Core Viewpoint - The report from CITIC Securities indicates that the Hong Kong stock market is expected to experience a second round of valuation recovery and further earnings revival by 2026, driven by a rebound in the fundamental outlook and significant valuation discounts [1] Long-term Investment Directions - Technology sector, including AI-related sub-sectors and consumer electronics [1] - Healthcare sector, particularly biotechnology [1] - Resource products benefiting from rising overseas inflation expectations and de-dollarization, including non-ferrous metals and rare earths [1] - Consumer staples sector, which is relatively stagnant and undervalued, is expected to see valuation recovery [1] - Paper and aviation sectors benefiting from the appreciation of the Renminbi [1]

Core Viewpoint - The report from CITIC Securities indicates that the Hong Kong stock market is expected to experience a second round of valuation recovery and further earnings revival by 2026, driven by a rebound in the fundamental outlook and significant valuation discounts [1] Long-term Investment Directions - Technology sector, including AI-related sub-sectors and consumer electronics [1] - Healthcare sector, particularly biotechnology [1] - Resource products benefiting from rising overseas inflation expectations and de-dollarization, including non-ferrous metals and rare earths [1] - Essential consumer goods sector, which is relatively undervalued and expected to see valuation recovery as the domestic economy further recovers [1] - Paper and aviation sectors benefiting from the appreciation of the Renminbi [1]

Investment Rating - The investment rating for the company is "Buy" and is maintained [6] Core Views - The company is expected to see a bottoming out of its fundamentals in 2025, with an anticipated recovery in 2026 and an improvement in valuation. Short-term challenges include old factory utilization rates, order adjustments, and the impact of new factory production in H2, which are expected to continue to pressure net profit margins. However, a stable tax rate and recent efficiency improvements are expected to support a recovery in Q3 net profit margins. In the medium term, stabilization from existing customers and growth from new customers are anticipated to drive a new growth cycle, supported by proactive capacity expansion and an improved industry landscape, which should enhance profitability and valuation [2][4][10]. Financial Performance Summary - For the first three quarters of 2025, the company achieved revenue of 186.8 billion yuan, a year-on-year increase of 6.7%, while net profit attributable to the parent company was 24.4 billion yuan, a decrease of 14.3%. In Q3 alone, revenue was 60.2 billion yuan, a slight decline of 0.3% year-on-year, and net profit was 7.6 billion yuan, down 20.7% year-on-year [4][10]. - The Q3 gross profit margin improved by 1.1 percentage points quarter-on-quarter but decreased by 4.8 percentage points year-on-year to 22.2%. The net profit margin attributable to the parent company was 12.7%, reflecting a quarter-on-quarter increase of 0.3 percentage points and a year-on-year decrease of 3.3 percentage points [10][4]. Earnings Forecast - The company forecasts net profits attributable to the parent company for 2025, 2026, and 2027 to be 33.6 billion yuan, 40.7 billion yuan, and 47.2 billion yuan, respectively, representing year-on-year changes of -12%, +21%, and +16%. The corresponding price-to-earnings ratios are projected to be 21, 17, and 15 times, with a dividend payout ratio of 70%, leading to a forecasted dividend yield of 3.4% for 2025 [2][10].

Core Insights - The current bull market is driven more by liquidity and confidence rather than actual earnings growth, with future trends dependent on policy implementation and corporate profits catching up to valuations [4][3]. Group 1: Overview of Chinese Listed Companies - As of October 24, 2025, there are 8,070 Chinese companies listed globally, accounting for 70% of China's GDP, with a total market value of approximately 153 trillion RMB [3][8]. - The revenue growth for Chinese listed companies in the first half of 2025 was only 0.9%, while net profit increased by 3.9%, despite a 25% rise in total market value [3][11]. Group 2: Market Valuation Discrepancies - The market value growth of A-shares is 9.3 times the profit growth, significantly higher than the ratios for Hong Kong and U.S. listed companies [21][20]. - The A-share market has seen a total market value increase of 25% year-on-year, while profits have only grown by 2.6% [21][23]. Group 3: Industry Performance Analysis - Certain sectors like semiconductors and hardware have shown strong performance, with revenue and profit growth, while many others rely on market sentiment and liquidity [10][27]. - Industries such as defense and consumer retail have experienced revenue growth but at the cost of profit margins, indicating a trend of expanding scale without corresponding profit increases [28][29]. Group 4: Comparison with U.S. Markets - Chinese companies have a lower P/E ratio compared to U.S. companies, but their PEG ratio is significantly higher, indicating that Chinese stocks may be overvalued relative to their earnings growth [40][41]. - The average profit margin for U.S. companies is higher than that of Chinese companies, with U.S. firms showing a 13% profit growth compared to only 3.9% for Chinese firms [34][40]. Group 5: Future IPO Considerations - The current market conditions suggest a need for a shift in IPO standards, moving from strict profit requirements to a focus on growth potential and innovation [55][64]. - The trend of high-quality IPOs in China has not translated into strong post-listing performance, indicating a potential misalignment between market expectations and actual company growth [61][62].

Core Insights - The company is entering a phase of stable development with a continuous recovery in its main business profitability and an overall positive operational status [1][2] Financial Performance - In Q3 2025, the company achieved an operating revenue of 190 million, maintaining steady growth [1] - The net profit attributable to shareholders reached 38.27 million, with a net profit of 17.14 million after deducting non-recurring gains, marking a year-on-year increase of 102.25% [1] - For the first three quarters, the cumulative operating revenue was 572 million, with a net profit of 60.91 million, reflecting a year-on-year growth of 71.34% [1] - The net profit after excluding non-recurring gains was 46.56 million, showing a significant year-on-year increase of 119.63% [1] Asset Structure and Business Strategy - The company’s total asset scale remained stable as of September 30, 2025 [1] - There has been an increase in inventory and prepaid items, indicating the company's positive expectations for future market demand [1] Cash Flow and Investment Strategy - The company maintains a healthy level of operating cash flow, with strategic investments in mall upgrades and equity investments to support long-term development [2] - The stable shareholder structure and high ownership by the actual controller reflect management's confidence in the company's future [2] Market Outlook - The report indicates that the company has returned to a normal development track, with performance recovery driven by optimized operational strategies and improved efficiency [2] - With the ongoing recovery in the consumer market and continuous internal management improvements, the company is expected to maintain its positive growth momentum, providing stable and sustainable returns for investors [2]

Core Viewpoint - Yiling Pharmaceutical has shown signs of recovery in its performance for the first three quarters of 2025, with a significant increase in net profit despite a decline in revenue compared to the previous year [1][3]. Financial Performance - For the first three quarters of 2025, Yiling Pharmaceutical reported revenue of 58.68 billion yuan, a year-on-year decrease of 7.82%, while net profit attributable to shareholders reached 10 billion yuan, marking an 80.33% increase [1][3]. - The company's revenue for the same period in 2024 was approximately 64 billion yuan, with a net profit of 5.55 billion yuan, reflecting a year-on-year decline of about 26% and 68% respectively [1]. - In Q3 2025, Yiling's revenue turned positive with a net profit of 3.32 billion yuan, the highest level in nearly three years [1][5]. Cost Management - A significant factor in the profit increase was a reduction in sales expenses, which totaled 13.53 billion yuan for the first three quarters, down by 3.19 billion yuan compared to the previous year [1][6]. - The gross margin and net margin for the first three quarters of 2025 were 60.53% and 16.99%, respectively, indicating an upward trend [1]. Product Portfolio and Market Position - Yiling Pharmaceutical's product range includes patented traditional Chinese medicine, biopharmaceuticals, and health products, addressing various medical fields such as cardiovascular, respiratory, and diabetes [6]. - The company is focusing on the anti-aging drug, Baizi Bujin Capsule, which is expected to have a broad market potential if its efficacy is confirmed [7]. Cash Flow and Dividends - The operating cash flow for the first three quarters of 2025 was 12.78 billion yuan, representing a year-on-year increase of 296.19% [7]. - On October 22, 2025, the company distributed a cash dividend of 5.01 billion yuan, indicating a return to profitability [8]. Leadership Transition - The company is under new leadership with Wu Xiangjun taking over as chairman and general manager in 2023, following the retirement of founder Wu Yiling [4].

Investment Rating - The investment rating for the industry is "Outperform the Market" (maintained) [1][5]. Core Insights - The report indicates that Nike's Q1 FY2026 performance shows a strong recovery momentum, with revenue and gross margin exceeding management guidance and Bloomberg consensus expectations. The revenue for Q1 was $11.7 billion, representing a year-on-year increase of 1%, while on a constant currency basis, it declined by 1% [2][4][7]. - The report highlights that while short-term adjustments and tariff impacts persist, certain regions and product categories are showing signs of recovery. North America led the growth, while the Greater China market and Converse brand continue to face pressure [3][4][7]. Summary by Sections Performance and Guidance - FY2026 Q1 revenue and gross margin were better than management's previous guidance and Bloomberg consensus expectations. The Q2 revenue guidance is expected to decline in the low single digits. Short-term adjustments and tariff impacts are ongoing, but some regions and categories are showing recovery signs [3][4][7]. - The revenue for FY2026 Q1 was $11.7 billion, with a year-on-year increase of 1% and a constant currency decline of 1%. North America and wholesale channels drove growth, while the Greater China market and Converse brand faced ongoing pressure [2][4][7]. Regional Performance - North America showed strong performance with a revenue increase of 4% year-on-year. The Greater China region experienced a significant decline of 10%, impacted by reduced foot traffic and a highly promotional environment [4][16][17]. - The EMEA region's revenue grew by 1%, while the Asia-Pacific and Latin America regions saw a 1% increase in revenue [4][16][17]. Product and Channel Performance - The report notes that the running category performed well, with growth exceeding 20%, while classic shoe models continued to decline. Overall shoe revenue saw a reduced decline of 2%, and apparel revenue turned positive with a growth rate of 7% [9][8]. - In terms of channels, the direct-to-consumer (DTC) revenue declined by 5%, primarily due to a 12% drop in digital sales, while wholesale revenue increased by 5% [8][9]. Management Guidance - For Q2 FY2026, management expects wholesale revenue to recover modestly, while direct-to-consumer revenue is not anticipated to recover. The Greater China region and Converse brand are expected to continue exerting pressure on revenue and gross margin throughout the fiscal year [31][32]. - The gross margin is projected to decline by approximately 300 to 375 basis points, with new tariffs contributing about 175 basis points to this decline [31][33]. Investment Recommendations - The report recommends focusing on high-quality suppliers and retailers within the industry chain, particularly Shenzhou International and Huayi Group, as well as core retailer Taobo, which is expected to benefit from Nike's recovery and increased new product ratios [34].

Group 1 - The core event is the CINE2025 Solid-State Battery Exhibition and Industry Annual Conference scheduled for November 6-8, 2025, in Guangzhou, with over 200 exhibitors and 20,000 professional attendees expected [1] - The restructuring of Ningbo Shanshan Co., Ltd. is underway, with a new control structure emerging from a joint investment agreement involving multiple parties, including Jiangsu New Yangzi Trading Co., Ltd. and TCL Technology [2][3] - The joint investment group aims to acquire a controlling stake of 23.36% in Shanshan Co. for approximately 3.284 billion yuan [5] Group 2 - The new actual controller of Shanshan Co. will be Ren Yuanlin, a prominent figure in the shipbuilding industry, known as the "King of Private Shipbuilding" in China [6] - Shanshan Co. has faced significant changes in control following the sudden death of its founder, leading to a power struggle and eventual restructuring [8] - The financial performance of the new controlling entity, Yangzi Jiang Shipbuilding, shows a total revenue of 12.9 billion yuan and a net profit of 4.2 billion yuan for the first half of 2025, indicating a 37% year-on-year growth [6]

Group 1 - The overall market has seen an increase, returning to a rating of 4.2 stars [1] - Large-cap stocks have slightly risen, while small and mid-cap stocks have seen more significant gains [2] - The growth style has shown overall upward movement [3] Group 2 - In the value style, free cash flow has increased, while other value styles have seen slight declines [4] - Typically, when the growth style is strong, the value style tends to be weaker [5] Group 3 - The pharmaceutical industry has experienced an overall increase, with biotechnology and medical sectors rising significantly [6] - Hong Kong's pharmaceutical sector has led the way in performance recovery this year, driving a substantial rise in the index [7] - The A-share pharmaceutical industry also saw a recovery in the first quarter, but the extent was not as strong as in Hong Kong [8] - Recently, related A-share varieties have entered a phase of catch-up growth [9] - Hong Kong stocks have also risen today, with a greater increase compared to A-shares [10] Group 4 - Major internet companies in Hong Kong reported better-than-expected earnings growth in the second quarter, leading to a significant rise in technology stocks [12] - The financial reports for Hong Kong technology stocks in the first two quarters have shown substantial year-on-year profit growth [13] Group 5 - Both A-shares and Hong Kong stocks have shown strong growth styles this year, driven by performance recovery and a combination of "valuation increase" and "profit growth" [14] - A-shares have seen significant increases in small-cap growth stocks, while Hong Kong has primarily seen gains in large-cap growth stocks [14] - The recent rises in Hong Kong stocks have been closely tied to earnings reports [16] Group 6 - The overall profit of all listed companies has shown year-on-year growth [37] - In 2024, the fundamentals of A-shares are expected to be weak, with a decline in profits [38] - The profit growth rate in the second quarter is similar to that of the first quarter, indicating a steady recovery [42] - The growth in different sectors varies significantly, with technology and pharmaceuticals in Hong Kong showing notable profit increases, while consumer sectors remain relatively weak [46][48]

Core Viewpoint - The company, Hanrui Cobalt, reported significant growth in its financial performance for the first half of 2025, with a notable increase in both revenue and net profit, indicating a recovery from previous downturns in the cobalt market [1] Financial Performance - In the first half of 2025, Hanrui Cobalt achieved an operating income of 3.168 billion yuan, representing a year-on-year growth of 23.77% [1] - The net profit for the same period was 127 million yuan, showing a substantial year-on-year increase of 102.94% [1] - The company's first quarter of 2025 saw a non-recurring net profit of 22.23 million yuan, a decline of 63.59% year-on-year, but it rebounded to 83.07 million yuan in the second quarter, demonstrating strong profit elasticity post-capacity ramp-up [1] Historical Performance - From 2023 to 2024, Hanrui Cobalt experienced a performance cycle from pressure to recovery, with a net profit of 138 million yuan in 2023, down over 34% year-on-year due to falling cobalt prices [1] - In 2024, the net profit recovered to 201 million yuan, driven by tightened supply from the extended cobalt export ban in the Democratic Republic of Congo and improved capacity utilization [1] Shareholder Activity - Significant shareholder reductions have been noted, with the controlling shareholders, Liang Jiankun and Liang Jie, having reduced their holdings since the lifting of the lock-up period in 2020, cashing out a total of 952 million yuan over three years [2][3] - In July 2025, other shareholders announced plans to reduce their holdings by up to 3% due to personal funding needs [3] Strategic Initiatives - The company provided a bank credit guarantee of up to 120 million USD for its wholly-owned subsidiary in Hong Kong, aimed at funding the construction of a nickel project in Indonesia, which is expected to generate annual revenue of 2.37 billion yuan and a gross margin of 29.2% upon its completion in March 2026 [3] - The nickel project is crucial for addressing the company's supply chain gaps in the "cobalt powder - precursor" segment and is projected to meet the demand for 400,000 electric vehicles [3] Challenges - Despite the recovery in performance, the company faces challenges, as evidenced by a decline in gross profit margin to 11.2% in the first quarter of 2025, down from 16.57% in the same period of 2024, highlighting the ongoing impact of price fluctuations in copper and cobalt on profitability [3] - The ongoing shareholder sell-offs and fluctuating gross margins reflect the vulnerabilities of resource-based companies amid cyclical market changes [3]