algorithms for full-stack solutions, enhancing customer adoption of smart driving through integrated hardware-software offerings [3][4]. Capacity Expansion - The company announced a private placement plan for Rmb4.5 billion to support capacity expansion in smart driving solutions and automotive electronics, with specific allocations for production base construction and domain controller manufacturing [4][10].

Investment Rating - The report initiates coverage on Huaqin Technology with a "Buy" rating and includes it on the APAC Conviction List [1]. Core Insights - Huaqin's target price is raised to Rmb94, with expectations for net income to grow at a 27% CAGR from 2024 to 2027, driven by an increase in AI server shipments [1]. - The contribution of AI servers to Huaqin's revenues is projected to rise from 14% in 2024 to 45% by 2027 [1]. - The company is diversifying from consumer electronics to data centers, capitalizing on stronger market demand and healthier competition [1]. Revenue and Growth Projections - Huaqin's blended revenues are expected to grow at a 29% CAGR from 2024 to 2028 [5]. - The data center business, which includes general servers, switches, and AI servers, is anticipated to see AI servers grow at a 73% CAGR from 2024 to 2028, followed by switches at 67% CAGR and general servers at 8% CAGR [6]. - Data center revenues are expected to increase from 21% in 2024 to 51% by 2028 [6]. Earnings Revisions - Revenue estimates for 2025-2028 have been revised upwards by 1%, 14%, 21%, and 29% respectively, primarily due to higher expectations for AI servers and switches [9]. - Despite a reduction in net income estimates by 12% to 0% for 2025-2028, the target price is raised by 14.9% due to a higher target P/E multiple [9][13]. - The new target P/E multiple is set at 18.8x, reflecting a positive outlook on earnings growth driven by the data center business [13]. Financial Metrics - The report outlines expected revenues of Rmb147.2 billion in 2025, Rmb208.4 billion in 2026, and Rmb253.2 billion in 2027 [21]. - The net income for 2025 is projected at Rmb3.89 billion, increasing to Rmb5.07 billion in 2026 and Rmb5.91 billion in 2027 [21]. - The gross margin is expected to decline from 9.4% in 2025 to 8.4% in 2028, while the operating margin is projected to decrease from 2.6% in 2025 to 2.5% in 2028 [10][18].

Investment Rating - The report does not explicitly provide an investment rating for Longcheer (603341.SS) but indicates a positive outlook on the company's growth opportunities in AI PC and AI/AR glasses [1][2]. Core Insights - Longcheer is optimistic about the increasing penetration of AI PCs, which are expected to have higher average selling prices (ASP) due to enhanced specifications for computing power and storage [3]. - The company is expanding its business into AI/AR glasses, leveraging its strengths in lightweight design and customized solutions, with projected annual shipments in China expected to grow at a 56% CAGR from 2024 to 2030, reaching 7 million units by 2030 [7]. - Longcheer is also focusing on overseas expansion, with production facilities in Vietnam and India, targeting markets in the US, Europe, Japan, and Korea [8]. Summary by Sections AI PC Market - Management is positive about the rising AI PC penetration rate, viewing Longcheer as a key beneficiary in the supply chain due to its R&D efficiency and automated production lines [3]. - The company has already penetrated local brands and aims to collaborate with global-tier brand clients [3]. AI/AR Glasses Market - Longcheer is actively providing PCBA and accessory services for AI/AR glasses, with a focus on enhancing user experience through lightweight solutions and proofing/simulation [7]. - The management anticipates significant growth in the AI/AR glasses market, driven by affordability and increased use cases [7]. Overseas Expansion - Longcheer has established production sites in China, Vietnam, and India, with plans to expand capacity in Vietnam to mitigate concentration risks amid trade tensions [8]. - The company is building a Manage Sales & Marketing (MSM) framework to enhance product development efficiency and service quality for its overseas markets [8].

Investment Rating - The report does not explicitly state an investment rating for the solar industry, but it suggests that polysilicon and module names could exhibit the highest potential upside within the sector due to inexpensive valuation and limited downside risks [4]. Core Insights - The solar glass manufacturers in China are beginning to cut production due to persistently weakening demand, with estimates suggesting a reasonable production cut of 10-20%, leading to an effective monthly production of around 45-50GW [2]. - The government is expected to push for capacity cuts across the solar supply chain, starting with the polysilicon segment, and discussions are ongoing regarding acquiring smaller players [3]. - There is a stronger commitment from the government to tackle overcapacity, with expectations of more policy support to phase out obsolete capacity and deter price competition, despite lingering fundamental pressures in the second half of 2025 [4]. Summary by Sections Production and Demand - Solar glass manufacturers are cutting production due to weak demand, with a potential cut of 10-20% rather than the 30% estimated by some media [2]. - The effective production capacity could be around 45-50GW monthly, with the possibility of resuming operations once prices rebound [2]. Government Policies - The government is anticipated to implement capacity cuts in the solar supply chain, particularly in the polysilicon segment, and is discussing measures to acquire smaller players [3]. - There is speculation about policies to curb excess capacity, with a belief that the government is determined to reduce involution competition [4]. Market Sentiment and Valuation - Despite expected fundamental pressures in the second half of 2025, market sentiment may improve in the long term due to better supply-demand dynamics [4]. - Polysilicon and module names are highlighted as having the highest potential upside within the sector, attributed to inexpensive valuations and limited downside risks [4].

Investment Rating - The report does not explicitly state an investment rating for the aluminum industry but provides insights into demand trends and expectations for growth in specific sectors [1][3]. Core Insights - Aluminum demand in the solar power industry is expected to increase by 5-8% year-over-year (YoY) in 2025, despite a recent decline in demand since mid-May [1][4]. - Overall aluminum demand in China is projected to grow by 3-4% YoY in 2025, with a weaker growth forecast for the second half of the year compared to the first half [3]. - The demand for aluminum building profiles is anticipated to decrease by 8-10% YoY in 2025, showing a slight improvement from a 10% YoY decrease in 2024 [5]. Summary by Sections Aluminum Production - The weekly semi-aluminum products output was approximately 610kt in early July 2025, reflecting a 7.5% YoY increase, while the aluminum profile output was around 190kt, down 6% YoY [2]. - The weekly aluminum foil sheet output was about 370kt, showing a slight decline of 1% YoY [2]. Demand Trends - The aluminum demand from the solar power industry is primarily for industrial profiles and foil sheets, with a noted decrease in demand since mid-May, which has slowed into July [1][4]. - The apparent consumption of aluminum is expected to remain weak in July but may rebound in September and October, with potential growth in the automotive and electricity sectors [3]. Inventory Levels - Current inventory levels for aluminum profile mills are around 520kt, which is a 20% decrease YoY, with raw materials and finished goods inventories down 18% and 21% YoY, respectively [6].

Investment Rating - The report does not explicitly provide an investment rating for the humanoid robot industry Core Insights - The humanoid robot transmission system is characterized by a mix of rotary and linear joints, with domestic companies favoring rotary modules while international firms like Tesla prefer linear actuators. The design trends indicate a shift towards hybrid systems for dexterous hands, driven by increasing demands for high degrees of freedom and precision [1][5][9] Summary by Sections Industry Overview - The humanoid robot industry is witnessing a convergence of technology standards, transmission schemes, and processing techniques, although a clear competitive landscape has yet to emerge. Continuous tracking is necessary to understand the evolving dynamics [1][2] Key Components and Cost Structure - Core components of humanoid robot transmission systems include lead screws, reducers, and bearings, which collectively account for over 30% of the hardware costs. The cost structure is still in flux as technology converges [2][3] Domestic vs. International Trends - Domestic companies focus on light-load industrial applications and consumer markets, utilizing mature rotary actuators. In contrast, international players like Tesla emphasize high-load industrial scenarios, favoring lead screw designs [6][8] Patent Activity - As of 2024, patent applications in China show a significant focus on perception systems and linear actuators, indicating substantial investment in these areas. Rotary actuators and dexterous hands have fewer related patents [12] Future Development Directions - The future of humanoid robots will revolve around cost reduction, structural design optimization, and material selection. Innovations in manufacturing processes, such as improved heat treatment for harmonic reducers, are critical for enhancing performance [13][15] Competitive Landscape - The competitive landscape for reducers is changing, with latecomers needing to establish customer loyalty and possess strong development capabilities to succeed. The lightweight material advancements, such as PEEK, are noteworthy for their potential to reduce energy consumption and improve efficiency [16][17] Application Scenarios - Different application scenarios dictate the choice of transmission schemes, with domestic firms focusing on simpler designs for home use, while international firms prioritize complex, high-load industrial applications [6][8] Investment Considerations - Investors should focus on new technologies, materials, and structural designs that could lead to non-linear cost changes and reshape the industry landscape. Companies that have converged on technology routes and possess competitive advantages are likely to outperform [21]

Investment Rating - The report assigns a "Buy" rating to Sangfor, iFlytek, Shiji, Glodon, BOCHU, and Hundsun, indicating a positive outlook for these companies [10][32]. Core Insights - AI applications monetization is a key focus area, with investors showing increased interest in AI-related software despite a weak economy. Companies like Beisen, Yonyou, and Changet are gaining traction with their AI functionalities [4]. - Overseas expansion is another preferred theme among investors, particularly for BOCHU, which is working directly with local integrators [5]. - Investors have mixed views on turnaround stories, favoring growth potential over attractive valuations, with Glodon being highlighted for its cost control [6]. Summary by Sections AI Applications - Investors are keen on AI monetization ideas, especially in mainland China, as AI agents are seen to help enterprises reduce costs. Companies like Beisen and Yonyou are attracting investor interest due to their AI functionalities [4]. Overseas Expansion - BOCHU's overseas expansion is well-received, with investors not overly concerned about tariffs due to its collaboration with local integrators. There is also interest in BOCHU's welding business [5]. Turnaround Stories - Investors prefer growth potential over valuation, with Glodon noted for its effective cost control despite concerns about limited growth in the property sector [6]. Company Ratings and Financials - Sangfor (300454 CH): Buy, Target Price RMB143.00, Upside 54% [7][32] - iFlytek (002230 CH): Buy, Target Price RMB57.00, Upside 21% [7][32] - Shiji (002153 CH): Buy, Target Price RMB11.00, Upside 27% [7][32] - Glodon (002410 CH): Buy, Target Price RMB17.00, Upside 28% [7][32] - BOCHU (688188 CH): Buy, Target Price RMB160.71, Upside 23% [7][32] - Hundsun (600570 CH): Buy, Target Price RMB44.00, Upside 30% [7][32]

Global Research ab 30 June 2025 First Read China Solar Industry People's Daily reiterates efforts to curb excess competition People's Daily of China advocates tackling involution competition On 29 Jun, People's Daily of China published commentary about reining in involution- style competition, especially in the solar, EV, and battery sector. It attributed the involution-style competition mainly to oversupply, lack of high market entry standards, and support from local government. Measures to address excess ...

Investment Rating - The report indicates a positive outlook for the commercial aerospace industry, suggesting it is entering a rapid development phase [2][16]. Core Insights - The new leadership team at Xingwang Group is diverse and is expected to enhance resource assurance and management efficiency, facilitating the construction of the first-generation and enhanced systems [1][4]. - Significant progress has been made in satellite manufacturing and networking, with successful launches of experimental satellites by New Wang Group [1][6]. - The domestic rocket launch technology has improved but still lags behind SpaceX, particularly in reusable rocket technology [1][7]. - The capital market is increasingly supportive of commercial aerospace, with state-owned funds being established to back industry development [1][8][9]. Summary by Sections Industry Investment Rating - The commercial aerospace industry is rated positively, with expectations for accelerated growth and development [2][16]. Management and Market Integration - The new management structure at Xingwang Group is expected to improve operational efficiency and drive technological advancements [3][5]. Satellite Manufacturing and Networking - Shanghai Yuanxin has resolved technical issues with its networking satellites, and New Wang Group has successfully launched its first-generation and second-generation experimental satellites [1][6]. Rocket Launch Technology - Domestic rocket launch capabilities are advancing, but there remains a gap compared to international leaders like SpaceX, especially in reusable technology [1][7]. Capital Market Support - Increased support from the capital market is evident, with state-owned investment funds being established to promote commercial aerospace enterprises [1][8]. Policy Changes - Recent government reports emphasize commercial aerospace as a priority, indicating forthcoming supportive policies [9]. Upcoming Goals in Satellite Internet Engineering - The first-generation enhanced networking plan is set to advance, with significant developments expected in the third quarter [10][12]. Key Focus Areas for Investors - Investors should focus on core supporting enterprises in space segment construction, commercial rocket launch sectors, and potential suppliers benefiting from mobile internet system developments [15].