Group 1: Market Trends and Performance - The construction and building materials indices have shown a W-shaped fluctuation in 2025, with the building materials sector outperforming the Shanghai Composite Index by 2.5 percentage points[12] - As of May 30, 2025, the CI building materials index has increased by 0.05% compared to the end of 2024, while the CI construction index has decreased by 3.3%[12] - The construction sector's operating cash flow has improved significantly, with a net cash inflow of CNY 1,668 billion in 24Q4 and 25Q1, an increase of CNY 1,534 billion year-on-year[38] Group 2: Industry Outlook and Recommendations - The demand for renovation and urban renewal is expected to support the building materials sector, with an estimated 1.1 to 1.2 million units of renovation demand per year from 2024 to 2026, growing at a CAGR of 5%[4] - Key recommendations for investment include China State Construction, China National Materials, and China Nuclear Engineering, with target prices set at CNY 8.60, CNY 13.04, and CNY 10.81 respectively[10] - The cement industry is projected to see a 6% year-on-year decline in demand, while the glass fiber and carbon fiber sectors are expected to maintain high demand due to emerging industries[5] Group 3: Corporate Strategies and Transformations - Many small and medium-sized construction enterprises are actively seeking cross-industry transformations, with a focus on sectors like semiconductors and renewable energy[45] - The "6+4+2" trillion yuan debt restructuring plan has led to a total of CNY 3.38 trillion in debt replacement funds in 2024, benefiting smaller construction firms more significantly[37] - The construction industry is entering a phase of deep integration, with state-owned enterprises likely to increase their market share as private firms exit the market[43]

Market Overview - The Hang Seng Index rose by 1.96% to 22,504.68 points during the trading days from April 28 to May 2, 2023, with the Hang Seng Tech Index showing a strong increase of 4.64% to 5,244.06 points [1] - Recent easing of geopolitical tensions has led to a rebound in risk assets, with the Hong Kong stock market rising for the third consecutive week, nearing recovery from the declines caused by the "reciprocal tariffs" imposed during the Trump administration [1] Economic Indicators - The Hong Kong Monetary Authority (HKMA) intervened by purchasing HKD 46.539 billion (approximately USD 6 billion) to maintain the stability of the Hong Kong dollar against the US dollar, triggered by the strong-side convertibility undertaking at 7.75 HKD per USD [2] - The HKMA noted an increase in demand for Hong Kong dollars related to stock investments, which supports the currency's value [2] Company Performance - Hong Kong Exchanges and Clearing Limited (HKEX) reported record revenue of HKD 68.57 billion for Q1 2025, a 32% year-on-year increase, and a net profit of HKD 40.77 billion, up 37% year-on-year [3] - The average daily trading amount for Hong Kong stocks reached a historical high of HKD 242.7 billion, with the IPO market remaining strong, raising HKD 18.7 billion from 17 companies, nearly quadrupling the amount from the same period last year [3] New Listings - Hunan Mingming Henmang Commercial Chain Co., Ltd. submitted its IPO application to HKEX, aiming to raise funds for supply chain upgrades, store network optimization, brand building, and digital investment [4][5] - The company, formed by the merger of "Snacks Very Busy" and "Zhao Yiming Snacks," is projected to achieve a GMV of RMB 55.5 billion in 2024, making it the largest leisure food and beverage retail chain in China [4][5] Industry Trends - The leisure food market in lower-tier cities is expected to reach a GMV of RMB 2.3 trillion in 2024, with growth rates surpassing those in higher-tier markets [5] - The market is undergoing rapid consolidation, with an estimated 50% of lower-tier companies expected to exit by 2025 [5]

Investment Rating - The investment rating for the company is "Outperform the Market" [6] Core Views - The company is experiencing significant revenue growth driven by the acceleration of AI computing infrastructure, with a projected revenue of 13.34 billion yuan in 2024, representing a year-over-year increase of 49.26% [1] - The company's net profit for 2024 is expected to reach 2.59 billion yuan, reflecting a year-over-year growth of 71.05% [1] - The AI computing infrastructure is identified as the core driver of growth in the PCB industry, leading to structural growth and improved profitability for the company [1][2] Revenue and Profitability - The company's revenue from the enterprise communications market segment is projected to be 10.09 billion yuan in 2024, a year-over-year increase of 71.94%, with AI server and HPC-related PCB products accounting for approximately 29.48% of this revenue [2] - The automotive PCB segment is expected to generate revenue of 2.41 billion yuan in 2024, with a year-over-year growth of 11.6%, although the gross margin is projected to decline to 24.45% [3] Financial Forecasts - The company is expected to achieve net profits of 3.52 billion yuan, 4.66 billion yuan, and 5.55 billion yuan in 2025, 2026, and 2027 respectively, with year-over-year growth rates of 35.9%, 32.5%, and 19.2% [3] - The projected PE ratios for the company are 14x, 11x, and 9x for 2025, 2026, and 2027 respectively, indicating a favorable valuation [3] Market Dynamics - The AI sector is anticipated to significantly reshape high-end PCB demand, with the company maintaining resilience and competitive advantages through strategic product launches [2] - The automotive PCB market faces challenges such as oversupply in the mid-to-low end segment and increased price competition, impacting profitability [3]