Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited (00388.HK) is "Buy" (maintained) [1] Core Views - The valuation of Hong Kong Exchanges is lagging behind trading volume, with a recovery in IPOs benefiting the long-term Average Daily Turnover (ADT) [4] - The trading volume in the Hong Kong stock market has been active, with February's ADT reaching a historical peak of HKD 297.3 billion, a year-on-year increase of 230% [13] - The company has adjusted its ADT forecasts for 2025-2027 to HKD 2200 billion, HKD 2000 billion, and HKD 2000 billion respectively, reflecting a year-on-year growth of 66.9%, a decline of 9.1%, and flat growth [4] - The net profit forecasts for 2025-2027 have been raised to HKD 16.8 billion, HKD 16.9 billion, and HKD 17.2 billion respectively, indicating year-on-year growth of 29.0%, 0.2%, and 2.2% [4] Summary by Sections Market Activity and Trading Settlement Business - The Hong Kong stock market's activity has been improving, with February's ADT reaching a historical peak of HKD 297.3 billion, a year-on-year increase of 230% [13] - The trading settlement business, which is highly correlated with ADT, contributed over 53% of the company's revenue in 2024 [5] IPO Recovery and Market Structure - Regulatory support for A-share companies to list in Hong Kong is expected to enhance market capitalization and activity [6] - In the first two months of 2025, there were 10 IPOs in Hong Kong, doubling year-on-year, with a financing scale of HKD 7.8 billion, an increase of 258% [6][32] Financial Performance and Valuation - The company's revenue for 2025 is projected to be HKD 27.785 billion, reflecting a year-on-year growth of 24.18% [7] - The net profit for 2025 is estimated at HKD 16.828 billion, indicating a year-on-year increase of 28.95% [7] - The current price-to-earnings (P/E) ratio is projected to be 27.8 times for 2025, compared to a historical average of approximately 37 times over the past decade [4][7]

[Table_Page] 跟踪分析|银行 证券研究报告 [Table_Title] 银行投资观察 20250316 兵马已动，粮草先行 ——坚定看好顺周期复苏 [Table_Summary] 核心观点： | [Table_Gr ade] 行业评级 | 买入 | | --- | --- | | 前次评级 | 买入 | | 报告日期 | 2025-03-16 | [Table_PicQuote] 相对市场表现 [分析师： Table_Author]倪军 SAC 执证号：S0260518020004 021-38003646 nijun@gf.com.cn 分析师： 许洁 SAC 执证号：S0260518080004 SFC CE No. BNU965 021-38003625 xujie@gf.com.cn -14% -5% 4% 12% 21% 30% 03/24 05/24 08/24 10/24 12/24 03/25 银行 沪深300 请注意，倪军并非香港证券及期货事务监察委员会的注册 持牌人，不可在香港从事受监管活动。 [Table_ 相关研究： DocReport] 识别风险，发现价值 请务必阅读末页 ...

Summary of Hezhong Electric's Conference Call Company Overview - **Company**: Hezhong Electric - **Industry**: AIDC (Automatic Identification and Data Capture) Key Points and Arguments Business Growth and Performance - Hezhong Electric has made significant progress in the AIDC sector, particularly in the renewable energy field, with notable advancements in HVDC (High Voltage Direct Current) development [3][5][12] - The company expects a growth rate of **30% to 40%** in its wind power business, with a steady recovery in gross margins [3][5] - The solar storage business is anticipated to double its growth due to recognition from top state-owned enterprises and new technology applications [3][5] - The large transmission business is expected to benefit from military procurement demand, with a potential **1 billion** level order from Chengfei Group, leading to a **20% to 30%** compound growth rate [3][4][5] Management and Governance Changes - The appointment of the CTO as president has led to comprehensive reforms in the business units, significantly boosting sales incentives across wind power, solar, storage, and large transmission sectors [3][6] - These governance changes have improved operational efficiency and market competitiveness, reflected in the strong performance in Q4 [6] Market Position and Competitive Advantage - Hezhong Electric is viewed as a preferred stock in the AIDC sector due to its enhanced comprehensive capabilities and ability to switch valuations amid high market demand [3][5] - The company is positioned to maintain its competitive edge in the wind power sector as market price competition eases [8] - In the solar storage sector, the company is leveraging bidding successes and new technology recognition for accelerated growth [8] Future Development Directions - Hezhong Electric aims to achieve a qualitative transformation in its comprehensive capabilities, similar to CATL in the lithium battery industry, maintaining strong growth post-cycle [7] - The company is expected to complete valuation switches and maintain high growth expectations beyond 2026 [7] - The focus on overseas market expansion through HVDC technology upgrades is anticipated to significantly enhance revenue and profit [8][14] Product and Technology Positioning - The AIDC product market positioning is gaining attention, with Hezhong Electric leveraging its high-power inverter technology to lead in both domestic and international markets [11] - The company has established a strong foothold in the HVDC sector, with ongoing collaborations that may facilitate breakthroughs in the U.S. market [12] Financial Projections - Hezhong Electric's traditional main business is projected to achieve revenues of **650 million to 700 million** in 2025, with a corresponding market valuation of approximately **13 billion** [15] - The HVDC business is expected to generate significant incremental revenue, with a projected market space of **7 billion** if the company captures a **50%** market share [15] Additional Important Insights - The company’s governance and management structure improvements have already shown results in Q4 performance, indicating a strong operational turnaround [10] - Hezhong Electric's strategic partnerships, particularly with companies like Vidi China, enhance its competitive positioning and product development capabilities [11][14] - The overall market for power electronics in the solar and wind sectors is expected to see substantial growth, driven by increased recognition and support for these industries [10]

Core Viewpoint - The article emphasizes that Chinese assets, particularly in the Hong Kong technology sector, are experiencing a significant revaluation, driven by a combination of improved fundamentals and external capital inflows [4][29]. Group 1: Market Performance - The Hong Kong Internet ETF (513770) has seen a substantial increase, achieving a new high with three consecutive days of gains [1]. - Since the market rally began on January 14, the Hang Seng Index and the Hang Seng Tech Index have risen by 29.12% and 43.74%, respectively, while the Hong Kong Internet Index has surged by 51.53% [2]. Group 2: Institutional Insights - Morgan Asset Management believes that the revaluation of Chinese assets is just beginning, predicting a "Davis Double Play" where both valuations and corporate earnings improve [4]. - The macroeconomic environment is stabilizing, which is conducive to a better pricing environment for the market [7]. Group 3: Foreign Capital Inflows - There is a significant amount of capital waiting to enter the market, primarily from long-term foreign investors, which could lead to a new rally in Chinese technology assets [3][15]. - The CEO of Norway's sovereign wealth fund has suggested reallocating investments from U.S. tech stocks to Chinese stocks, indicating a shift in foreign investment strategies [12]. Group 4: AI and Technology Investments - The article highlights the increasing capital expenditures by Chinese tech companies in AI, with ByteDance investing hundreds of billions in AI technology, similar to investments made by U.S. tech giants [20][27]. - The rise of AI technology in China is seen as a pivotal moment that could attract long-term foreign capital back into the market [29]. Group 5: Market Sentiment and Future Outlook - Despite skepticism from some investors due to past market volatility, the current upward trend in Hong Kong tech stocks is expected to continue as more capital flows in [30][36]. - The article suggests that the current valuations of major Hong Kong tech stocks like Tencent and Alibaba are still below their 2021 highs, indicating potential for further growth [36].

Investment Rating - The industry investment rating is "Positive" with expectations of returns exceeding the CSI 300 index by more than 5% over the next six months [78]. Core Viewpoints - The global geopolitical tensions are escalating, leading to a new round of military expansion. China's defense spending has consistently outpaced GDP growth in most years, indicating significant growth potential for future defense budgets. The year 2025 marks the end of the "14th Five-Year Plan," and the industry is expected to recover from the past two years of stagnation, entering a phase of comprehensive recovery. As orders normalize and are gradually released, the military industry may experience a "Davis Double-Click" phase of performance improvement and valuation enhancement. It is recommended to focus on leading companies in advanced fighter jets, low-altitude economy, domestic large aircraft, satellite internet, and underwater offense and defense sectors, which have favorable competitive landscapes and high technological barriers [4][11]. Summary by Sections Industry News - The Southern Theater Command and the China Coast Guard have conducted patrols in the waters surrounding Huangyan Island, reinforcing maritime control and safeguarding national sovereignty and maritime rights [3][17]. Market Performance - In the past week, the Aerospace and Defense Index fell by 2.95%, while the CSI 300 Index decreased by 0.99%. In the monthly performance, the Aerospace and Defense Index increased by 1.79%, compared to a 1.91% rise in the CSI 300 Index [12]. Company Tracking - Platinum Power has completed a share buyback, repurchasing 1,759,549 shares at a total cost of approximately RMB 73.21 million [24]. - Tian'ao Electronics reported a revenue of approximately RMB 96.44 million, a year-on-year decrease of 13.04%, and a net profit of approximately RMB 6.42 million, down 26.37% [25]. - ST Guandian reported a significant revenue drop of 43.92% year-on-year, with a net loss of approximately RMB 100.11 million [26]. - Tongyi Aerospace expects a revenue of approximately RMB 16.72 million, a decrease of 11.27%, and a net loss of approximately RMB 1.54 million [27]. - Zhong UAV reported a revenue of approximately RMB 68.52 million, down 74.28%, with a net loss of approximately RMB 53.92 million [28].

Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited is "Buy" (maintained) [1] Core Views - The report highlights a significant improvement in ADT-linked business year-on-year, with a recovery in IPOs supporting growth [1] - The expected total revenue and net profit for 2024 are HKD 22.374 billion and HKD 13.050 billion, respectively, representing year-on-year growth of 9% and 10% [1] - The report anticipates a strong performance driven by the recovery of the IPO market and increased activity in the technology sector, suggesting a potential "double boost" in performance and valuation for the exchange [1][3] Summary by Sections Financial Performance - In 2024, the company achieved total revenue of HKD 22.374 billion and net profit of HKD 13.050 billion, with Q4 net profit reaching HKD 3.78 billion, up 46% year-on-year and 20% quarter-on-quarter [1] - Revenue from trading, settlement, and other income showed year-on-year increases of 18%, 21%, and slight declines in other categories [1] - The forecast for net profit for 2025-2027 is HKD 15.775 billion, HKD 15.571 billion, and HKD 16.141 billion, respectively, with corresponding EPS of HKD 12.44, HKD 12.28, and HKD 12.73 [1][4] Market Activity - The report notes a year-on-year increase in ADT for Hong Kong stocks, reaching HKD 1.32 trillion in 2024, up 26%, with northbound and southbound ADT increasing by 39% and 55%, respectively [2] - The IPO market showed signs of recovery, with 71 companies listed in 2024, raising HKD 88 billion, a 90% increase year-on-year [2] - The report emphasizes the role of new economy companies in driving market activity, with significant listings expected in the coming years [3] Valuation Metrics - The current P/E ratios for 2025-2027 are projected at 29.0, 29.4, and 28.4 times, respectively, indicating a favorable valuation outlook [1][4] - The report provides a financial summary indicating a steady growth trajectory in revenue and net profit, with a projected revenue increase of 22.56% in 2025 [4][9]