Key Points Summary Core Viewpoints - The theme of the 2025 strategy report is "light at the end of the tunnel" and "progress will be made." The capital market has felt the policy signals behind this theme, indicating a positive trend despite challenges ahead [1][3]. Economic Environment - In 2024, the GDP growth rate was 5%, with strong export growth but low consumer spending and investment due to real estate drag. Industrial profits declined, and the manufacturing PMI orders decreased [2][27]. Policy Environment - There is an increased effort in counter-cyclical adjustments, focusing on stabilizing the capital market and improving its structure and quality. A joint plan was issued to promote long-term capital market investments, with consumer subsidy policies being expanded [3][75]. Investment Strategy - The capital market in 2025 faces complex and variable conditions, with external risks and internal factors intertwining. However, the resilience of the economy, strong policy support, breakthroughs in technology, and relatively low valuation levels enhance the market's risk resistance. The market will revolve around three main themes: "real returns," "real growth," and "real hedging," corresponding to dividend assets, technological innovation, and gold [4][16]. Market Performance Review - In January 2025, gold prices reached a new high, and major global stock markets showed strength. The Hang Seng Index rose by 0.8%, while A-shares experienced a decline of 2.3% [10][12]. Industry Performance - Only four of the Shenwan first-level industries rose in January, with a 12.9% industry rise ratio. The non-ferrous metals sector increased by 4.5%, while several sectors, including real estate and non-bank financials, saw declines exceeding 5% [14][16]. Recommended Industries - The report maintains previous recommendations for banks, securities, the Hang Seng Index, Hong Kong dividend ETFs, and gold. New recommendations include sectors such as electronics (semiconductors), communications, and robotics [7][9]. Fund Flow Analysis - As of January 27, 2025, southbound capital saw a record net inflow of 38233.8 billion HKD, with a single-month net inflow of 1255.9 billion HKD, marking a new high in three years [22][24]. Industrial Profitability - In 2024, the total profit of industrial enterprises decreased by 3.3%, with a profit margin of 5.39%. The pressure on enterprises remains significant, with rising accounts receivable and extended recovery periods [55][57]. PMI Index - The manufacturing PMI in January was 49.1%, indicating a slight decline, with new orders and export orders also decreasing. The non-manufacturing PMI was at 50.2%, reflecting a decrease in business activity [58][61]. Consumer and Investment Trends - Consumer retail sales grew by 3.5% in 2024, while fixed asset investment increased by 3.2%. The real estate sector continued to face challenges, with a 10.5% decline in development investment [51][41].

Market Strategy - The report highlights that the Hong Kong stock market is experiencing a rally led by technology stocks, with a focus on dividend assets for potential catch-up opportunities [2][3] - AI applications are accelerating, supported by policy initiatives, which has boosted market sentiment [4][5] - The Hang Seng Index is approaching 23,000 points, indicating a significant recovery in valuations, particularly in the tech sector [4][5] AI Application and Investment Opportunities - The AI narrative is deepening within industries, with major companies like Alibaba and Apple collaborating to enhance AI applications [4][6] - The report suggests a tactical shift towards dividend assets as the market begins to refocus on fundamental factors after a period of rapid gains [4][5] - There is a notable valuation gap between growth sectors, particularly tech, and dividend-paying sectors, which may present investment opportunities [4][5] AI Industry Chain Investment Layout - Investors are advised to focus on both the foundational and application layers of the AI industry chain, as demand for computing power is expected to drive infrastructure investments [9][10] - The report emphasizes the importance of controlling traffic entry points in the AI era, which will enhance market power for leading companies [9][10] Company Capital Expenditure Trends - Major internet companies in China are expected to significantly increase their capital expenditures in 2025, with Alibaba projected to spend 539 billion RMB and Tencent 425 billion RMB [11] - The report notes a recovery in capital expenditures following a period of contraction, driven by the rapid evolution of AI technologies [11][12] Market Performance Overview - The Hong Kong stock market has shown strong performance, with the Hang Seng Index and Hang Seng Tech Index leading global indices [26][27] - The report indicates that the valuation recovery of the Hang Seng Index is nearing levels seen during previous market rallies, with risk premiums returning to historical averages [26][27] - Southbound capital flows continue to support the market, particularly in technology and consumer sectors, while financial and real estate sectors have seen net outflows [75]

Financial Data and Key Metrics Changes - The Chinese government has placed significant emphasis on the development of the low-altitude economy, highlighting its strategic importance in national development and the need for a robust low-altitude safety management system [2][9] - The low-altitude economy is seen as a critical area for investment, with companies benefiting from advancements in manned spaceflight [8][24] Business Line Data and Key Metrics Changes - Yihang Intelligent has become the first globally to apply for and receive the operational certificate (OC certificate) for unmanned aerial vehicles, marking a significant step in the low-altitude economy [3][11] - The commercial and industrialization pace in the low-altitude sector has exceeded expectations, particularly in the main manufacturers and financial intelligence sectors [4][12] Market Data and Key Metrics Changes - The low-space industry is expected to show long-term investment value, with a potential second wave of market activity following a period of adjustment [7][21] - Key regions for low-altitude industry development include Guangdong, Anhui, Jiangsu, and the Sichuan-Chongqing area, which have strong industrial clusters and diverse application scenarios [19] Company Strategy and Development Direction - The focus is on core companies in the general aviation sector, particularly those with advanced technology and product lines, as investment opportunities in the A-share market [4][13] - Local governments play a crucial role in the development of the low-altitude economy, especially in promoting the construction of general aviation airports [14] Management's Comments on Operating Environment and Future Outlook - The management emphasizes the importance of a comprehensive low-altitude safety management mechanism for the healthy development of the low-altitude economy [10] - The market environment is currently favorable for dividend assets, with adjustments seen as buying opportunities [22] Other Important Information - The low-altitude economy is viewed as a significant area of focus, with related companies expected to benefit from developments in manned spaceflight [8][24] - The discussion highlighted the importance of top-level design and government investment in the low-space industry [7] Q&A Session Summary Question: What are the key drivers for the second wave of the low-altitude economy? - The second wave is driven by a recent meeting of the Central Political Bureau emphasizing the need for modern air traffic management and the healthy development of the low-altitude economy [9] Question: How does the development of the low-altitude economy relate to traffic safety? - The healthy development of the low-altitude economy is closely linked to the establishment of a comprehensive low-altitude safety management mechanism [10] Question: What are the latest developments of Yihang Intelligent in the low-altitude sector? - Yihang Intelligent has successfully applied for the OC certificate, which will accelerate the standardization of unmanned aerial vehicle operations [11] Question: Why are main manufacturers considered important in the low-altitude economy? - Main manufacturers are now seen as core investment focuses due to the accelerated pace of commercialization in the low-altitude economy [12] Question: What regions should be prioritized for low-altitude industry development? - Regions such as Guangdong, Anhui, Jiangsu, and Sichuan-Chongqing are highlighted for their strong industrial foundations and potential for low-altitude development [19]