Industry Investment Rating - The report does not explicitly state an overall industry investment rating for the automotive sector [2][3] Core Views - In 2024, China's automobile exports reached 5 859 million units, a year-on-year increase of 19 3% [2] - Passenger vehicle exports were 4 955 million units, up 19 7% year-on-year [2] - Commercial vehicle exports were 904 thousand units, up 17 5% year-on-year [2] - New energy vehicle (NEV) exports slowed to 1 284 million units, up 6 7% year-on-year, lagging behind traditional fuel vehicle exports which grew 23 5% to 4 574 million units [2] - Plug-in hybrid (PHEV) exports surged 193 7% to 297 thousand units, driving NEV exports [2] - Top 10 automakers accounted for 86% of total exports, with Chery, SAIC, and Changan leading at 20%, 16%, and 9% respectively [2] - Russia's auto market recovered to near 2021 levels, with 1 43 million units sold in Jan-Nov 2024, up 54% year-on-year [2] - China exported 1 06 million vehicles to Russia in Jan-Nov 2024, up 26% year-on-year [2] - Chinese brands now hold nearly 60% market share in Russia [2] Investment Implications - China's automobile exports are expected to maintain strong growth in 2025, driven by competitive pricing of domestic fuel vehicles and expanding market share in South America, Middle East, and Africa [2] - NEV exports face uncertainty due to external factors like EU tariffs [2] - Localized production is becoming a key strategy for Chinese automakers entering European markets [2] - BYD's Hungary factory is expected to start production in 2025 [2] Covered Companies - The report covers multiple companies with buy ratings [9] - Battery sector: CALB (3931 HK), CATL (300750 CH), EVE Energy (300014 CH), Guoxuan High-Tech (002074 CH) [9] - EV makers: BYD (1211 HK), Great Wall Motors (2333 HK), XPeng (9868 HK), Li Auto (2015 HK), NIO (9866 HK) [9] - Commercial vehicles: Sinotruk (3808 HK), Weichai Power (2338 HK) [9] - Two-wheel EVs: Ninebot (689009 CH), Yadea (1585 HK), Luyuan (2451 HK) [9] Charts and Data - Chart 1 shows China's total vehicle exports from 2015-2024, reaching 5 86 million units in 2024 with 19% year-on-year growth [4][5] - Chart 2 illustrates NEV exports, reaching 1 28 million units in 2024 with 6 7% year-on-year growth [6][7]

Investment Rating - The report maintains a **Buy** rating for iQIYI (IQ US) with a target price of $2.60, representing a potential upside of **39.8%** from the current closing price of $1.86 [1][3] Core Views - The target price is based on a **10x 2025 P/E ratio**, adjusted from the previous $2.90 to $2.60 due to content supply stability recovery [1] - Membership is expected to gradually bottom out and rebound in 2025, leading to marginal financial improvements [1] - The current valuation is near historical lows at **6.6x 2025 P/E**, making it an attractive investment opportunity [1] - The company's micro-drama layout is progressing steadily, with potential contributions to commercial growth [1] Financial Model Updates - Revenue forecasts for 2024E, 2025E, and 2026E are adjusted to **RMB 29,222 million**, **RMB 28,914 million**, and **RMB 31,233 million**, respectively, with minor downward revisions [2] - Gross profit margins are expected to remain stable at **25%** in 2024E and 2025E, increasing to **27%** in 2026E [2] - Adjusted operating profit for 2024E is revised upward to **RMB 2,353 million**, while 2025E and 2026E forecasts are slightly lowered [2] - Adjusted net profit for 2024E is reduced by **12%** to **RMB 1,494 million**, with further downward revisions for 2025E and 2026E [2] Performance Outlook - Q4 2024 revenue is expected to decline by **14% YoY** to **RMB 6,610 million**, with membership revenue under pressure, declining **15% YoY** [5][6] - Advertising revenue is projected to grow **7% QoQ** in Q4 2024, driven by popular dramas like *I Am a Police Officer* [5] - Adjusted operating profit for Q4 2024 is revised upward to **RMB 397 million**, despite pressure from exchange rate losses [5] Industry and Peer Comparison - iQIYI is categorized under the **entertainment content** sub-sector, alongside peers like Bilibili (BILI US) and Tencent Music (TME US) [12] - The report covers multiple companies in the internet and education sectors, with **Buy** ratings for most, including Baidu (BIDU US) and Pinduoduo (PDD US) [12] Financial Ratios and Metrics - Gross margin is expected to improve from **24.9%** in 2024E to **26.6%** in 2026E [16] - ROE is forecasted to increase from **5.5%** in 2024E to **11.8%** in 2026E, reflecting improved profitability [16] - Net debt-to-equity ratio is projected to decrease significantly from **62.2%** in 2024E to **13.7%** in 2026E [16]

Inflation Data and Market Impact - US December 2024 CPI increased by 2.9% YoY, matching expectations, with a MoM increase of 0.4%, slightly above the expected 0.3%[2] - Core CPI rose by 3.2% YoY, slightly below the expected 3.3%, with a MoM increase of 0.2%, in line with expectations[2] - Energy prices surged by 2.6% MoM, contributing nearly 40% to the overall CPI increase, with gasoline prices rising by 4.4%[3] Housing and Supercore Inflation - Housing inflation showed a mixed trend, with rents and owner-equivalent rents rising again in December after a November dip, indicating limited room for further decline[3] - Supercore inflation (excluding housing) cooled, driven by a decline in medical services prices, but ISM services PMI suggests potential upward pressure in the coming months[3] Fed Policy and Economic Outlook - The Fed is expected to skip a rate cut in January, with market expectations shifting to a potential rate cut in June 2025, down from September, with 1-2 cuts anticipated for the year[2] - Strong labor data and slowing inflation support the Fed's cautious approach, with potential for rate cuts in the first half of 2025 to address tightening financial conditions[4][5] Commodity and Service Price Trends - Used car prices, after a brief decline, are expected to rise again in the next 2-3 months, potentially driving up goods prices, influenced by factors like the Los Angeles fire[3] - Transportation services prices increased due to seasonal factors like holiday travel, while auto insurance prices are expected to decline due to narrowing cost-premium gaps[3]

Investment Rating - The report maintains a **Buy** rating for Great Wall Motor (2333 HK) with a target price of HKD 17.36, representing a potential upside of **30.3%** from the current price of HKD 13.32 [1][6] Core Views - Great Wall Motor's 2024 full-year and Q4 performance was largely in line with expectations, driven by strong sales of the Tank brand and robust export performance [2] - The company is expected to achieve a net profit of RMB 12.4-13.0 billion in 2024, a year-on-year increase of **76.60%-85.14%**, with non-GAAP net profit rising **94.47%-106.88%** [6] - The Tank brand saw a **42.12%** year-on-year increase in sales, reaching 231,000 units, contributing significantly to the company's profitability [6] - Great Wall Motor's high-end and intelligent vehicle strategy is progressing smoothly, with the company dominating the Chinese off-road vehicle market and successfully expanding into the high-end segment [6] - The company's global expansion, including production bases and R&D centers in Russia, Thailand, India, and Brazil, supports its growth prospects [6] Financial Performance - Revenue is projected to grow from RMB 137.34 billion in 2022 to RMB 261.44 billion in 2026, with a CAGR of **13.0%** [5] - Net profit is expected to increase from RMB 8.27 billion in 2022 to RMB 18.04 billion in 2026, with a CAGR of **18.9%** [5] - EPS is forecasted to rise from RMB 0.96 in 2022 to RMB 2.11 in 2026, with a CAGR of **18.9%** [5] - The company's gross margin is expected to improve from **19.4%** in 2022 to **20.5%** in 2026, driven by higher sales of premium models and improved product mix [14] Market and Industry Analysis - Great Wall Motor sold 1.23 million vehicles in 2024, including 321,800 new energy vehicles, a year-on-year increase of **22.82%** [6] - Overseas sales reached 453,100 units, up **43.39%** year-on-year, accounting for a significant portion of total sales [6] - Sales of vehicles priced above RMB 200,000 reached 309,600 units, a year-on-year increase of **37.13%**, representing **25.1%** of total sales [6] - The company plans to launch several new models and technology platforms in 2025, including the Tank 500 Hi4-Z, which was officially launched on January 1, 2025, and the Tank 400/700 Hi4-Z, which will feature enhanced power performance and pure electric range [6] Valuation and Target Price - The target price of HKD 17.36 is based on the company's strong performance in high-end and intelligent vehicle segments, as well as its global expansion strategy [6] - The potential upside of **30.3%** reflects the market's confidence in the company's growth prospects and its ability to maintain profitability through premium product offerings and export growth [1][6]

Investment Rating - The report assigns a **Buy** rating to Simcere Pharmaceutical (2096 HK) with a target price of HK$10.00, representing a potential upside of 53.2% from the current price of HK$6.53 [5] Core Views - Simcere Pharmaceutical has entered into a licensing agreement with AbbVie for SIM0500, a BCMA x GPRC5D x CD3 trispecific antibody, with a total potential deal value exceeding $1.055 billion [1] - SIM0500 is currently in Phase I clinical trials for relapsed/refractory multiple myeloma (MM), a market with significant potential as the global MM treatment market is projected to reach $26.7 billion by 2024 [1] - The deal represents the second and largest out-licensing transaction in Simcere's history, following the 2022 licensing of SIM0278 to Almirall [1] - SIM0500 also shows potential in autoimmune diseases due to its ability to target B cells expressing BCMA and GPRC5D, with other BCMA-targeting drugs already demonstrating efficacy in conditions like Sjögren's syndrome and rheumatoid arthritis [1] - The TCE platform has been validated through this deal, with three additional molecules targeting AML, CLL/DLBCL, and solid tumors expected to enter clinical trials soon [1] Market Potential - The global MM market is substantial, with 188,000 new cases and 121,000 deaths annually, making it the largest single subtype in the hematologic oncology market [1] - SIM0500 has shown superior tumor suppression in preclinical models compared to competing BCMA x CD3 bispecific antibodies and GPRC5D x CD3 bispecific antibodies [1] - The low-affinity targeting of CD3 and subcutaneous injection formulation may reduce CRS risk and improve administration convenience [1]

Macroeconomic Factors - US 10-year Treasury yield surged over 100 basis points since September 2024, reaching a high of 4.79% despite a 100 basis point Fed rate cut[2] - The yield increase significantly exceeds historical patterns during past rate cut cycles, driven by US economic resilience and Trump 2.0 policy expectations[2] - Short-term factors include economic resilience, adjusted rate cut expectations, and renewed fiscal concerns, while long-term factors stem from Trump 2.0 policies increasing fiscal deficits and reflation expectations[2] Interest Rate Projections - The fair value of US 10-year Treasury yield is estimated at 4.4%, with a likely range of 4-4.5% in 2025, potentially showing a high-then-low trend[3] - Under inflation narrative, long-term yield equilibrium is around 4.5%, while fiscal deficit narrative suggests a range of 4.0-5.0%[87][88][96] Economic Indicators - US economic surprise index shows weakening fundamentals since November 2024, potentially indicating overpricing of growth expectations in bond yields[49] - Labor market remains resilient with rising job openings and small business hiring intentions, though output gap narrowing may limit further tightening[32][33] Fiscal and Debt Dynamics - US debt level reached $36.1 trillion in January 2025, approaching the debt ceiling, with potential for increased long-term bond issuance[51][52] - 2025 fiscal year deficit projected at 6.3% of GDP ($1.88 trillion), with Treasury's TGA balance at $720 billion potentially supporting 4-5 months of operations[52][60] Market Structure and Demand - Foreign investors and money market funds remain primary net buyers of Treasuries, but long-term bond demand weakens amid policy uncertainty[70][71] - Recent 10-year Treasury auctions show declining bid-to-cover ratios and rising dealer take-up, reflecting reduced institutional demand for long-duration bonds[78][81]

Industry Investment Rating - The report maintains a positive outlook on the battery industry, driven by strong growth in new energy vehicle (NEV) sales and battery installations [1][3] Core Views - In 2024, China's NEV sales reached 10.899 million units, a 40.7% YoY increase, with a penetration rate of 49.4%, up 9.1 percentage points YoY [3] - China's power battery installations in 2024 totaled 548.4 GWh, a 41.5% YoY increase, with lithium iron phosphate (LFP) batteries accounting for 74.6% of total installations, up 7 percentage points YoY [3] - Battery production and sales in 2024 were 1096.8 GWh and 1039.5 GWh respectively, with a production-to-sales ratio of 1.06, similar to 2023 levels [3] - Battery exports in 2024 reached 197.1 GWh, a 29.2% YoY increase, with energy storage battery exports growing 151.6% YoY, accounting for 32.2% of total exports [3] - Tesla's Shanghai energy storage super factory is expected to start production in Q1 2025, with an annual capacity of 10,000 Megapack units, totaling nearly 40 GWh [3] - The report forecasts NEV penetration to reach 60% in 2025, driven by new consumer subsidy policies, further boosting power battery installations [3] - Energy storage battery sales are expected to maintain strong growth in 2025, supported by China's energy storage policies and US grid upgrades [3] - Solid-state battery industrialization is accelerating, with potential benefits for related materials such as solid electrolytes, anodes, cathodes, and aluminum-plastic films [3] Company Analysis - CATL (300750 CH) is rated as a Buy with a target price of CNY 310.10, representing a 25.6% upside potential [2][18] - EVE Energy (300014 CH) is rated as a Buy with a target price of CNY 56.51, representing a 31.3% upside potential [2][18] - Gotion High-tech (002074 CH) is rated as a Buy with a target price of CNY 29.07, representing a 42.8% upside potential [2][18] - CALB (3931 HK) is rated as a Buy with a target price of HKD 15.59, representing a 26.9% upside potential [2][18] - REPT Battero (666 HK) is rated as Neutral with a target price of HKD 14.25, representing a 40.6% upside potential [2][18] Market Share and Rankings - In December 2024, CATL led the market with a 45.5% share of power battery installations, followed by BYD at 23.2% and CALB at 5.6% [16] - For the full year 2024, CATL maintained its leading position with a 45.1% market share, followed by BYD at 24.7% and CALB at 6.7% [17] - The top 3 companies (CR3) accounted for 74.2% of the market in December 2024, while the top 10 companies (CR10) accounted for 95.2% [17][18] Industry Trends - The report highlights the strong growth of LFP batteries, which have become the dominant technology in China's power battery market [3] - Energy storage battery exports are growing rapidly, driven by strong demand from international markets [3] - The industry is witnessing a shift towards solid-state batteries, with several companies planning mass production, which could drive material innovation [3]

Investment Rating - The report maintains a **Buy** rating for Futu Holdings (FUTU US) with a target price of **$108.00**, representing a potential upside of **43.2%** from the current price of **$75.41** [1][5] Core Views - The report highlights that Futu Holdings' current valuation is attractive, with a 2024E P/E ratio of **16x**, significantly lower than its US internet brokerage peers [9] - The company's diversified overseas markets and product lines (stocks, equity derivatives, cryptocurrencies, wealth management products) are expected to enhance business stability [9] - The report expects Futu's ROE to remain around **18%** from 2024 to 2026, excluding special dividends [9] Financial Performance and Forecasts Revenue and Profit Growth - Revenue is expected to grow from **HKD 10,008 million** in 2023 to **HKD 12,848 million** in 2024E, representing a **28.4%** YoY increase [7][9] - Non-GAAP net profit is forecasted to grow from **HKD 4,572 million** in 2023 to **HKD 5,419 million** in 2024E, an **18.5%** YoY increase [7][9] - The report has revised its 2024E revenue forecast upward by **4.2%** and Non-GAAP net profit by **2.4%** [4] Key Financial Metrics - Gross margin is expected to remain stable at **81.9%** in 2024E, slightly up from **81.8%** in the previous forecast [4] - Net profit margin is projected to be **39.6%** in 2024E, down **0.6** percentage points from the previous forecast [4] - EPS is expected to grow from **HKD 30.78** in 2023 to **HKD 36.49** in 2024E, a **2.6%** upward revision from the previous forecast [6] Operational Metrics - The number of funded clients is expected to grow from **1.71 million** in 2023 to **2.31 million** in 2024E, a **34.9%** YoY increase [3][7] - Client assets are projected to grow from **HKD 485.6 billion** in 2023 to **HKD 645.9 billion** in 2024E [7] - Trading volume is expected to reach **HKD 7.1 trillion** in 2024, a **68%** YoY increase, driven by active trading in both Hong Kong and US markets [9] Market and Industry Context - The report notes that the Federal Reserve's slower pace of interest rate cuts is expected to stabilize Futu's net interest income, with a **3.7%** YoY growth forecasted for 2024 [9] - The company's overseas expansion and product diversification are seen as key drivers of future profitability, particularly in a high-interest-rate environment [9] Valuation and Peer Comparison - Futu's 2024E P/E ratio of **16x** is significantly lower than its US internet brokerage peers, making its valuation attractive [9] - The report suggests that supportive economic policies in China could further boost the company's valuation [9]

Investment Rating - The report assigns a **Buy** rating to Anta Sports (2020 HK) with a target price of HKD 104.28, implying a potential upside of **33.5%** from the current price of HKD 78.10 [1][13] Core Views - Anta Sports' multi-brand strategy continues to receive positive market feedback, with the company maintaining a strong outlook for long-term growth [13] - The report slightly lowers the financial forecasts for 2024-2026 due to uncertainties in the consumer environment, adjusting the target price to HKD 104.28, based on 22x 2025 P/E [13] Financial Performance - Revenue is expected to grow from RMB 53,651 million in 2022 to RMB 80,152 million in 2026, with a CAGR of **9.5%** [3] - Net profit is projected to increase from RMB 7,590 million in 2022 to RMB 14,778 million in 2026, with a CAGR of **18.1%** [3] - EPS is forecasted to grow from RMB 2.73 in 2022 to RMB 4.94 in 2026, with a CAGR of **16.1%** [3] - The company maintains a strong balance sheet with net cash positions from 2024 to 2026 [6] Operational Highlights - In Q4 2024, Anta brand retail sales grew by high single digits, FILA by high single digits, and other brands by **50-55%** [13] - For the full year 2024, Anta brand/FILA/other brands retail sales grew by high single digits/mid single digits/**40-45%**, respectively [13] - Anta brand's offline retail discount remained stable at 72%, while online discounts improved by 1 percentage point year-on-year [13] - FILA brand's discount rate remained stable at 74-75%, with growth in its mainline, kids, and fashion segments [13] - Other brands, including Kolon and Descente, exceeded expectations with combined sales exceeding RMB 10 billion, growing by **60-65%** and **45-50%**, respectively [13] Strategic Initiatives - Anta is actively expanding its overseas markets, particularly in Southeast Asia, and plans to enter the Middle East in 2025, with a potential direct store opening in Los Angeles [13] - The company is focusing on creating popular products, such as the PG7 running shoes (with sales reaching millions) and the Storm Armor jacket, to prepare for the upcoming sales season [13] - Anta is leveraging major sporting events like the Asian Winter Olympics, Milan Winter Olympics, and Los Angeles Olympics to enhance its international brand exposure and recognition [13] Valuation Metrics - The stock is trading at a forward P/E of **16.8x** for 2024, **16.5x** for 2025, and **14.9x** for 2026 [3] - The P/B ratio is expected to decline from **3.86x** in 2023 to **2.77x** in 2026 [3] - The dividend yield is projected to increase from **2.5%** in 2023 to **3.5%** in 2026 [3]

Employment Data - US December non-farm payrolls added 252,000 jobs, significantly exceeding the expected 160,000 and the revised November figure of 212,000[2] - Unemployment rate dropped to 4.1%, below the expected and previous rate of 4.2%[2] - Average hourly earnings growth slowed to 3.9% year-over-year, below the expected 4.0%[2] Labor Market Trends - Service sector contributed 231,000 jobs, with retail and leisure/hospitality adding 43,000 each, driven by the holiday season[2] - Manufacturing employment declined due to strikes, while job vacancies unexpectedly rose to 8.1 million, indicating strong labor demand[2] - Labor force participation rate remained steady at 62.5%, with household survey data showing a recovery in employment[2] Market Reactions - Probability of a January rate cut dropped to 3.3% from 6.6%, and March rate cut probability fell to 23.9% from 39.6%[5] - US 10-year Treasury yield surged to 4.79%, and the dollar index rose to 109.6, while major US stock indices declined[5] Future Outlook - Short-term labor market volatility is expected due to strikes and potential downward revisions in non-farm payroll data[5] - Fed officials remain divided on rate cuts, with some supporting further easing in 2024 amid cooling inflation and tightening financial conditions[5]