Investment Rating - The investment rating for the company is "Buy-A" with a 6-month target price of 61.29 CNY, compared to the current stock price of 47.52 CNY [4]. Core Insights - The company is expected to achieve a revenue growth of 15%-20% and a net profit growth of 30%-50% in the first half of 2025 compared to the same period last year [1][2]. - The AI capabilities of the company continue to upgrade, particularly in the education sector, with significant enhancements in AI learning machines and smart blackboards [2][3]. - The company has established a comprehensive product system in smart education, serving over 1.3 billion teachers and students across 32 provinces in China [2][3]. Summary by Sections Financial Performance - The company anticipates a gross profit increase of over 600 million CNY in the first half of 2025, with total sales receipts reaching approximately 10.3 billion CNY, an increase of about 1.3 billion CNY year-on-year [1]. - The net cash flow from operating activities has grown by over 700 million CNY, representing a growth of approximately 50% compared to the previous year [1]. Product Development - The AI learning machine has undergone 16 major upgrades, including personalized test paper generation and one-on-one interactive tutoring capabilities [1][3]. - The AI blackboard has been widely adopted across 33 provincial-level administrative regions, empowering over 2.3 million teachers [3]. Market Position - The company’s AI hardware sales during the "618" shopping festival saw a year-on-year increase of 42%, with the AI learning machine maintaining the top sales position on major e-commerce platforms for three consecutive years [2]. - The company is recognized as a leader in the domestic AI industry, focusing on the commercialization of AI technologies across various sectors [10]. Future Projections - Revenue projections for the company are estimated at 28.34 billion CNY, 32.78 billion CNY, and 37.53 billion CNY for the years 2025, 2026, and 2027 respectively, with net profits expected to reach 870.5 million CNY, 1.28 billion CNY, and 1.69 billion CNY in the same years [10][12].

Summary of Conference Call Notes Industry or Company Involved - The conference call primarily discusses the **cloud computing** and **AI application** sectors, with a focus on **domestic computing power** and **software companies** in China. Core Points and Arguments 1. **AI Application Trends**: The AI application sector is showing a positive trend, which is expected to continue driving the computing industry forward in 2021 and beyond. The computing sector was highlighted as a key recommendation in June [1][3]. 2. **Overseas Performance**: Companies like **NVIDIA** and **Oracle** have reported better-than-expected earnings, indicating a trend that is likely to continue in the second half of the year [2][3]. 3. **Domestic Market Outlook**: The domestic computing power sector is expected to mirror the positive performance seen in overseas markets, with companies like **Guangdian** being highlighted as key players [3][4]. 4. **Cloud Computing Recovery**: The cloud computing market is anticipated to recover, with expectations of a 20% growth in Q2, reaching approximately **2.3 billion RMB** in revenue [6]. 5. **Domestic Computing Power Development**: The introduction of Huawei's **314 system-level computing power** is a significant development, aiming to compete with overseas products [7][8]. 6. **AI Software Growth**: The AI application software sector is expected to see robust growth, particularly in management and office software, driven by domestic demand [11][12]. 7. **Investment Recommendations**: Key companies to watch include **Kingsoft Cloud**, **Hua Da 9000**, and **Da Meng Data**, which are expected to perform well due to their focus on AI and domestic market needs [15][19]. 8. **Market Dynamics**: The overall sentiment is optimistic, with expectations of continued growth in the AI application and cloud computing sectors, driven by both domestic and international demand [9][10]. Other Important but Possibly Overlooked Content 1. **Impact of Supply Chain Disruptions**: The inability to import certain overseas products, such as H20 chips, has caused disruptions in the cloud computing supply chain, but recovery is expected in the coming quarters [5]. 2. **Focus on Domestic Demand**: Companies with a strong domestic focus, particularly those meeting local needs for AI applications, are likely to outperform their peers [11][12]. 3. **Long-term Trends**: The shift towards system-level computing solutions is seen as a long-term trend that will continue to shape the domestic computing power landscape [8][9]. 4. **Sectoral Differentiation**: There is a noted differentiation in performance across various sectors, with energy, telecommunications, and military applications showing particular promise [28][29]. This summary encapsulates the key insights and projections discussed during the conference call, providing a comprehensive overview of the current state and future outlook of the cloud computing and AI application sectors.

Group 1: Non-Bank Financial Sector - The Ministry of Finance issued a notice on July 11 to strengthen the long-term assessment of state-owned commercial insurance companies, adjusting the evaluation method for "return on net assets" and "capital preservation and appreciation rate" to a combination of current year, 3-year, and 5-year indicators with respective weights of 30%, 50%, and 20% [2][6][21] - The new assessment method aims to encourage insurance funds to focus on long-term stable investments, which is expected to enhance the long-term investment returns of insurance companies and alleviate investment pressures [2][9][21] - The insurance sector is anticipated to see an increase in equity asset allocation, while maintaining a generally stable asset allocation style due to the pressure on liability costs and the need for quality assets to achieve incremental investment returns [8][9][21] Group 2: Market Strategy and Performance - The A-share market continued to rise, with the ChiNext index and the CSI 1000 index both increasing by approximately 2.4%, driven by the ongoing "anti-involution" trend and positive changes in domestic policies [3][12] - The report suggests focusing on three main lines: technology growth sectors benefiting from both domestic and external demand, industries likely to improve due to the "anti-involution" trend, and financial sectors with high dividend advantages [3][13] - The real estate sector saw a significant increase of 6.12%, indicating a potential recovery as market sentiment improves ahead of important meetings [18][19] Group 3: AI and Office Software Industry - The AI + office software industry is at a turning point, transitioning from tool intelligence to workflow reconstruction, driven by breakthroughs in large model technology [3][15] - Major players like Microsoft dominate the high-end market, while domestic companies leverage localized data advantages and policy support to rapidly rise in the market [15][16] - Investment opportunities are recommended in companies such as Kingsoft Office, Foxit Software, and others, as the industry is expected to continue expanding due to the deepening of digital transformation and the demand for domestic alternatives [15][16] Group 4: Oil and Petrochemical Sector - The oil and petrochemical sector is supported by seasonal demand for refined oil, with WTI crude oil prices rising by 3.05% recently [24][26] - Geopolitical risks in the Middle East continue to provide short-term support for oil prices, while OPEC+ plans to increase production may lead to downward pressure on prices in the medium term [24][26] - The report suggests focusing on domestic oil companies with strong earnings resilience, such as China National Petroleum, China Petroleum & Chemical, and China National Offshore Oil [26] Group 5: Precious and Industrial Metals - The gold market is expected to perform well in the medium to long term due to ongoing macroeconomic uncertainties and a weakening dollar [28][30] - Copper prices may face short-term volatility due to impending tariffs, but medium-term demand is expected to remain strong due to industrialization in emerging markets [28][30] - The aluminum market is anticipated to see upward price movement due to a strong supply-demand imbalance, with recommendations for companies like Tianshan Aluminum [28][30]

Group 1 - The technology growth sector has seen a strong rebound since April 9, with the PCB index rising over 50% and the CPO concept index increasing nearly 40% as of July 3 [1] - Notable companies such as Xinyiseng in the optical module sector and Shenghong Technology, Dongshan Precision in the PCB sector have reached historical stock price highs [1] - Funds heavily invested in the technology sector have also experienced significant net value rebounds, with the Yongying Technology Smart Mixed Fund increasing by 57.77% and the Zhonghang Opportunity Leading Mixed Fund rising by 56.66% from April 9 to July 2 [3] Group 2 - A substantial influx of capital into technology sub-sectors has been observed, with significant net subscriptions for thematic ETFs, including 2.682 billion yuan for the Jiashi Science and Technology Chip ETF and 1.413 billion yuan for the Huaxia Robot ETF since June [3] - The overall valuation of the TMT sector has recovered to historical averages, although there is internal valuation differentiation, particularly in computing, electronics, and media sectors, which may lead to short-term market fluctuations [3] - Institutions have been actively researching technology sub-sectors, with a focus on semiconductor, computer software, and optoelectronic devices, emphasizing performance as a core concern [4]

Group 1 - Significant capital inflow into technology sector ETFs since June, with some ETFs reaching historical highs in shares [1][3] - The technology growth sector is experiencing a positive industry trend, particularly in the AI-related supply chain, with strong performance expected in upcoming half-year reports [1][4] - The PCB index has increased over 50% and the CPO concept index has risen nearly 40% since April 9, indicating a strong rebound in the technology growth sector [2] Group 2 - Major funds focused on the technology sector have seen substantial net value rebounds, with some funds increasing by over 56% since April 9 [2] - Recent data shows significant net subscriptions for various technology-themed ETFs, with notable amounts for the Jiashi Sci-Tech Chip ETF and Huaxia Robot ETF [3] - Institutions are actively researching and seeking investment opportunities in the technology sector, with a focus on performance metrics of relevant companies [4] Group 3 - The AI industry is expected to see continued demand for computing power, with innovations in AI hardware and applications likely to drive growth in the semiconductor cycle [5] - Institutions are increasing allocations in AI-related sectors, including internet applications and hardware supply chains, reflecting a bullish outlook on the technology sector [4]

Core Viewpoint - The digital economy theme index and related ETFs are showing positive performance, indicating a growing interest and investment in the digital economy sector, particularly in technology and finance [1][2]. Group 1: Market Performance - As of June 19, 2025, the China Securities Digital Economy Theme Index (931582) increased by 0.45%, with notable gains in constituent stocks such as Northern Huachuang (3.01%) and Mingzhi Electric (2.86%) [1]. - The Digital Economy ETF (560800) rose by 0.27%, with a latest price of 0.74 yuan and a turnover rate of 0.73%, totaling a transaction volume of 550.43 million yuan [1]. - Over the past year, the average daily transaction volume for the Digital Economy ETF was 2,308.89 million yuan [1]. Group 2: Regulatory Insights - The chairman of the China Securities Regulatory Commission emphasized the importance of financial services in supporting technological and industrial innovation during the 2025 Lujiazui Forum [2]. - The speech highlighted the need to address three shortcomings in the current financial service system to better support technological innovation and industrial transformation [2]. Group 3: Index Composition - As of May 30, 2025, the top ten weighted stocks in the China Securities Digital Economy Theme Index accounted for 50.98% of the index, with companies like Dongfang Caifu and Zhongxin International leading [3]. - The index primarily focuses on the electronics and computer sectors, which together represent 82% of the index's weight, with non-bank financials increasing by 2 percentage points to 10% [2].

Investment Rating - The report maintains a "Recommended" rating for the industry, indicating a positive outlook for investment opportunities in the fintech sector, particularly in stablecoins and RWA (Real World Assets) [4]. Core Insights - The report emphasizes the global regulatory evolution surrounding stablecoins, highlighting the transition from a "grey area" to a "regulatory sandbox" as major economies establish frameworks to support the industry. This regulatory clarity is expected to enhance market acceptance and reduce transaction costs [9][20]. - The report suggests that the RWA market is poised for significant growth, with projections indicating that the on-chain asset scale could exceed $2 trillion by 2030, up from over $23 billion in 2025 [16][30]. - The report identifies key companies to watch in the stablecoin and RWA sectors, including Zhongke Jincai, Jinzheng Co., and Langxin Group, among others, recommending investors to focus on these entities as they navigate the evolving landscape [30]. Summary by Sections 1. Global Evolution of Stablecoins and RWA - The report outlines the overseas development of stablecoins, noting that major economies are creating regulatory frameworks to facilitate their use in cross-border payments and digital asset transactions. This shift is expected to lead to a more structured and compliant market [9]. - In China, the report discusses the Hong Kong regulatory sandbox for stablecoins, which aims to balance financial stability with innovation, allowing for the issuance of various fiat-backed stablecoins [20][21]. 2. Investment Recommendations - The report recommends focusing on the following companies involved in stablecoins: Zhongke Jincai, Jinzheng Co., Zhong An Online, Lianlian Digital, China Everbright Holdings, Yuxin Technology, Tianyang Technology, Sifang Chuangxin, and Jingbei Fang [30]. - For RWA, the report highlights Langxin Group, Xiexin Energy, and Jieshun Technology as key players, along with potential RWA assets that could be tokenized [30]. 3. Market Review - The report provides a market review for the week of June 9-13, 2025, noting a slight decline in the CSI 300 index by 0.25% and a 2.25% drop in the computer sector, with specific stocks showing significant gains and losses [38][43].

Core Insights - The report indicates that the global metal industry is still in a weak supply cycle, with exploration investments declining for the second consecutive year, down 3% to $12.5 billion in 2024 [3] - The magnesium industry is expected to enter a state of sustained tight balance, while the lithium industry is gradually improving its oversupply situation [2][11] Supply and Demand Analysis - Global mining supply growth is significantly constrained, with actual supply growth dropping from 6.35% to 2.22% in 2024, which is only 49.8% of the average growth rate over the past 30 years [4] - China's actual supply growth for ten non-ferrous metals is projected to remain within the fluctuation range observed since 2012, averaging 6.79% from 2023 to 2024 [4] Industry Trends - The report emphasizes the cyclical, growth, and hedging value of the metal industry, highlighting three main lines of focus: industrial metals with resilient supply-demand states, small metals with enhanced growth attributes, and precious metals with tight supply-demand fundamentals [7] - The proportion of holdings in the non-ferrous metal sector has significantly increased, reaching a historical high of 5.43% in Q1 2024, although it is expected to decline to 2.85% by Q4 2024 due to economic weakness and declining downstream demand [8] Magnesium Industry Insights - The magnesium industry is forming a new modern industrial cluster in China, which is expected to enhance scale efficiency and profitability, aligning with the development of the new energy industry [9] - Global magnesium production is projected to increase from 1.12 million tons in 2024 to 2 million tons by 2027, with a compound annual growth rate (CAGR) of 21% [9] Lithium Industry Insights - The lithium industry is expected to see a gradual improvement in supply-demand dynamics, with global lithium supply projected to grow from 1.231 million tons LCE in 2024 to 1.86 million tons LCE by 2027, reflecting a CAGR of 15% [11] - The demand for lithium is driven by the growth of the electric vehicle market and energy storage systems, with total lithium battery shipments expected to rise from 1,545 GWh in 2024 to 2,778 GWh by 2027 [11] Investment Opportunities - The report identifies key companies in the magnesium sector, such as Baowu Magnesium and Xingyuan Zhuomai, and in the lithium sector, including Tianqi Lithium, Ganfeng Lithium, Yongxing Materials, and Jinyinhai [10][12]

Group 1: Macro Insights - The report suggests that the upcoming months of June and July will be critical for trade negotiations and economic observations, particularly focusing on the U.S.-China and EU trade talks, with a significant meeting scheduled on June 9 [5] - The U.S. economy shows resilience with no signs of recession as of May, and the market expectations for interest rate cuts by the Federal Reserve have been slightly adjusted, indicating a cautious outlook for the next two months [6] Group 2: Market Performance - The stock market is expected to continue its upward trend, with the Shanghai Composite Index rising by 1.13% over the past week, indicating a bullish sentiment among investors [6] - A total of 20 industries are currently in a weekly uptrend, suggesting a broad-based market recovery, with opportunities for investors to position themselves favorably [6] Group 3: Banking Sector - Several banks have announced dividend distributions, with 11 banks having completed their annual dividend distributions by early June, indicating a proactive approach to shareholder returns [21] - The average dividend yield for listed banks is reported at 4.14%, with state-owned banks yielding between 4.3% and 5%, reflecting stable profit growth and a favorable long-term investment outlook [22] Group 4: Coal Industry - The coal price has seen a significant decline from a peak of 1615 RMB/ton in October 2021 to approximately 618 RMB/ton as of June 5, 2025, marking a cumulative drop of 997 RMB/ton [28] - Historical analysis indicates that coal prices typically recover following government intervention or demand-side stimulus, suggesting that policy support will be crucial for future price stabilization [27][28] Group 5: Real Estate Sector - China Resources Vientiane Life is positioned as a leader in commercial operations, with plans to open 6 new shopping centers annually from 2025 to 2028, contributing to revenue growth [31] - The company has demonstrated resilience with a projected retail sales growth of 4.6% in 2024, outperforming the overall retail sector [31] Group 6: Pharmaceutical Sector - The report highlights the transformation of China's innovative drug sector from an importer to an exporter, with a significant increase in the commercialization of innovative drugs [10][11] - The domestic innovative drug market is expected to grow, with the proportion of innovative drugs in medical insurance expenditures rising to 3.19% in 2023, indicating a robust growth trajectory [10] Group 7: Technology Sector - Guokewai plans to acquire a 94.366% stake in Zhongxin Ningbo, which is expected to enhance its capabilities in high-end filters and MEMS, thereby expanding its market reach in smart devices and connected vehicles [42]

Strategy Overview - The market in June is expected to remain in a state of waiting for a breakthrough, with large-cap stocks likely to see a recovery. Domestic demand momentum is anticipated to improve marginally, although April's industrial profits showed a decline in both volume and price, with cost reductions being the main driver for profit growth. The PMI for May indicates a slight recovery in domestic production demand compared to April. It is expected that growth-stabilizing policies will be implemented alongside resilient external demand, continuing the trend of weak inventory replenishment in the second quarter. However, global trade policies remain uncertain, compounded by concerns over rising US debt rates, which may pressure market sentiment in the short term. In June, various growth-stabilizing policies are expected to accelerate, maintaining a volatile consolidation pattern in the market. Key areas to monitor for a breakthrough include overseas tariff developments and the implementation of domestic growth-stabilizing policies in June. [5][7] June Stock Recommendations - The June stock selection by Zhongyin Securities includes: - SF Express (Transportation) - Anji Technology (Chemicals) - Bairen Medical (Healthcare) - Lingnan Holdings (Social Services) - Qingdao Beer (Food and Beverage) - Suochen Technology (Computers) [14][16] Performance Review of May Stock Selection - The stock selection for May outperformed the market, with notable performances from Jiemian Express-W and Yiwei Lithium Energy, both achieving over 10% monthly returns. The absolute return of the May stock selection was 3.87%, outperforming the market benchmark (CSI 300) by 2.02 percentage points. Three stocks achieved excess returns of over 5% compared to the CSI 300. [9] Company-Specific Insights SF Express (Transportation) - In Q1 2025, SF Express reported a net profit of 2.234 billion yuan, reflecting a stable growth trend. The company achieved a total express volume of 3.56 billion parcels, a year-on-year increase of 19.7%, with revenue reaching 69.85 billion yuan, up 6.9% year-on-year. The net profit increased by 16.87% year-on-year, driven by continuous improvement in product matrix and service competitiveness. The gross profit margin was 13.3%, slightly up by 0.1 percentage points. [16][17] Anji Technology (Chemicals) - Anji Technology is expected to see rapid growth in revenue and net profit in 2024, driven by increased market coverage and new product introductions. The gross margin for 2024 is projected at 58.45%, up 2.64 percentage points year-on-year. The company’s polishing liquid revenue reached 1.545 billion yuan in 2024, a year-on-year increase of 43.73%. The global semiconductor CMP polishing materials market is expected to grow from 3.42 billion USD in 2024 to 3.62 billion USD in 2025. [19][20] Bairen Medical (Healthcare) - Bairen Medical reported rapid growth in Q4 2024 and Q1 2025, with significant increases in revenue across all three major business segments. The heart valve replacement and repair segment saw a year-on-year growth of 64.28%. The approval of the TAVR product in August 2024 is expected to drive further growth in 2025. [24][25] Lingnan Holdings (Social Services) - Lingnan Holdings achieved a revenue of 4.309 billion yuan in 2024, a year-on-year increase of 25.43%, with a net profit of 150 million yuan, up 116.08%. The travel agency and hotel management segments are expected to continue growing, particularly with the recovery of inbound tourism. [29][30] Qingdao Beer (Food and Beverage) - Qingdao Beer faced challenges in 2024 with a volume decline of 7.0% and a slight price increase of 0.5%. The company’s gross margin improved due to lower raw material costs, but net profit margin slightly decreased. Future growth is anticipated as restaurant demand recovers. [34][35] Suochen Technology (Computers) - Suochen Technology reported a revenue of 39 million yuan in Q1 2025, a year-on-year increase of 21.73%. The company is focusing on enhancing its CAE software capabilities and exploring AI applications in various fields. [38][39][40]