The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take no responsibility for the contents of this Application Proof, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Application Proof. Application Proof of SHENZHEN HAN'S CNC TECHNOLOGY CO., LTD. 深圳市大族數控科技股份有限公司 (A joint stock company incorporated in the People's Republi ...

Core Insights - NOV Inc. is a global leader in oilfield and energy equipment, known for innovation and reliability, but its share price has dropped 19.1% over the past six months, raising investor concerns [1][15] Financial Performance - In Q2 2025, NOV reported adjusted earnings of 29 cents per share, missing the Zacks Consensus Estimate of 30 cents, primarily due to margin pressures in the Energy Equipment segment [4] - The backlog in the Energy Equipment segment fell to $4.30 billion, with new orders dropping to $420 million in Q2, down from $977 million the previous year, indicating potential revenue growth challenges [12] Market Challenges - Aftermarket spare parts demand has sharply declined, particularly in the Drilling Equipment business, with a projected mid-teen decline in aftermarket revenues for the full year [5] - North America's oil-directed drilling market has softened, with a 9% decline in the U.S. rig count since March 2025, leading to reduced capital expenditures and further revenue dampening [6] - Delays in offshore projects due to supply-chain constraints and macroeconomic uncertainty are impacting near-term revenue visibility, reflected in a book-to-bill ratio of 66 for the Energy Equipment segment in Q2 [7] International Market Dynamics - International markets, including Saudi Arabia and Latin America, are experiencing slowdowns, with repositioning costs affecting results, although long-term potential remains [8] Operational Efficiency - NOV's working capital as a percentage of revenues was 30% in Q2 2025, with expectations to remain elevated at 27-29% for the full year, which may limit free cash flow conversion [10] - The company plans to cut $100 million in annual costs by the end of 2026, but rising tariffs and inflation may offset these savings [11] Competitive Landscape - Increasing price competition in the market is squeezing margins, particularly in the Energy Products and Services segment, as competitors use concessions to regain market share [13] - Despite returning $176 million to shareholders in Q2 2025 through dividends and buybacks, the sustainability of this capital return is uncertain due to declining profitability [14] Relative Performance - NOV has underperformed compared to peers and the broader oil and energy sector, with a 19.1% decline over the past six months, which is steeper than competitors like Oil States International and Solaris Energy Infrastructure [15]

Core Insights - The energy sector is currently leading the stock market with the best risk-to-reward ratio, highlighted by Baker Hughes Co.'s record M&A activity, acquiring Chart Industries Inc. for up to $13.6 billion, indicating institutional confidence in energy's long-term growth [1][2]. Group 1: Mergers and Acquisitions - Baker Hughes Co. has made a significant move by acquiring Chart Industries Inc. for a total of up to $13.6 billion, marking a record in M&A dealings for 2025 [1]. - This merger focuses on growth areas such as Liquefied Natural Gas (LNG) infrastructure, industrial gases, and decarbonization technology, reflecting a bullish outlook on the energy sector [2]. Group 2: Investment Opportunities - Transocean, a drilling equipment maker, is highlighted as a potential high-reward investment, currently trading at $2.81, which is 51% of its 52-week high, suggesting a strategic entry point for investors [3][4]. - Wall Street analysts project a price target of $4.60 per share for Transocean, indicating a potential upside of 56% from current levels, with expectations of a turnaround from a loss to earnings by Q4 2025 [6]. Group 3: Market Dynamics - The decline in short interest for Transocean by 3.2% suggests a potential shift in market sentiment, with $354.6 million in short positions that could lead to a short squeeze if oil prices rise or if the company reports strong earnings [5]. - The Energy Select Sector SPDR Fund (XLE) is recommended for investors seeking diversified exposure to the energy sector, holding major energy companies that perform well across oil price cycles [7][8]. Group 4: Strategic Investment Approaches - A balanced investment strategy is suggested, combining a core position in XLE for stability with a smaller stake in Transocean for leveraged returns if oil prices surge [12]. - The Baker Hughes-Chart deal is viewed as a vote of confidence in the energy sector, presenting an opportunity for investors to rotate into energy stocks [11].

Core Viewpoint - The energy sector is currently presenting potential investment opportunities, particularly through acquisitions, with BP being a notable target for major companies like Exxon Mobil, Chevron, and Shell [2][5]. Group 1: Industry Performance - The Energy Select Sector SPDR Fund (XLE) has underperformed the S&P 500 index by as much as 20% over the past 12 months, indicating a potential catch-up opportunity for the industry [3][4]. - Valuation multiples, particularly price-to-book (P/B) ratios, have declined over the past year, leading to cyclically cheap levels for major industry players [4]. Group 2: Acquisition Insights - BP's potential acquisition price could reach up to $160 billion, which is double its current market capitalization, suggesting a potential 100% upside for shareholders if the acquisition is approved [6]. - Exxon Mobil is positioned as a likely winner in the bidding for BP due to its strong balance sheet and fewer regulatory hurdles compared to competitors [7]. Group 3: Alternative Investment Opportunities - Transocean Ltd. is highlighted as a strong investment opportunity, having seen a 54.5% decline in stock price over the past year, which may have priced in worst-case scenarios [11][12]. - Analysts at BTIG Research have reiterated a Buy rating on Transocean with a price target of $5 per share, indicating confidence in its recovery potential [13].

Core Insights - The energy sector is experiencing a significant shift due to recent events in Europe, particularly a power outage in Portugal and Spain, highlighting the challenges of overreliance on renewable energy sources [2][3] - Major players like Exxon Mobil and Hess are positioned to benefit from the ongoing reliance on fossil fuels, presenting long-term investment opportunities [3][4] Exxon Mobil - Exxon Mobil's stock forecast indicates a 12-month price target of $126.50, representing a 19.11% upside from the current price of $106.20, with a high forecast of $144.00 and a low of $105.00 [4] - The company reported better-than-expected quarterly earnings despite declining crude oil prices, which could have negatively impacted earnings per share (EPS) [4][5] - Management's decision to maintain the share buyback program signals confidence in the stock's undervaluation and potential for future price increases [5][6] - Analysts from Barclays have reiterated an Overweight rating on Exxon Mobil, with a valuation target of $130 per share, indicating a 23% upside [7] Hess Corporation - Hess's stock forecast suggests a 12-month price target of $164.46, indicating a 24.28% upside from the current price of $132.33, with a high forecast of $194.00 and a low of $136.00 [8][9] - The recent European blackout has led to increased institutional interest in Hess, with the Bank of New York Mellon boosting its holdings by 22.2%, bringing its net position to $572.1 million [9][10] - Wall Street analysts project an EPS of $3.18 for Hess in the final quarter of 2025, a 63% increase from the current EPS of $1.95, supporting the growth thesis and recent institutional buying [11] Transocean Ltd. - Transocean, a drilling equipment maker and leaser, presents an attractive investment opportunity due to its asymmetrical risk-reward profile, especially after its stock has fallen to a 52-week low [12][13] - Analysts have set a consensus price target of $4.6 per share for Transocean, suggesting a potential upside of 98.5% from its current levels [14]