Market Overview - The Hang Seng Index slightly declined by 8 points or 0.03%, closing at 438 points on September 16, 2025[1] - The Hang Seng Tech Index rose by 0.6%, closing at 6,077 points[1] - Market turnover was recorded at HKD 294.1 billion, with a net outflow of HKD 3.18 billion from the Hong Kong Stock Connect[1] Economic Indicators - Investor sentiment is cautious, awaiting the outcome of the upcoming FOMC meeting[1] - The U.S. Federal Reserve's potential rate cut is anticipated to have limited impact on Hong Kong stocks due to already high valuations[2] - Sectors sensitive to interest rates, such as AI, robotics, semiconductors, and real estate, may benefit more directly from monetary policy changes[2] Sector Performance - The automotive parts sector saw a significant rise, with Sanhua Intelligent Controls (2050 HK) increasing by 12.8%[3] - The pharmaceutical sector experienced minor declines, with a focus on innovative drugs and leading CXO companies[3] - The renewable energy sector showed mixed performance, with solar stocks generally rising, such as Xinyi Solar (968 HK) up by 2.1%[4] Company Insights - Chaoyun Group (6601 HK) reported a 7.2% increase in revenue to RMB 1.34 billion, with pet category revenue doubling to RMB 96 million, a growth of 101.4%[5][6] - The overall gross margin improved by 2.9 percentage points to 49.3%[5] - The company plans to expand its offline pet store count to 200 by 2027 and is expected to maintain a high dividend payout ratio of 80%[8] Investment Strategy - The report suggests focusing on technology leaders and sectors benefiting from industrial upgrades, such as semiconductors and AI, amidst market volatility[9] - The anticipated rate cut by the Fed is expected to attract foreign capital back to Hong Kong stocks, with a focus on sectors showing strong earnings certainty[9]

Core Viewpoint - Zhongtai International maintains a "buy" rating for Chaoyun Group (06601), forecasting a net profit of 210 million by 2025 and a target price of 3.00 HKD, corresponding to a 4.0 times price-to-earnings ratio after cash adjustments [1] Group 1: Financial Performance - The company achieved a revenue of 1.34 billion RMB in the first half of the year, a year-on-year increase of 7.2% [1] - Overall gross margin improved by 2.9 percentage points to 49.3%, driven by an increase in the revenue share of the pet category and changes in sales channel structure [1] - Net profit for the first half was 170 million RMB, a slight decline of 3.3% year-on-year, impacted by a temporary increase in effective tax rate to 26.2% due to the expiration of tax incentives [1] Group 2: Pet Category Growth - The pet category's revenue reached 96 million RMB, with a year-on-year growth of 101.4%, increasing its share from 3.8% to 7.2% [2] - The gross margin for the pet segment rose by 8.6 percentage points to 58.1%, with plans to expand self-operated stores to 200 by 2027 [2] - The company plans to initiate a franchise model as early as next year to accelerate growth in the pet segment [2] Group 3: Multi-Channel Strategy - Online revenue increased by 27.4% to 520 million RMB, accounting for 38.6% of total revenue [3] - The company is focusing on high-margin products and enhancing distribution quality in response to changes in offline consumer behavior [3] - Special promotional strategies, such as product display techniques, are being employed to boost sales [3]