Core Viewpoint - Korean investors are increasingly buying Chinese stocks, with significant growth in trading volumes and a focus on technology sectors such as electric vehicles, artificial intelligence, and semiconductors [1][3][4] Group 1: Investment Trends - In February, Korean investors' trading volume in A-shares and Hong Kong stocks reached $782 million, a nearly 200% increase month-on-month, marking the highest level since August 2022 [3][4] - Chinese stocks occupied six of the top ten positions in net purchases by Korean investors from February 17 to 28, primarily in leading technology companies [3][4] - The return of foreign capital to the Chinese market is noted, with both short-term and long-term investors showing interest, particularly in the Hong Kong technology sector [1][6] Group 2: Market Performance - The performance of Chinese index ETFs listed on the Korean exchange has been strong, with the top ETF gaining 62.8% in the past month, contrasting sharply with less than 10% returns from U.S. index ETFs [4] - The A-share Science and Technology Innovation 50 Index has risen over 16% since January 13, while the Hang Seng Technology Index has increased by 43%, significantly outperforming other major stock indices [7] Group 3: Valuation and Future Outlook - Despite substantial gains, the average price-to-earnings ratio of China's "seven giants" in technology is 32.3 times, still lower than the 37.6 times for Nvidia, indicating potential for further appreciation [8][9] - Analysts predict that the Chinese AI sector's market value could rise from $350 billion to $480 billion by 2028, driven by technological advancements and supportive macroeconomic policies [8][9] - The overall sentiment among foreign investors is optimistic, with expectations of continued interest in Chinese assets and potential annual returns of 7.8% over the next 10 to 15 years [9][10]

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Group 1: Industry Insights - The petrochemical and transportation sectors are expected to see continuous improvement in supply and demand, with a positive outlook on the profitability of viscose filament yarns [3] - The semiconductor materials sector is poised for growth due to an increase in fab investments, with the number of 300mm wafer fabs in mainland China projected to rise from 29 in 2024 to 71 by 2027, indicating a significant opportunity for domestic material companies [4] - The agricultural chemicals and private refining sectors are also expected to perform well, alongside the vitamin and methionine segments [3] Group 2: Company Performance - Alibaba Group plans to invest over 380 billion yuan in cloud and AI hardware infrastructure over the next three years, marking the largest investment in this area by a private company in China [5] - Hongsoft Technology is anticipated to benefit from the rapid development of edge AI, with projected revenue of 820 million yuan in 2024, representing a 22% year-on-year increase, and a net profit of 180 million yuan, up 98% [7] - China National Offshore Oil Corporation (CNOOC) has made significant breakthroughs in oil and gas exploration in the Beibu Gulf, with a capital expenditure budget of 125 to 135 billion yuan for 2025 [8] - Andisu's revenue for 2024 is expected to reach 15.5 billion yuan, a year-on-year increase of 18%, with net profit soaring by 2,209% to 1.2 billion yuan [9] - Dongfang Yuhong reported a decline in revenue and net profit for 2024, with total revenue of 2.806 billion yuan, down 14.5%, and a net profit of 110 million yuan, down 95.2% [10]

Investment Rating - The report maintains a "Buy" rating for Dongxin Co., Ltd. (688110) [7][10] Core Views - The semiconductor design industry is experiencing a recovery, leading to improved performance for the company, with a revenue increase of 20.80% year-on-year to 641 million yuan in 2024, and a reduction in net loss by 43.24% to 173.83 million yuan [2][3] - The company is focusing on high-level R&D investments, particularly in storage technologies, and is advancing its SLC NAND FLASH technology while also developing Wi-Fi 7 wireless communication chips [3][4][8] - The demand for storage chips is expected to grow due to the increasing application of AI technology in various devices, positioning the company to benefit from this trend [4][9] Summary by Sections Financial Performance - In 2024, the company achieved a revenue of 641 million yuan, a 20.80% increase year-on-year, while the net loss narrowed to 173.83 million yuan, a reduction of 43.24% [2][3] - The company anticipates revenues of 946 million yuan in 2025 and 1.29 billion yuan in 2026, with projected net profits turning positive in 2025 at 1.90 million yuan and reaching 18 million yuan in 2026 [10][12] Market Position and Strategy - The company is actively expanding its market presence in key applications such as network communication, surveillance, wearables, and automotive electronics, which has led to significant growth in product sales [3][4] - The company is enhancing its product structure and market strategies to improve operational efficiency and reduce costs, resulting in an increase in gross margin compared to the previous year [3] Product Development - The company is expanding its SLC NAND Flash product line and has entered the risk production phase for its advanced 1xnm SLC NAND Flash products [8] - The MCP series products are designed to meet the low-power requirements of mobile internet and IoT applications, with ongoing iterations to enhance product offerings [9]

Investment Rating - The report maintains a "Buy" rating for Transsion Holdings with a target price of RMB 114.2, indicating a potential upside of 16.9% from the current price of RMB 97.7 [3][5][9]. Core Insights - Transsion Holdings has shown a positive quarter-over-quarter improvement in revenue and profit for Q4 2024, laying a solid foundation for growth in 2025. The company ranks fourth globally in smartphone shipments with a market share of 8.7% [9][12]. - The growth drivers for 2025 include strong smartphone shipment growth, expansion in digital accessories and energy storage products, and accelerated growth in mobile internet services benefiting from operational leverage [9][12]. - The DCF valuation method estimates a target price of RMB 114.2, with assumptions of a 1.8% risk-free rate and a WACC of 6.1% [15][17]. Financial Projections - Revenue projections for Transsion Holdings are as follows: - 2023: RMB 62,295 million - 2024E: RMB 68,743 million - 2025E: RMB 78,105 million - 2026E: RMB 89,470 million - 2027E: RMB 100,537 million - The expected revenue growth rates are 34% for 2023, 10% for 2024E, and 14% for 2025E [4][10]. - Net profit projections are: - 2023: RMB 5,537 million - 2024E: RMB 5,590 million - 2025E: RMB 6,080 million - 2026E: RMB 7,363 million - 2027E: RMB 8,511 million - The net profit growth rates are 123% for 2023, 1% for 2024E, and 9% for 2025E [4][10]. Q4 2024 Performance - For Q4 2024, Transsion's revenue is expected to reach RMB 17,491 million, a 9% year-over-year decline but a 5% quarter-over-quarter increase. Net profit is projected at RMB 1,687 million, reflecting a 2% year-over-year increase and a 60% quarter-over-quarter increase [13][12].

Core Viewpoint - BYD's advanced intelligent driving solutions are expected to significantly penetrate the market, with projected sales of high-level NOA models reaching nearly 3 million units by 2025, indicating a penetration rate of 60% for highway NOA and 9% for urban NOA, leading to a total of 3.46 million units and a combined penetration rate of 69%, a substantial increase from 7.2% in 2024 [1] Summary by Sections Intelligent Driving Configuration - BYD's intelligent driving technology matrix includes three levels: 1) Tian Shen Zhi Yan A with three LiDARs and DiPilot 600, mainly used in the Yangwang brand for urban NOA 2) Tian Shen Zhi Yan B with one LiDAR and DiPilot 300, used in Tengshi and BYD brands for urban NOA 3) Tian Shen Zhi Yan C with high-definition three-camera setup and DiPilot 100, primarily in BYD models for high-speed NOA - All models priced above 100,000 yuan will be equipped with the Tian Shen Zhi Yan system, while models below this price, such as Qin PLUS DM-i, Sea Lion 0.5 DM-i, and Sea Gull, will also feature this technology, making advanced driving technology accessible at a starting price of 78,800 yuan [2] Upstream Hardware Supply Chain - The core incremental components in the hardware supply chain for intelligent driving include: 1) Main chips and domain controllers: Tian Shen Zhi Yan A uses dual NVIDIA Orin-X chips, B uses a single Orin-X, and C uses either Orin-N or Horizon J series chips 2) Cameras: All three configurations use 12 cameras, with a significant demand increase projected for 2024 and 2025, estimated at 10 million and 50 million units respectively 3) LiDAR: Tian Shen Zhi Yan A has three LiDARs, B has one, and C uses a pure vision approach, with demand expected to rise to 80,000 and 450,000 units for 2024 and 2025 respectively [3][4][5] Investment Strategy - The investment focus for 2025 is on edge AI, with BYD's automotive intelligent upgrade as a key direction. The hardware sector's core growth is anticipated in main chips, domain controllers, cameras, LiDAR, and connectors. - The investment tiers are categorized as follows: 1) First tier: Upstream components with potential supply-demand tightness and long-term product upgrade logic 2) Second tier: Components with volume growth logic, particularly in lens modules and LiDAR 3) Third tier: Components with volume growth logic and potential market share increase in connectors 4) Fourth tier: General automotive components and PCBs [7][8][9][10]

Core Viewpoint - The integration of AI edge models and hardware modules is set to drive a significant explosion in smart terminal applications, particularly with the introduction of DeepSeek-R1 and its adaptations for various edge scenarios [1][4][5]. Summary by Sections AI Edge Market Potential - The global AI edge market is projected to reach $143.6 billion by 2032, driven by applications in sectors such as medical devices, personal storage, and smart home technologies [6]. DeepSeek and Domestic Innovations - The integration of DeepSeek-R1 with WeChat marks a significant innovation in the domestic mobile internet landscape, showcasing the potential of large models in practical applications [4][5]. Technical Innovations by iDeepWise.ai - iDeepWise.ai has developed the Dongni-AMDC algorithm, which compresses the DeepSeek R1 model for edge deployment, ensuring low power consumption and high performance [8][11]. - The company has introduced the TinyDongni model, specifically designed for edge scenarios, with parameter sizes of 1.5B, 0.4B, and 0.15B, ensuring rapid response times and data security [19][21]. Collaboration with Domestic Hardware - iDeepWise.ai has partnered with leading domestic module manufacturers to create a comprehensive edge AI solution that integrates with various operating systems, including OpenHarmony and Linux [30][32]. - The collaboration with hardware manufacturers has reduced the development cycle for AI smart hardware by 50%, facilitating faster deployment in sectors like automotive and robotics [32]. Performance Metrics - The DeepSeek 1B model deployed on the Rockchip RK3588 achieves a processing speed of 10.2 tokens per second, while the TinyDongni model reaches 13.6 tokens per second, demonstrating significant advancements in edge AI performance [34][35]. Real-World Applications - iDeepWise.ai's edge models have been successfully implemented in various applications, including AI PCs for local multimodal searches and AI microscopes for medical diagnostics, showcasing their versatility and effectiveness [40][46]. - The company has a strong focus on the healthcare sector, having developed AI solutions that have processed over 30 million cervical cancer screenings, leveraging extensive medical literature for training [47][48]. Future Outlook - The company anticipates a surge in AI-enabled smart terminal applications, positioning itself to meet the growing market demand for localized AI solutions that prioritize user privacy and data security [49].

Investment Rating - The report maintains a "Buy" rating for Transsion Holdings with a target price of RMB 114.2, indicating a potential upside of 16.9% from the current price of RMB 97.7 [3][5][9]. Core Insights - Transsion Holdings has shown a good sequential improvement in revenue and profit for Q4 2024, laying a solid foundation for growth in 2025. The company is expected to rank fourth globally in smartphone shipments in 2024, with a market share of 8.7%, continuing to grow from 2023 [9][12]. - The growth drivers for 2025 include strong smartphone shipment growth, expansion in digital accessories and energy storage products, and accelerated growth in mobile internet business, benefiting from operational leverage [9][12]. - The DCF valuation method estimates a target price of RMB 114.2, with assumptions of a 1.8% risk-free rate, a 10% growth rate from 2030 to 2034, and a WACC of 6.1% [15][17]. Financial Summary - Revenue projections for Transsion Holdings from 2023 to 2027 are as follows: - 2023: RMB 62,295 million - 2024E: RMB 68,743 million (34% YoY growth) - 2025E: RMB 78,105 million (10% YoY growth) - 2026E: RMB 89,470 million (14% YoY growth) - 2027E: RMB 100,537 million (15% YoY growth) [4][10]. - Net profit projections are: - 2023: RMB 5,537 million - 2024E: RMB 5,590 million (123% YoY growth) - 2025E: RMB 6,080 million (1% YoY growth) - 2026E: RMB 7,363 million (9% YoY growth) - 2027E: RMB 8,511 million (21% YoY growth) [4][10]. - The gross margin is expected to fluctuate, with estimates of 24.5% in 2023, decreasing to 21.4% in 2024E, and then gradually improving to 22.0% by 2027E [4][10]. Performance Metrics - Q4 2024 performance highlights: - Revenue: RMB 17,491 million, down 9% YoY but up 5% QoQ - Net profit: RMB 1,687 million, up 2% YoY and up 60% QoQ [13]. - Adjusted forecasts for 2025E and 2026E show a decrease in revenue and profit expectations due to slightly lower than anticipated market share and gross margin improvements [12][13].