Core Viewpoint - The ongoing US-China tariff dispute has led to increased share buyback activities among Hong Kong-listed companies, particularly in the testing industry, with Lihong Testing (01586.HK) being a notable example [1] Group 1: Share Buyback Activities - Lihong Testing has conducted frequent share buybacks, totaling 118 times from December 13 of last year to October 15 this year, acquiring 17.72 million shares, which is 3% of its total share capital, with a total expenditure of 40.48 million HKD [1] - The company's market value has increased by 32.56% during the buyback period [1] Group 2: Strategic Focus on AI - Lihong Testing is actively investing in artificial intelligence (AI) as a core strategic direction, aiming to enhance its competitiveness through an "AI + Robotics" dual-driven intelligent transformation [1] - The company has achieved significant breakthroughs in key business areas with its self-developed "Lihong AI System," integrating AI models with core energy testing operations [2] Group 3: AI Applications and Innovations - The AI technology has been applied in various business scenarios, including automated analysis and risk prediction in complex energy testing data, significantly improving testing efficiency and accuracy [2] - The company plans to advance the global deployment of its AI system in the second half of the year, focusing on developing a "carbon emission AI accounting module" and an "energy commodity quality prediction model" [2] Group 4: Global Expansion and ESG Initiatives - Since launching its globalization strategy in 2017, Lihong Testing has expanded its service network to 19 countries, with 80 branches and professional laboratories [3] - The company has become a designated quality inspection agency for 13 core futures products across five major domestic futures exchanges, covering key commodities like new energy metals and non-ferrous metals [3] - Lihong Testing has established core service capabilities in clean energy, environmental protection, and climate change, and has received the "2024 Best Trading Award" from the Beijing Green Exchange [3]

Core Viewpoint - The company, Lihong Testing (01586), has demonstrated strong performance in the Hong Kong stock market, achieving a market capitalization increase of 28.9% this year, with a long-term growth trajectory reflected in over 100% growth in the past three years and over 300% in the past six years [1][8]. Financial Performance - For the first half of 2025, Lihong Testing reported revenues of HKD 603 million, with gross profit and net profit attributable to shareholders at HKD 258 million and HKD 41 million, respectively, showcasing resilience despite external challenges [1]. - The company anticipates steady growth from 2022 to 2024, with a compound annual growth rate (CAGR) of 15.7% in revenue and 9.4% in net profit [1]. Share Buyback and Investor Confidence - Lihong Testing initiated a share buyback plan on December 19, 2022, and has conducted 116 buybacks totaling 17.64 million shares, representing 3% of total share capital, with a total expenditure of HKD 40.25 million [2]. - The company's market capitalization increased by 48.7% during the buyback period, and as of June 2025, it held cash equivalents of HKD 216 million, a 13.1% increase year-on-year [2]. Strategic Initiatives and AI Integration - The company is aligning with AI trends, establishing AI as a core strategic direction for 2025, and aims to leverage AI and robotics to enhance its service offerings [6]. - Lihong Testing is integrating IoT, big data analysis, and multimodal AI technologies to develop a safety production intelligent platform, focusing on optimizing safety management efficiency [6]. ESG and Global Expansion - The company is committed to long-term development through ESG initiatives, assisting clients in addressing climate change and contributing to green low-carbon transitions [7]. - Lihong Testing is expanding its global footprint, with overseas revenue reaching HKD 295 million in the first half of 2025, accounting for 48.92% of total revenue, and establishing a network across 19 countries [7]. Shareholder Support - The company has received strong support from shareholders, with consistent buying activity from major stakeholders since its IPO, indicating confidence in its long-term growth prospects [8]. - The ongoing buyback efforts not only support stock price stability but also significantly enhance shareholder returns, with the company maintaining a favorable valuation outlook [8].

Core Viewpoint - The company is optimistic about the future development prospects of Lihong Testing (01586) due to the dual support of AI and overseas business, maintaining a target price of HKD 3.18 per share, with corresponding PE ratios of 19.8x, 17.4x, and 15.2x for 2025, 2026, and 2027 respectively, and a "Buy" rating [1] Group 1: Financial Performance - The company's performance met expectations, with revenue growth of 12.9% to HKD 1.263 billion [2] - The company achieved a net profit attributable to shareholders of HKD 82.725 million, a year-on-year increase of 3.4% [2] - The company is actively expanding its overseas network to build a global service network while maintaining steady growth in traditional energy bulk business [2] Group 2: Overseas Business Development - Revenue from the Greater China region reached HKD 696 million, a 7% year-on-year increase, driven by stable domestic demand for consumer product testing [3] - Overseas revenue amounted to HKD 568 million, up 21.3% year-on-year, benefiting from improved overseas network and growth in Singapore's oil testing business [3] - The overseas business team performed excellently, with overseas revenue accounting for 45% of total revenue [3] Group 3: AI Investment and Efficiency - The company has deployed its self-developed "Lihong AI System," achieving deep integration of AI models with core energy testing business [4] - Plans are in place to complete global deployment of the AI system by 2025, with continuous breakthroughs in cross-border inspection AI recognition systems and carbon emission accounting modules [4] - AI empowerment is expected to enhance testing efficiency and provide more customized services, increasing product competitiveness and customer loyalty [4] Group 4: Shareholder Returns - The company has initiated a share buyback plan based on market conditions and strategic considerations, starting from December 13 [5] - The buyback initiative is expected to provide continuous returns to shareholders [5]