Group 1 - The focus on the self-controllable information technology sector has led to a strong performance of the Xinchuang ETF (562570), with a nearly 1% increase and a trading volume approaching 300 million yuan [1] - The investment enthusiasm in the Xinchuang sector is driven by several key factors, including the rise of stablecoins, which necessitate highly secure and self-controllable information technology to avoid reliance on foreign technology [1] - The restriction on EDA tool exports from the US has provided a valuable opportunity for domestic EDA companies like Huada Jiutian and Gai Lun Electronics to enhance their capabilities through mergers and acquisitions [1] Group 2 - The strategic restructuring of domestic computing power leaders Haiguang Information and Zhongke Shuguang may initiate a wave of mergers and acquisitions, transforming the competitive landscape of domestic semiconductor equipment companies [2] - The Xinchuang ETF (562570) tracks the CSI Xinchuang Index, which covers core segments of the Xinchuang industry chain, including basic hardware, software, information security, and external devices [2] - Investors are encouraged to pay attention to the Xinchuang ETF, while being cautious of potential tracking deviation risks due to the suspension of weight stocks [2]

Investment Rating - The report maintains an "Outperform" rating for the electronic industry [5][9]. Core Views - The ongoing US-China tariff disputes are intensifying the urgency for self-sufficiency in the electronic sector. Despite a slight decline in the overall electronic market, certain sub-sectors like components have shown resilience with a 2.21% increase [1][10]. - The semiconductor industry is facing challenges due to export restrictions on EDA tools, emphasizing the strategic importance of domestic production capabilities [2]. - The NAND Flash market is expected to recover as inventory levels normalize, with a projected 10% revenue growth for major brands in Q2 2025 [3]. - Nvidia's quarterly revenue reached a record high, driven by strong demand for AI infrastructure, indicating a robust growth trajectory for the AI-related electronic components [4]. Summary by Sections Market Trends - The Shanghai Composite Index fell by 0.03%, while the electronic sector declined by 0.59%. The semiconductor sub-sector faced concerns over sustainability due to recent performance issues from SMIC [1][10]. Semiconductor Industry - The report highlights the impact of US export restrictions on EDA tools, which reinforces the need for a fully domestic semiconductor supply chain. Companies like SMIC and Huahong Semiconductor are recommended for their potential in this area [2]. Storage Market - NAND Flash prices are expected to rebound in Q2 2025 after a significant drop in Q1 2025, with a forecasted 10% revenue increase for major brands as demand stabilizes [3]. AI and Infrastructure - Nvidia's data center revenue surged to $39.112 billion, reflecting a 73.3% year-over-year increase, driven by the demand for AI infrastructure. The report suggests continued investment in companies involved in AI technologies [4]. Key Investment Recommendations - The report recommends focusing on companies with strong domestic capabilities in the semiconductor and storage sectors, including names like SMIC, Jingwei, and others [2][3][9].

ETF Industry News - The three major indices collectively rose, with the Shanghai Composite Index increasing by 0.42%, the Shenzhen Component Index by 0.87%, and the ChiNext Index by 1.11. Multiple electronic sector ETFs saw gains, including the CICC Technology Pioneer ETF (560990.SH) which rose over 6%, and the 5G Communication ETF (515050.SH) which increased by 2.26% [1][3] Fund Flows - In May, over 20 billion yuan flowed into technology innovation ETFs, particularly in the semiconductor and high-end manufacturing sectors. The top three ETFs by net inflow were the Huaxia Science and Technology 50 ETF with 4.93 billion yuan, the Guolian An Semiconductor ETF with 2.36 billion yuan, and the Harvest Science and Technology Chip ETF with 1.87 billion yuan [2] Market Performance - The overall performance of ETFs showed that cross-border ETFs had the best average return at 1.07%, while money market ETFs had the worst performance with an average return of 0.00% [8] Sector Performance - The beauty care, comprehensive, and textile and apparel sectors ranked highest in daily performance, with daily increases of 2.63%, 2.53%, and 2.41% respectively. Conversely, transportation, national defense, and public utilities sectors lagged behind with declines of -0.58%, -0.24%, and -0.12% [5] Top Performing ETFs - The top three performing stock ETFs today were the CICC Technology Pioneer ETF (560990.SH) with a return of 6.40%, the Innovative Drug ETF by Huatai-PB (517120.SH) with 2.87%, and the Innovative Drug ETF by Shanghai-Hong Kong (159622.SZ) with 2.74% [10][11]

Summary of China Great Wall's Conference Call Company Overview - **Company**: China Great Wall - **Industry**: IT Power Supply and Information Technology Innovation (信创) Key Points Financial Performance - In 2024, China Great Wall experienced significant losses due to the impact of value-added tax and losses in the information technology innovation (信创) business, despite strong performance in the power supply segment, which generated approximately 5 billion yuan in revenue and over 400 million yuan in profit [2][4] - The first quarter of 2025 showed a recovery in the信创 business, particularly in the government sector, with a notable increase in orders [5] Business Segments - The IT power supply and consumer power supply segments continued to grow, with a combined revenue of about 5 billion yuan in 2024 [2][4] - The military system equipment segment faced challenges due to decreased client demand and the impact of pricing and value-added tax, leading to increased losses [4][22] Market Dynamics - The government sector's payment issues have been resolved through central government funding, ensuring financial stability for planned tasks from 2023 to 2027 [7] - The信创 market is expected to show improvement starting in the second quarter of 2025, with an increase in server bidding volumes anticipated [8] Competitive Landscape - In the server power supply industry, AI servers are experiencing high demand, with China Great Wall holding over 50% market share, potentially reaching 60% [11] - The company is producing servers based on Huawei's Kunpeng and developing AI server products based on Feiteng CPUs, AMD, and domestic GPUs [12] Strategic Adjustments - The company is focusing on high-margin businesses and internal cost reductions to improve gross margins, while also enhancing research and development efficiency [3][20] - A significant workforce reduction of approximately 1,200 employees occurred in 2024, with further adjustments planned for 2025 [21] Future Outlook - The military market is expected to gradually recover over the next few years, supported by the implementation of the 14th Five-Year Plan [6][22] - The overall market demand for信创 and power supply businesses is anticipated to remain strong due to domestic substitution and new applications driven by AI [22] Additional Insights - Huawei's Harmony OS PCs are expected to dominate the government market with a projected 50% market share, while Feiteng is estimated to hold around 30% [13][14] - The ongoing state-owned enterprise reform is expected to enhance focus on core business and improve development quality, although specific measures are yet to be defined [15][16] Conclusion - China Great Wall is navigating through a challenging financial landscape with strategic adjustments aimed at enhancing profitability and market position, particularly in the power supply and信创 sectors, while also preparing for a recovery in military-related business. The company is well-positioned to leverage its technological advantages and market share in the growing AI server segment.

Investment Rating - The industry investment rating is "Positive" and is maintained [7] Core Viewpoints - The OpenHarmony Developer Conference 2025 was held on May 24 in Shenzhen, showcasing the progress of the OpenHarmony project. The report suggests that OpenHarmony is expected to accelerate its penetration into various industries due to its open-source nature and ecosystem, benefiting the related industrial chain [2][11] - The OpenHarmony system has released version 5.1, focusing on enhancing the overall interaction experience and system capabilities, which is anticipated to reach world-class performance levels with continuous iterations [11] - The code scale of OpenHarmony has exceeded 130 million lines, with over 8,600 contributors and more than 1,100 software and hardware products passing compatibility tests. This growth is expected to attract more manufacturers, creating a positive cycle for ecosystem development [11] - OpenHarmony is actively incubating "AI + Robotics" technologies and has already seen 38 manufacturers release 67 commercial versions of the operating system across various sectors, including finance, transportation, education, and healthcare [11] - The report recommends focusing on investment opportunities in the Huawei Harmony PC supply chain and OpenHarmony operating system developers [11]

Market Overview - The overall market is in a turbulent phase, but interest rate cuts provide a hedge, leading to strong demand for CATL (宁德时代) shares, boosting market confidence [1] - The Hang Seng Index continued to rise last week [1] - A new round of tariffs was announced by Trump, imposing a 50% tariff on the EU and a 25% tariff on non-US smartphone manufacturers starting June 1, which negatively impacts consumer electronics [1] - The upcoming Federal Reserve meeting minutes may exert pressure on US stocks if they lean hawkish [1] - The National Development and Reform Commission approved the "Green and Low-Carbon Development Action Plan for Manufacturing (2025-2027)" [1] Nuclear Energy Sector - Trump's executive order aims to promote the US nuclear power industry, leading to a surge in related company stock prices [3] - The order requires the Nuclear Regulatory Commission to reduce regulatory measures and expedite the approval of new reactors and nuclear plants [3] - China General Nuclear Power Corporation (中广核矿业) expects a revenue of 8.624 billion yuan in 2024, a year-on-year increase of 17.05%, with a pre-tax profit of 814 million yuan, up 48.3% [3] AI and Technology Sector - The AI industry is accelerating, with significant advancements in Agent commercialization, including updates to Google's Gemini 2.5 model and Anthropic's Claude 4 model [5] - Huawei's HarmonyOS PC was officially launched, marking a breakthrough in the consumer sector [6] - The potential market for HarmonyOS PCs is substantial, with an estimated annual market shipment of 40 million units in mainland China in 2024 [6] Market Data - The Hong Kong Stock Exchange reported a total of 101,082 open contracts for the Hang Seng Index futures in May, with a net open interest of 34,435 contracts [7] - Concerns over rising funding costs were raised due to a significant drop in long-term bonds in Japan and the US [7]

Group 1: Major Asset Restructuring - Xiangcai Co. and Shanghai Dazhihui Co. are planning a major asset restructuring through a share swap, with Xiangcai issuing A-shares to absorb Dazhihui [2][3] - The stock of both companies will be suspended from trading starting March 17, 2025, for a period not exceeding 10 trading days [2] - As of the latest closing, Xiangcai's total market value is 19.7 billion, while Dazhihui's is 18.055 billion, totaling approximately 37.8 billion [3] Group 2: Securities Industry Mergers - The securities industry is experiencing a wave of mergers, with significant room for consolidation driven by policy guidance and internal motivations [3][4] - Recent merger cases include Zhejiang Merchants + Guodu, Western + Guorong, and Guoxin + Wanhua, indicating diverse integration pathways [3] - The current valuation of the brokerage sector is at 1.6 times PB, suggesting limited downside and potential for upward movement [4] Group 3: Huawei's Harmony OS Developments - Huawei has launched a new laptop pre-installed with Linux, potentially signaling a shift towards its own Harmony OS for future PC products [5] - Harmony OS has gained a 17% market share in China, surpassing Apple's iOS to become the second-largest operating system in the market [6] - The official release of Harmony OS NEXT (5.0) is expected in 2024, with a goal of achieving 100,000 applications as a sign of ecosystem maturity by 2025 [7] Group 4: Investment Opportunities in Harmony Concept Stocks - 229 Harmony concept stocks have seen an average increase of 23.53% this year, outperforming the Shanghai Composite Index [8] - Notable low-valuation stocks include Dahua Technology with a rolling P/E ratio below 10, attracting significant institutional investment [8] - Six low-valuation concept stocks are projected to have net profit growth rates exceeding 20% in 2025 and 2026, indicating strong future potential [8]